SECURITIES PURCHASE AGREEMENT

HeartWare International, Inc.
205 Newbury Street, Suite 101
Framingham, Massachusetts 01701

Ladies & Gentlemen:

              The undersigned (the “Investor”), hereby confirms its agreement
with you as follows:
 
1.           This Securities Purchase Agreement is made as of August 10, 2009
between HeartWare International, Inc., a company organized under the laws of the
state of Delaware (the “Company”), and the Investor.
 
2.           The Company will issue up to an aggregate of 1,113,534 Shares
(“Firm Shares”) and seek shareholder authorization for the issuance of up to an
aggregate of additional 1,386,466 Shares (“Additional Shares” and together with
the Firm Shares, the “Shares”) to certain investors in a private placement (the
“Offering”).
 
3.           The Company and the Investor agree that, subject to the conditions
referred to in this Agreement, the Investor will purchase from the Company and
the Company will issue and sell to the Investor ______ Shares for a purchase
price of US $22.00 per Share, or an aggregate purchase price of US $______.00,
pursuant to the Terms and Conditions for Purchase of Shares attached hereto as
Annex I and incorporated herein by reference as if fully set forth herein (the
“Terms and Conditions”).  The Shares purchased pursuant to this Agreement shall
consist of (i) ______ Firm Shares and (ii) such number of Additional Shares
allocated on a pro rata basis in the same proportion as the Firm Shares to be
purchased by the Investor bears to the total number of Firm Shares purchased by
all Investors less 182,184 Firm Shares; provided however, if the proceeds from
the Australian Offering (as defined below) are less than $5,000,000 the number
of Firm Shares issued to the Investor under this Agreement shall be increased on
the same basis as the pro rata allocation described in clause (ii) of this
paragraph 3.  This Securities Purchase Agreement, together with the Terms and
Conditions, may hereinafter be referred to as the “Agreement.”  In addition, the
Company may make an offer of shares to various Australian investors upon similar
terms and conditions as the Shares being purchased in the Offering (the
“Australian Offering”), and such shares purchased outside the United States will
be made pursuant to a form of Australian Subscription Agreement in accordance
with the requirements of Australian corporate and securities laws.  Unless
otherwise requested by the Investor, the Shares purchased by the Investor will
be registered in the Investor’s name and address as set forth below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.  This Agreement may be
executed in separate counterparts, each of which shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument.

AGREED AND ACCEPTED:
 
 

HeartWare International, Inc.    Investor:                            By:    
By:     Name:     Name:   Title:      Title:

 

  Address:                                   Tax ID No.:           Contact name:
          Telephone:            Name in which shares should be registered (if
different):            

 
 
 
 
 
 
 
 
 
 
 
 

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ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SHARES

1.             Authorization and Sale of the Shares.  Subject to these Terms and
Conditions, the Company will issue up to an aggregate of 2,500,000 shares (the
“Shares”) of common stock, par value $0.001 per share (the “Common Stock”), and
to the extent the number of shares of Common Stock sold in the offering exceeds
approximately 15.0% of the Common Stock outstanding prior to the offering (the
“Firm Shares”), seek shareholder authorization for the issue of any additional
shares (the “Additional Shares”).

2.             Agreement to Sell and Purchase the Shares; Subscription Date.

 
2.1               At the Closing (as defined in Section 4), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of Shares as set forth in
Section 3 of the Securities Purchase Agreement to which these Terms and
Conditions are attached at the purchase price set forth thereon.

2.2               The Company may enter into (i) the same or substantially
similar form of Securities Purchase Agreement, including these Terms and
Conditions, with certain other investors in the United States (the “U.S.
Investors”), and (ii) a form of subscription agreement for the sale of its
securities in accordance with the requirements of Australian corporate and
securities laws, with certain other investors outside the United States
(collectively, the “Other Investors”). The Investor, the other U.S.
Investors, and the Other Investors are hereinafter sometimes collectively
referred to as the “Investors,” and the Securities Purchase Agreement to which
these Terms and Conditions are attached (the "Agreement") (including attached
Terms and Conditions) and the Australian form of subscription agreement, as
applicable, executed by the Other Investors are hereinafter sometimes
collectively referred to as the “Agreements.”  The Company may accept executed
Agreements from Investors for the purchase of Shares commencing upon the date on
which the Company provides the Investors with the proposed purchase price per
Share and concluding upon the date (the “Subscription Date”) on which the
Company is no longer accepting additional Agreements from Investors for the
purchase of Shares.  The Company may not enter into any Agreements after the
Subscription Date.

2.3               The obligations of each Investor under any Agreement are
several and not joint, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under any
Agreement.  Nothing contained herein, and no action taken by any Investor
hereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated hereby,
provided that such obligations or the transactions contemplated hereby may be
modified, amended or waived in accordance with Section 10 below.  Each Investor
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement (provided, that such
rights may be modified, amended or waived in accordance with Section 10 below),
and it shall not be necessary for any Other Investor to be joined as an
additional party in any proceeding for such purpose.

3.             Holding of subscription monies

3.1               The business day after the Subscription Date, the Company
shall transfer the subscription monies relating to the Additional Shares
(“Escrow Funds”) into the escrow account established and operated in accordance
with this clause 3 and the Escrow Agreement between the Company and Citibank,
N.A., dated as of August 10, 2009 (the “Escrow Agreement”).

3.2               In the event that (a) the Additional Conditions (as defined
herein) are satisfied on or before December 15, 2009, the Company shall direct
the Escrow Agent to release the Escrow Funds to the Company promptly upon
becoming aware that the Additional Conditions have been satisfied; or (b)
stockholder approval is not obtained at the Special Meeting (or at any
adjournment of that meeting) or the Additional Conditions are not satisfied on
or before December 15, 2009, the Company shall direct the Escrow Agent to
release the Escrow Funds to the Company for refund to Investors on the earlier
of the business day after (i) the Special Meeting (if the resolution approving
the offering was not passed); or (ii) the Company becomes aware that the
Additional Conditions are not capable of being satisfied; or (iii) December 15,
2009.

3.3               Upon receipt of the Escrow Funds from the Escrow Agent in
accordance with section 3.2(b), the Company shall promptly refund the Escrow
Funds to the Investors.

3.4               Interest shall accrue on the Escrow Funds while in the Escrow
Account in accordance with the terms of the Escrow Agreement and shall follow
the principal amount and shall be paid to the Company or refunded to Investors
(as the case may be) at the same time as payment of the corresponding principal.
 
 
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4.             Delivery of the Shares at Closing.

4.1.               It is expected that the completion of the purchase and sale
of the Shares (the “Closing”) shall occur electronically on or about August 14,
2009 (the “Closing Date”).  On or prior to the Closing, the Company shall
provide to the Investor copies of the physical certificated Shares for the
number of Firm Shares, in each case as is set forth in Section 3 of the
Securities Purchase Agreement.  Upon written notice to the Company at least one
business day prior to the Closing Date, the Investor may elect to receive
thirty-five restricted CHESS Depository Interests for each Share. Within seven
(7) days following the Closing Date, the Company shall cause the original
certificates to be delivered to the Investor or its nominee as instructed
overnight, receipted delivery.
 
The Company’s obligation to issue the Firm Shares on the Closing Date to the
Investor shall be subject to the following additional conditions, any one or
more of which may be waived by the Company: (a) receipt by the Company of a
certified or official bank check or wire transfer of funds in the full amount of
the purchase price for the Shares being purchased hereunder as set forth in
Section 3 of the Securities Purchase Agreement; and (b) the accuracy of the
representations and warranties made by the Investors and the fulfillment of
those undertakings of the Investors to be fulfilled prior to the Closing.

The Investor’s obligation to purchase the Shares shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) the representations and warranties of the Company set forth herein shall be
true and correct as of the Closing Date (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date) in all material respects
and the fulfillment in all material respects of those undertakings of the
Company in this Agreement to be fulfilled on or prior to the Closing Date, (b) a
legal opinion of the Company’s U.S. counsel, dated as of the Closing Date, in
the form attached hereto as Exhibit A executed by such counsel and addressed to
the Investor, and (c) the Investor shall have received such documents as such
Investor shall reasonably have requested in connection with the Offering.

4.2.              The Company’s obligation to issue the Additional Shares to the
Investor shall be subject to the conditions in Section 4.1 hereof, and upon the
following additional conditions: (a) the Company has received the approval of
the requisite number of Company shareholders for the offer and sale of the
Additional Shares under the ASX Listing Rules and Nasdaq Stock Market Rule
5635(d); and (b) all other requirements of the ASX Listing Rules and Nasdaq
Stock Market Rules applicable to the Offering have been satisfied in relation to
the offering (“Additional Conditions”).  Promptly upon satisfaction of the
Additional Conditions and the release of the Escrow Funds from escrow, the
Company shall deliver to the Investor the number of Additional Shares, in each
case as is set forth in Section 3 of the Securities Purchase Agreement.

5.             Representations, Warranties and Covenants of the Company.  The
Company hereby represents and warrants to, and covenants with, the Investor, as
follows:

5.1               Organization.  The Company is a corporation duly organized and
validly existing in good standing under the laws of the state of Delaware, and
has the requisite power to own or lease its properties and to conduct its
business as presently conducted.  The Company is duly registered or qualified as
a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it or the location
of the properties owned or leased by it requires such registration or
qualification and where the failure to be so registered or so qualified would
have a material adverse effect upon the condition (financial or otherwise),
earnings, business, properties or operations of the Company and its subsidiaries
taken as a whole (a “Material Adverse Effect”), and no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority, registration or
qualification.

5.2               Due Authorization and Valid Issuance.  The Company has all
requisite power and authority to execute, deliver and, subject to the approval
referred to in clause 4.2(b) above and 5.4 below, perform its obligations under
each Agreement, and each Agreement has been duly authorized and validly executed
and delivered by the Company and constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution may be limited by
applicable securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).  The Shares being purchased by the Investor
hereunder will, upon issuance and payment therefor pursuant to the terms hereof
and subject to the approval referred to in clause 4.2(b) above and 5.4 below, be
duly authorized, validly issued, fully-paid and non-assessable.
 
 
 
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5.3             Non-Contravention.  The execution and delivery of each
Agreement, the issuance and sale of the Shares under each Agreement, the
fulfillment of the terms of each Agreement and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
bond, debenture, note or other evidence of indebtedness, lease, contract,
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 and other
organizational documents of the Company, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company, or its properties, except in the
case of clauses (i) and (iii) for any such conflicts, violations or defaults
that are not reasonably likely to have 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 properties or assets of the Company or
an acceleration of indebtedness pursuant to any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company is a party or by which it is bound or to which
any of the material property or assets of the Company is subject, except for
such liens, encumbrances, claims, security interests or restrictions upon any of
the properties or assets of the Company or accelerations of indebtedness that
are not reasonably likely to have a Material Adverse Effect.  No consent,
approval, authorization or other order of, or registration, qualification or
filing with, any regulatory body, administrative agency, or other governmental
body or any other person is required for the execution and delivery of the
Agreements, and the valid issuance and sale of the Shares to be sold pursuant to
the Agreements, other than the stockholder approval referred to in Section 4 or
such as have been made or obtained, and except for any post-closing securities
filings or notifications required to be made under applicable securities laws.

5.4               Capitalization.  As of the date hereof, the capital of the
Company is as set out in the “Summary of Terms and Conditions”.  All of the
Company’s shares have been duly and validly issued and are fully paid and
non-assessable, have been issued in compliance with all applicable securities
laws, and were not issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities.  The Shares to be sold pursuant
to the Agreements, when they are issued and paid for in accordance with the
terms of the Agreements, will be duly and validly issued, fully paid and
non-assessable. Without limiting the foregoing, no preemptive right, co-sale
right, right of first refusal or other similar right exists with respect to the
Shares or the issuance and sale thereof.  Except as set forth in Section 4
above, no further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale of the
Shares.  Except as may be disclosed in the Company's SEC Documents, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.  The issuance and sale of the Shares will not result in a right of
any current holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.  Except for options issued to
officers, directors and employees of the Company under its employee benefit
plans or as otherwise set forth in the Company SEC Documents (as defined in
Section 5.5 hereof), there are no outstanding rights (including, without
limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of capital stock or
other equity interest in the Company, or any contract, commitment, agreement,
understanding or arrangement of any kind to which the Company is a party or of
which the Company has knowledge and relating to the issuance or sale of any
capital stock of the Company, any such convertible or exchangeable securities or
any such rights, warrants or options.  Subject to the filing of the notification
with the Nasdaq Stock Market, Inc. and the receipt of stockholder approval, the
issuance and sale of the Shares under the Agreements do not contravene the rules
and regulations of the Nasdaq Stock Market, Inc.

5.5               Reporting Status.  The Company has made or filed all required
disclosures or obtained appropriate waivers with the Nasdaq Stock Market,
Inc.  The Company has filed all forms, documents and reports required to be
filed prior to the date hereof by it with the Securities and Exchange Commission
(the “Company SEC Documents”).  As of their respective dates, or if amended, as
of the date of the last such amendment, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933, as
amended (the “Securities Act”) and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) as the case may be, and the applicable rules and
regulations promulgated thereunder, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  At the date hereof the Company meets the requirements for use of
Form S-3 under the Securities Act to register the sale of the Shares by the
Investor.
 
5.6               Legal Proceedings; Disagreements with Advisors.  There are no
material legal or governmental investigations, actions, suits or proceeding
pending or, to the knowledge of the Company, threatened to which the Company is
or may be a party or of which the business or property of the Company is subject
that are not disclosed in the Company SEC Documents.  There are no material
disagreements presently existing, or reasonably anticipated by the Company to
arise, between the accountants presently employed by the Company.

5.7               No Violations.  The Company is not (i) in violation of its
charter, bylaws, or other organizational document; (ii) in violation of any
applicable law, administrative regulation, ordinance or order of any court or
governmental
 
 
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agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to have
a Material Adverse Effect; or (iii) in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company is a party or by which the Company is bound or by which the
properties of the Company are bound, which would be reasonably likely to have a
Material Adverse Effect.

5.8               Governmental Permits, Etc.  The Company has all necessary
franchises, licenses, certificates and other authorizations from any applicable
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company as currently
conducted and as described in the Company SEC Documents except where the failure
to currently possess would not have a Material Adverse Effect.
 
5.9             Compliance in Clinical Trials. The clinical trials conducted by
or on behalf of the Company have been conducted in accordance with accepted
professional scientific standards.  The Company has not received any notices or
correspondence from the FDA or any other governmental agency requiring the
termination, suspension or modification of any clinical trials currently
conducted by, or on behalf of, the Company or in which the Company has
participated, if any, or the results of which are referred to in its publicly
available documents and press releases.
 
5.10              Intellectual Property.  Except as specifically disclosed in
the Company SEC Documents (i)  the Company owns or possesses sufficient rights
to use all patents, patent rights, trademarks, copyrights, licenses, inventions,
trade secrets, trade names and know-how (including trade secrets and other
unpatented and/or unpatentable property or confidential information, systems,
processes or procedures) (collectively, “Intellectual Property”) described or
referred to in the Company SEC Documents as owned or possessed by them or that
are necessary for the conduct of its business as now conducted as described in
the Company SEC Documents except where the failure to currently own or possess
would not have a Material Adverse Effect, (ii) to its knowledge, the Company is
not infringing, and have not received any notice of any asserted infringement by
the Company of any rights of a third party with respect to any Intellectual
Property that, individually or in the aggregate, would have a Material Adverse
Effect and (iii) the Company has not received any notice of, and has no
knowledge of, infringement by a third party with respect to any Intellectual
Property rights of the Company, individually or in the aggregate, would have a
Material Adverse Effect.

5.11             Financial Statements; Obligations to Related Parties.  (a) The
financial statements of the Company and the related notes contained in the
Company SEC Documents present fairly, in accordance with generally accepted
accounting principles as applied in the United States (“GAAP”), 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 except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments that are not expected to be material in
amount.  Such financial statements (including the related notes) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods therein specified, except as may be disclosed in the notes to such
financial statements and except as disclosed in the Company SEC Documents.  The
other financial information contained in the Company SEC Documents has been
prepared on a basis consistent with the financial statements of the Company.

5.12               Except as set forth in any Company SEC Documents, there are
no obligations of the Company to officers, directors, stockholders or employees
of the Company or its subsidiaries other than (i) for payment of salary for
services rendered and for bonus payments; (ii) reimbursements for reasonable
expenses incurred on behalf of the Company; (iii) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company); and (iv) obligations listed in the Company’s
financial statements.

5.13             No Material Adverse Change.  Except as disclosed in the Company
SEC Documents, since December 31, 2008, there has not been (i) any material
adverse change in the financial condition or earnings of the Company, (ii) any
material adverse event affecting the Company, (iii) any obligation, direct or
contingent, that is material to the Company, incurred by the Company, except
obligations incurred in the ordinary course of business, (iv) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, or (v) any loss or damage (whether or not insured) to the physical
property of the Company which has been sustained which had a Material Adverse
Effect.

5.14             Disclosure. The representations and warranties of the Company
contained in this Section 5 as of the date hereof and as of the Closing Date, do
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.  Except with respect to the material terms and conditions of the
transaction contemplated by the Agreements and the anticipated use of the
proceeds therefrom, which shall be publicly disclosed by the Company pursuant to
the Exchange Act, the Company confirms that neither it nor any person acting on
its behalf has provided the Investors with any information that the Company
believes constitutes material, non-public information.  Subject to section 6.6
below, the Company understands and confirms that the Investors will rely on the
foregoing representations in effecting transactions in the securities of the
Company.
 
 
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5.15             Listing.  The Company shall use reasonable commercial efforts
to comply with all requirements of the Nasdaq Stock Market, Inc. with respect to
the issuance of the Shares and the listing of the Shares on the Nasdaq Global
Market.

5.16             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 its stock to facilitate the sale or resale of the Shares.
 
5.17             Company not an “Investment Company”.  The Company has been
advised of the rules and requirements under the Investment Company Act of 1940
of the United States, as amended (the “Investment Company Act”).  The Company is
not, and immediately after receipt of payment for the Shares will not be, an
“investment company” or an entity “controlled” by an “investment company” within
the meaning of the Investment Company Act and shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.

5.18             Contracts.  The contracts described in the Company SEC
Documents that are material to the Company are in full force and effect on the
date hereof, and neither the Company nor, to the Company's knowledge, any other
party to such contracts is in breach of or default, or received a notice of
termination under any of such contracts which would have a Material Adverse
Effect.
 
5.19             Taxes.  The Company and its subsidiaries have filed (or has
obtained an extension of time within which to file) all necessary tax returns
and have paid all taxes shown as due on such tax returns, except where the
failure to so file or the failure to so pay would not have a Material Adverse
Effect.  The Company and its subsidiaries are not aware of any tax deficiency
that has been or might be asserted or threatened against them that would have a
Material Adverse Effect.

5.20             Private Offering.  Assuming the correctness of the
representations and warranties of the Investors set forth in Section 6 hereof
and assuming that the Company has not offered or sold any of the Shares by any
form of general solicitation or advertising in the United States, the offer and
sale of the Shares hereunder is exempt from registration under the Securities
Act.  The Company has not distributed and will not distribute prior to the
Closing Date any offering material in connection with this Offering and sale of
the Shares other than the documents of which this Agreement is a part and the
Company SEC Documents and any documents in connection with the Australian
Offering.  The Company has not in the past nor will it hereafter take any action
to sell, offer for sale or solicit offers to buy any securities of the Company
that would bring the offer, issuance or sale of the Shares as contemplated by
this Agreement within the registration provisions of Section 5 of the Securities
Act, unless such offer, issuance or sale was or shall be within the exemptions
from registration available under the Securities Act. Neither the Company nor
any person acting on behalf of the Company has offered or sold any of the Shares
by any form of general solicitation or general advertising in the United
States.  The Company has offered the Shares on a private placement basis in the
United States for sale only to the Investors and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

5.21             Transactions With Affiliates.  There are no business
relationships or related-party transactions involving the Company or any other
person required to be described in the Company SEC Documents that have not been
described as required.

5.22             Rule 144A Information.  At any time a Trading Market ceases to
exist with respect to the Shares, the Company shall furnish to holders of the
Shares, and to prospective purchasers of the Shares, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act.  A “Trading
Market” shall be deemed to exist at such time as the Shares are (i) registered
under the Exchange Act, and (ii) traded on the Nasdaq Global Market or to any
other approved exchange.

5.23             Company Acknowledgement of Investor Representation.  The
Company acknowledges and agrees that the Investor does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Sections 6 and 16(a) of this
Agreement, or in the Investor Questionnaire.
 
5.24             Placement Agents.  The Company has taken no action that would
give rise to any claim by any person for brokerage commissions, placement
agent’s fees or similar payments relating to this Agreement or the transactions
contemplated hereby, except for dealings with Canaccord Adams Inc. and Summer
Street Research Partners, whose commissions and fees will be paid by the
Company.

5.25             Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
the Company believes are prudent and customary for a company (i) in the
businesses and location in which the Company is engaged, (ii) with the resources
of the Company, and (iii) at a similar stage of development as the Company.  The
Company has not received any written notice that the Company will not be able to
renew
 
 
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its existing insurance coverage as and when such coverage expires.  The Company
believes it will be able to obtain similar coverage at reasonable cost from
similar insurers as may be necessary to continue its business.
 

6.             Representations, Warranties and Covenants of the Investor.

6.1               The Investor represents and warrants to, and covenants with,
the Company that: (i) the Investor is an “accredited investor” as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor is
acquiring the Shares set forth in Section 3 of this Agreement in the ordinary
course of its business and for its own account for investment only and with no
present intention of distributing any of such Shares; (iii) the Investor has not
entered into any arrangement or understanding with any other persons regarding
the distribution of such Shares; (iv) 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 securities laws
and the respective rules and regulations promulgated thereunder; (v) the
Investor shall furnish to the Company such information regarding such Investor
and the distribution proposed by such Investor as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
U.S. Registration; and (vi) the Investor has, in connection with its decision to
purchase the number of Shares set forth in Section 3 of this Agreement relied
only upon the Company SEC Documents and the representations and warranties of
the Company contained herein.  The Investor understands that its acquisition of
the Shares has not been registered under the Securities Act or registered or
qualified under any applicable securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of the Investor’s investment intent as expressed herein.  The Investor
has completed or caused to be completed and delivered to the Company the
Investor Questionnaire, which questionnaire is true, correct and complete in all
material respects.

6.2               The Investor shall not offer, sell, contract to sell or
otherwise dispose of or deliver any of the Shares unless: (i) the Shares are
sold in a transaction that does not require registration under the Securities
Act or any applicable laws and regulations of the states of the United States
governing the offer and sale of securities and, (ii) prior to and as a condition
to the execution of the offer, sale or delivery described in subclause (i)
above, such Investor has furnished to the Company a written opinion of counsel
reasonably satisfactory to the Company to such effect, unless the Company waives
receipt of such opinion.
 
6.3               The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity 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, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.

6.4               The Investor has not engaged in any short sales or similar
transactions with respect to the Company’s capital stock, nor has the Investor,
directly or indirectly, caused any person to engage in any short sales or
similar transactions with respect to the Company’s capital stock.  Without
limiting the foregoing, Investor will not use any of the Shares acquired
pursuant to the Agreements to cover any short position in the capital stock of
the Company if doing so would be in violation of applicable securities laws and
Investor will otherwise comply with federal securities laws of the United States
in the holding and resale of the Shares.

6.5               The Investor understands that nothing in the Company SEC
Documents, the Agreements, 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 Shares.

6.6               The Investor acknowledges that, if it has material non-public
information regarding the Company, insider trading restrictions may apply to
it.  The Investor agrees not to, and not to cause any other person to, acquire
or sell any of the Company's securities after it has had access to material
non-public information if doing so would be a breach of insider trading
restrictions in either the United States or Australia.

6.7.              The Investor acknowledges and accepts that the Company may
offer its securities to other U.S. Investors and various Australian investors
upon substantially similar terms and conditions as the Shares being purchased
pursuant to this Offering.

 
 
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7.             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, provided that the representations and warranties contained herein
shall expire on the one-year anniversary of the Closing Date.

8.             Registration of the Shares in the United States; Compliance with
the Securities Act.

8.1               Registration Rights.  The Company shall, subject to the
receipt of necessary information from the Investors, use commercially reasonable
efforts to prepare and file with the Securities and Exchange Commission (“SEC”),
a registration statement on Form S-3 to enable the resale of the Registrable
Securities (as defined below) by the Investors on a delayed or continuous basis
under Rule 415 of the Securities Act as soon as reasonably practicable but in
any event within 30 days after the Closing Date with respect to the Firm Shares
and within 30 days from the date of issuance with respect to the Additional
Shares.  In the event that Form S-3 is not available for the registration of the
resale of Registrable Securities hereunder, the Company shall register the
resale of the Registrable Securities on another form reasonably acceptable to
the Investors, including a registration statement on Form S-1.  The Company
shall use commercially reasonable efforts to cause the Registration Statement to
be declared effective by the SEC as soon as reasonably practicable but in any
event within 90 days after the Closing Date with respect to the registration
statement relating to the Firm Shares and 90 days after the issuance date with
respect to the registration statement relating to the Additional
Shares;  provided, however, in the event the SEC has elected to review the
Registration Statement, the Company shall use commercially reasonable efforts to
cause the Registration Statement to be declared effective by the SEC as soon as
reasonably practicable but in any event within 120 days after the Closing Date
with respect to the registration statement relating to the Firm Shares and 120
days after the issuance date with respect to the registration statement relating
to the Additional Shares (such 90 day or 120 day date, shall be referred to as
the “Required Registration Date”).  Subject to the Company’s right to declare a
Suspension Period as set forth in Section 8.10, the Company shall use its
commercially reasonable efforts to keep each Registration Statement continuously
effective under the Securities Act until the earlier of (i) such time as all of
the Registrable Securities covered by such Registration Statement have been
publicly sold by the Investors or (ii) the date that all Registrable Securities
covered by such Registration Statement may be sold by non-affiliates without
volume or manner of sale restrictions under Rule 144, without the requirement
for the Company to be in compliance with the current public information
requirements under Rule 144.

The Company further agrees that, subject to the Company’s right to declare a
Suspension Period as set forth in Section 8.10, in the event the Registration
Statement has not been declared effective by the applicable Required
Registration Date, unless the failure to become effective is due to the fault of
one or more Investors or if the Registration Statement ceases to
remain continuously effective as provided in this Agreement (each such event
referred to as a “Registration Default”) and if the Registration Default exists
for 30 days or more following the applicable Required Registration Date, then
the Company shall issue additional shares of Common Stock to the Investors equal
to 1% of the Shares issued to such Investor on the Closing Date, per month for
each month during which the applicable Registration Default exists; provided
that in no event shall the total aggregate number of shares issued pursuant to
this Section 8.1 exceed 5% of the number of Shares issued to such Investor on
the Closing Date and provided further that no additional shares shall be issued
if the Shares are freely tradeable pursuant to Rule 144.

The term “Registration Statement” shall refer to the registration statement
filed under the Securities Act that covers the resale of any of the Registrable
Securities pursuant to this Section 8.1.

The term “Registrable Securities” shall mean the Shares; provided, however, that
a Share shall cease to be a Registrable Security when (i) in the circumstances
contemplated by this Section 8.1, a Registration Statement registering such
Shares under the Securities Act has been declared or becomes effective and such
Shares have been sold or otherwise transferred by the Investor thereof pursuant
to and in a manner contemplated by such effective Registration Statement; (ii)
such Share is sold pursuant to Rule 144 under circumstances in which any legend
borne by such Security relating to restrictions on transferability thereof,
under the Securities Act or otherwise, is removed by the Company; (iii) such
Shares are eligible to be sold pursuant to Rule 144; or (iv) the Shares shall
cease to be outstanding.

8.2               Registration Procedures.  The Company shall:
 
(a)          The Company shall not less than two (2) trading days prior to the
filing of a Registration Statement and not less than one (1) trading day prior
to the filing of any related prospectus or any amendment or supplement thereto
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and any similar or successor reports), the Company
shall, furnish to the Investors copies of such Registration Statement,
prospectus or amendment or supplement thereto, as proposed to be filed, which
documents will be subject to the review of such Investor  (it being acknowledged
and agreed that if an Investor does not object to or comment on the
aforementioned documents within such two (2) trading days or one (1) trading day
period, as the case may be, then the Investor shall be deemed to have consented
to and approved the use of such documents).  The Company shall not file any
Registration Statement or amendment
 
 
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or supplement thereto in a form to which an Investor reasonably objects in good
faith, provided that, the Company is notified of such objection in writing
within the two (2) trading days or one (1) trading day period described above,
as applicable.

(b)          prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement;

(c)          furnish such number of prospectuses, including any preliminary
prospectuses, and other documents incident thereto, including any amendment of
or supplement to the prospectus, as an Investor from time to time may reasonably
request;

(d)          use its reasonable best efforts to register and qualify the
securities covered by such Registration Statement under such other securities
laws of such jurisdiction within the U.S. as shall be reasonably requested by
the Investor; provided, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions; and

(e)          notify each Investor or seller of Registrable Securities when a
Registration Statement becomes effective.

(f)           notify each seller of Registrable Securities covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in light of the circumstances
then existing, and following such notification promptly prepare and furnish to
such seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include 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 not misleading or incomplete
in light of the circumstances then existing.

8.3               Indemnification.  For the purpose of this Section 8.3:

(i)                 the term “Selling Stockholder” means the Investor and any
affiliate of such Investor;

(ii)                the term “Registration Statement” shall include the
Prospectus in the form first filed with the SEC pursuant to Rule 424(b) of the
Securities Act or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, and any exhibit, supplement
or amendment included in or relating to the Registration Statement referred to
in Section 8.1; and

(iii)               the term “untrue statement” for purposes of Section 8.3(d)
hereof shall include any untrue statement or alleged untrue statement, or any
omission or alleged omission to state in the Registration Statement a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

(a)          The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages or liabilities to which
such Selling Stockholder may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon (i) any breach
of the representations or warranties of the Company contained herein or failure
to comply with the covenants and agreements of the Company contained herein,
(ii) any untrue statement of a material fact contained in the Registration
Statement as amended at the time of effectiveness or any omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any failure by the Company to fulfill any undertaking
included in the Registration Statement as amended at the time of effectiveness,
and the Company will reimburse such Selling Stockholder for any reasonable legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim, or preparing to defend any such
action, proceeding or claim, provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement made in such Registration
Statement or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the Registration
Statement, or the failure of such Selling Stockholder to comply with its
covenants and agreements contained in Section 8.2 hereof respecting sale of the
Shares or any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Selling Stockholder prior to the
pertinent sale or sales by the Selling Stockholder.  The Company shall reimburse
each Selling Stockholder for the amounts provided for herein on demand as such
expenses are incurred as reasonably documented by the Selling Stockholder.
 
 
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(b)          The Investor agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, (i) any failure
to comply with the covenants and agreements made by the Investor herein
respecting sale of the Shares other than a failure to comply due to the
misrepresentation, negligence, fraud, willful misconduct or breach of a covenant
of the Company or (ii) any untrue statement of a material fact contained in the
Registration Statement or any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
untrue statement or omission was made in reliance upon and in conformity with
written information furnished by or on behalf of the Investor specifically for
use in preparation of the Registration Statement, and the Investor will
reimburse the Company (or such officer, director or controlling person), as the
case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided that Investor’s obligation to indemnify the Company under this
subparagraph (iii)(b) shall be limited to the net amount received by the
Investor from the sale of the Shares.

(c)          Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 8.3, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, but the omission to so notify the
indemnifying person will not relieve it from any liability which it may have to
any indemnified person under this Section 8.3 (except to the extent that such
omission materially and adversely affects the indemnifying person’s ability to
defend such action) or from any liability otherwise than under this
Section 8.3.  Subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person, the indemnifying person
shall be entitled to participate therein, and, to the extent that it shall elect
by written notice delivered to the indemnified person promptly after receiving
the aforesaid notice from such indemnified person, shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
person.  After notice from the indemnifying person to such indemnified person of
its election to assume the defense thereof, such indemnifying person shall not
be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided, however, that if there exists or shall exist a conflict of interest
that would make it inappropriate, in the opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties.  In no
event shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided that such consent shall not be unreasonably
withheld.  No indemnifying person shall, without the prior written consent of
the indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could have been a
party and indemnification could have been sought hereunder by such indemnified
person, unless such settlement includes an unconditional release of such
indemnified person from all liability on claims that are the subject matter of
such proceeding.

(d)          If the indemnification provided for in this Section 8.3 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investor,
as well as any other Selling Stockholders under such registration statement on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.  The relative
fault shall be determined by reference to, among other things, in the case of an
untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or an Investor or other Selling Stockholder on
the other and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement.  The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investor and other Selling Stockholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d).  The
amount paid or payable by an indemnified person as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified person in connection with investigating
or defending any such action or claim.  Notwithstanding the provisions of this
subsection (d), the Investor shall not be required to contribute any amount in
excess of the amount by which the net amount received by the Investor from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which such Investor has otherwise been required to pay by reason of such untrue
statement.  No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.  The
Investor’s obligations in this subsection to contribute shall be in proportion
to its sale of Shares to which such loss relates and shall not be joint with any
other Selling Shareholders.

 
 
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(e)          The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 8.3, and are fully informed regarding said
provisions.  They further acknowledge that the provisions of this Section 8.3
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act.  The parties are advised that federal or state public policy in the United
States as interpreted by the courts in certain jurisdictions may be contrary to
certain of the provisions of this Section 8.3, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public policy
as a defense to a claim under this Section 8.3 and further agree not to attempt
to assert any such defense.

8.4               Termination of Conditions and Obligations.  The conditions
precedent imposed by Section 5 or this Section 8 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares (i)
when such shares shall have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such shares, (ii)
when such Shares are freely tradeable under Rule 144 or (iii) at such time as an
opinion of counsel reasonably satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.

8.5               Restrictions on Transfer.
 
The Investor expressly agrees that any sale by the Investor of Shares pursuant
to the Registration Statement shall be sold in a manner described under the
caption “Plan of Distribution” in such Registration Statement and the Investor
will deliver a copy of the Prospectus contained in the Registration Statement to
the purchaser or purchasers, directly or through the Investor's broker, in
connection with such sale, in each case in compliance with the requirements of
the Securities Act and Exchange Act applicable to such sale.
 
8.6               Legends.  Certificates evidencing the Shares shall bear a
legend in substantially the following form:
 
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or the securities
laws of any state, and may not be offered or sold unless a registration
statement under the Securities Act and applicable state securities laws shall
have become effective with regard thereto, or an exemption from registration
under the Securities Act and applicable state securities laws is available in
connection with such offer or sale.

8.7               Removal of Legends.  The restrictive legend set forth in
Section 8.6 above shall be removed and the Company shall issue a certificate
without such restrictive legend or any other restrictive legend to the Investor
upon which it is stamped or issue to such holder by electronic delivery at the
applicable balance account at the Depository Trust Company (“DTC”), if (i) such
Shares are registered for resale under the Securities Act (provided that, if the
Investor is selling pursuant to the effective registration statement registering
the Shares for resale, the Investor agrees to only sell such Shares during such
time that such registration statement is effective and such Investor is not
aware or has not been notified by the Company that such registration statement
has been withdrawn or suspended, and only as permitted by such registration
statement), (ii) such Shares are sold or transferred pursuant to Rule 144 (if
the transferor is not an Affiliate of the Company), or (iii) such Shares are
eligible for sale under Rule 144, without the requirement for the Company to be
in compliance with the current public information required under Rule 144 as to
such Shares and without volume or manner-of-sale restrictions.  Following the
earlier of (i) the effective date of such registration statement or (ii) Rule
144 becoming available for the resale of Shares, without the requirement for the
Company to be in compliance with the current public information required under
Rule 144 as to the Shares and without volume or manner-of-sale restrictions, the
Company shall cause Company counsel to issue to the Transfer Agent the legal
opinion referred to in the Irrevocable Transfer Agent Instructions.  Any fees
(with respect to the Transfer Agent, Company counsel or otherwise) associated
with the issuance of such opinion or the removal of such legend shall be borne
by the Company.  Following the effective date of such registration statement, or
at such earlier time as a restrictive legend is no longer required for certain
Shares, the Company will no later than five (5) trading days following the
delivery by a Investor to the Company or the Transfer Agent (with notice to the
Company) of a legended certificate representing such Shares (endorsed or with
stock powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer) and an opinion of counsel to the extent
required by this Section, (such fifth trading day, the “Legend Removal Date”)
deliver or cause to be delivered to such Investor a certificate representing
such Shares that is free from all restrictive legends.  The Company may not make
any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in this Section.  Certificates
for Shares free from all restrictive legends may be transmitted by the Transfer
Agent to the Investors by crediting the account of the Investor’s prime broker
with DTC as directed by such Investor.

8.8               Irrevocable Transfer Agent Instructions.  As and when required
under the terms of this Agreement, the Company shall issue irrevocable
instructions to its Transfer Agent, and any subsequent transfer agent in the
form of Exhibit B attached hereto (the “Irrevocable Transfer Agent
Instructions”). The Company represents and warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section
 
 
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will be given by the Company to its transfer agent in connection with this
Agreement, and that the Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and applicable law. The Company acknowledges that a breach by it of its
obligations under this Section will cause irreparable harm to an Investor.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section will be inadequate and agrees, in the event of a
breach by the Company of the provisions of this Section, the Investor shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

8.9               Buy-In.  If the Company shall fail for any reason or for no
reason to issue to an Investor unlegended certificates within five (5) trading
days of receipt of all documents necessary for the removal of the legend set
forth above (the “Deadline Date”), then, in addition to all other remedies
available to such Investor, if on or after the trading day immediately following
such five (5) trading day period, such Investor purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the holder of shares of Common Stock that such Investor anticipated
receiving from the Company without any restrictive legend (a “Buy-In”), then the
Company shall, within five (5) trading days after such Investor’s request and in
such Investor’s sole discretion, either (i) pay cash to the Investor in an
amount equal to such Investor’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such shares of Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to such Investor a certificate or certificates
representing such shares of Common Stock and pay cash to the Investor in an
amount equal to the excess (if any) of the Buy-In Price over the product of (a)
such number of shares of Common Stock, times (b) the closing bid price on the
Deadline Date.

8.10               Investor Covenants.
 
(a)          At any time after the Registrable Securities are covered by an
effective Registration Statement, the Company may deliver to the Investors of
such Registrable Securities a certificate (the “Suspension Certificate”) signed
by an officer of the Company stating that sales of Registrable Securities under
the applicable Registration Statement would:

i.           materially interfere with the consummation of any financing,
acquisition, merger, disposition assets, corporate reorganization or any other
similar transactions including without limitation any transaction that would
require the Company to prepare financial statements under the Securities Act
that the Company would otherwise not be required to prepare in order to comply
with its obligations under the Exchange Act, or
 
ii.           require public disclosure of a material transaction or event prior
to the time such disclosure might otherwise be required.
 
Upon receipt of a Suspension Certificate by Investors of Registrable Securities,
such Investors of Registrable Securities shall refrain from selling or otherwise
transferring or disposing of any Registrable Securities then held by such
Holders pursuant to a Registration Statement and the Company shall not be
required to maintain the effectiveness of the Registration Statement for a
specified period of time (a “Suspension Period”) that is customary under the
circumstances (not to exceed fifteen (15) business days). Notwithstanding the
foregoing sentence, the Company shall be permitted to cause Investors of
Registrable Securities to so refrain from selling or otherwise transferring or
disposing of any Registrable Securities pursuant to a Registration Statement on
only three (3) occasions during each six (6) consecutive month period that such
Registration Statement remains effective. The Company may impose stop transfer
instructions to enforce any required agreement of the Investors under this
Section 8.5(a).

(b)          Each Investor agrees by its acquisition of Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 8.2(d) or

i.           (A) when a prospectus or any prospectus supplement or post
effective amendment to a Registration Statement is proposed to be filed; (B)
when the SEC notifies the Company whether there will be a “review” of such
Registration Statement and whenever the SEC comments in writing on any
Registration Statement; and (C) with respect to each Registration Statement or
any post effective amendment, when the same has become effective;
 
ii.           of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or prospectus or for additional information that pertains to the Investors as
“Selling Stockholders” or the “Plan of Distribution”;
 
 
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iii.           of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement covering any or all of the Registrable Securities or the
initiation of any proceedings for that purpose; or
 
iv.           of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose.
 
such Holder will forthwith discontinue disposition of such Registrable
Securities under the applicable Registration Statement until it is advised in
writing (the “Advice”) by the Company that the use of the applicable prospectus
(as it may have been supplemented or amended) may be resumed.  The Company may
provide appropriate stop orders to enforce the provisions of this Section
8.5(b).  The Company will use its commercially reasonable best efforts to ensure
that the use of the Registration Statement and prospectus may be resumed as soon
as reasonably practicable under the circumstances.

(c)          Not less than three (3) business days prior to the initial filing
of the Registration Statement, each Investor agrees to furnish to the Company
such information as the Company shall reasonably request in order to effect the
registration of such Investor’s Registrable Securities including information
regarding the Investor and the intended method of disposition. Each Investor
further agrees that it shall not be entitled to be named as a selling
stockholder in the Registration Statement until such Investor has provided to
the Company the information requested pursuant to this clause (c). Each Investor
acknowledges and agrees that the information provided will be used by the
Company in the preparation of the Registration Statement covering such
Investor’s Registrable Securities and hereby consents to the inclusion of such
information in the Registration Statement.
 
 
9.           Notices.  All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified mail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile or electronic mail, or (B) if
delivered from outside the United States, by International Federal Express (or
other recognized international express courier) or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified mail, 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 (or other recognized international express
courier), two business days after so mailed, or (iv) if delivered by facsimile
or electronic mail, upon electronic confirmation of receipt and shall be
delivered as addressed as follows:

(a)                if to the Company, to:

 
HeartWareInternational,Inc.

205 Newbury Street, Suite 101
Framingham, Massachusetts 01701
Attn:  David McIntyre

 
Phone:
+1 305 818 4100

 
Fax:
+1 305 818 4111

(b)               with copies to:

Shearman & Sterling, LLP
599 Lexington Avenue
New York, New York 10022
Attn:  Robert Evans III

 
Phone: 
+1 212 848 8830

 
Fax:
+1 646 848 8830

 
(c)
if to the Investor, at its address on the Securities Purchase Agreement to which
these Terms and Conditions are attached, or at such other address or addresses
as may have been furnished to the Company in writing in accordance with this
Section 9.

Notwithstanding anything in this Agreement to the contrary, (a) the Company may
deliver any documents, information or notices required to be delivered to an
Investor under this Agreement by email, in any recognized electronic format,
including Portable Document Format (PDF) or Microsoft Word document format, and
(b) with respect to any documents, exhibits, filings, furnishings or other
submissions publicly available on the Electronic Data Gathering, Analysis and
Retrieval System (“EDGAR”), such Company SEC Filing shall be deemed furnished by
the Company to such Investor, in each case as of the date first publicly
available on EDGAR.

10.           Changes.  This Agreement may be modified, amended or waived only
pursuant to a written instrument signed by the Company and (a) Investors holding
a majority of the Shares issued and sold in the Offering, provided that such
 
 
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modification, amendment or waiver is made with respect to all Agreements and
does not adversely affect the Investor without adversely affecting all Investors
in a similar manner; or (b) the Investor.

11.           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.

12.           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.

13.           Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.

14.           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 parties.

15.           Entire Agreement.  This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares and the resale registration of
the Shares.

16.           Confidential Information.

 
(a)               The Investor represents to the Company that, at all times
during the Company’s offering of the Shares, the Investor (i) has maintained in
confidence all non-public information regarding the Company received by the
Investor from the Company or its agents, including without limitation, the
existence of the transactions contemplated therein, (ii) has used all such
non-public information only in connection with the evaluation of the
transactions contemplated therein, and (iii) has not purchased or sold the
Company’s securities or any securities convertible or exchangeable for any of
the Company’s securities while in possession of such information, and covenants
that it will continue to comply with (i), (ii) and (iii) above until such
information (x) becomes generally publicly available other than through a
violation of this provision by the Investor or its agents or (y) is required to
be disclosed in legal proceedings (such as by deposition, interrogatory, request
for documents, subpoena, civil investigation demand, filing with any
governmental authority or similar process), provided, however, that before
making any use or disclosure in reliance on this subparagraph (y) the Investor
shall give the Company prior written notice specifying the circumstances giving
rise thereto and will furnish only that portion of the non-public information
which is legally required in the opinion of counsel to the Investor.

(b)               The Company shall prior to 9:30 a.m. on the business day after
the execution of this Agreement,, issue a press release disclosing the material
terms of the transactions contemplated hereby (including at least the number of
Shares sold and proceeds therefrom) and all other material, nonpublic
information regarding the Company and its securities provided to the Investor by
the Company or its agents.  The Company shall not publicly disclose the name of
Investor, or include the name of Investor in any filing with any regulatory
agency or stock exchange without the prior written consent of Investor except to
the extent such disclosure is required by law or the regulations of any
applicable stock exchange.
 
17.           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

18.           Expenses.  The parties shall pay their own legal and other
expenses in connection with the preparation, negotiation and execution of the
Agreements and the consummation of the transactions contemplated herein.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT A

 
(1)
The Company (a) has the corporate power to execute, deliver and perform the
Securities Purchase Agreement and (b) has taken all corporate action necessary
to authorize the execution, delivery and performance of the Securities Purchase
Agreement.

(2)
The Securities Purchase Agreement has been duly executed and delivered by the
Company.

(3)
The Shares have been duly authorized by the Company and, when (i) all required
shareholder approvals have been obtained and (ii) the Shares are issued and
delivered as provided in the Securities Purchase Agreement, the Shares will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to preemptive rights pursuant to the General Corporation Law
of the State of Delaware, the certificate of incorporation or by-laws of the
Company.

(4)
Based upon the representations, warranties and agreements of the Company and the
Investors contained in the Securities Purchase Agreement, and assuming
compliance with the offering and transfer procedures and restrictions described
in the Securities Purchase Agreement and the other transaction documents, it is
not necessary in connection with the offer and sale of the Shares to the
Investors under the Securities Purchase Agreement to register the Shares under
the Securities Act, it being understood that no opinion is expressed as to any
subsequent resale of any Shares.

 
 
 
 
 
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EXHIBIT B
 
Form of Irrevocable Transfer Agent Instructions
 
August __, 2009
 
Computershare
[Address]
Attn:  _________________
 
Ladies and Gentlemen:
 
Reference is made to those certain Securities Purchase Agreements, dated August
___, 2009 (the “Agreements”), by and among HeartWare International, Inc., a
Delaware corporation (the “Company”), and the purchasers named on the signature
pages thereto (collectively, such purchasers and their permitted transferees,
the “Investors”), pursuant to which, among other things, the Company is issuing
to certain Investors 2,500,000 shares (the “Shares”) of the common stock of the
Company, par value $0.001 per share (the “Common Stock”).
 
This letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time and the
conditions set forth in this letter are satisfied), subject to any stop transfer
instructions that we may issue to you from time to time, if any to issue
certificates representing the Shares.
 
You acknowledge and agree that so long as you have received (a) written
confirmation from the Company’s legal counsel that a registration statement
covering resales of the Shares has been declared effective by the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as
amended (the “Securities Act”), a copy of such registration statement and a
completed and signed certificate from a Holder confirming the sale or transfer
of the Shares pursuant to such effective registration statement, (b) written
confirmation from the Company’s legal counsel that the Shares are eligible for
sale in conformity with Rule 144 under the Securities Act (“Rule 144”) and
customary documentation from a Holder’s broker with respect to a sale pursuant
to Rule 144 or (c) written confirmation from the Company’s legal counsel that
the Shares are eligible for sale in conformity with Rule 144 under the
Securities Act without being subject to the volume or other restrictions
thereunder, then, unless otherwise required by law, within five (5) business
days of delivery by a Holder to the Company or to you (with concurrent notice to
the Company) of a notice of sale and documentation required pursuant to clause
(a) or (b) above, as applicable, or a request from a Holder for the issuance of
an unlegended certificate in the event that the Shares are eligible for sale in
conformity with Rule 144 under the Securities Act without being subject to the
volume or other restrictions thereunder, together with a legended certificate
representing such Shares (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer), you shall issue the certificate(s) representing the Shares registered
in the names of the purchaser of such Shares or the Holder, as the case may be,
and such certificates shall not bear any legend restricting transfer of the
Shares thereby and should not be subject to any stop-transfer restriction. To
the extent a Holder is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Holder, you
are authorized, in lieu of issuing certificates representing the Shares, to
credit the number of shares of Common Stock to which the the Holder shall be
entitled to the Holder’s or its designee’s balance account with DTC through its
Deposit Withdrawal At Custodian system.
 
In the event that you have not received the documentation required pursuant to
clause (a) or (b) of the immediately preceding paragraph or such Shares are not
eligible for sale in conformity with Rule 144 under the Securities Act without
being subject to the volume or other restrictions thereunder, then the
certificates for such Shares shall bear the following legend:
 
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or the securities
laws of any state, and may not be offered or sold unless a registration
statement under the Securities Act and applicable state securities laws shall
have become effective with regard thereto, or an exemption from registration
under the Securities Act and applicable state securities laws is available in
connection with such offer or sale.
 
 
                Please be advised that the Investor are relying upon this letter
as an inducement to enter into the Agreement and, accordingly, each Holder is a
third party beneficiary to these instructions.
 
THE FOREGOING INSTRUCTIONS SUPERSEDE ANY PRIOR INSTRUCTIONS YOU HAVE RECEIVED
FROM THE COMPANY WITH RESPECT TO THE MATTERS SET FORTH HEREIN.

 
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                 Please execute this letter in the space indicated to
acknowledge your agreement to act in accordance with these instructions.
 

  Very truly yours,          
HEARTWARE INTERNATIONAL, INC.
         
 
By:
        Name:        Title:           

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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HEARTWARE INTERNATIONAL, INC.

INVESTOR QUESTIONNAIRE

(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

 

 
To:
HeartWare International, Inc.

   
205 Newbury Street, Suite 101

 
Framingham, Massachusetts 01701

This Investor Questionnaire (“Questionnaire”) must be completed by each
potential investor in connection with the offer and sale of common stock, par
value $0.001 per share of HeartWare International, Inc. (the “Securities”).  The
Securities are being offered and sold by HeartWare International, Inc. (the
“Corporation”) without registration in the United States under the Securities
Act of 1933, as amended (the “Act”), and the securities laws of certain states,
in reliance on the exemptions contained in Section 4(2) of the Act and on
Regulation D promulgated thereunder and in reliance on similar exemptions under
applicable state laws.  The Corporation must determine that a potential investor
meets certain suitability requirements before offering or selling Securities to
such investor.  The purpose of this Questionnaire is to assure the Corporation
that each investor will meet the applicable suitability requirements.  The
information supplied by you will be used in determining whether you meet such
criteria, and reliance upon the private offering exemption from registration is
based in part on the information herein supplied.

This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any security.  Your answers will be kept strictly
confidential.  However, by signing this Questionnaire you will be authorizing
the Corporation to provide a completed copy of this Questionnaire to such
parties as the Corporation deems appropriate in order to ensure that the offer
and sale of the Securities will not result in a violation of the Act or the
securities laws of any state and that you otherwise satisfy the suitability
standards applicable to purchasers of the Securities.  All potential investors
must answer all applicable questions and complete, date and sign this
Questionnaire.  Please print or type your responses and attach additional sheets
of paper if necessary to complete your answers to any item.  Capitalized terms
used but not defined herein have the meaning given thereto in the Securities
Purchase Agreement to which this Questionnaire is attached (the “Securities
Purchase Agreement”).

A.           BACKGROUND INFORMATION
 
 

Name [EXACT NAME AS IT WILL APPEAR ON THE HOLDING STATEMENTS]:  

 

Business Address:           (Number and Street)                   (City)    
(State)   (Zip Code)           Telephone Number: (          )                
Residence Address:                (Number and Street)                      
(City)     (State)  (Zip Code)           Telephone Number:  (          )       

 
If an individual:
          Age:    Citizenship:   Where registered to vote:  

 

If an existing shareholder of the Company: (HIN / SRN)    

 
If a corporation, partnership, limited liability company, trust or other entity:

  Type of entity:     State of formation:   Date of formation:   

 

Social Security or Taxpayer Identification No.   

 

Send all correspondence to (check one):  ______ Residence Address  ______
Business Address

 

Email address of contact person:    

 
 
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B.            STATUS AS ACCREDITED INVESTOR
 
The undersigned is an “accredited investor” as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):2
 
____  (1)                       a bank as defined in Section 3(a)(2) of the Act,
or a savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined in Section 2(13) of the
Act; an investment company registered under the Investment Corporation Act of
1940 or a business development company as defined in Section 2(a)(48) of that
Act; a Small Business Investment Corporation licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with the investment decisions made
solely by persons that are accredited investors;

____  (2)                       a private business development company as
defined in Section 202(a)(22) of the Investment Adviser Act of 1940;

____  (3)                       an organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended, corporation, Massachusetts or
similar business trust, or partnership, not formed for the specific purpose of
acquiring the Securities offered, with total assets in excess of $5,000,000;

____  (4)                       a natural person whose individual net worth, or
joint net worth with that person’s spouse, at the time of such person’s purchase
of the Securities exceeds $1,000,000;

____  (5)                       a natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
that person’s spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;

____  (6)                       a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Securities
offered, whose purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D; and

____  (7)                       an entity in which all of the equity owners are
accredited investors (as defined above) (If the answer is yes, all shareholders,
partners or other equity owners must complete an Individual Questionnaire).

C.            REPRESENTATIONS

The undersigned hereby represents and warrants to the Corporation as follows:

1.
Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view to any
resale, fractionalization, division, or distribution thereof.

2.
The information contained herein is complete and accurate and may be relied upon
by the Corporation, and the undersigned will notify the Corporation immediately
of any material change in any of such information occurring prior to the
closing, if any, with respect to the purchase of Securities by the undersigned
or any co-purchaser.

3.
There are no suits, pending litigation, or claims against the undersigned that
could materially affect the net worth of the undersigned as reported in this
Questionnaire.

 

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2 As used in this Questionnaire, the term “net worth” means the excess of total
assets over total liabilities.  In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances.  In determining
income, the investor should add to the investor’s adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depiction,
contributions to an IRA or KEOGH retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
 
 
 
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4.
The overall commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned’s net worth and financial
circumstances, and any purchase of the Securities will not cause such commitment
to become excessive.  The undersigned is able to bear the economic risk of an
investment in the Securities.

5.
The undersigned is aware of its obligations under applicable United States
federal and state securities laws with respect to use and disclosure of
non-public information regarding the Company.

6.
The undersigned has carefully considered the potential risks relating to the
Corporation and a purchase of the Securities, and fully understands that the
Securities are speculative investments which involve a high degree of risk of
loss of the undersigned’s entire investment.  Among others, the undersigned has
carefully considered each of the risks identified in the Company SEC Documents.

7.
The undersigned understands that the Securities that it is acquiring are
characterized as “restricted securities” under the federal securities laws of
the United States inasmuch as they are being acquired in a transaction not
involving a public offering, and that under such laws and applicable regulations
such securities may be resold without registration under the Act, only in
certain limited circumstances. In this connection, the undersigned represents
that it is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this _____
day of August 2009, and declares under oath that it is truthful and correct.

        Print Name            
 
By:
            Signature               Title:             
(required for any purchaser that is a corporation, partnership, trust or other
entity)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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