Exhibit

10.19




 




PLEDGE

AGREEMENT




 




 




In consideration of a loan made by Inverness Medical

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

the “Company”), to David Scott (“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

399,381 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 therefor.




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

remedies with respect to the Collateral.




 




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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 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.




 




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(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 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 




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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/ David

Scott        




Name:  David Scott




COMPANY:




INVERNESS MEDICAL

INNOVATIONS, INC.




By: /s/ Duane L.

James       




        Name: Duane L. James




        Title: Vice President and Treasurer