Exhibit 10.1


 


Execution Copy


 


EPIX MEDICAL, INC.


 


$75,000,000


 


3% CONVERTIBLE SENIOR NOTES DUE 2024


 


PURCHASE AGREEMENT


 


June 2, 2004


 


SG
COWEN & CO., LLC

NEEDHAM & COMPANY, INC.

WELLS FARGO SECURITIES, LLC

WR HAMBRECHT + CO. LLC

   As Representatives of the several Initial Purchasers

c/o SG Cowen & Co., LLC

1221 Avenue of the Americas

New York, New York  10020


 


Dear
Sirs:


 


1.                                      INTRODUCTORY.  EPIX Medical, Inc., a Delaware corporation
(the “Company”), proposes to sell, pursuant to the terms of this Agreement, to
SG Cowen & Co., LLC (“SG Cowen”), Needham & Company, Inc., Wells Fargo
Securities, LLC and WR Hambrecht + Co. LLC (the “Initial Purchasers,” or, each,
an “Initial Purchaser”), $75,000,000 principal amount of its3% Convertible
Senior Notes due 2024 (the “Firm Securities”). 
The Company also proposes to sell to the Initial Purchasers, upon the
terms and conditions set forth in Section 3 hereof, up to an additional
$25,000,000 principal amount of its 3% Convertible Senior Notes due 2024 (the
“Optional Securities”).  The Firm
Securities and the Optional Securities are hereinafter collectively referred to
as the “Securities”.  The Securities are
to be issued pursuant to an Indenture to be dated as of June 7, 2004 (the
“Indenture”) to be entered into by and between the Company and U.S. Bank
National Association, as trustee (the “Trustee”).  The Securities will be convertible into shares of the Company’s
common stock (the “Common Stock”), $0.01 par value per share (the “Underlying
Securities”).  SG Cowen, Needham &
Company, Inc., Wells Fargo Securities, LLC and WR Hambrecht + Co. LLC are
acting as representatives of the several Initial Purchasers and in such
capacity are hereinafter referred to as the “Representatives.”


 


The Securities and the Underlying Securities will be offered
without being registered under the Securities Act of 1933, as amended (the
“Securities Act”), to “qualified institutional buyers” as defined in, and in
compliance with the exemption from registration provided by, Rule 144A under
the Securities Act (“Qualified Institutional Buyers”).  The Company has prepared a preliminary
offering memorandum dated June 1, 2004 (the “Preliminary Offering
Memorandum”) and will prepare an offering memorandum dated the date hereof (the
“Offering Memorandum”) setting forth information concerning the Company, the
Securities and the Underlying Securities. 
Copies of the Preliminary Offering Memorandum have been, and copies of
the Offering Memorandum will be, delivered by the Company to the Initial
Purchasers pursuant to the terms of this Agreement.  Any references herein to the Preliminary Offering Memorandum and
the Offering Memorandum shall be deemed to include, as applicable, all
amendments and supplements thereto and all documents incorporated by reference
therein (“Incorporated Documents”) that are filed with the Securities and
Exchange Commission (the “Commission”) and any amendments thereto that are made
prior to the completion of this Offering. 
The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in


 

















 


connection with the offering and resale of the Securities and
the Underlying Securities by the Initial Purchasers in accordance with
Section 3.


 


Each of the Initial Purchasers and its direct and indirect
transferees will be entitled to the benefits of a Registration Rights
Agreement, substantially in the form attached hereto as Annex A (the
“Registration Rights Agreement”), pursuant to which the Company will agree to
file with the Securities and Exchange Commission (the “Commission”) a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
“Shelf Registration Statement”).


 


2.                                      REPRESENTATIONS AND
WARRANTIES OF THE COMPANY. 
The Company represents and warrants to, and agrees with, the several
Initial Purchasers that:


 


(a)                                  (i)  Each document, if any, filed or to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and incorporated by reference in the Preliminary Offering Memorandum or
the Offering Memorandum conformed, or will conform when so filed, in all
material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder, and (ii) each of the Preliminary
Offering Memorandum and the Offering Memorandum, as of its respective date, did
not, and on the Closing Date (as defined below) the Offering Memorandum will
not, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading;
provided, however, that the foregoing representations and warranties
shall not apply to information contained in or omitted from the Offering
Memorandum or any such amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the Initial
Purchasers specifically for inclusion therein, which information the parties
hereto agree is limited to the Initial Purchaser Information (as defined in
Section 16).


 


(b)                                 Each
of the Preliminary Offering Memorandum and the Offering Memorandum, as of its
respective date, contains all of the information that, if requested by a
prospective purchaser of the Securities or the Underlying Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.


 


(c)                                  Assuming
the accuracy of the representations and warranties of the Initial Purchasers
contained in Section 3 and their compliance with the agreements set forth
therein, it is not necessary, in connection with the issuance and sale of the
Securities to the Initial Purchasers and the offer, resale and delivery of the
Securities by the Initial Purchasers in the manner contemplated by this
Agreement and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended (the “Trust Indenture Act”).


 


(d)                                 The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its businesses requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the businesses in which
it is engaged, except where the failure to so qualify or have such power or
authority would not have, singularly or in the aggregate, a material adverse
effect on the condition (financial or otherwise), results of operations,
business or prospects of the Company (a “Material Adverse Effect”).  The Company does not own or control,
directly or indirectly, any corporation, partnership, limited liability partnership,
limited liability company, association or other entity.


 


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(e)                                  The
Company has full right, power and authority to execute and deliver this
Agreement, the Registration Rights Agreement, the Indenture, the Securities and
the Underlying Securities (collectively, the “Transaction Documents”) and to
perform its respective obligations hereunder and thereunder; and all corporate
action required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby has been duly and validly taken.


 


(f)                                    Each
of the Indenture and the Registration Rights Agreement, when duly executed by
the proper officers of the Company and delivered by the Company (assuming due
authorization, execution and delivery thereof by the other parties thereto),
will constitute a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing which may be
limited under applicable law and except as the enforcement or indemnification
and contribution provisions thereof may be limited by applicable law; the
Securities, when duly executed, authenticated, issued and delivered as provided
in the Indenture and upon payment and delivery in accordance with this
Agreement, will be validly issued and delivered by the Company and will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and the Registration Rights Agreement and enforceable
in accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing which may be limited under
applicable law; the Underlying Securities issuable upon conversion of the
Securities have been duly and validly authorized and reserved and, when issued
upon conversion of the Securities in accordance with the terms of the
Securities, will (i) be validly issued, fully paid and non-assessable, (ii)
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and the Registration Rights Agreement and enforceable
in accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing, and (iii) not be subject to
any preemptive or similar rights; and the Indenture, the Registration Rights
Agreement, and the Securities conform in all material respects to the
descriptions thereof contained in the Offering Memorandum.


 


(g)                                 The
Company has an authorized capitalization as set forth in the Offering
Memorandum, and all of the issued shares of capital stock of the Company, have
been duly and validly authorized and issued, are fully paid and non-assessable,
and conform to the description thereof contained in the Offering Memorandum.


 


(h)                                 The
execution, delivery and performance of each of the Transaction Documents by the
Company and the consummation of the transactions contemplated thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of the property or
assets of the Company is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its properties or assets.


 


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(i)                                     Except
(i) for such consents, approvals, authorizations, registrations or
qualifications as may be required under applicable state securities laws or the
Nasdaq National Market (“Nasdaq”) in connection with the purchase and
distribution of the Securities by the Initial Purchasers and (ii) as expressly
required pursuant to the Transaction Documents, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of each of this Agreement, the Indenture, the Registration Rights
Agreement or the Securities by the Company and the consummation of the
transactions contemplated hereby and thereby.


 


(j)                                     Ernst
& Young LLP, who have expressed their opinions on the audited financial
statements and related schedules included or incorporated by reference in the
Offering Memorandum are independent public accountants as required by the
Securities Act and the Rules and Regulations.


 


(k)                                  The
financial statements, together with the related notes and schedules, included
or incorporated by reference in the Offering Memorandum fairly present the
financial position and the results of operations and changes in financial
position of the Company at the respective dates or for the respective periods
therein specified.  Such statements and
related notes and schedules have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis except as may be set forth
in the Offering Memorandum.  The
financial statements, together with the related notes and schedules, included
in the Offering Memorandum comply in all material respects with the Securities
Act and the Rules and Regulations thereunder. 
No other financial statements or supporting schedules or exhibits are
required by the Securities Act or the Rules and Regulations thereunder to be
included in the Offering Memorandum.


 


(l)                                     Since
the date of the latest audited financial statements included or incorporated by
reference in the Offering Memorandum, the Company has not sustained any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Offering Memorandum; and, since such date, there has not
been any change in the capital stock or long-term debt of the Company or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, general affairs, management,
financial position, stockholders’ equity or results of operations of the
Company, otherwise than as set forth or contemplated in the Offering
Memorandum.


 


(m)                               Except
as set forth in the Offering Memorandum, there is no legal or governmental
proceeding pending to which the Company is a party or of which any property or
assets of the Company is the subject which is required to be described in the
Offering Memorandum and is not described therein, or which, singularly or in
the aggregate, if determined adversely to the Company, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the Company
to perform its obligations under this Agreement; and to the best of the
Company’s knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.


 


(n)                                 The
Company is not (i) in violation of its charter or by-laws, (ii) in
default in any respect, and no event has occurred that, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) is in violation in any respect of any law,
ordinance, governmental rule, regulation or court decree to


 


4

















 


which it or its property or assets may be subject except, with respect
to clauses (ii) and (iii), any violations or defaults which, singularly or in
the aggregate, would not have a Material Adverse Effect.


 


(o)                                 The
Company possesses and has performed its obligations with respect to all
licenses, certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or foreign
regulatory agencies or bodies that are necessary or desirable for the ownership
of its properties or the conduct of its business as described in the Offering
Memorandum including all such licenses, certificates, authorizations and
permits required by the United States Food and Drug Administration (the “FDA”)
or any other federal, state or foreign agencies or bodies engaged in the
regulation of pharmaceuticals except where any failures to possess or make the
same, singularly or in the aggregate, would not have a Material Adverse Effect;
and the Company has not received notification of any proceeding relating to
revocation or modification of any such license, certificate, authorization or
permit and has no reason to believe that any such license, certificate,
authorization or permit will not be renewed. Each of the human clinical trials,
animal studies and other preclinical tests conducted by the Company, or to the
Company’s knowledge, by any third party on behalf of the Company, that are
described in the Offering Memorandum or the results of which are referred to in
the Offering Memorandum, and such studies and tests conducted on behalf of the
Company, were and, if still pending, are being, conducted in all material
respects (i) in accordance with experimental protocols, procedures and controls
generally used by qualified experts in the preclinical or clinical study of
products comparable to those being developed by the Company and (ii) in
compliance with all applicable current Good Laboratory and Good Clinical
Practices; the descriptions of the results of such studies, tests and trials
contained in the Offering Memorandum are accurate and complete in all material
respects, and the Company has no knowledge of any other trials, studies or
tests, the results of which reasonably call into question the results described
or referred to in the Offering Memorandum; each Investigational New Drug
submission to the FDA or similar application to foreign regulatory bodies, and
related documents and information, has been filed, approved (if applicable) and
maintained in compliance in all material respects with applicable statutes,
rules, regulations, standards, guides or orders administered or promulgated by
the FDA or other regulatory body; the Company has not received any notices or
correspondence from the FDA or any other governmental agency requiring the
termination, suspension or modification (other than such modifications as are
normal in the regulatory process) of any animal studies, preclinical tests or
clinical trials conducted by or on behalf of the Company or in which the
Company has participated that are described in the Offering Memorandum or the
results of which are referred to in the Offering Memorandum.


 


(p)                                 The
Company, after giving effect to the offering of the Securities and the
application of the proceeds thereof as described in the Offering Memorandum
will not become an “investment company” within the meaning of the Investment
Company Act of 1940, as amended and the rules and regulations of the Commission
thereunder.


 


(q)                                 Neither
the Company nor any of its officers, directors or affiliates has taken or will
take, directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or that caused or resulted
in, or that might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.


 


(r)                                    The
information contained in the Offering Memorandum concerning the issued patents
and pending patent applications, owned by or licensed to the Company is
accurate in all material respects.  The
Company owns or has valid, binding and enforceable licenses or other rights
from


 


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all necessary third parties (the “Licensors”) to use any patents,
trademarks, trade names, service marks, service names, copyrights, confidential
and proprietary information, including trade secrets, know-how, inventions and technology,
whether patented or not, proprietary computer software and other intellectual
property rights (collectively, the “Intellectual Property”) necessary to
conduct the business of the Company in the manner in which it has been and is
contemplated to be conducted, as described in the Offering Memorandum, and
without any conflict with the rights of others, except as described in the
Offering Memorandum and except for such conflicts that, if determined adversely
to the Company, would not have, singly or in the aggregate, a Material Adverse
Effect.  The Company has no knowledge
that, or has not received any notice from any other person alleging that, the
business of the Company in the manner in which it has been and is contemplated
to be conducted, as described in the Offering Memorandum, conflicts with the
Intellectual Property rights of others, except as described in the Offering
Memorandum and for such conflicts that, if determined adversely to the Company,
would not have, singly or in the aggregate, a Material Adverse Effect.


 


(s)                                  All
patent applications owned by or licensed to the Company that are material to
the conduct of the business of the Company in the manner in which it has been
and is contemplated to be conducted, as described in the Offering Memorandum,
have been duly and properly filed or caused to be filed with the United States
Patent and Trademark Office (“PTO”) and, in some cases, applicable foreign and
international patent authorities, and assignments for all patents and patent
applications owned by or licensed to the Company that are material to the
conduct of business of the Company in the manner in which it has been and is
contemplated to be conducted, as described in the Offering Memorandum
(collectively, the “Patent Rights”) have been properly executed and recorded
for each named inventor.  To the
knowledge of the Company, all printed publications and patent references
material to the patentability of the inventions claimed in the Patent Rights have
been disclosed to those patent offices so requiring.  To the knowledge of the Company, each of the Company, its
assignors or the Licensors, as applicable, has met its duty of candor and good
faith to the PTO for the Patent Rights. 
To the knowledge of the Company, no material misrepresentation has been
made to any patent office in connection with the Patent Rights.  The Company is not aware of any facts
material to a determination of patentability regarding the Patent Rights not
disclosed to the PTO or other applicable patent office.  The Company is not aware of any facts not
disclosed to the PTO or other applicable patent office that would preclude the
patentability, validity or enforceability of any patent or patent application
in the Patent Rights.  The Company has
no knowledge of any facts that would preclude the Company or the Licensors, as
applicable, from having clear title to the patents and patent applications in
the Patent Rights.  To the knowledge of
the Company, the patents in the Patent Rights are valid and enforceable, and
have not been adjudged invalid or unenforceable in whole or in part.


 


(t)                                    To
the knowledge of the Company, no third party is engaging in any activity that
infringes, misappropriates or otherwise violates the Intellectual Property
owned by or licensed to the Company, except as described in the Offering
Memorandum and except for such activities that, singly or in the aggregate,
would not have a Material Adverse Effect.


 


(u)                                 With
respect to each material agreement governing rights in and to any Intellectual
Property licensed by or licensed to the Company:  (i) such agreement is valid and binding on the Company and
in full force and effect; (ii) the Company has not received any notice of
termination or cancellation under such agreement, received any notice of breach
or default under such agreement, which breach has not been cured, or granted to
any third party any rights, adverse or otherwise, under such agreement that
would constitute a material breach of such agreement; and (iii) the Company,
and to the knowledge of the Company, each other party to such agreement, is


 


6

















 


not in breach or default thereof in any material respect, and no event
has occurred that, with notice or lapse of time, would constitute such a
material breach or default or permit termination, modification or acceleration
under such agreement.


 


(v)                                 The
Company has good and marketable title in fee simple to, or has valid rights to
lease or otherwise use, all items of real or personal property which are material
to the business of the Company, in each case free and clear of all liens,
encumbrances, claims and defects that may result in a Material Adverse Effect.


 


(w)                               No
labor disturbance by the employees of the Company exists or, to the best of the
Company’s knowledge, is imminent that might be expected to have a Material
Adverse Effect.  The Company is not
aware that any key employee or significant group of employees of the Company
plans to terminate employment with the Company.


 


(x)                                   No
“prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or
any of the events set forth in Section 4043(b) of ERISA (other than events
with respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee benefit plan
that could have a Material Adverse Effect; each employee benefit plan of the
Company is in compliance in all material respects with applicable law,
including ERISA and the Code; the Company has not incurred and does not expect
to incur liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any “pension plan”; and each “pension plan” (as defined in
ERISA) for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, that
could cause the loss of such qualification.


 


(y)                                 There
has been no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes or
other hazardous substances by, due to, or caused by the Company (or, to the
best of the Company’s knowledge, any other entity for whose acts or omissions
the Company is or may be liable) upon any of the property now or previously
owned or leased by the Company, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or permit
or which would, under any statute or any ordinance, rule (including rule of
common law), regulation, order, judgment, decree or permit, give rise to any
liability, except for any violation or liability which would not have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; there has been no disposal, discharge, emission or
other release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company has knowledge, except for any such
disposals, discharges, emissions, or other releases of any kind which would not
have, singularly or in the aggregate, a Material Adverse Effect.


 


(z)                                   The
Company (i) has filed with all necessary federal, state and foreign income
and franchise tax returns, (ii) has paid all federal sate, local and
foreign taxes due and payable for which it is liable other than amounts that
may currently be the subject of a good faith dispute by the Company, and (iii)
does not have any tax deficiency or claims outstanding or assessed or, to the
best of the Company’s knowledge, proposed against it that might reasonably be
expected to have a Material Adverse Effect.


 


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(aa)                            The
Company carries, or is covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries.


 


(bb)                          The
Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.


 


(cc)                            The
minutes and written actions of the Company for meetings or actions of the board
of directors since August 1, 2003 have been made available to the Initial
Purchasers and counsel for the Initial Purchasers, and such minutes or actions
(i) contain a complete summary of all meetings and actions of the board of
directors (including each board committee) and stockholders of the Company
through the date of the latest meeting and action, and (ii) accurately in all
material respects reflect all transactions referred to in such minutes.


 


(dd)                          There
is no franchise, lease, contract, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in the Offering
Memorandum that is not described therein as required; and all descriptions of
any such franchises, leases, contracts, agreements or documents contained in
the Offering Memorandum are accurate and complete descriptions of such
documents in all material respects. 
Other than as described in the Offering Memorandum, no such franchise,
lease, contract or agreement has been suspended or terminated for convenience
or default by the Company or any of the other parties thereto, and the Company
has not received notice or any other knowledge of any such pending or
threatened suspension or termination, except for such pending or threatened
suspensions or terminations that would not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect.


 


(ee)                            No
relationship, direct or indirect, exists between or among the Company on the
one hand, and any director, officer, stockholder, customer or supplier of the
Company on the other hand, that is required to be described in the Offering
Memorandum and that is not so described.


 


(ff)                                On
and immediately after the Closing Date, the Company (after giving effect to the
issuance of the Securities and to the other transactions related thereto as
described in the Offering Memorandum) will be Solvent.  As used in this paragraph, the term
“Solvent” means, with respect to a particular date, that on such date (i) the
present fair market value (or present fair saleable value) of the assets of the
Company is not less than the total amount required to pay the probable
liabilities of the Company on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured, and
(ii) the Company is not engaged in any business or transaction, and is not
about to engage in any business or transaction, for which, in the opinion of
the Company’s management, its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which the Company is engaged. 
In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.


 


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(gg)                          The
Company does not own any “margin securities” as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System (the
“Federal Reserve Board”), and none of the proceeds of the sale of the
Securities will be used, directly or indirectly, for the purpose of purchasing
or carrying any margin security, for the purpose of reducing or retiring any
indebtedness that was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Securities to be
considered a “purpose credit” within the meanings of Regulation T, U or X of
the Federal Reserve Board.


 


(hh)                          The
Company is not a party to any contract, agreement or understanding with any
person that would give rise to a valid claim against the Company or the Initial
Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Securities.


 


(ii)                                  No
forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the
Offering Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.


 


(jj)                                  The
Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the
Securities Act.


 


(kk)                            Neither
the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation
D under the Securities Act, an “Affiliate”) has, directly or through any agent
(other than the Initial Purchasers and their Affiliates, as to whom no
representation is made), (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as such term is defined in
the Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities under
the Securities Act or (ii) engaged, in connection with the offering of the
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the Securities Act.


 


(ll)                                  The
Company meets all of the requirements for use of Form S-3 for registering
securities for resale under the Securities Act.


 


(mm)                      The
Company is in compliance with all applicable provisions of the Sarbanes-Oxley
Act of 2002 and all rules and regulations promulgated thereunder or
implementing the provisions thereof (the “Sarbanes-Oxley Act”) that are
currently in effect and is actively taking steps to ensure that it will be in
compliance with other applicable provisions of the Sarbanes-Oxley Act not
currently in effect upon and at all times after the effectiveness of such
provisions.


 


(nn)                          The
Company is in compliance with all applicable corporate governance requirements
set forth in the Nasdaq Marketplace Rules that are currently in effect and is
actively taking steps to ensure that it will be in compliance with other
applicable corporate governance requirements set forth in the Nasdaq
Marketplace Rules not currently in effect upon and all times after the
effectiveness of such requirements.


 


(oo)                          The
Company has delivered to the Representatives letter agreements of all of the
executive officers and directors of the Company, pursuant to which those
persons have agreed to certain transfer restrictions with respect to their
holdings of securities of the Company.


 


(pp)                          Neither
the Company nor, to the best of the Company’s knowledge, any employee or agent
of the Company has made any contribution or other payment to any official of,
or candidate


 


9

















 


for, any federal, state or foreign office in violation of any law or of
the character required to be disclosed in the Offering Memorandum.


 


(qq)                          There
are no transactions, arrangements or other relationships between and/or among
the Company, any of its affiliates (as such term is defined in Rule 405 of the
Securities Act) and any unconsolidated entity, including, but not limited to,
any structure finance, special purpose or limited purpose entity that could
reasonably be expected to materially affect the Company’s liquidity or the
availability of or requirements for its capital resources required to be
described in the Offering Memorandum which have not been described as required.


 


(rr)                                There
are no outstanding loans, advances (except normal advances for business expense
in the ordinary course of business) or guarantees or indebtedness by the
Company to or for the benefit of any of the officers or directors of the
Company, except as disclosed in the Offering Memorandum.


 


3.                                       PURCHASE SALE AND DELIVERY OF OFFERED SECURITIES.


 


(a)                                  On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
each Initial Purchaser, and each Initial Purchaser agrees to purchase the Firm
Securities from the Company at a purchase price of 96.75% of the principal
amount thereof, plus accrued interest, if any, from June 2, 2004 to the
Closing Date.  The Company shall not be
obligated to deliver any of the Firm Securities except upon payment for all the
Firm Securities to be purchased as provided herein.


 


Delivery of and payment for the Firm Securities shall be made at the
offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., or at such
other place as shall be agreed upon by SG Cowen and the Company, at 10:00 A.M.,
New York City time, on June 7, 2004, or at such other date or time as
shall be agreed upon by SG Cowen and the Company (such date and time being
referred to herein as the “First Closing Date”).


 


The Initial Purchasers may purchase from the Company up to all of the
Optional Securities; provided, however, that if counsel to the Company and
counsel to the Initial Purchasers determine that the initial resale of the
Optional Securities is not exempt from the registration requirements of the
Securities Act, then the Initial Purchasers may purchase the Optional
Securities only if such Optional Securities have an “effective conversion
premium” (within the meaning of Rule 144A) of at least ten percent (10%) at the
time of the exercise of such option. 
Subject to the limitation set forth in the preceding sentence, the
option granted hereby may be exercised in whole or in part, and from time to
time, at any time or times on or before the thirtieth day following the date of
the Offering Memorandum by giving written notice to the Company by SG Cowen of
each such election to exercise this option not later than 5:00 p.m. New York
City time on the date of such election (each, an “Exercise Notice”).  Each Exercise Notice shall specify the principal
amount of Optional Securities to be purchased and the date on which such
Optional Securities are to be purchased (each, an “Option Closing Date”).  (The Option Closing Dates and the First
Closing Date are herein collectively referred to as the “Closing Dates”.)  Each Option Closing Date must be at least
two business days after the Exercise Notice is given, unless a shorter time is
approved by the Company.  No Optional
Securities shall be sold and delivered unless the Firm Securities previously
have been, or simultaneously are, sold and delivered. The right to purchase the
Optional Securities or any portion thereof may be surrendered and terminated at
any time upon notice by SG Cowen to the Company.


 


Delivery of and payment for the Optional Securities shall be made at
the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., or at such
other place as shall be agreed upon by SG Cowen and the Company, at 10:00 A.M.,
New York City time, on the Option Closing Date.


 


10

















 


The Securities to be purchased by the Initial Purchasers hereunder and
sold to Qualified Institutional Buyers shall be represented by one or more
global securities in book-entry form which will be deposited by or on behalf of
the Company with The Depository Trust Company or its designated custodian.


 


On each Closing Date, the Company shall deliver or cause to be
delivered the Securities to the Initial Purchasers against payment to or upon
the order of the Company of the purchase price by wire transfer payable in
federal (same day) funds by causing The Depository Trust Company to credit the
Securities to the account of each of the Initial Purchasers at The Depository
Trust Company.  The Company shall make
the certificates representing the Securities available for inspection by the
Representatives at least 24 hours prior to the Closing Date. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of the Initial Purchasers
hereunder.


 


(b)                                 The
Initial Purchasers have advised the Company that they propose to offer the
Securities for resale upon the terms and subject to the conditions set forth
herein and in the Offering Memorandum. 
Each of the Initial Purchasers represents and warrants to, and agrees
with, the Company that (i) it is a Qualified Institutional Buyer purchasing the
Securities pursuant to Rule 144A under the Securities Act, (ii) it is an
accredited investor as defined under Rule 501(a)(1) under the Securities Act,
(iii) it has not solicited offers for, or offered or sold, and will not solicit
offers for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) of Regulation
D under the Securities Act (“Regulation D”) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act and (iv)
it has solicited and will solicit offers for the Securities only from, and has
offered or sold and will offer, sell or deliver the Securities, as part of its
initial offering, only to persons whom it reasonably believes to be Qualified
Institutional Buyers, or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in transactions
in accordance with Rule 144A.  Each of
the Initial Purchasers agrees that, prior to or simultaneously with the
confirmation of sale by the Initial Purchasers to any purchaser of the
Securities purchased by the Initial Purchasers from the Company pursuant
hereto, the Initial Purchasers shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the Company
shall have furnished to the Initial Purchasers prior to the date of such
confirmation of sale).  In addition to
the foregoing, each of the Initial Purchasers acknowledges and agrees that the
Company and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Sections 6(d), (e), (f) and (g), counsel for the Company
and for the Initial Purchasers, respectively, may rely upon the accuracy of the
representations and warranties of the Initial Purchasers and its compliance
with their agreements contained in this Section 3, and each of the Initial
Purchasers hereby consents to such reliance.


 


(c)                                  The
Company acknowledges and agrees that the Initial Purchasers may sell any or all
of the Securities to any affiliate of the Initial Purchasers and that any such
affiliate may sell any or all of the Securities purchased by it to the Initial
Purchasers.


 


4.                                      FURTHER AGREEMENTS
OF THE COMPANY. 
The Company agrees with the several Initial Purchasers:


 


(a)                                  At any time prior to
completion of the resale of Securities by the Initial Purchasers, to advise the
Initial Purchasers promptly of any order preventing or suspending the use of
the Preliminary Offering Memorandum or the Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any


 


11

















 


proceeding for any such purpose; and to use its reasonable efforts to
prevent the issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or suspending any
such qualification and, if any such suspension is issued, to obtain the lifting
thereof at the earliest possible time.


 


(b)                                 If, at any time prior
to completion of the resale of the Securities by the Initial Purchasers, any
event shall occur as a result of which the Offering Memorandum as then amended
or supplemented would include any untrue statement of a material fact, or omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Offering Memorandum or to file under the
Exchange Act any document incorporated by reference in the Offering Memorandum
to comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Representatives thereof and upon their request will prepare
an amended or supplemented Offering Memorandum or make an appropriate filing
pursuant to Section 13 or 14 of the Exchange Act which will correct such
statement or omission or effect such compliance. The Company will furnish
without charge to each Initial Purchaser as many copies as any Initial
Purchaser may from time to time reasonably request of such amended or
supplemented Offering Memorandum.


 


(c)                                  To furnish promptly
to each of the Representatives and to counsel for the Initial Purchasers,
without charge, as many copies of the Preliminary Offering Memorandum, the
Offering Memorandum (and any amendments or supplements thereto) and any
document incorporated by reference in the Offering Memorandum as may be
reasonably requested.


 


(d)                                 Prior to making any
amendment or supplement to the Offering Memorandum, to promptly furnish a copy
thereof to each of the Representatives and to counsel for the Initial
Purchasers and not to effect any such amendment or supplement to which the
Representatives shall reasonably object by notice to the Company after a
reasonable period to review, except such amendment or supplement as counsel to
the Company shall advise the Company is required under applicable law.


 


(e)                                  For so long as the
Securities are outstanding and are “restricted securities” within the meaning
of Rule 144(a)(3) under the Securities Act, to make available to holders of the
Securities and prospective purchasers of the Securities designated by such
holders, upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance with
Section 13 or 15(d) of the Exchange Act (the foregoing agreement being for
the benefit of the holders from time to time of the Securities and prospective
purchasers of the Securities designated by such holders).


 


(f)                                    To promptly take
from time to time such actions as the Representatives may reasonably request to
qualify the Securities for offering and sale under the securities or Blue Sky
laws of such jurisdictions as the Representatives may designate and to continue
such qualifications in effect for so long as required for the distribution of
the Securities; provided that the Company shall not be obligated to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified or to file a general consent to service of process in any
jurisdiction.


 


(g)                                 During the period of
five years from the date hereof, deliver to the Representatives and, upon
request, to each of the other Initial Purchasers, (i) as soon as they are
available, copies of all reports or other communications furnished to
stockholders and (ii) as soon as they are available, copies of any reports and
financial statements furnished or filed with the Commission pursuant to


 


12

















 


the Exchange Act or any national securities exchange or automatic
quotation system on which the Securities or any class of securities of the
Company are listed or quoted.


 


(h)                                 Not to directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of any shares of Common Stock or securities convertible into
or exercisable or exchangeable for Common Stock for a period of 90 days from
the date of the Offering Memorandum without the prior written consent of SG
Cowen other than (i) the Company’s sale of the Securities hereunder, (ii) the issuance
of shares of Common Stock pursuant to the Company’s employee benefit plans,
qualified stock option plans or other employee compensation plans existing on
the date hereof, or (iii) pursuant to currently outstanding options, warrants,
preferred stock or convertible indebtedness. 
The Company will cause each officer, director and shareholder listed in
Annex B to furnish to the Representatives, prior to the First Closing Date, a
letter, substantially in the form of Annex C hereto, pursuant to which each
such person shall agree not to directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock for a period of 90 days from the date of the Offering Memorandum,
without the prior written consent of SG Cowen.


 


(i)                                     To use its best
efforts to permit the Securities to be designated Private Offerings, Resales
and Trading through Automated Linkages (“PORTAL”) Market securities in
accordance with the rules and regulations adopted by the National Association
of Securities Dealers, Inc. (“NASD”) relating to trading in the PORTAL Market
and for the Securities to be eligible for clearance and settlement through The
Depository Trust Company (“DTC”).


 


(j)                                     Not to, and to
cause its affiliates not to, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as such term is defined in the
Securities Act) which could be integrated with the sale of the Securities in a
manner which would require registration of the Securities under the Securities
Act.


 


(k)                                  Except following the
effectiveness of the Shelf Registration Statement, not to, and to cause its
affiliates not to, and not to authorize or knowingly permit any person acting
on their behalf to, solicit any offer to buy or offer to sell the Securities by
means of any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or disposition
would cause the exemption afforded by Section 4(2) of the Securities Act
to cease to be applicable to the offering and sale of the Securities as
contemplated by this Agreement and the Offering Memorandum.


 


(l)                                     During the period
from the Closing Date until two years after the Closing Date, without the prior
written consent of SG Cowen, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the Securities
that have been reacquired by them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered under
the Securities Act.


 


(m)                               Prior to each of the
Closing Dates, not to issue any press release or other communication directly
or indirectly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the Company and of
which the Representatives are notified), without first providing written


 


13

















 


notification to each of the Representatives, unless such notification
is in the opinion of the Company’s counsel, prohibited by applicable law.


 


(n)                                 In connection with the
offering of the Securities, until SG Cowen shall have notified the Company of
the completion of the resale of the Securities, not to, and will cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act) not
to, either alone or with one or more other persons, (i) bid for or purchase,
for any account in which it or any of its affiliated purchasers has a
beneficial interest, any Securities, (ii) attempt to induce any person to
purchase any Securities, and (iii) to cause its affiliated purchasers not to,
make bids or purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Securities.


 


(o)                                 To not take any
affirmative action prior to the Option Closing Date that would require the
Offering Memorandum to be amended or supplemented pursuant to Section 4(b)
hereof.


 


(p)                                 To at all times take
such action as it reasonably determines to be necessary to comply with all
applicable provisions of the Sarbanes-Oxley Act in effect from time to time.


 


(q)                                 To apply the net
proceeds from the sale of the Securities as set forth in the Offering
Memorandum under the heading “Use of Proceeds.”


 


(r)                                    In connection with
the offering of the Securities, to make its officers, employees, independent
accountants and legal counsel reasonably available upon reasonable request by
the Representatives.


 


5.                                      PAYMENT OF EXPENSES.  The Company agrees with the Initial
Purchasers to pay, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated: (a) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Securities and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, Offering Memorandum any amendments, supplements and
exhibits thereto; (c) the costs of printing, reproducing and distributing the
applicable Transaction Documents by mail, telex or other means of
communications; (d) all expenses incurred in connection with the application
for quotation of the securities on The PORTAL Market and the approval of the
securities for book-entry transfer by the Depository Trust Company; (e) any
applicable listing or other fees; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 4(f) hereof and of preparing, printing and distributing Blue
Sky Memoranda and Legal Investment Surveys (including related fees and expenses
of counsel to the Initial Purchasers); (g) all fees and expenses of the Trustee
or any agent thereof; (h) any fees charged by securities rating services for
rating the Securities; and (i) all other costs and expenses incident to the
performance of the obligations of the Company under this Agreement (including,
without limitation, the fees and expenses of the Company’s counsel and the
Company’s independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 9, the Initial Purchasers
shall pay their own costs and expenses, including the fees and expenses of
their counsel, any transfer taxes on the Securities which it may sell and the
expenses of advertising any offering of the Securities made by the Initial
Purchasers.


 


6.                                      CONDITIONS OF THE
INITIAL PURCHASERS’ OBLIGATIONS. 
The respective obligations of the several Initial Purchasers hereunder
on any Closing Date are subject to the accuracy, when made and on such Closing
Date, of the representations and warranties of the Company contained herein, to
the accuracy of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of their
obligations hereunder, and to each of the following additional terms and
conditions:


 


14

















 


(a)                                  The Offering Memorandum (and
any amendments or supplements thereto) shall have been printed and copies
distributed to the Representatives as promptly as practicable on or following
the date of this Agreement or at such other date and time as to which the
Representatives may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.


 


(b)                                 None of the Initial
Purchasers shall have discovered and disclosed to the Company on or prior to
such Closing Date that the Offering Memorandum or any amendment or supplement
thereto contains an untrue statement of a fact that, in the opinion of counsel
for the Initial Purchasers, is material or omits to state any fact which, in
the opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.


 


(c)                                  All corporate
proceedings and other legal matters incident to the authorization, form and
validity of each of each of the Transaction Documents, the Offering Memorandum
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects
to counsel for the Initial Purchasers, and the Company shall have furnished to
such counsel all documents and information that they may reasonably request to
enable them to pass upon such matters.


 


(d)                                 Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo P.C. shall have furnished to the Representatives such
counsel’s written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated such Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:


 


(i)                                     The Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, and is duly qualified to do
business and is in corporate good standing as a foreign corporation in the
Commonwealth of Massachusetts.


 


(ii)                                  All of the
issued shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to the
description thereof contained in or incorporated by reference in the Offering
Memorandum.


 


(iii)                               The Company has
full right, power and authority to execute and deliver each of the Transaction
Documents and to perform its obligations thereunder; and all corporate action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.


 


(iv)                              The Securities
being issued on the date hereof have been duly authorized and executed by the
Company, and when authenticated by the Trustee in the manner provided in the
Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee) and issued and delivered by the Company to you
against payment therefor in accordance with the terms of the Purchase
Agreement, the Securities will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms.


 


(v)                                 The shares of
Common Stock initially issuable upon conversion of the Securities pursuant to
the Indenture (the “Conversion Shares”) have been duly authorized and reserved
for issuance and, when issued and delivered upon conversion of the Securities
in


 


15

















 


accordance with the terms of
the Indenture, will be validly issued, fully paid and nonassessable and not be
subject to any preemptive rights under the Delaware General Corporation Law,
the Company’s charter or bylaws, to our knowledge, or any material contract to
which the Company or any of its properties or assets is bound and will conform
in all material respects to the description of the Common Stock contained or
incorporated by reference in the Offering Memorandum.


 


(vi)                              The Indenture
has been duly authorized, executed and delivered by the Company and, assuming
due authentication thereof by the Trustee, constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms.


 


(vii)                           The Purchase
Agreement has been duly authorized, executed and delivered by the Company.


 


(viii)                        The
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms.


 


(ix)                                The statements
in the Offering Memorandum under the caption “Description of Notes” and
“Description of Capital Stock”, in each case insofar as such statements
constitute matters of law or legal conclusions or summarize the terms of the
Transaction Documents, have been reviewed by such counsel and are correct in
all material respects.


 


(x)                                   The statements
set forth under the caption “Certain United States Federal Income Tax
Consequences”, insofar as they purport to describe provisions of the United
States federal tax laws referred to therein, fairly and accurately summarize in
all material respects, such laws referred to therein.


 


(xi)                                The execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated thereby, including without limitation, the
issuance and sale of the Securities by the Company, will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or
by which the Company is bound or to which any of the properties or assets of
the Company is subject and which is filed as an Exhibit to any filing with the
Commission incorporated by reference into the Offering Memorandum, nor will
such actions result in any violation of the charter or by-laws of the Company,
any applicable law,  or any judgment,
order or decree of any court or governmental agency or body specifically naming
the Company or any of its properties or assets.


 


(xii)                             Except (i) for
the registration of the Securities and the Conversion Shares under the Act as
contemplated by the Registration Rights Agreement, (ii) as may be expressly
contemplated by the Transaction Documents and (iii) for such consents,
approvals, authorizations, registrations or qualifications as may be required
under applicable state securities laws or Blue Sky Laws or rules of the
National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Securities by the Initial Purchasers (as to which
no opinion is expressed herein) no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby.


 


16

















 


(xiii)                          To the best of
such counsel’s knowledge and other than as set forth in the Offering Memorandum
or incorporated by reference therein, there are no legal or governmental
proceedings pending to which the Company is a party or of which any property or
asset of the Company is the subject that, singularly or in the aggregate, if
determined adversely to the Company, would prevent or adversely affect the
ability of the Company to perform its obligations under this Agreement.


 


(xiv)                         Assuming the
accuracy of the representations, warranties and agreements of the Company and
of the Initial Purchasers contained in this Agreement, no registration of the
Securities under the Securities Act or qualification of the Indenture under the
Trust Indenture Act is required in connection with the issuance and sale of the
Securities by the Company and the initial resale of the Securities by the
Initial Purchasers in the manner contemplated by this Agreement and the
Offering Memorandum (it being understood that no opinion is expressed as to any
subsequent resale of the Securities or the Underlying Common Stock).


 


(xv)                            The Company is
not, and upon application of the proceeds as described under the caption “Use
of Proceeds” in the Offering Memorandum will not be, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder.


 


Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Initial Purchasers and dated such Closing Date, in
form and substance satisfactory to the Representatives, to the effect that (x)
such counsel has acted as counsel to the Company in connection with the
preparation of the Offering Memorandum and (y) based on such counsel’s
examination of the Offering Memorandum and such counsel’s investigations made
in connection with the preparation of the Offering Memorandum and “conferences
with certain officers and employees of and with auditors for and counsel to the
Company”, such counsel has no reason to believe that the Offering Memorandum,
as of its date, contained, and on the Closing Date, contains any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.


 


The foregoing opinion and statement may be qualified by a statement to
the effect that such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
and takes no responsibility therefor.


 


In addition, the foregoing opinion may note that the Offering
Memorandum has been prepared in the context of a Rule 144A transaction and not
as part of a registration statement under the Securities Act and does not
contain all of the information that would be required in a registration
statement under the Securities Act.


 


(e)                                  Fish & Richardson P.C. shall have
furnished to the Representatives such counsel’s written opinion, as patent
counsel to the Company, addressed to the Initial Purchasers and dated such
Closing Date, in form and substance reasonably satisfactory to the
Representatives.


 


(f)                                    Fish
& Neave P.C. shall have furnished to the Representatives such counsel’s
written opinion, as patent counsel to the Company, addressed to the Initial
Purchasers and dated such Closing Dates, in form and in substance reasonably
satisfactory to the Representatives.


 


(g)                                 Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo  P.C.  shall
have furnished to the Representatives such counsel’s written opinion, as FDA
regulatory counsel to the Company,


 


17

















 


addressed to the Initial Purchasers and dated such Closing Date, in
form and substance reasonably satisfactory to the Representatives.


 


(h)                                 Wilmer
Cutler Pickering Hale and Dorr LLP shall have furnished to the Representatives
such counsel’s written opinion as counsel for the Initial Purchasers, addressed
to the Initial Purchasers and dated such Closing Date, with respect to such
matters as the Initial Purchasers may reasonably require, and the Company shall
have furnished to such counsel such documents as they request for enabling them
to pass upon such matters.


 


(i)                                     At
the time of the execution of this Agreement, the Representatives shall have
received from Ernst & Young LLP a letter, addressed to the Initial
Purchasers and dated such date, in form and substance satisfactory to the
Representatives (i) confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Securities
Act and the Rules and Regulations thereunder and (ii) stating the conclusions
and findings of such firm with respect to the financial statements and certain
financial information contained in or incorporated by reference in the Offering
Memorandum.


 


(j)                                     On
the Closing Date, the Representatives shall have received a letter (the
“bring-down letter”) from Ernst & Young LLP addressed to the Initial
Purchasers and dated such Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial information
is given in the Offering Memorandum as of a date not more than three business
days prior to the date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information and other matters
covered by its letter delivered to the Representatives concurrently with the
execution of this Agreement pursuant to Section 6(g).


 


(k)                                  The
Company shall have furnished to the Representatives a certificate, dated such
Closing Date, of its President and Chief Executive Officer or a Vice President
and its Chief Financial Officer stating that (i) such officers have carefully
examined the Offering Memorandum and, in their opinion, the Offering
Memorandum, as of its date and such Closing Date, did not include any untrue
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(ii) since the date of the Offering Memorandum, no event has occurred that
should have been set forth in a supplement or amendment to the Offering
Memorandum, (iii) to the best of their knowledge after reasonable
investigation, as of such Closing Date, the representations and warranties of
the Company in this Agreement are true and correct and the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date, and (iv) subsequent to
the date of the most recent financial statements included in the Offering
Memorandum there has been no material adverse change in the financial position
or results of operation of the Company, or any change, or any development
including a prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the Company, except
as set forth in the Offering Memorandum as of the date hereof.


 


(l)                                     The
Company shall not have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Offering Memorandum any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Memorandum (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any change, or any development involving a prospective change, in or affecting
the business, general affairs, management, financial position, stockholders’
equity or results of operations of the


 


18

















 


Company, otherwise than as set forth or contemplated in the Offering
Memorandum, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Representatives, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or delivery of
the Securities on the terms and in the manner contemplated in the Offering
Memorandum.


 


(m)                               No
action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency or body that
would, as of such Closing Date, prevent the issuance or sale of the Securities
or the Underlying Securities or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company; and
no injunction, restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued as of such Closing
Date which would prevent the issuance or sale of the Securities or the
Underlying Securities or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company.


 


(n)                                 Subsequent
to the execution and delivery of this Agreement (i) no downgrading shall have
occurred in the Company’s corporate credit rating or the rating accorded the
Company’s debt securities by any “nationally recognized statistical rating
organization,” as that term is defined by the Commission for purposes of Rule
436(g)(2) of the Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its rating of
any of the Company’s debt securities.


 


(o)                                 Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following:  (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum range for prices shall have
been established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities or a material disruption has occurred in commercial banking
or securities settlement or clearance services in the United States, (iii) the
United States shall have become engaged in further hostilities, or the subject
of further acts of terrorism, or there shall have been an escalation in
hostilities involving the United States, or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) as to make it, in the
judgment of the Representatives, impracticable or inadvisable to proceed with
the sale or delivery of the Securities on the terms and in the manner
contemplated in the Offering Memorandum.


 


(p)                                 Counsel
to the Representatives shall have received a counterpart of the Registration
Rights Agreement which shall have been executed and delivered by a duly
authorized officer of the Company.


 


(q)                                 The
Indenture shall have been duly executed and delivered by the Company and the
Trustee, and the Securities shall have been duly executed and delivered by the
Company and duly authenticated by the Trustee.


 


(r)                                    The
Securities shall have become eligible for The PORTAL Market.


 


19

















 


(s)                                  All
consents, approvals, authorizations or orders of, or filings, notifications or
registrations with, Nasdaq shall have been obtained for the listing and trading
of the Underlying Securities on the Nasdaq National Market.


 


(t)                                    Counsel
to the Representatives shall have received the written agreements,
substantially in the form of Annex C hereto, of the officers, directors and
shareholders of the Company listed in Annex B to this Agreement.


 


All opinions, letters, evidence and
certificates mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Initial Purchasers.


 


7.                                      Indemnification and
Contribution.


 


(a)                                  The Company shall indemnify
and hold harmless each Initial Purchaser, its officers, employees,
representatives and agents and each person, if any, who controls any Initial
Purchaser within the meaning of the Securities Act (collectively the “Initial
Purchaser Indemnified Parties” and, each an “Initial Purchaser Indemnified
Party”) against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which that Initial Purchaser Indemnified Party
may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state in any Preliminary Offering Memorandum or the Offering Memorandum or in
any amendment or supplement thereto a material fact required to be stated
therein or necessary to make the statements therein not misleading and shall
reimburse each Initial Purchaser Indemnified Party promptly upon demand for any
legal or other expenses reasonably incurred by that Initial Purchaser
Indemnified Party in connection with investigating or preparing to defend or
defending against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon (i) an untrue statement or
alleged untrue statement in or omission or alleged omission from the
Preliminary Offering Memorandum or the Offering Memorandum or any such
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on
behalf of any Initial Purchaser specifically for use therein, which information
the parties hereto agree is limited to the Initial Purchasers’
Information.  This indemnity agreement
is not exclusive and will be in addition to any liability that the Company
might otherwise have and shall not limit any rights or remedies that may
otherwise be available at law or in equity to each Initial Purchaser
Indemnified Party.


 


(b)                                 Each Initial
Purchaser, severally and not jointly, shall indemnify and hold harmless the
Company, its officers, employees, representatives, agents, directors and each
person, if any, who controls the Company within the meaning of the Securities
Act (collectively the “Company Indemnified Parties” and each a “Company
Indemnified Party”) against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company Indemnified
Parties may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or the Offering Memorandum or
in any amendment or supplement thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the


 


20

















 


statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of that
Initial Purchaser specifically for use therein, and shall reimburse the Company
Indemnified Parties for any legal or other expenses reasonably incurred by such
parties in connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided that
the parties hereto hereby agree that such written information provided by the
Initial Purchasers consists solely of the Initial Purchasers’ Information.  This indemnity agreement is not exclusive
and will be in addition to any liability that the Initial Purchasers might
otherwise have and shall not limit any rights or remedies that may otherwise be
available at law or in equity to the Company Indemnified Parties.


 


(c)                                  Promptly after
receipt by an indemnified party under this Section 7 of notice of any
claim or the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 7, notify the indemnifying party in writing of the claim or
the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have under this Section 7 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under this Section 7.  If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. 
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 7 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of investigation;
provided,
however, that any indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment thereof shall have been
specifically authorized by the indemnifying party in writing, (ii) such
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it that are different from or additional to
those available to the indemnifying party and in the reasonable judgment of
such counsel it is advisable for such indemnified party to employ separate
counsel or (iii) the indemnifying party shall have failed to assume the defense
of such action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying party
in writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties, which
firm shall be designated in writing by SG Cowen, if the indemnified parties
under this Section 7 including any Initial Purchaser Indemnified Party, or
by the Company if the indemnified parties under this Section 7 consist
solely of Company Indemnified Parties. 
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 7(a) and (b) hereof, shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim.  Subject to the provisions of
Section 7(d) hereof, no indemnifying party shall be liable for any
settlement of any such action


 


21

















 


effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be
a final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against
any loss or liability by reason of such settlement or judgment.


 


(d)                                 If at any time an
indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
this Section 7 effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the request for reimbursement, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.


 


(e)                                  If the indemnification
provided for in this Section 7 is unavailable or insufficient to hold
harmless an indemnified party under Section 7(a) or 7(b), then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof,  (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial Purchasers on the
other with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations.  The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions
received by the Initial Purchasers with respect to the Securities purchased
under this Agreement, in each case as set forth in this Agreement.


 


(f)                                    The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Initial Purchasers on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission; provided that the parties hereto
agree that the written information furnished to the Company through the
Representatives by or on behalf of the Initial Purchasers for use in any
Preliminary Offering Memorandum or the Offering Memorandum consists solely of the
Initial Purchasers’ Information.  The
Company and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 7(f) were to be
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein.  The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7(f) shall be deemed to
include, for purposes of this Section 7(f), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. 
Notwithstanding the provisions of this Section 7(f), no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities purchased by it and distributed
as contemplated by this Agreement less the amount of any damages that such
Initial Purchaser has


 


22

















 


otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission.  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
Initial Purchasers’ obligations to contribute as provided in this
Section 7(f) are several in proportion to their respective underwriting
obligations and not joint.


 


8.                                      TERMINATION.  The obligations of the Initial Purchasers
hereunder may be terminated by SG Cowen, in its absolute discretion by notice
given to and received by the Company prior to delivery of and payment for the
Securities if, prior to that time, any of the events described in Sections
6(k), 6(m) or 6(n) have occurred or if the Initial Purchasers shall decline to purchase
the Securities for any reason permitted under this Agreement.


 


9.                                      REIMBURSEMENT OF THE INITIAL PURCHASERS’  EXPENSES.  If (a) this Agreement shall have been
terminated pursuant to Section 8, (b) the Company shall fail to tender the
Securities for delivery to the Initial Purchasers for any reason permitted
under this Agreement, or (c) the Initial Purchasers shall decline to purchase
the Securities for any reason permitted under this Agreement, then the Company
shall reimburse the Initial Purchasers for the fees and expenses of the Initial
Purchasers’ counsel and for such other out-of-pocket expenses as shall have
been reasonably incurred by them in connection with this Agreement and the
proposed purchase of the Securities, and, upon demand, the Company shall pay
the full amount thereof to SG Cowen.  If
this Agreement is terminated pursuant to Section 8 by reason of the
default of one or more of the Initial Purchasers, the Company shall not be
obligated to reimburse any defaulting Initial Purchaser on account of those
expenses.


 


10.                               COUNTERPARTS.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.


 


11.                               SUCCESSORS; PERSONS
ENTITLED TO BENEFIT OF AGREEMENT. 
This Agreement shall inure to the benefit of and be binding upon the
several Initial Purchasers, the Company, and their respective successors.  Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the Initial Purchaser
Indemnified Parties, and the indemnities of the several Initial Purchasers
shall also be for the benefit of the Company Indemnified Parties.  It is understood that the Initial
Purchasers’ responsibility to the Company is solely contractual in nature and
the Initial Purchasers do not owe the Company, or any other party, any
fiduciary duty as a result of this Agreement.


 


12.                               SURVIVAL OF
INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC.  The respective indemnities, covenants,
agreements, representations, warranties and other statements of the Company and
the several Initial Purchasers, as set forth in this Agreement or made by them
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Initial Purchaser,
the Company or any person controlling any of them and shall survive delivery of
and payment for the Securities.


 


13.                               NOTICES.  All statements, requests, notices and
agreements hereunder shall be in writing, and:


 


23

















 


(a)                                  if to the Initial
Purchasers, shall be delivered or sent by mail, telex or facsimile transmission
to SG Cowen & Co., LLC Attention: 
Convertible Securities Sales and Trading (Fax: 212-278-4637), with a
copy to the same address, Attention: 
Legal Department – Veronica Iuliano (Fax: 212-278-7995) with a copy to
Wilmer Culter Pickering Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109, Attention: Philip P. Rossetti, Esq. (Fax: 617-526-5000);
provided, however, that any notice to an Initial Purchaser pursuant to
Section 7 hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Initial Purchaser at its address set forth in its acceptance
telex to the Representative, which address will be supplied to any other party
hereto by SG Cowen upon request; or


 


(b)                                 if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to EPIX
Medical, Inc., 71 Rogers Street, Cambridge, Massachusetts02142, Attention:
Chief Executive Officer (Fax: 617-250-6031), with a copy to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts
02111, Attention: William T. Whelan, Esq. (Fax: 617-542-2241).


 


Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.


 


14.                               DEFINITION OF
CERTAIN TERMS.  For purposes
of this Agreement,  (a) “business day”
means any day on which the Nasdaq is open for trading and (b) “subsidiary” has
the meaning set forth in Rule 405 of the Rules and Regulations.


 


15.                               GOVERNING LAW.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.


 


16.                               INITIAL PURCHASERS’
INFORMATION.  The parties
hereto acknowledge and agree that, for all purposes of this Agreement, the
Initial Purchasers’ Information consists solely of the following information in
the Offering Memorandum: (i) the statements concerning the initial purchasers
contained in the fourth paragraph under the heading “Plan of Distribution”
(which paragraph begins “We have been advised that the initial purchasers
propose to resell the notes....”) and (ii) the first sentence of the tenth
paragraph under the heading “Plan of Distribution” (which sentence begins “In
order to facilitate this offering ....”).


 


17.                               AUTHORITY OF THE
REPRESENTATIVES. 
In connection with this Agreement, you will act for and on behalf of the
several Initial Purchasers, and any action taken under this Agreement by the Representatives,
will be binding on all of the Initial Purchasers.


 


18.                               PARTIAL
UNENFORCEABILITY. 
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof.  If any Section, paragraph or provision of this Agreement is for
any reason determined to be invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are necessary to make
it valid and enforceable.


 


19.                               GENERAL.  This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. 
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. 
The section headings in this Agreement are for the convenience of
the parties only and will not affect the construction or interpretation of this
Agreement.  This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company and the Representatives.


 


24

















 


If the foregoing is in accordance with your understanding of the
agreement among the Company and the several Initial Purchasers, kindly indicate
your acceptance in the space provided for that purpose below.


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  EPIX MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peyton J. Marshall

  	
   

  
	
   

  	
   Name:  Peyton J. Marshall

  
	
   

  	
   Title:    CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted as of

  the date first above written:

  	
   

  
	
   

  	
   

  
	
  SG COWEN & CO., LLC

  	
   

  
	
  NEEDHAM & COMPANY, INC.

  	
   

  
	
  WELLS FARGO SECURITIES, LLC

  	
   

  
	
  WR HAMBRECHT + CO. LLC

  	
   

  
	
   

  	
   

  
	
   

  	
  Acting on their own behalf

  and as Representatives of the several

  Initial Purchasers referred to in the

  foregoing Agreement.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  SG
  COWEN & CO., LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Mosler

  	
   

  	
   

  
	
  Name:  John Mosler

  	
   

  
	
  Title:    MD

  	
   

  
							



 


Signature Page to Purchase Agreement


 

















 


Annex
A


 


 


[Form of Registration Rights Agreement]


 


2

















 


Annex
B


 


Alan P. Carpenter


Stanley T. Crooke


Christopher F. O. Gabrieli


Gregg Mayer


Peyton J. Marshall


Thomas McMurry


Michael D. Webb


Robert Weisskoff


Peter Wirth


 


3

















 


Annex
C


 


Form of Lock-Up Agreement for Messrs. Crooke, Mayer, McMurry and Wirth


 


 


                      
, 2004


 


SG Cowen & Co., LLP


Needham & Company, Inc.


Wells Fargo Securities, LLC


WR Hambrecht + Co. LLC


As representatives of the

several Initial Purchasers


c/o SG Cowen & Co., LLP


1221 Avenue of the Americas


New York, New York  10020


 


Re:  EPIX Medical, Inc.


 


Ladies and Gentlemen:


 


In order to induce SG Cowen & Co., LLP (“SG Cowen”) and
Needham & Company, Inc., Wells Fargo Securities, LLC and WR Hambrecht + Co.
LLC (together with SG Cowen, the “Representatives”), to enter in to a certain
Purchase Agreement with EPIX Medical, Inc., a Delaware corporation (the “Company”),
with respect to the offering (the “Offering”) by the Company of
$75,000,000 principal amount of Convertible Senior Notes Due 2024 (the
“Securities”) convertible into shares of Company Common Stock, $0.01 par value
per share (the “Common Stock”), the undersigned hereby agrees that from the
date hereof and continuing to and including the date that is 90 days after the
date of the offering circular related to the Offering (the “Lock-Up Period”),
the undersigned will not, without the prior written consent of SG Cowen, directly
or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the
Securities Act of 1933, as the same may be amended or supplemented from time to
time (such shares, the “Beneficially Owned Shares”)) or securities
convertible into or exercisable or exchangeable for Common Stock, (ii) enter
into any swap, hedge or similar agreement or arrangement that transfers, in
whole or in part, the economic risk of ownership of the Beneficially Owned
Shares or securities convertible into or exercisable or exchangeable for Common
Stock or (iii) engage in any short selling of the Common Stock (each of the
foregoing clauses (i), (ii) and (iii), a “Disposition”).


 


The foregoing paragraph shall not apply to (a) any transfer of shares
of Common Stock or any security convertible into or exercisable or exchangeable
Common Stock (i) as a bona fide gift or gifts, (ii) to any trust, family
limited partnership or other entity for estate or tax planning purposes for the
benefit of the undersigned or the undersigned’s immediate family, (iii) by will
or intestacy to the undersigned’s legal representative, heir or legatee, or
(iv) acquired in open market transactions after the completion of the Offering,
provided that any permitted donee, transferee or distributee in the case
of (i), (ii) or (iii) shall execute and deliver to the Representatives a
duplicate form of this letter or (b) the entering into a contract, instruction
or plan described in Rule 10b5-1(c) (the “Rule 10b5-1 Trading Program”)
promulgated under the Securities Exchange Act of 1934, as amended, provided
that such Rule 10b5-1 Trading Program does not provide for any Disposition
during the Lock-Up Period.  For the
purposes of


 

















 


this paragraph, “immediate family” shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor.


 


Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred
from the undersigned shall be bound by the terms of this Agreement.


 


In addition, the undersigned hereby waives, from the date hereof until
the expiration of the Lock-Up Period, any and all rights, if any, to request or
demand registration pursuant to the Securities Act of any shares of Common
Stock that are registered in the name of the undersigned or that are
Beneficially Owned Shares.  In order to
enable the aforesaid covenants to be enforced, the undersigned hereby consents
to the placing of legends and/or stop-transfer orders with the transfer agent
of the Common Stock with respect to any shares of Common Stock or Beneficially
Owned Shares.


 


 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


2

















 


Annex
C


 


Form of Lock-Up Agreement for Mr. Gabrieli


 


 


                      
, 2004


 


SG Cowen & Co., LLP


Needham & Company, Inc.


Wells Fargo Securities, LLC


WR Hambrecht + Co. LLC


As representatives of the

several Initial Purchasers


c/o SG Cowen & Co., LLP


1221 Avenue of the Americas


New York, New York  10020


 


Re:  EPIX Medical, Inc.


 


Ladies and Gentlemen:


 


In order to induce SG Cowen & Co., LLP (“SG Cowen”) and
Needham & Company, Inc., Wells Fargo Securities, LLC and WR Hambrecht + Co.
LLC (together with SG Cowen, the “Representatives”), to enter in to a certain
Purchase Agreement with EPIX Medical, Inc., a Delaware corporation (the “Company”),
with respect to the offering (the “Offering”) by the Company of
$75,000,000 principal amount of Convertible Senior Notes Due 2024 (the
“Securities”) convertible into shares of Company Common Stock, $0.01 par value
per share (the “Common Stock”), the undersigned hereby agrees that from the
date hereof and continuing to and including the date that is 30 days after the
date of the offering circular related to the Offering (the “Lock-Up Period”),
the undersigned will not, without the prior written consent of SG Cowen,
directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the
Securities Act of 1933, as the same may be amended or supplemented from time to
time (such shares, the “Beneficially Owned Shares”)) or securities
convertible into or exercisable or exchangeable for Common Stock, (ii) enter
into any swap, hedge or similar agreement or arrangement that transfers, in
whole or in part, the economic risk of ownership of the Beneficially Owned
Shares or securities convertible into or exercisable or exchangeable for Common
Stock or (iii) engage in any short selling of the Common Stock (each of the
foregoing clauses (i), (ii) and (iii), a “Disposition”).


 


The foregoing paragraph shall not apply to (a) any transfer of shares
of Common Stock or any security convertible into or exercisable or exchangeable
Common Stock (i) as a bona fide gift or gifts, (ii) to any trust, family
limited partnership or other entity for estate or tax planning purposes for the
benefit of the undersigned or the undersigned’s immediate family, (iii) by will
or intestacy to the undersigned’s legal representative, heir or legatee, or
(iv) acquired in open market transactions after the completion of the Offering,
provided that any permitted donee, transferee or distributee in the case
of (i), (ii) or (iii) shall execute and deliver to the Representatives a
duplicate form of this letter; (b) the entering into a contract, instruction or
plan described in Rule 10b5-1(c) (the “Rule 10b5-1 Trading Program”)
promulgated under the Securities Exchange Act of 1934, as amended, provided
that such Rule 10b5-1 Trading Program does not provide for any Disposition
during the Lock-Up Period.  For the
purposes of


 

















 


this paragraph, “immediate family” shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor; or (c) the
Disposition of an aggregate of 50,000 shares of Common Stock.


 


Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred
from the undersigned shall be bound by the terms of this Agreement.


 


In addition, the undersigned hereby waives, from the date hereof until
the expiration of the Lock-Up Period, any and all rights, if any, to request or
demand registration pursuant to the Securities Act of any shares of Common
Stock that are registered in the name of the undersigned or that are
Beneficially Owned Shares.  In order to
enable the aforesaid covenants to be enforced, the undersigned hereby consents
to the placing of legends and/or stop-transfer orders with the transfer agent
of the Common Stock with respect to any shares of Common Stock or Beneficially
Owned Shares.


 


 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Signature Page to Lock-Up Agreement


 


2

















 


Annex
C


 


Form of Lock-Up Agreement for Messrs.
Carpenter

Marshall, Webb, and Weisskoff


 


 


                      
, 2004


 


SG Cowen & Co., LLP


Needham & Company, Inc.


Wells Fargo Securities, LLC


WR Hambrecht + Co. LLC


As representatives of the

several Initial Purchasers


c/o SG Cowen & Co., LLP


1221 Avenue of the Americas


New York, New York  10020


 


Re:  EPIX Medical, Inc.


 


Ladies and Gentlemen:


 


In order to induce SG Cowen & Co., LLP (“SG Cowen”) and
Needham & Company, Inc., Wells Fargo Securities, LLC and WR Hambrecht + Co.
LLC (together with SG Cowen, the “Representatives”), to enter in to a certain
Purchase Agreement with EPIX Medical, Inc., a Delaware corporation (the “Company”),
with respect to the offering (the “Offering”) by the Company of $75,000,000
principal amount of Convertible Senior Notes Due 2024 (the “Securities”)
convertible into shares of Company Common Stock, $0.01 par value per share (the
“Common Stock”), the undersigned hereby agrees that from the date hereof and
continuing to and including the date that is 90 days after the date of the
offering circular related to the Offering (the “Lock-Up Period”), the
undersigned will not, without the prior written consent of SG Cowen, directly
or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the Securities
Act of 1933, as the same may be amended or supplemented from time to time (such
shares, the “Beneficially Owned Shares”)) or securities convertible into
or exercisable or exchangeable for Common Stock, (ii) enter into any swap,
hedge or similar agreement or arrangement that transfers, in whole or in part,
the economic risk of ownership of the Beneficially Owned Shares or securities
convertible into or exercisable or exchangeable for Common Stock or (iii)
engage in any short selling of the Common Stock.


 


The foregoing
paragraph shall not apply to any transfer of shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock (a)
as a bona fide gift or gifts, (b) to any trust, family limited partnership or
other entity for estate or tax planning purposes for the benefit of the
undersigned or the undersigned’s immediate family, (c) by will or intestacy to
the undersigned’s legal representative, heir or legatee, (d) pursuant to a
contract, instruction or plan described in Rule 10b5-1(c) (the “Rule 10b5-1
Trading Program”) promulgated under the Securities Exchange Act of 1934, as
amended, existing prior to the date hereof, or (e) acquired in open market
transactions after the completion of the Offering, provided that any
permitted donee, transferee or distributee in the case of (a), (b) or (c) shall
execute and deliver to the Representatives a duplicate form of this
letter.  For the purposes of this
paragraph, “immediate family” shall mean spouse, lineal descendant, father,
mother,


 

















 


brother or
sister of the transferor.  The
undersigned hereby represents that that certain Rule 10b5 1 Trading Program
dated                    between the undersigned and           and as previously provided to SG Cowen is
the only Rule 10b5-1 Trading Program applicable to the undersigned or any
Beneficially Owned Shares in existence on the date hereof.


 


Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred
from the undersigned shall be bound by the terms of this Agreement.


 


In addition, the undersigned hereby waives, from the date hereof until
the expiration of the Lock-Up Period, any and all rights, if any, to request or
demand registration pursuant to the Securities Act of any shares of Common
Stock that are registered in the name of the undersigned or that are
Beneficially Owned Shares.  In order to
enable the aforesaid covenants to be enforced, the undersigned hereby consents
to the placing of legends and/or stop-transfer orders with the transfer agent
of the Common Stock with respect to any shares of Common Stock or Beneficially
Owned Shares.


 


 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Signature Page to Lock-Up Agreement


 


2