ex4-1



 



Exhibit 4.1



SECURITIES PURCHASE AGREEMENT



          This Securities Purchase Agreement, dated on and as of the date set forth
on the signature page hereto (this “Agreement”), is made between Meridian
Medical Technologies, Inc., a Delaware corporation (the “Company”), and the
undersigned prospective purchaser(s) (each a “Purchaser” and collectively, the
“Purchasers”).


          WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933 (the “Securities
Act”) and Regulation D promulgated thereunder, the Company desires to offer,
issue and sell to the Purchasers (the “Offering”), and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares (the
“Shares”) of the Company’s voting common stock, $0.10 per share par value (the
“Common Stock”) as more fully described in this Agreement.


          NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration the
receipt and adequacy of which is hereby acknowledged, the Company and the
Purchasers agree as follows:


A.     Subscription


          (1)          The Purchaser hereby irrevocably subscribes for and agrees to purchase
Shares in the amount indicated on the signature page hereto (the “Subscription
Amount”). The Purchaser shall deliver the Subscription Amount within five (5)
business days of the date of this Agreement by check payable to the escrow
account set forth on Schedule A or by wire transfer to the Company’s escrow
agent in accordance with the wire transfer instructions set forth on Schedule A
and shall be held in the manner described in Paragraph (2) below. The
Purchaser acknowledges that the actual number of Shares that the Purchaser will
be issued at the Closing will be equal to the quotient of the Subscription
Amount, divided by the Offering Price (as defined below), rounded down to the
nearest whole number of Shares. For purposes of this Agreement, the Offering
Price shall mean the price per Share to be paid by the Purchasers equal to the
product of (a) .90 multiplied by (b) the average closing price of the Common
Stock as reported by the NASDAQ National Market (“NASDAQ”) for a period of from
one to ten trading days immediately preceding the closing of the purchase and
sale of the Shares under this Agreement, as mutually agreed by the Company and
Fahnestock & Co. Inc., the lead placement agent for the Offering (the
“Placement Agent,” together with Adams, Harkness & Hill, Inc., the “Placement
Agents”).


          (2)          All payments for Shares made by the Purchasers as contemplated by
Paragraph (1) above will be deposited as soon as practicable for the
undersigned’s benefit in a non-interest bearing escrow account. The payment
will be returned promptly, without interest or deduction, if the undersigned’s
subscription is rejected or the Offering is terminated for any reason. The
Company may hold a closing of the Offering (the “Closing”) at any time during
the period beginning after one or more subscriptions have been accepted and
ending on or before January 11, 2002 (the “Termination Date”); provided,
however, that the Termination Date may be extended to a date not later than
February 11, 2002 upon the mutual agreement of the Company


 






 




and the Placement Agent and written notice to the Purchaser. The Company
may, in its discretion, terminate the Offering if a minimum of 500,000 Shares
is not subscribed for within sixty (60) days from the date of the Memorandum
(as defined below), or if the Company and the Placement Agent agree, within
ninety (90) days from the date of the Memorandum (as defined below). There is
no minimum subscription requirement for the Offering.


          (3)          Upon receipt by the Company of the requisite payment for all Shares to
be purchased by the Purchasers whose subscriptions are accepted at the Closing,
the Company shall, at such Closing: (i) issue to each Purchaser stock
certificates representing the shares of Common Stock purchased under this
Agreement; (ii) deliver to each Purchaser a certificate stating that the
representations and warranties made by the Company in Section C of this
Agreement were true and correct in all material respects when made and are true
and correct in all material respects on the date of the Closing relating to the
Shares subscribed for pursuant to this Agreement as though made on and as of
such Closing; and (iii) cause to be delivered to each Purchaser an opinion of
Arnold & Porter in the form of Exhibit A hereto.


          (4)          The Purchaser acknowledges and agrees that this Agreement shall be
binding upon the Purchaser upon the execution and delivery to the Company, in
care of the Placement Agents, of the Purchaser’s signed counterpart signature
page to this Agreement unless and until the Company or the Placement Agents
shall reject the subscription being made hereby by the Purchaser.


          (5)          The Purchaser agrees that each of the Company and the Placement Agent
may reduce the Purchaser’s subscription with respect to the number of Shares to
be purchased without any prior notice or further consent by the Purchaser. If
such a reduction occurs, the part of the Subscription Amount attributable to
the reduction shall be promptly returned, without interest or deduction.


          (6)          The Purchaser acknowledges and agrees that the purchase of Shares by
the Purchaser pursuant to the Offering is subject to all the terms and
conditions set forth in this Agreement as well as in the Memorandum.


B.     Representations and Warranties of the Purchaser


          Each of the Purchasers hereby represents and warrants to the Company and
the Placement Agent, and agrees with the Company as follows:


          (1)          The Purchaser has been furnished with and has carefully read the
Company’s Confidential Private Placement Memorandum dated November 12, 2001
(together with all documents and filings attached thereto or incorporated
therein by reference, the “Memorandum”) and this Agreement (collectively the
“Offering Documents”), and is familiar with and understands the terms of the
Offering. Specifically, the Purchaser has carefully read and considered the
Company’s financial statements included in the Company’s annual report on Form
10-K for the fiscal year ended July 31, 2001 (the “2001 Form 10-K”), the
subsection of the 2001 Form 10-K entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations – Liquidity and Capital
Resources”, the section of the 2001 Form 10-K entitled “Item 1. Business,” and
the section of the Memorandum entitled “Risk Factors”, and has


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 taken full cognizance of and understands all of the risks related to the
purchase of the Shares. The Purchaser has carefully considered and has
discussed with the Purchaser’s professional legal, tax, accounting and
financial advisors, to the extent the Purchaser has deemed necessary, the
suitability of an investment in the Shares for the Purchaser’s particular tax
and financial situation and has determined that the Shares being subscribed for
by the Purchaser are a suitable investment for the Purchaser. The Purchaser
recognizes that an investment in the Shares involves substantial risks,
including the possible loss of the entire amount of such investment.


          (2)          The Purchaser acknowledges that (i) the Purchaser has had the right to
request copies of any documents, records, and books pertaining to this
investment and (ii) any such documents, records and books that the Purchaser
requested have been made available for inspection by the Purchaser, the
Purchaser’s attorney, accountant or advisor(s).


          (3)          The Purchaser and the Purchaser’s advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from representatives of the
Company or persons acting on behalf of the Company concerning the Offering and
all such questions have been answered to the full satisfaction of the
Purchaser.


          (4)          The Purchaser is not subscribing for Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising.


          (5)          If the Purchaser is a natural person, the Purchaser has reached the
age of majority in the state in which the Purchaser resides. Each Purchaser
has adequate means of providing for the Purchaser’s current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares for an indefinite period of time, has no need for liquidity in
such investment and can afford a complete loss of such investment.


          (6)          The Purchaser has sufficient knowledge and experience in financial,
tax and business matters to enable the Purchaser to utilize the information
made available to the Purchaser in connection with the Offering, to evaluate
the merits and risks of an investment in the Shares and to make an informed
investment decision with respect to an investment in the Shares on the terms
described in the Offering Documents.


          (7)          The Purchaser will not sell or otherwise transfer the Shares without
registration under the Securities Act of 1933 or applicable state securities
laws or an exemption therefrom. The Purchaser acknowledges that neither the
offer or sale of the Shares have been registered under the Securities Act or
under the securities laws of any state. The Purchaser represents and warrants
that the Purchaser is acquiring the Shares for the Purchaser’s own account, for
investment and not with a view toward resale or distribution within the meaning
of the Securities Act. The Purchaser has not offered or sold the Shares being
acquired nor does the Purchaser have any present intention of selling,
distributing or otherwise disposing of such Shares either currently or after
the passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstances in violation of the
Securities Act. The Purchaser is aware that (i) the Shares are not currently
eligible for sale in reliance upon Rule


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144 promulgated under the Securities Act and (ii) the Company has no
obligation to register the Shares subscribed for hereunder, except as provided
in Section E hereof.


          (8)          The Purchaser acknowledges that the certificate representing the
Shares shall be stamped or otherwise imprinted with a legend substantially in
the following form: “The securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws and neither the securities nor any interest therein may be
offered, sold, transferred, pledged or otherwise disposed of except pursuant to
an effective registration under such act or an exemption from registration,
which, in the opinion of counsel reasonably satisfactory to counsel for this
corporation, is available.”


          (9)          If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust, estate or other entity: (i) such partnership,
corporation, trust, estate or other entity has the full legal right and power
and all authority and approval required (a) to execute and deliver this
Agreement and all other instruments executed and delivered by or on behalf of
such partnership, corporation, trust, estate or other entity in connection with
the purchase of its Shares, and (b) to purchase and hold such Shares; (ii) the
signature of the party signing on behalf of such partnership, corporation,
trust, estate or other entity is binding upon such partnership, corporation,
trust, estate or other entity; and (iii) such partnership, corporation, trust
or other entity has not been formed for the specific purpose of acquiring such
Shares, unless each beneficial owner of such entity is qualified as an
accredited investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act and has submitted information
substantiating such individual qualification.


         (10)          If the Purchaser is a retirement plan or is investing on behalf of a
retirement plan, the Purchaser acknowledges that an investment in the Shares
poses additional risks including the inability to use losses generated by an
investment in the Shares to offset taxable income.


         (11)          The information contained in the questionnaire in the form of Exhibit
B attached hereto delivered by the Purchaser in connection with this Agreement
(the “Questionnaire”) is complete and accurate in all respects. The Purchaser
shall indemnify and hold harmless the Company and each officer, director or
control person of any such entity, who is or may be a party or is or may be
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of or arising from any actual or alleged misrepresentation or
misstatement of facts or omission to represent or state facts made or alleged
to have been made by the Purchaser to the Company or omitted or alleged to have
been omitted by the Purchaser, concerning the Purchaser or the Purchaser’s
authority to invest or financial position in connection with the Offering,
including, without limitation, any such misrepresentation, misstatement or
omission contained in the Agreement or any other document submitted by the
Purchaser, against losses, liabilities and expenses for which the Company or
any officer, director or control person of any such entity has not otherwise
been reimbursed (including attorney’s fees, judgments, fines and amounts paid
in settlement) actually and reasonably incurred by the Company or such officer,
director or control person in connection with such action, suit or proceeding.


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C.     Representations and Warranties of the Company


          The Company hereby represents and warrants to the Purchaser and the
Placement Agent that:


          (1)          Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
conduct its business as currently conducted. The Company is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary except
where the failure to be so qualified would not have a material adverse effect
on the business, properties, prospects, financial condition or results of
operations of the Company (a “Material Adverse Effect”).


          (2)          Capitalization. The authorized capital stock of the Company consists
of 20,000,000 shares of stock of all classes. The authorized capital stock is
divided into 17,800,000 shares of Common Stock, $.10 par value per share,
200,000 shares of Class A Common Stock, $.10 par value per share (the
“Non-Voting Common Stock”), and 2,000,000 shares of Preferred Stock, $.01 par
value per share (the “Preferred Stock”). As of November 20, 2001, there were
3,627,077 shares of Common Stock issued and outstanding and no shares of
Non-Voting Common Stock or Preferred Stock issued and outstanding. As of
November 20, 2001, the Company had reserved 1,500,000 shares of Common Stock
for issuance to employees, directors and consultants pursuant to the Company’s
stock option plans, of which 1,319,014 shares of Common Stock are subject to
outstanding, unexercised options. As of November 20, 2001, the Company had
reserved 90,912 shares of Non-Voting Common Stock subject to an outstanding
warrant to purchase such shares expiring on April 15, 2006. In addition, the
Company has agreed to issue to Fahnestock & Co. Inc. a warrant (the “Placement
Agent Warrant”) to purchase a number of shares of Common Stock equal to 5% of
the number of Shares of Common Stock sold in the Offering pursuant to the
Placement Agent Agreement, dated as of October 23, 2001 (the “Placement Agent
Agreement”), between the Company and the Placement Agents. Other than as set
forth above or as contemplated in this Agreement, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
the Company is a party or by which either the Company is bound or obligating
the Company to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of the Company or obligating the Company to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement.


          (3)          Issuance. The issuance of the Shares have been duly and validly
authorized by all necessary corporate and shareholder action and, when issued
and paid for pursuant to this Agreement, will be validly issued, fully paid and
non-assessable shares of Common Stock of the Company.


          (4)          Authorization; Enforceability. The Company has all corporate right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares contemplated herein
and the performance


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of the Company’s obligations hereunder has been taken. This Agreement has
been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy. The issuance and sale of the Shares contemplated
hereby will not give rise to any preemptive rights or rights of first refusal
on behalf of any person.


          (5)          No Conflict; Governmental and Other Consents.


                         (a)          The execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
violation of any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority to or by which the
Company is bound, or of any provision of the First Amended and Restated
Certificate of Incorporation or Bylaws of the Company, and will not conflict
with, or result in a breach or violation of, any of the terms or provisions of,
or constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its properties or assets is subject, nor result in the
creation or imposition of any lien upon any of the properties or assets of the
Company except to the extent that any such violation, conflict or breach would
not be reasonably likely to have a Material Adverse Effect.


                         (b)          No consent, approval, authorization or other order of any governmental
authority or other third-party is required to be obtained by the Company in
connection with the authorization, execution and delivery of this Agreement or
with the authorization, issue and sale of the Shares, except such filings as
may be required to be made with the Securities and Exchange Commission (the
“SEC”), NASDAQ and with any state or foreign blue sky or securities regulatory
authority.


          (6)          Litigation. There are no pending, or to the Company’s knowledge
threatened, legal or governmental proceedings against the Company which, if
adversely determined, would be reasonably likely to have a Material Adverse
Effect on the Company.


          (7)          Accuracy of Reports. All material reports required to be filed by the
Company within the two years prior to the date of this Agreement (the “SEC
Reports”) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), have been duly filed with the SEC, complied at the time of filing in all
material respects with the requirements of their respective forms and, except
to the extent updated or superseded by any subsequently filed report were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue
statements of a material fact nor omitted to state any material fact necessary
in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.


          (8)          Financial Information. The Company’s financial statements that appear
in the SEC Reports have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”) (except that the financial
statements that are not audited do not have notes


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thereto) applied on a consistent basis throughout the periods indicated
and such financial statements fairly present in all material respects the
financial condition and results of operations of the Company as of the dates
and for the periods indicated therein.


          (9)          Absence of Certain Changes. Since the date of the Company’s financial
statements in the 2001 Form 10-K, there has not occurred any event that has
caused a Material Adverse Effect or any occurrence, circumstance or combination
thereof that reasonably would be likely to result in such Material Adverse
Effect.


         (10)          Investment Company. The Company is not an “investment company”
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.


         (11)          Subsidiaries. To the extent required under applicable SEC rules, the
SEC Reports set forth each subsidiary of the Company, showing the jurisdiction
of its incorporation or organization and showing the percentage of each
person’s ownership of the outstanding stock or other interests of such
subsidiary. For the purposes of this Agreement, “subsidiary” shall mean any
company or other entity of which at least 50% of the securities or other
ownership interest having ordinary voting power for the election of directors
or other persons performing similar functions are at the time owned directly or
indirectly by the Company or any of its other subsidiaries. Except as set
forth in the SEC Reports, none of such subsidiaries is a “significant
subsidiary” as defined in Regulation S-X.


         (12)          Indebtedness. The SEC Reports set forth, to the extent required, as
of the date thereof all outstanding secured and unsecured Indebtedness of the
Company or any subsidiary, or for which the Company or any subsidiary has
commitments. For purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $25,000 (other than
trade accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.


         (13)          Certain Fees. Other than fees payable to the Placement Agents
pursuant to the Placement Agent Agreement, no brokers’, finders’ or financial
advisory fees or commissions will be payable by the Company or any subsidiary
with respect to the transactions contemplated by this Agreement.


         (14)          Material Agreements. Except as set forth in the SEC Reports, neither
the Company nor any subsidiary is a party to any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, a copy of
which would be required to be filed with the SEC as an exhibit to Form 10-K
(each, a “Material Agreement”). The Company and each of its subsidiaries has
in all material respects performed all the obligations required to be performed
by them to date under the foregoing agreements, have received no notice of
default and, to the


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best of the Company’s knowledge, are not in default under any Material
Agreement now in effect, the result of which would be reasonably likely to have
a Material Adverse Effect.


         (15)          Transactions with Affiliates. Except as set forth in the SEC
Reports, there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions with
aggregate obligations of any party exceeding $60,000 between (a) the Company,
any subsidiary or any of their respective customers or suppliers on the one
hand, and (b) on the other hand, any officer, employee, consultant or director
of the Company, or any of its subsidiaries, or any person who would be covered
by Item 404(a) of Regulation S-K or any Company or other entity controlled by
such officer, employee, consultant, director or person.


         (16)          Taxes. The Company and each of the subsidiaries has accurately
prepared and filed all federal, state, local, foreign and other tax returns for
income, gross receipts, sales, use and other taxes and custom duties (“Taxes”)
required by law to be filed by it, has paid or made provisions for the payment
of all Taxes shown to be due and all additional assessments, and adequate
provisions have been and are reflected in the financial statements of the
Company and the subsidiaries for all current Taxes and other charges to which
the Company or any subsidiary is subject and which are not currently due and
payable, except for Taxes which, if unpaid, individually or in the aggregate,
do not and would not have a Material Adverse Effect on the Company or its
subsidiaries. None of the federal income tax returns of the Company or any
subsidiary for the past five years has been audited by the Internal Revenue
Service. The Company has no knowledge of any additional assessments,
adjustments or contingent tax liability (whether federal, state, local or
foreign) pending or threatened against the Company or any subsidiary for any
period, nor of any basis for any such assessment, adjustment or contingency.


         (17)          Environmental Matters. (a) Except as disclosed in the SEC Reports,
all real property owned, leased or otherwise operated by Company and its
subsidiaries is free of contamination from any substance, waste or material
currently identified to be toxic or hazardous pursuant to, within the
definition of a substance which is toxic or hazardous under, or which may
result in liability under, any Environmental Law, including, without
limitation, any asbestos, polychlorinated biphenyls, radioactive substance,
methane, volatile hydrocarbons, industrial solvents, oil or petroleum or
chemical liquids or solids, liquid or gaseous products, or any other material
or substance (“Hazardous Substance”) which has or would reasonably be expected
to cause or constitute a health, safety, or environmental hazard to any Person
or property or result in any environmental liabilities that would be reasonably
likely to have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has caused or suffered to occur any release, spill, migration,
leakage, discharge, disposal, uncontrolled loss, seepage, or filtration of
Hazardous Substances which would reasonably be expected to result in
environmental liabilities that would be reasonably likely to have a Material
Adverse Effect. The Company and each subsidiary has generated, treated, stored
and disposed of any Hazardous Substances in full compliance with applicable
Environmental Laws, except for such non-compliances which would not be
reasonably likely to have a Material Adverse Effect. The Company and each
subsidiary has obtained, or has applied for, and is in full compliance with and
in good standing under all permits required under Environmental Laws (except
for such failures which would not be reasonably likely to have a Material
Adverse Effect) and neither Company nor any of its


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subsidiaries has any knowledge of any proceedings to substantially modify
or to revoke any such permit. There are no investigations, proceedings or
litigation pending or, to Company’s or its subsidiaries’ knowledge, threatened,
affecting or against Company, any of its subsidiaries or any of Company’s or
subsidiaries’ facilities relating to Environmental Laws or Hazardous
Substances. “Environmental Laws” shall mean all federal, state, regional and
local laws, statutes, ordinances and regulations, in each case as amended or
supplemented from time to time, and any judicial or administrative
interpretation thereof, including orders, consent decrees or judgments relating
to the regulation and protection of human health, safety, the environment and
natural resources.


         (18)          Intellectual Property Rights and Licenses. The Company and its
subsidiaries own or have the right to use any and all information, know-how,
trade secrets, patents, copyrights, trademarks, trade names, software,
formulae, methods, processes and other intangible properties that are necessary
or customarily used by them in their business (“Intangible Rights”). The
Company (including its subsidiaries) has not received any notice that it is in
conflict with or infringing upon the asserted intellectual property rights of
others in connection with the Intangible Rights, and, to the Company’s
knowledge, neither the use of the Intangible Rights nor the operation of the
Company’s businesses is infringing or has infringed upon any intellectual
property rights of others. All payments have been duly made that are necessary
to maintain the Intangible Rights in force. No claims have been made, and to
the Company’s knowledge, no claims are threatened, that challenge the validity
or scope of any material Intangible Right of the Company or any of its
subsidiaries. The Company and each of its subsidiaries have taken reasonable
steps to obtain and maintain in force all licenses and other permissions under
Intangible Rights of third parties necessary to conduct their businesses as
heretofore conducted by them, and now being conducted by them, and as expected
to be conducted, and neither the Company nor any of its subsidiaries is or has
been in material breach of any such license or other permission. The Company
has obtained and maintained such agreements providing for assignment of all
patentable inventions made by and copyright interest in works created by
employees and non-employees as it reasonably believes is necessary for the
securing and maintenance by the Company of intellectual property rights with
respect to such inventions and interest and for the conduct of its business.
The Company and each of its subsidiaries have used all commercially reasonable
efforts to maintain the confidentiality of all trade secrets and other
confidential information owned by them or in their possession and have no
knowledge of any misappropriation of any such trade secrets or other
confidential information by any third party.


         (19)          Labor, Employment and Benefit Matters.


                         (a)          There are no existing, or to the best of the Company’s knowledge,
threatened strikes or other labor disputes against the Company or any of its
subsidiaries that would be reasonably likely to have a Material Adverse Effect.
Except as set forth in the 2001 Form 10-K, there is no organizing activity
involving employees of the Company or any of its subsidiaries pending or, to
the Company’s or its subsidiaries’ knowledge, threatened by any labor union or
group of employees. There are no representation proceedings pending or, to the
Company’s or its subsidiaries’ knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of the Company
or its subsidiaries has made a pending demand for recognition.


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                         (b)          Except as set forth in the 2001 Form 10-K, neither the Company nor any
of its subsidiaries is, or during the five years preceding the date of this
Agreement was, a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
employees of the Company or its subsidiaries.


                         (c)          Each employee benefit plan is in compliance with all applicable law,
except for such noncompliance that would not be reasonably likely to have a
Material Adverse Effect.


                         (d)          Neither the Company nor any of its subsidiaries has any liabilities,
contingent or otherwise, including without limitation, liabilities for retiree
health, retiree life, severance or retirement benefits, which are not fully
reflected, to the extent required by GAAP, on the Balance Sheet or fully
funded. The term “liabilities” used in the preceding sentence shall be
calculated in accordance with reasonable actuarial assumptions.


                         (e)          None of the Company nor any of its subsidiaries (i) has terminated any
“employee pension benefit plan “ as defined in Section 3(2) of ERISA (as
defined below) under circumstances that present a material risk of the Company
or any of its subsidiaries incurring any liability or obligation that would be
reasonably likely to have a Material Adverse Effect, or (ii) has incurred or
expects to incur any outstanding liability under Title IV of the Employee
Retirement Income Security Act of 1974, as amended and all rules and
regulations promulgated thereunder (“ERISA”).


         (20)          Compliance with Law. The Company is in compliance in all material
respects with all applicable laws, except for such noncompliance that would not
reasonably be likely to have a Material Adverse Effect. The Company has not
received any notice of, nor does the Company have any knowledge of, any
violation (or of any investigation, inspection, audit or other proceeding by
any governmental entity involving allegations of any violation) of any
applicable law involving or related to the Company which has not been dismissed
or otherwise disposed of that would be reasonably likely to have a Material
Adverse Effect. The Company has not received notice or otherwise has any
knowledge that the Company is charged with, threatened with or under
investigation with respect to, any violation of any applicable law, or has any
knowledge of any proposed change in any applicable law that would reasonably be
likely to have a Material Adverse Effect.


         (21)          Ownership of Property. Except as set forth in the Company’s
financial statements included in the 2001 Form 10-K, each of Company and its
subsidiaries has (i) good and marketable and insurable fee simple title to its
owned real property, free and clear of all liens, except for liens which do not
individually or in the aggregate interfere unreasonably with the use of the
property by the Company or its subsidiaries, (ii) a valid and marketable
leasehold interest in all leased real property, and each of such leases is
valid and enforceable in accordance with its terms and is in full force and
effect, and, (iii) good and marketable title to, or valid leasehold interests
in, all of its other properties and assets free and clear of all liens, except
for liens which do not individually or in the aggregate interfere unreasonably
with the use of the property by the Company or its subsidiaries.


10






 


D.     Understandings


          Each of the Purchasers understands, acknowledges and agrees with the
Company as follows:


          (1)          The Company may terminate this Offering at any time in its sole
discretion. The execution of this Agreement by the Purchaser or solicitation
of the investment contemplated hereby shall create no obligation on the part of
the Company or the Placement Agents to accept any subscription or complete the
Offering.


          (2)          The Purchaser hereby acknowledges and agrees that the subscription
hereunder is irrevocable by the Purchaser, that, except as required by law, the
Purchaser is not entitled to cancel, terminate or revoke this Agreement or any
agreements of the Purchaser hereunder and that if the Purchaser is an
individual this Agreement shall survive the death or disability of the
Purchaser and shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
permitted assigns.


          (3)          No federal or state agency or authority has made any finding or
determination as to the accuracy or adequacy of the Offering Documents or as to
the fairness of the terms of the Offering nor any recommendation or endorsement
of the Shares. Any representation to the contrary is a criminal offense. In
making an investment decision, Purchasers must rely on their own examination of
the Company and the terms of the Offering, including the merits and risks
involved.


          (4)          The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the Purchaser herein
and in the Questionnaire.


          (5)          There can be no assurance that the Purchaser will be able to sell or
dispose of the Shares. It is understood that in order not to jeopardize the
Offering’s exempt status under Section 4(2) of the Securities Act and
Regulation D, any transferee may, at a minimum, be required to fulfill the
investor suitability requirements thereunder.


          (6)          The Purchaser acknowledges that the information contained in this
Agreement is confidential and non-public and agrees that all such information
shall be kept in confidence by the Purchaser and neither used for the
Purchaser’s personal benefit (other than in connection with this subscription)
nor disclosed to any third party for any reason; provided, however, that this
confidentiality obligation shall not apply to any such information that (i) is
at the time of the disclosure under this Agreement already in the public
domain, (ii) becomes part of the public domain (other than as a result of a
breach of this Agreement by the Purchaser) or (iii) is received by the
Purchaser from third parties (other than third parties who disclose such
information in violation of any obligation or duty to the Company).


          (7)          The Purchaser acknowledges that the foregoing restrictions on the
Purchaser’s use and disclosure of any such confidential, non-public information
contained in the above-described documents restricts the Purchaser from trading
in the Company’s securities to the extent such trading is on the basis of
material, non-public information of which the Purchaser is aware.


11






 


E.     Registration Rights


          (1)          Certain Definitions. For purposes of this Section E, the following
terms shall have the meanings ascribed to them below.


                         (a)          “Prospectus” means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.


                         (b)          “Registrable Securities” shall means any Shares issued or issuable
pursuant to the Offering Documents or pursuant to the Placement Agent Warrant,
together with any securities issued or issuable upon any stock split, dividend
or other distribution, recapitalization or similar event with respect to the
foregoing.


                         (c)          “Registration Statement” means each registration statement required to
be filed under this Section E, including in each case the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.


          (2)          Shelf Registration.


                         (a)          As promptly as possible, and in any event on or prior to the 30th day
following the Closing (the “Filing Date”), the Company shall prepare and file
with the Commission a “Shelf” Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith as the Purchasers may consent) and
shall contain (except if otherwise directed by the Purchasers) the “Plan of
Distribution” attached hereto as Exhibit C.


                         (b)          The Company shall use its commercially reasonable best efforts to
cause the Registration Statement to be declared effective by the Commission as
promptly as possible after the filing thereof, but in any event prior to the
date that is (i) the 45th day following the Closing in case the SEC has not
required a review of the Registration Statement as filed, or (ii) the 90th day
following the Closing in case the SEC has required a review of the Registration
Statement as filed (in either case, the “Required Effectiveness Date”), and
shall use its best efforts to keep the Registration Statement continuously
effective under the Securities Act until the earliest of (i) the third
anniversary of the Effective Date or (ii) the date when all Registrable
Securities covered by such Registration Statement have been sold (the
“Effectiveness Period”).


12






 


                         (c)          The Company shall notify each Purchaser in writing promptly (and in
any event within one business day) after receiving notification from the SEC
that the Registration Statement has been declared effective.


                         (d)          Upon the occurrence of any Event (as defined below), as partial relief
for the damages suffered therefrom by the Purchasers (which remedy shall not be
exclusive of any other remedies are available at law or in equity), the Company
shall pay to each Purchaser, as liquidated damages and not as a penalty, such
amounts and at such times as shall be determined pursuant to this Section
E2(d). For such purposes, each of the following shall constitute an “Event”:



			
	 	(i)	      the Registration Statement is not filed in appropriate form on or
prior to the Filing Date, in which case the Company shall pay (x) on
the calendar day following the Filing Date an amount in cash equal to
one percent (1.0%) of the aggregate purchase price paid by such
Purchaser, plus (y) on the calendar day following every 30-calendar day
period following the Filing Date beginning with the 31st calendar day
after the Filing Date an amount in cash equal to one and one-half
percent (1.5%) of the aggregate purchase price paid by such Purchaser,
provided that no such amounts shall be required to be paid by the
Company after the cure of such Event; or




			
	 	(ii)	      the Registration Statement is not declared effective on or prior to
the Required Effectiveness Date, in which case the Company shall pay
(x) on the calendar day following the Required Effectiveness Date an
amount in cash equal to one percent (1.0%) of the aggregate purchase
price paid by such Purchaser, plus (y) on the calendar day following
every 30-calendar day period beginning with the 31st calendar day after
the Required Effectiveness Date an amount in cash equal to one and
one-half percent (1.5%) of the aggregate purchase price paid by such
Purchaser, provided that no such amounts shall be required to be paid
by the Company after the cure of such Event.



The payment obligations of the Company under this Section E2(d) shall be
cumulative.


          (3)          Registration Procedures. In connection with the Company’s
registration obligations hereunder, the Company shall:


                         (a)          (i) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the Securities
Act all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as
promptly as reasonably possible, and in any event within ten trading days, to
any comments received from the SEC with respect to the Registration Statement
or any amendment thereto and as promptly as reasonably possible provide the
Purchasers true


13






 




and complete copies of all correspondence from and to the SEC relating to
the Registration Statement.


                         (b)          Notify the Placement Agents as promptly as reasonably possible, and
(if requested by the Placement Agents) confirm such notice in writing no later
than one trading day thereafter, of any of the following events: (i) the SEC
notifies the Company whether there will be a “review” of any Registration
Statement; (ii) the SEC comments in writing on any Registration Statement (in
which case the Company shall deliver to each Purchaser a copy of such comments
and of all written responses thereto); (iii) the SEC or any other Federal or
state governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information related
thereto; (iv) if the SEC issues any stop order suspending the effectiveness of
any Registration Statement or initiates any action, claim, suit, investigation
or proceeding (a “Proceeding”) for that purpose; (v) the Company receives
notice of any suspension of the qualification or exemption from qualification
of any Registrable Securities for sale in any jurisdiction, or the initiation
or threat of any Proceeding for such purpose; or (vi) the financial statements
included in any Registration Statement become ineligible for inclusion therein
or any statement made in any Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference is
untrue in any material respect or any revision to a Registration Statement,
Prospectus or other document is required so that it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.


                         (c)          Use its commercially reasonable efforts to avoid the issuance of or,
if issued, obtain the withdrawal of (i) any order suspending the effectiveness
of any Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.


                         (d)          Furnish to each Purchaser who is selling Registrable Securities,
without charge, a copy of each Registration Statement, each amendment and
supplement thereto, in each case including all exhibits thereto but excluding
all documents incorporated by reference therein unless specifically requested
by the Purchaser, as such Purchaser may reasonably request.


                         (e)          Promptly deliver to each Purchaser, without charge, such reasonable
number of copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Purchasers in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.


                         (f)          (i) In the time and manner required by NASDAQ, prepare and file with
NASDAQ an additional shares listing application covering all of the Registrable
Securities; (ii) take all steps necessary to cause such Registrable Securities
to be approved for listing on NASDAQ as soon as possible thereafter; (iii)
provide to the Purchasers notice of such listing; and (iv) maintain the listing
of such Registrable Securities on NASDAQ.


14






 


                         (g)          Prior to any public offering of Registrable Securities, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Purchasers in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or “blue sky” laws of such
jurisdictions within the United States as any Purchaser requests in writing, to
keep each such registration or qualification (or exemption therefrom )
effective during the Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be required for any such purpose to (i)
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not be otherwise required to qualify but for the requirements
of this Section E(3)(g), (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction.


                         (h)          Upon the occurrence of any event described in Paragraph (b)(vi) above,
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.


                         (i)          Comply with all applicable rules and regulations of the SEC in all
material respects.


          (4)          Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, NASDAQ and in connection with applicable
state securities or “Blue Sky” laws, (b) printing expenses (including without
limitation expenses of printing certificates for Registrable Securities and of
printing prospectuses requested by the Purchasers), (c) messenger, telephone
and delivery expenses, (d) fees and disbursements of counsel for the Company
and fees and disbursements, up to an aggregate of $10,000, of a single counsel
for all the Purchasers, and (e) fees and expenses of all other Persons retained
by the Company in connection with the consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing, the Purchasers
shall pay any and all underwriting fees, discounts or commissions attributable
to the sale of the Registrable Securities.


          (5)          Indemnification.


                         (a)          Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Purchaser,
its officers and directors, partners, members, agents, brokers and employees of
each of them, each Person who controls any such Purchaser (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, partners, members, agents and employees of


15






 




each such controlling Person, and each underwriter of Registrable
Securities, to the fullest extent permitted by applicable law, from and against
any and all losses, claims, damages, liabilities, settlement costs and
expenses, including without limitation costs of preparation and reasonable
attorneys’ fees (collectively, “Losses”), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement, any Prospectus or form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading, except
to the extent, but only to the extent, that (i) such untrue statements or
omissions are based upon information regarding such Purchaser furnished in
writing to the Company by such Purchaser expressly for use therein, or to the
extent that such information related to such Purchaser or such Purchaser’s
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an
event of the type specified in Paragraph (3)(b) above, the use by such
Purchaser of an outdated or defective Prospectus after the Company has notified
such Purchaser in writing that the Prospectus is outdated or defective and
prior to the receipt by such Purchaser of the Advice contemplated in Paragraph
(6) below. The Company shall notify the Purchasers promptly of the
institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.


                         (b)          Indemnification by Purchasers. Each Purchaser shall, severally and
not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, and each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses (as determined by a court of competent jurisdiction in a final
judgment not subject to appeal or review) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus, or any form of prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information furnished in
writing by such Purchaser to the Company specifically for inclusion in such
Registration Statement or Prospectus or to the extent that (i) such untrue
statements or omissions are based upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use
therein, or to the extent that such information related to such Purchaser or
such Purchaser’s proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Purchaser expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto or (ii) in the case of an occurrence
of an event of the type specified in Paragraph (3)(b) above, the use by such
Purchaser of an outdated or defective Prospectus after the Company has notified
such Purchaser in writing that the Prospectus is outdated or defective and
prior to the receipt by such Purchaser of the Advice contemplated in Paragraph
(6) below. In no event shall the liability of any selling Purchaser hereunder
be greater


16






 




in amount than the dollar amount of the net proceeds received by such
Purchaser upon the sale of the Registrable Securities giving rise to such
indemnification obligation.


                         (c)          Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof, provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have
prejudiced the Indemnifying Party.


               An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying 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 thereof and such counsel shall be at the expense of
the Indemnifying Party; provided, however, that in the event that the
Indemnifying Party shall be required to pay the fees and expenses of separate
counsel, the Indemnifying Party shall only be required to pay the fees and
expenses of one separate counsel for such Indemnified Party or Parties. The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding affected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.


               All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten
trading days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).


                         (d)          Contribution. If a claim for indemnification under Paragraph (5)(a)
or (b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each


17






 




Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or related to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Paragraph (5)(c), any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Paragraph was available to such party in
accordance with its terms.


               The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Paragraph (5)(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Paragraph (5)(d), no
Purchaser shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Purchaser
from the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Purchaser has otherwise been required to
pay by reason of such 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 indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.


          (6)          Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Paragraphs
(3)(b), such Purchaser will discontinue disposition of such Registrable
Securities under the Registration Statement until such Purchaser’s receipt of
the copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Paragraph (3)(h), or until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may
provide appropriate stop orders to enforce the provisions of this paragraph.


          (7)          No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Purchasers in such capacity pursuant hereto
and any holder of the


18






 




Placement Agent Warrant or warrants issued by the Company in exchange for such
warrant) may include securities of the Company in the Registration Statement
other than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right with respect to the
Registration Statement to any of its security holders.


          (8)          Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice,
any such Purchaser shall so request in writing, the Company shall include in
such registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.


F.     Covenants of the Company


          (1)          The Company hereby agrees that, for a period of ninety (90) days after
the First Closing, it shall not issue or sell any Common Stock of the Company,
any warrants or other rights to acquire Common Stock or any other securities
that are convertible into Common Stock, with the exception of (i) securities or
shares of Common Stock issued upon exercise of outstanding warrants, options or
other convertible securities, (ii) options granted under the Company’s stock
option plans; or (iii) warrants granted to the Placement Agents.


G.     Miscellaneous


          (1)          All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, singular or plural, as identity of the person
or persons may require.


          (2)          Any notice or other document required or permitted to be given or
delivered to the Purchaser shall be in writing and sent (i) by fax if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), (b) by registered or certified
mail with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid):



	 	(a) if to the Company, at




	 	Meridian Medical Technologies, Inc.

10240 Old Columbia Road

Columbia, Maryland 21046-2371

Fax No.: (410) 309-1691

Attention: Chief Financial Officer



19






 



	 	or such other address as it shall have specified to the Purchaser
in writing, with a copy (which shall not constitute notice) to




	 	Arnold & Porter

555 Twelfth Street NW

Washington, DC 20004-1202

Fax. No.: (202) 942-5999

Attention: Steven Kaplan, Esq.



                         (b)          if to the Purchaser, at its address set forth on the signature page to
this Agreement, or such other address as it shall have specified to the Company
in writing.


          (3)          Failure of the Company to exercise any right or remedy under this
Agreement or any other agreement between the Company and the Purchaser, or
otherwise, or delay by the Company in exercising such right or remedy, will not
operate as a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed by the Company.


          (4)          This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws are
applied by the New York courts to agreements entered into and to be performed
in New York by and between residents of New York, and shall be binding upon the
Purchaser, the Purchaser’s heirs, estate, legal representatives, successors and
assigns and shall inure to the benefit of the Company, its successors and
assigns.


          (5)          If any provision of this Agreement is held to be invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provisions hereof.


          (6)          The parties understand and agree that money damages would not be a
sufficient remedy for any breach of the Agreement by the Company or the
Purchaser and that the party against which such breach is committed shall be
entitled to equitable relief, including injunction and specific performance, as
a remedy for any such breach. Such remedies shall not be deemed to be the
exclusive remedies for a breach by either party of the Agreement but shall be
in addition to all other remedies available at law or equity to the party
against which such breach is committed.


          (7)          This Agreement, together with the agreements and documents executed
and delivered in connection with this Agreement, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.


H.     Signature


          The signature page of this Agreement is contained as part of the
applicable subscription package, entitled “Signature Page”.


20






 


SIGNATURE PAGE



          The Purchaser hereby subscribes for such number of Shares as shall equal
the Subscription Amount as set forth below divided by the Offering Price and
agrees to be bound by the terms and conditions of this Agreement.


PURCHASER



	1.		 	Dated: _______________, 2001
	 
	2.		 	Subscription Amount: $_______________




	 	 
	______________________________	______________________________
	Signature of Subscriber	Taxpayer Identification or Social
	(and title, if applicable)	Security Number
	 
	______________________________
	Name (please print as name will appear

        on certificate)	 
	 
	______________________________

Number and Street	 
	 
	______________________________

City    State       Zip Code	 



ACCEPTED BY:


MERIDIAN MEDICAL TECHNOLOGIES, INC.


By:

Name:__________________________

Title:___________________________


Dated:__________________________


 






 


Schedule A



Account Name and Wire Transfer Instructions



Checks should be made payable to: “The Bank of NY – for Meridian Med Tech”



	 	 
	Wire Transfer Instructions:	 
	BK of NYC	 
	ABA No. 021000018	 
	General Ledger Account 111-565	 
	Trust No. 112624	 
	Account Name:	
Fahnestock & Co./ Meridian Med Tech
	Bank Address:	
The Bank of New York
	 	
5 Penn Plaza – 13th Fl/ Escrow Unit
	 	
New York, NY 10001
	 	
Attn: Carlos Luciano/ Assistant Vice President



 






 



Exhibit A



Legal Matters



                  Arnold & Porter of Washington, D.C. shall deliver an opinion covering the
following matters. The opinion shall be subject to and include Arnold &
Porter’s customary assumptions, limitations and qualifications.



	 	1.	 	The Company is validly existing and in good standing, with corporate
power and authority to conduct its business as described in the
Confidential Private Placement Memorandum dated November 12, 2001.
	 
	 	2.	 	Due authorization by all required corporate or shareholders action,
execution and delivery of the Securities Purchase Agreement and
transactions contemplated thereby.
	 
	 	3.	 	Execution, delivery and performance by the Company of the Securities
Purchase Agreement will not violate the charter, bylaws, terms of material
indentures, notes or other financing agreements filed as exhibits to Form
10-K, or provisions of applicable Delaware or Federal laws customarily
applicable to transactions of this type, other than Federal securities
laws.
	 
	 	4.	 	Enforceability of the Securities Purchase Agreement against the Company
in accordance with its terms, subject to customary limitations and
exceptions.
	 
	 	5.	 	Opinion regarding registration under the Securities Act of 1933 based on
usual and customary assumptions.



* * *



                  Arnold & Porter shall also deliver a letter to the effect that, based on
its participation in the preparation of the Confidential Private Placement
Memorandum, nothing has come to its attention that has caused it to believe
that the Confidential Private Placement Memorandum (subject to certain
exceptions set forth in the letter) contains any untrue statement of material
fact or fails to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading.


 






 


Exhibit B



CONFIDENTIAL



PURCHASER QUESTIONNAIRE



           Before any sale of securities in the above-captioned Company can be made
to you, this Questionnaire must be completed and returned to FAHNESTOCK & CO.
INC., Attn: Investment Banking Dept., 125 Broad St., New York, NY 10004.


           The purpose of this Questionnaire is to determine whether you meet the
standards imposed by Section 4(2) of the Securities Act of 1933, as amended
(the “Securities Act”).



	(1)	 	Name:                                                                                                           
	 
	(2)	 	Address:




	 		(a)	Home:                                                                                                 


                                                                                                                    
	 
	 	 	 	Telephone: (      )                                                                                     
	 
	 		(b)	Business:                                                                                            


                                                                                                                    
	 
	 	 	 	Telephone: (      )                                                                           




	(3)	 	Social Security Number:           -           -                                             
	 
	(4)	 	Occupation:                                                                                            
	 
	(5)	 	Age:                                                                                                      
	 
	(6)	 	The following information is required to ascertain whether you would be
deemed an “accredited investor” as defined in Rule 501 of Regulation D
under the Securities Act. Please check whether you are any of the
following:




	 		(a)	A bank as defined in Section 3(a)(2) of the Securities Act,
or any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended; any insurance company as defined in Section 2(13) of the
Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that act; any Small Business
Investment Company licensed by the U.S. Small



 






 







	 	 	 	Business Administration
under Section 301(c) or (d)
of the Small Business
Investment Act of 1958; any
plan established and
maintained by a state, its
political subdivisions, or
any agency or
instrumentality of a state
or its political
subdivisions, for the
benefits of its employees if
such plan has total assets
in excess of $5,000,000; any
employee benefit plan within
the meaning of Title I of
the Employee Retirement
Income Security Act of 1974
if the investment decision
is made by a plan fiduciary,
as defined in Section 3(21)
of such act, which is either
a bank, savings and loan
association, insurance
company, or registered
investment adviser, or if
the employee benefit plan
has total assets in excess
of $5,000,000, or, if a
self-directed plan, with
investment decisions made
solely by persons that are
accredited investors;
	 
	 	 	 	Yes____                    No____
	 
	 		(b)	A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
	 
	 	 	 	Yes____                    No____
	 
	 		(c)	An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose
of acquiring the securities offered, with total assets in excess of
$5,000,000;
	 
	 	 	 	Yes____                    No____
	 
	 		(d)	A director or executive officer of the Company;
	 
	 	 	 	Yes____                    No____
	 
	 		(e)	A natural person whose individual net worth, or joint net
worth with your spouse, at the time of your purchase exceeds
$1,000,000;
	 
	 	 	 	Yes____                    No____
	 
	 		(f)	A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with
your spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the
current year;
	 
	 	 	 	Yes____                    No____
	 
	 		(g)	A trust, with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii); or
	 
	 	 	 	Yes____                    No____



2






 







	 		(h)	Any entity in which all of the equity owners are accredited
investors.
	 
	 	 	 	Yes____                    No____




	(7)	 	Investment, business, and educational experience:




	 		(a)	Educational background:
	 
	 		
	
	 
	 		
	
	 
	 		(b)	Principal employment positions held during last five years:
	 
	 		
	
	 
	 		
	
	 
	 		
	
	 
	 		(c)	Frequency of prior investment (check one in each column):




	 	 	 	 	 
	 	 	
Stocks & Bonds
	 	Venture Capital

Investments
	Frequently	 	 	 	 
	 	 	


	 	

	Occasionally	 	 	 	 
	 	 	


	 	

	Never	 	 	 	 
	 	 	


	 	





	(8)	 	Please list the name and address of your:




	 		(a)	Bank                                                                       
                           


                                                                                       
                           
	 
	 		(b)	Accountant                                                                       
                 


                                                                                       
                           



3






 






I represent that the foregoing information is true and correct.


Dated:____________________, 2001



	 	 
	 	

(Name of Investor - Please Print)
	 
	 	

(Signature)
	 
	 	

(Print Name)                         (Title)



4






 



Exhibit C



Plan of Distribution



          The Selling Stockholders and any of their pledges, assignees, donees
selling shares received from such Selling Stockholders as a gift, and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares.



	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	 
	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
	 
	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	 
	•	 	an exchange distribution in accordance with the rules of the applicable exchange;
	 
	•	 	privately negotiated transactions;
	 
	•	 	short sales;
	 
	•	 	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per
share;
	 
	•	 	a combination of any such methods of sale; and
	 
	•	 	any other method permitted pursuant to applicable law.



          The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.


          The Selling Stockholders may also engage in short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.


          Broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the


1






 




purchaser) in amounts to be negotiated. The Selling Stockholders do not expect
these commissions and discounts to exceed what is customary in the types of
transactions involved.


          The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.


          The Company is required to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.


          To the extent required, the Company will amend or supplement this
prospectus to disclose material arrangements regarding the plan of
distribution.


          To comply with the securities laws of certain jurisdictions, registered or
licensed brokers or dealers may need to offer or sell the shares offered by
this prospectus. The applicable rules and regulations under the Securities
Exchange Act of 1934, may limit any person engaged in a distribution of the
shares of common stock covered by this prospectus in its ability to engage in
market activities with respect to such shares. A selling stockholder, for
example, will be subject to applicable provisions of the Securities Exchange
Act of 1934 and the rules and regulations under it, which provisions may limit
the timing of purchases and sales of any shares of common stock by that selling
stockholder.



2