Exhibit

10.16




 




PLEDGE

AGREEMENT




 




In consideration of a loan made by Inverness Medical

Innovations, Inc., a Delaware corporation (together with any successor thereto,

the “Company”), to Jerry McAleer (“Borrower”), under the

Promissory Note dated December 4, 2001, and any renewals or extensions thereof

made in the sole discretion of the Company (“Note”), Borrower agrees as

follows:




 




Section 1.  Pledge.  Borrower hereby pledges, assigns and

transfers to the Company, and grants to the Company a security interest in, the

following property (“Collateral”), to be held by the Company:




 




(a)      The 250,000 shares of Common Stock of the

Company (each, together with any successor securities, a “Share”)

obtained upon the exercise of stock options granted pursuant to a certain

Non-Qualified Stock Option Agreement dated as of August 15, 2001 between

Borrower and the Company (the “Option Agreement”) and held by Borrower,

or any Permitted Transferee (as that term is defined in the Option Agreement),

and any securities owned in respect thereof or in exchange therefore, as well

as any additional shares acquired upon any subsequent exercise of the Option

Agreement.




 




(b)      All other securities, instruments and

other property issued or accepted in substitution for any of the foregoing.




 




(c)      All proceeds of any and all of the

Collateral.




 




Section 2.  Obligations.  This Agreement and the security interest

granted hereby secure the payment of all obligations of Borrower to the Company

under the Note (“Obligations”), and the Obligations of Borrower under

this Agreement, and any and all renewals or extensions thereof.  So long as any of the Obligations are

outstanding, unless and until Borrower shall be in default hereunder or there

shall be any default of any of the Obligations, Borrower shall retain all

rights to dividends and distributions and voting rights, if any, with respect

to the Collateral.  In the event the

Obligations shall be in default or in the event that Borrower shall be in

default under the terms hereof, the Company may, in its discretion, vote and

exercise all of the powers of an owner with respect to any of the relevant

Collateral.  Without limiting the

generality of the other remedies provided herein and in addition thereto, in

the event any of the Obligations shall be in default or upon any default by

Borrower hereunder, the Company after the occurrence of an Event of Default may

take all steps necessary to cause the Collateral to be transferred into the

name of the Company, including but not limited to taking steps necessary to

comply with restrictions on sale or transfer of the shares constituting such

Collateral, and in connection therewith Borrower appoints the Company such

Borrower’s attorney-in-fact to execute and deliver such offers, tender offers,

certificates, documents or instruments of every nature or description required

for the purpose of the transfer of such shares into the name of the Company, or

any other person.




 




If Borrower receives any cash distribution or dividend

in respect of any Collateral, Borrower may retain such cash distribution or

dividend as his own property unless prior to such 




 




 





























 




receipt an Event of Default has occurred, in which event Borrower shall

accept same in trust for the Company, and shall upon request deliver same

immediately to the Company in the form received, with Borrower’s endorsement

and/or assignment when necessary, to be held by the Company as Collateral.




 




If Borrower receives any stock certificate or option

or deferred compensation right, whether as an addition to, in substitution of,

or in exchange for, any Collateral, or otherwise, Borrower shall accept same in

trust for the Company, and shall upon request deliver same immediately to the

Company in the form received, with Borrower’s endorsement and/or assignment

when necessary, to be held by the Company as Collateral.




 




Borrower is herewith delivering to the Company all

certificates or instruments representing or evidencing Collateral in suitable

form for transfer or delivery, or accompanied by duly executed instruments of

transfer or assignment to be held subject to the preceding paragraph.




 




Section 3.  Limitations

on Transfer.  Borrower acknowledges

that transfer of the Shares is subject to certain limitations under the Option

Agreement.  The obligation of the

Company to release certificates representing Shares to Borrower or his designee

hereunder shall in any event be subject to the requirements of the Option

Agreement.  Subject to such requirements

and the terms hereof, the Company shall release from this pledge Non-Repurchasable

Shares or Repurchasable Shares (as those terms are defined in the Option

Agreement) as designated by Borrower, provided that such Shares shall remain

subject to the Option Agreement to the extent applicable.




 




Section 4.  Representations

and Warranties.  Borrower represents

and warrants to the Company as follows:




 




(a)      Borrower is, and (as to any substitute or

additional Collateral) shall be, the sole owner of the Collateral pledged by

Borrower, free and clear of any lien, security interest, option or other charge

or encumbrance, except for (i) the security interest created by this Agreement,

(ii) certain restrictions under the Option Agreement and (iii) restrictions

imposed by applicable laws, and, subject to the same exceptions, Borrower has

and shall have the right to transfer such Collateral and to grant a security

interest therein to the Company as provided in this Agreement.




 




(b)      No effective financing statement or

similar notice covering any Collateral pledged by Borrower is or shall be on

file in any recording office, and no other pledge or assignment thereof has

been made, or shall have been made, other than in favor of the Company, except

as the Company may approve.




 




Section 5.  Further

Action by Borrower.  Borrower shall,

at the expense of Borrower, promptly execute and deliver all further notices,

instruments and documents, including, without limitation, financing statements,

and take all such further action as may be reasonably necessary or reasonably

advisable or as the Company at any time may reasonably request, in order to

perfect, preserve and protect the security interest granted or purported to be

granted hereby or to 




 




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enable the Company to exercise and enforce such rights, powers and

remedies with respect to the Collateral.




 




Section 6.  Preservation

of Collateral.




 




(a)      The Company shall give to the Collateral

the same degree of care and protection which it gives to its own property; provided,

however, that the Company shall have no liability to Borrower for any

losses, costs, expenses or damages due to any acts or omissions of third

parties, or due to any acts of God or other causes beyond its control.  The Company shall have no duty to preserve

any rights with respect to any Collateral, including, without limitation,

rights against prior parties, or to take, or to notify Borrower of the need to

take, any action respecting any rights, privileges or options relating to any

Collateral.  To replace any

certificates, however, Borrower shall not be required to supply any bond or

other indemnity.




 




(b)      Borrower shall furnish to the Company,

promptly upon receipt thereof, copies of all material notices, requests and

other documents received by Borrower relating to Collateral unless the same

were sent by the Company.




 




(c)      Borrower shall not (i) sell, assign,

transfer or otherwise dispose of any Collateral, or create or suffer to exist

any lien, security interest, assignment by operation of law or other charge or

encumbrance on, or with respect to, any Collateral, except for the security

interest created by this Agreement and the rights, remedies and restrictions

imposed by the Option Agreement; or (ii) attempt any action prohibited by

paragraph (c)(i) of this Section 6. 

Notwithstanding the foregoing, Borrower may transfer Shares to Permitted

Transferees pursuant to the Option Agreement or following the vesting of such

Shares provided such transfer is in accordance with the Option Agreement; provided,

however, that the Shares so transferred shall remain subject to the

security interest created by this Agreement and any such Permitted

Transferee(s) shall, as a condition to any transfer, agree to be subject to the

provisions of this Agreement.




 




Section 7.  Defaults.  A default (an “Event of Default”) shall

be deemed to have occurred hereunder if (a) Borrower fails in any material

respect to perform any material obligation hereunder, if any material

representation or warranty hereunder was untrue in any material respect when

made, or if any default or Event of Default by Borrower occurs under the Note

or any agreement evidencing, or constituting or granting security for, the

Obligations, and (b) the Company gives to Borrower written notice thereof and

such default shall not have been cured within fourteen (14) days or such

additional time as determined by the Board of Directors of the Company.




 




Section 8.  Remedies.  Upon and after the occurrence of any Event

of Default which is then continuing or which has not been cured within the time

period given for such cure:




 




(a)      The Company may exercise its rights with

respect to the Collateral, without regard to the existence of any other

security or source of payment for Obligations, including without limitation the

rights set forth in Section 2, and may demand, sue for collection or make

any other compromise or settlement with respect to other rights and remedies

provided 




 




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for herein or otherwise available to it, and the

Company shall have all of the rights and remedies of a secured party under the

Uniform Commercial Code as in effect in the State of Delaware.




 




(b)      Except as specifically reserved herein,

Borrower waives all suretyship defenses at law and in equity, including waste

and impairment of Collateral, and further waives the requirement of any demand

and presentment.  Twenty-one (21) days’

prior notice to Borrower at the address provided below or at such other address

as Borrower shall provide to the Company in writing for such purpose, of the

time and place of any public sale of Collateral, or of the time after which any

private sale or any other intended disposition is to be made, shall constitute

reasonable notification.




 




(c)      The Company is authorized at any such sale

(including without limitation any sale to itself or any affiliate of the

Company, the same being expressly authorized and contemplated herein), if the

Company deems it advisable to do so, in order to comply with any applicable

securities laws, to restrict the prospective bidders or purchasers to persons

who will represent and agree that they are purchasing the Collateral for their

own account for investment, and not with a view to the distribution or resale

thereof.  Sales made subject to such

restriction shall not, solely by reason thereof, be deemed not to have been

made in a commercially reasonable manner.




 




(d)      The Company is specifically authorized,

with respect to any Collateral that consists of Shares, to acquire such

Collateral itself or to transfer such Collateral to any affiliate of the

Company at a price equal to the Repurchase Price as that term is defined in the

Option Agreement.  Borrower expressly

waives any requirement that the Company conduct a public or private sale with

respect to such Shares and agrees that such a disposition is commercially

reasonable.




 




(e)      In case of any sale of all or part of the

Collateral on credit for future delivery, the Collateral so sold shall be

retained by the Company until the purchase price is paid.  The Company shall incur no liability in case

of the failure of the purchaser to pay for the Collateral as so sold if the

Collateral is recovered, or of the failure of the Company to make any sale of

Collateral after giving notice thereof, and in case of any such failure, such

Collateral may again be sold.




 




(f)       Subject to the terms of the Note, all

cash proceeds received by the Company in respect of any sale, collection or

other enforcement or disposition of Collateral shall be applied (after

deduction of any amounts payable to the Company for reasonable expenses of the

sale, collection or disposition of Collateral) against Obligations in such

order as the Company shall elect.  Upon

payment in full of all Obligations, Borrower shall be entitled to the return of

all Collateral pledged by him and all proceeds thereof, which have not been

used or applied toward the payment of Obligations as herein authorized.




 




Section 9.  Waivers

and Remedies.  Except as otherwise

provided herein or by law, Borrower waives presentment, demand, notice and

protest, notice of acceptance of this Agreement, and except as provided in

Section 8(b) notice of all action by the Company in reliance hereon.  No failure by the Company to exercise, no

delay by the Company in exercising, and no single or partial exercise of, any

right, remedy or power hereunder or under any other 




 




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agreement relating to the Obligations or to Collateral shall operate as

a waiver thereof, or of any other right, remedy or power at any time.  No amendment, modification or waiver of any

provision of this Agreement shall be effective unless contained in a writing

signed by the Company.  Any such waiver

or consent shall be effective only in the specific instance and for the specific

purpose for which given.  The rights,

remedies and powers of the Company and Borrower, not only hereunder, but also

under any promissory note or notes of Borrower held by the Company, any other

agreements of Borrower with the Company and applicable law, are cumulative and

may be exercised successively, concurrently or alternatively.




 




Section 10.  Term;

Binding Effect.  This Agreement

shall remain in full force and effect until payment and satisfaction in full of

all Obligations, shall be binding upon Borrower and the heirs, legatees, legal

representatives and assigns of Borrower, including Permitted Transferees, and

shall inure to the benefit of the Company and its successors and assigns.  Notwithstanding the foregoing, the Company

may terminate this Agreement and release the Collateral, or may accept

substitute Collateral, at any time in its sole discretion without in any way

affecting the nonrecourse nature of a portion of the Obligations as provided in

the Note.




 




Section 11.  Governing

Law.  This Agreement shall be

governed by and construed in accordance with the laws of the State of Delaware

without regard to conflict of law principles, except to the extent that the

perfection of the security interest granted hereby in respect of any item of

Collateral may be governed by the law of another jurisdiction.  Unless otherwise defined herein, all words

and terms used in this Agreement shall have the meanings provided in the

Uniform Commercial Code of the state of the jurisdiction of incorporation of

the Company (including its successor as issuer of the Shares).  If any provision of this Agreement, or the

application thereof to any person or circumstance, is held invalid, such

provision shall be deemed to be modified to comply with applicable law or if

not able to be so modified, shall be deemed to be severed from the Agreement,

the remaining provisions of which to be valid and enforceable.




 




Section 12.  Signatures.  This Agreement may be executed in

counterparts.




 




Section 13.  Headings.  The captions in this Agreement have been

included for reference only and shall not define or limit the provisions

hereof.




 




[SIGNATURE PAGE FOLLOWS]




 




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EXECUTED as of the date set forth below.




 




	

  December 4, 2001


  	

  BORROWER:


  
	

   


  	

   


  
	

   


  	

  /s/ Jerry McAleer


  	

   


  
	

   


  	

  Name:   Jerry

  McAleer


  
	

   


  	

   


  
	

   


  	

  COMPANY:


  
	

   


  	

   


  
	

   


  	

  INVERNESS MEDICAL INNOVATIONS,


  INC.


  
	

   


  	

   


  
	

   


  	

  By:


  	

  /s/ Duane L. James


  	

   


  
	

   


  	

   


  	

  Name:  Duane

  L. James


  
	

   


  	

   


  	

  Title: Vice President and Treasurer