Document:

NEITHER THIS WARRANT NOR ANY OF THE SHARES OF COMMON STOCK THAT MAY BE

ISSUED ON ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

AS AMENDED (THE “SECURITIES ACT”)

Exhibit

10.27

 

NEITHER

THIS WARRANT NOR ANY OF THE SHARES OF COMMON STOCK THAT MAY BE ISSUED ON ITS

EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

“SECURITIES ACT”).  NEITHER THIS WARRANT

NOR ANY SUCH SHARES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED

WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL,

SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

	

  No. W-

  	

   

  	

   

  	

   

  	

  For

  the Purchase of 65,000 Shares of

  
	

   

  	

   

  	

  Common

  Stock (subject to adjustment as set forth below)

  

 

 

VOID AFTER 5:00 P.M., BOSTON TIME, ON

DECEMBER 20, 2010

 

 

DECEMBER 20, 2001

 

INVERNESS MEDICAL INNOVATIONS, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

THIS CERTIFIES THAT, FOR VALUE RECEIVED, RBS Mezzanine Limited, or its

transferees or assigns (the “Holder”), is entitled to purchase, subject

to the provisions of this Warrant, from Inverness Medical Innovations, Inc., a

Delaware corporation (the “Company”), 65,000 duly authorized, fully

paid, validly issued and nonassessable shares of Common Stock, par value $.001

per share (the “Common Stock”), of the Company (the “Shares”) at

a price of $.001 per Share (the “Exercise Price”).  The right to purchase the Shares under this

Warrant is exercisable, in whole or in part, at any time and from time to time

after the date of this Warrant and prior to 5:00 p.m., Boston time, on

December     , 2010.  The Shares deliverable upon exercise of this

Warrant (including any adjusted number of Shares issuable pursuant to the

provisions of this Warrant) are hereinafter sometimes referred to as “Warrant

Shares.”  This Warrant is issued

pursuant to the Warrant Agreement, dated as of December     , 2001, by and between the Company and RBS

Mezzanine Limited (the “Warrant Agreement”).  Capitalized terms used in this Warrant and not otherwise defined

have the meanings ascribed to them in the Warrant Agreement.

 

ARTICLE I

 

METHOD

OF EXERCISE

 

Section 1.01.  Exercise of Warrant.

 

(a)   Subject to the conditions hereinafter set

forth, this Warrant may be exercised by presentation and surrender of this

Warrant, with the Notice of Exercise annexed hereto duly executed, to the

Company at the offices of the transfer agent for the Common Stock accompanied

by a payment, in cash or by certified or official bank check payable to the

Company, in the amount equal to the product of (i) the number of shares of

Common Stock designated in the 

 

 

 

Notice of Exercise

multiplied by (ii) the Exercise Price in effect at that time, whereupon the

Holder shall be entitled to receive such number of duly authorized, validly

issued, fully paid and nonassessable shares of Common Stock.

 

(b)   As soon as practicable after the exercise of

this Warrant, and in any event within two New York Stock Exchange trading days,

the Company shall issue and deliver to the Holder a certificate or certificates

representing the number of Shares issuable upon the exercise of this Warrant

(or such lesser number as shall be indicated on the Notice of Exercise),

registered in the name of the Holder or its designee.  If this Warrant is exercised only in part, the Company also shall

issue and deliver to the Holder a new Warrant, substantially in the form of

this Warrant, covering the number of Warrant Shares which then are issuable

hereunder.

 

(c)   Each exercise of this Warrant shall be deemed

to have been effected immediately prior to the close of business on the day on

which this Warrant shall have been surrendered to the Company’s transfer agent

as provided in Section 1(a).  The

Company shall pay any and all documentary stamp or similar issue or transfer

taxes payable in respect of the issue or delivery of Warrant Shares on exercise

of this Warrant; provided, however, that the Company shall not

be required to pay any tax which may be payable in respect of any transfer

involved in the issuance or delivery of Warrant Shares in a name other than

that of the Holder and in such case the Company shall not be required to issue

or deliver any stock certificate until such tax or other charge has been paid

or it has been established to the Company’s satisfaction that no tax or other

charge is due.

 

Section 1.02.       Reservation of Shares.  The Company shall at all times reserve and

keep available, free from preemptive rights, out of the Company’s authorized

but unissued Common Stock, for issuance on exercise of this Warrant, such

number of Shares as shall be required for issuance and delivery upon exercise

of this Warrant.

 

Section 1.03.       Fractional Shares.  No fractional shares or scrip representing

fractional shares shall be issued upon the exercise of this Warrant.  With respect to any fraction of a Share

called for upon any exercise hereof, the Company shall pay to the Holder an

amount in cash equal to such fraction multiplied by the Current Market Price

per Share as of the date of exercise.

 

ARTICLE

II

 

TRANSFER

 

Section 2.01.       Transfer of Warrant.  This Warrant may be transferred in whole or

in part by the Holder at any time, subject to the limitations set forth in this

Article II.  Each Holder acknowledges

that this Warrant and the Warrant Shares have not been registered under the

Securities Act and agrees not to sell, pledge, distribute, offer for sale,

transfer or otherwise dispose of this Warrant or any Warrant Shares issued upon

its exercise unless (a) there is an effective registration statement under the

Securities Act with respect to this Warrant or such Warrant Shares or (b) the

Company receives an opinion of counsel, satisfactory to the Company, that such

registration and qualification are not required.

 

Without limiting

the generality of the foregoing, unless the offering and sale of the Warrant

Shares to be issued upon the particular exercise of the Warrant shall have been

effectively registered under the Securities Act, the following legend, or a

legend in substantially similar form, may be published upon the certificate(s)

evidencing the Warrant Shares issued pursuant to such exercise:

 

2

 

THE SECURITIES

REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN

MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION

UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH

REGISTRATION IS NOT REQUIRED.

 

Section 2.02.       Method of Transfer.  Any transfer of this Warrant pursuant to

Section 2.01 shall be effected by the Holder by executing the Form of

Assignment annexed hereto and surrendering this Warrant for cancellation to the

Company’s stock transfer agent, whereupon the Company shall issue in the name

or names specified by the Holder a new Warrant or Warrants of like tenor and

representing in the aggregate rights to purchase the same number of Warrant

Shares as are issuable hereunder.

 

ARTICLE III

 

RIGHTS OF HOLDER

 

Section 3.01.       Loss or Destruction of Warrant.  If this Warrant is lost, stolen, mutilated

or destroyed, the Company may, upon receipt of evidence reasonably satisfactory

to the Company of such loss, theft, mutilation or destruction and on such terms

as to indemnity or otherwise as the Company reasonably may require (which

shall, in the case of a mutilated Warrant, include the surrender thereof),

issue a new Warrant of like denomination and tenor as the lost, stolen, mutilated

or destroyed Warrant.  If any Warrant is

lost, stolen, mutilated or destroyed, and the owner thereof desires to exercise

the rights evidenced thereby, the Company may, in lieu of issuing a substitute

Warrant, authorize the exercise thereof upon receipt of the above evidence and

on such terms of indemnity as it may reasonably require.

 

Section 3.02.       Rights under Warrant Agreement.  In addition to the rights set forth herein,

the Holder shall be entitled to the rights set forth in the Warrant Agreement.

 

ARTICLE

IV

 

ADJUSTMENTS UPON CERTAIN EVENTS

 

Section 4.01.       Anti-Dilution

Rights.  The number of shares of Common Stock issuable

upon exercise of this Warrant shall be subject to adjustment from time to time

upon the occurrence of certain events, as provided in this Article IV.

 

(a)   If the Company shall (i) pay a dividend in

shares of Common Stock or make a distribution in shares of Common Stock, (ii)

subdivide or reclassify its outstanding shares of Common Stock into a greater

number of shares, (iii) combine or reclassify its outstanding shares of Common

Stock into a smaller number of shares, the number of Warrant Shares issuable

upon the exercise of this Warrant immediately prior thereto shall be adjusted

so that the number of Warrant Shares issuable upon exercise of this Warrant

shall be the number determined by multiplying the number of Warrant Shares

theretofore issuable upon the exercise of this Warrant by a fraction, of which

the numerator shall be the number of shares of Common Stock outstanding immediately

following such action and of which the denominator shall be the number of

shares of Common Stock outstanding immediately prior thereto. If the Company

declares a dividend in money or its Common Stock and at substantially the same

time offers its stockholders a right to purchase new shares of Common Stock

from the proceeds of such dividend, or for an amount substantially equal to

such dividend, all shares of Common Stock so issued shall for purposes hereof

be deemed issued as a stock dividend.

 

3

 

(b)   If the Company shall (i) sell or issue shares

of its Common Stock, (ii) issue rights, options or warrants to subscribe for or

purchase shares of Common Stock or (iii) issue or sell other rights or securities

convertible into or for the purchase of shares of Common Stock at a price per

share which is lower at the record date mentioned below than the then Current

Market Price per share of Common Stock, the number of Warrant Shares thereafter

issuable upon the exercise of this Warrant shall be determined by multiplying

the number of Warrant Shares theretofore issuable upon exercise of this Warrant

by a fraction, of which the numerator shall be the number of shares of Common

Stock outstanding on such record date plus the number of additional shares of

Common Stock offered for subscription or purchase, and of which the denominator

shall be the number of shares of Common Stock outstanding on such record date

plus the number of shares which the aggregate offering price of the total

number of shares of Common Stock so offered would purchase at the then Current

Market Price per share of Common Stock. 

Such adjustment shall be made whenever such shares, rights, options or

warrants are issued, and shall become effective immediately after the record

date for the determination of stockholders entitled to receive such rights,

options or warrants.  In determining

whether any rights or warrants entitle the holders of the Common Stock to

subscribe for or purchase shares of Common Stock at less than the then Current

Market Price, and in determining the aggregate offering price of the shares of

Common Stock so offered, there shall be taken into account any consideration

received by the Company for such rights or warrants, the value of such

consideration, if other than cash, to be determined by the Board (whose

determination, if made in good faith, shall be conclusive).  To the extent that rights, options or

warrants expire unexercised, the number of Warrant Shares issuable upon the

exercise of this Warrant shall be readjusted to the number which would then be

in effect had the adjustments made upon the issuance of such rights, warrants

or options been made upon the basis of only the number of shares of Common

Stock delivered pursuant to rights, options or warrants actually exercised.

 

(c)   If the Company shall distribute to all

holders of its shares of Common Stock shares of stock other than Common Stock

or evidences of its indebtedness or assets (excluding cash, dividends or

distributions referred to in paragraph (a) above) or rights, options or

warrants or convertible or exchangeable securities containing the right to

subscribe for or purchase shares of Common Stock (excluding those referred to

in paragraph (b) above), then in each case the number of Warrant Shares

thereafter issuable upon the exercise of this Warrant shall be determined by

multiplying the number of Warrant Shares theretofore issuable upon the exercise

of this Warrant, by a fraction of which the numerator shall be the Current

Market Price per share of Common Stock on the record date mentioned below in

this paragraph (c), and of which the denominator shall be the Current Market

Price per share of Common Stock on such record date, less the then fair value

as determined by the Board (whose determination, if made in good faith, shall

be conclusive) of the portion of the shares of stock other than Common Stock or

assets or evidences of indebtedness so distributed or of such subscription

rights, options or warrants, or of such convertible or exchangeable securities

applicable to one share of Common Stock. 

Such adjustment shall be made whenever any such distribution is made,

and shall become effective immediately after the record date for the

determination of shareholders entitled to receive such distribution.

 

(d)   Notwithstanding the foregoing, the provisions

of Section 4.01(a), (b) and (c) shall not apply to any of the following:

 

4

 

(i)            the issuance and sale of shares of

capitalc stock by the Company for cash pursuant to a bona fide public

offering pursuant to a registration statement filed under the Securities Act;

 

(ii)           the issuance of shares of capital

stock (or options with respect thereto) by the Company to employees, officers

or directors of, or consultants or advisors to, the Company or its subsidiaries

pursuant to a bona fide compensatory plan or arrangement approved by the

Board of Directors of the Company;

 

(iii)          the issuance of shares of capital

stock by the Company upon exercise of any options, warrants or rights to

purchase any securities of the Company outstanding as of the date of the

Warrant Agreement (including the Warrants);

 

(iv)          the issuance of shares of Common Stock

by the Company as a dividend or distribution on the Company’s Series A

Preferred Stock in accordance with the provisions with respect thereto in

effect on the date of the Warrant Agreement;

 

(v)           the issuance of shares of capital

stock by the Company to financing institutions or lessors in connection with

commercial credit arrangements, equipment financings or similar strategic

transactions approved by a disinterested majority of the Board of Directors;

 

(vi)          the issuance of shares of capital

stock by the Company in connection with bona fide acquisitions of businesses,

products or technologies, as approved by a disinterested majority of the Board

of Directors;

 

(vii)         the issuance of shares of capital stock

by the Company in connection with strategic partnerships, joint ventures,

licensing arrangements or similar transactions not involving financial

investors, as approved by a disinterested majority of the Board of Directors;

or

 

(viii)        any other issuance of shares of capital

stock (or options, warrants or rights to acquire such shares) by the Company that

is (i) approved by a disinterested majority of the Board of Directors, and (ii)

approved by the vote or written consent of the Holders of Warrants representing

the right to acquire in the aggregate at least 66 2/3% of all Warrant Shares

then issuable pursuant to unexercised Warrants.

 

(e)   If any event occurs as to which the foregoing

provisions of this Section 4.01 are not strictly applicable or, if strictly

applicable, would not, in the good faith judgment of the Board, fairly protect

the purchase rights of this Warrant in accordance with the essential intent and

principles of such provisions, then the Board shall make such adjustments in

the application of such provisions, in accordance with such essential intent

and principles, as shall be reasonably necessary, in the good faith opinion of

the Board, to protect such purchase rights as aforesaid, but in no event shall

any such adjustment have the effect of increasing the Exercise Price or

decreasing the number of shares of Common Stock issuable upon exercise of this

Warrant, or otherwise adversely affect the Holder.

 

5

 

Section 4.02.       Adjustment Rules.

 

(a)   No adjustment in the number of Warrant Shares

issuable hereunder shall be required unless such adjustment would require an

increase or decrease of at least 1% in the number of Warrant Shares issuable

upon the exercise of this Warrant; provided, however, that any

adjustments which by reason of this Section 4.02 are not required to be made

shall be carried forward and taken into account in any subsequent

adjustment.  All calculations shall be

made to the nearest whole share, as the case may be, and no fractional shares

shall be issued.

 

(b)   No adjustment in the Exercise Price shall be

made hereunder if such adjustment would reduce the exercise price to an amount

below the par value of the Common Stock.

 

(c)   As a condition precedent to the taking of any

action which would require an adjustment pursuant to this Article IV, the

Company shall take any action which may be necessary, including obtaining

regulatory approvals or exemptions, in order that the Company may thereafter

validly and legally issue as fully paid and nonassessable all shares of Common

Stock.

 

Section 4.03.       Adjustment of Exercise Price.  Whenever the number of Warrant Shares

issuable upon the exercise of this Warrant is adjusted, as herein provided, the

Exercise Price shall be adjusted by multiplying the Exercise Price in effect

immediately prior to such adjustment by a fraction, of which the numerator

shall be the number of Warrant Shares issuable upon the exercise of this

Warrant immediately prior to such adjustment, and of which the denominator

shall be the number of Warrant Shares so issuable immediately thereafter; provided,

however, that the Exercise Price shall never be less than the par value of the

Common Stock.

 

Section 4.04.       Notice of Adjustment.  Whenever the number of Warrant Shares

issuable upon the exercise of this Warrant or the Exercise Price is adjusted,

as herein provided, the Company shall promptly mail to the Holder a notice of

such adjustment or adjustments, prepared and signed by the Chief Financial

Officer or Chief Accounting Officer of the Company, which sets forth the number

of Warrant Shares issuable upon the exercise of this Warrant and the Exercise

Price after such adjustment and a brief statement of the facts requiring such

adjustment and the computation by which such adjustment was made.

 

Section 4.05.       Capital Reorganization.  In the event of (i) any reclassification (other

than a change in par value) of the Common Stock, (ii) any conversion of the

Common Stock into securities of another corporation, (iii) the consolidation of

the Company with, or the merger of the Company with or into, any other

corporation where the Common Stock is converted into other securities or

property (including cash) or (iv) the sale of all or substantially all of the

properties and assets of the Company to any person as a consequence of which,

with respect to any of the matters described in clauses (i) through (iv) of

this Section 4.05, those persons who held all of the voting shares of the

Company immediately prior to such transaction hold less than a majority of the

voting shares or less than a majority of the beneficial interest in the resulting

or surviving corporation (each such event hereinafter being referred to as a “Capital

Change”), this Warrant shall be exercisable after such Capital Change, upon

the terms and conditions specified in this Warrant, only for the number of

shares of stock or other securities or property (including cash) of the Company

or of the person into which shares of Common Stock are converted or resulting

from such consolidation or surviving such merger or to which such sale shall be

made, as the case may be, to which the shares of Common Stock issuable

(immediately prior to such Capital Change) upon exercise of such Warrant would

have been entitled upon such Capital Change. 

In any such case, if necessary, the provisions set forth in this Article

IV with respect to the rights and interests thereafter of 

 

6

 

the Holder shall

be appropriately adjusted so as to be reasonably applicable to any shares of

stock or other securities or property thereafter deliverable on the exercise of

the Warrants.

 

ARTICLE

V

 

REGISTRATION

 

Section 5.01.       Piggyback Registration.

 

(a)           Whenever the Company proposes to file

a Registration Statement (as defined below) at any time and from time to time,

it shall, prior to such filing, give written notice to all Holders of its

intention to do so and, upon the written request of a Holder or Holders to the

Company, given within 10 business days after the Company provides such notice

(which request shall state the intended method of disposition of the Registrable

Shares (as defined below) requested to be registered), the Company shall use

its reasonable best efforts to cause all Registrable Shares which the Company

has been requested by such Holder or Holders to be registered to be so

registered under the Securities Act to the extent necessary to permit their

sale or other disposition in accordance with the intended methods of

distribution specified in the request of such Holder or Holders; provided,

however, that the Company shall have the right to postpone or withdraw any

registration effected pursuant to this Section 5.01 without obligation to any

Holder.  As used in this Warrant, the

term “Registration Statement” shall mean a registration statement filed

by the Company with the Commission for a public offering and sale of Common

Stock by the Company (other than a registration statement on Form S-8 or Form

S-4, or their successors, or any other form for a similar limited purpose, or

any registration statement covering only securities proposed to be issued in

exchange for securities or assets of another company).  As used in this Warrant, the term “Registrable

Shares” shall mean (i) the Warrant Shares; (ii) any shares of Common Stock

issued in respect of such Warrant Shares (because of stock splits, stock dividends,

reclassifications, recapitalizations, or similar events); and (iii) any other

securities issued or issuable on exercise of this Warrant.

 

(b)           In connection with any registration

under this 5.01 involving an underwriting, the Company shall not be required to

include any Registrable Shares in such registration unless the holders thereof

accept the terms of the underwriting as agreed upon between the Company and the

underwriters selected by it.  If the

managing underwriter delivers to the Holder a good faith opinion in writing

that inclusion of the Registrable Shares in the proposed offering could make

consummation of the offering impracticable, then the Company shall be required

to include in the registration only that number of Registrable Shares, if any,

which the managing underwriter believes should be included therein.  If any such registration covers re-sales by

any other holder of the Company’s securities (any such securities being

referred to herein as “Secondary Securities”), any reduction in the

number of Registrable Shares covered by the Registration Statement shall be

effected on the basis of a corresponding reduction in the number of other

Secondary Securities, pro  rata based on the number of securities

each such holder has designated for inclusion. 

Upon any reduction described in this Section 5.01(b) of the number of

Registrable Shares covered by a Registration Statement by an amount in excess

of 50% of the number of Registrable Shares requested by the Holder to be

included in the registration, the Holder shall be entitled to one additional

“demand registration” pursuant to Section 5.02.

 

7

 

Section 5.02.       Demand Registration.

 

(a)           On any day following the first

anniversary of the date of the Warrant Agreement, if the Company shall receive

at any time a written request from the Holder that the Company file a

Registration Statement covering the registration of all or part of the Warrant

Shares, then the Company shall, subject to the limitations set forth in this

Warrant, prepare and file such Registration Statement with the Commission, and

thereafter use its best efforts to have the Registration Statement declared

effective under the Securities Act as soon as practicable, and in any event

within 90 days after the receipt of such request.  Except as otherwise provided in Section 5.01(b) and Section

5.02(c), the Company is obligated to effect only two registrations for the

Holder pursuant to this Section 5.02.

 

(b)           If the Holder demands registration

hereunder and intends to distribute the Warrant Shares covered by its request

by means of an underwriting, the Holder shall so advise the Company as part of

its request made pursuant to this Section 5.02.  The underwriter or underwriters will be selected by the Company

and shall be reasonably acceptable to the Holder.  The Holder and the Company shall enter into an underwriting

agreement in customary form with the underwriter or underwriters selected for

such underwriting.

 

(c)           Notwithstanding the foregoing, (i) a

Holder may not demand registration pursuant to this Section 5.02 if a

registration pursuant to this Section 5.02 has been effected pursuant to and in

accordance with any Warrant within the previous 90 days, (ii) the Company may

delay filing any Registration Statement in the event that (A) the Company shall

have filed a Registration Statement with respect to an offering by the Company

of its Common Stock (or securities convertible into or exchangeable for Common

Stock) or shall have taken and be continuing to take substantial steps towards

filing such a Registration Statement, and (B) the managing underwriter of the

offering that is the subject of such Registration Statement shall have

delivered to the Holder an opinion in writing that filing a Registration

Statement for the benefit of the Holder at such time would materially and

adversely affect the offering of the Common Stock (or securities convertible

into or exchangeable for Common Stock) by the Company; (iii) the Company may

delay filing any Registration Statement in the event that the Company shall

have furnished to the Holder a certificate signed by the President of the

Company stating that the Company’s ability to pursue a significant business

opportunity would be materially and adversely affected by a registered public

offering of the Company’s Common Stock at such time; provided, however,

that (x) no delay pursuant to clause (ii) or this clause (iii) shall

extend beyond a reasonable period of time or in any event beyond 120 days after

such request; (y) in no event shall the aggregate delays imposed under

clauses (ii) and (iii) exceed 120 days in any twelve-month period; and

(z) upon the imposition of any delay pursuant to clause (ii) or (iii), the

Holder shall be entitled to one additional “demand registration” pursuant to

this Section 5.02, (iv) if, in connection with any underwritten

registration made pursuant to this Section 5.02, the managing underwriter or

underwriters of such underwritten offering shall inform the Company and the person(s)

participating in such underwritten offering by letter of its belief that the

number of securities requested to be included in such registration exceeds the

number that can be sold in (or during the time of) such offering within a price

range acceptable to the Holder, then the Company will include in such

registration such number of shares of Common Stock which the Company is so

advised can be sold in (or during the time of) such registration, in which case

for each such occurrence the Holder shall be entitled to have an additional

demand registration right under this Warrant conforming with the terms of this

Section 5.02, and (v) a Holder may not demand registration pursuant to this

Section 5.02 unless it proposes to dispose of Registrable Shares representing

in the aggregate less than 10% of the aggregate of all Warrant Shares.

 

8

 

Section 5.03.          Obligations of the Company.  Whenever required pursuant to this Warrant

to effect the registration of any Warrant Shares, the Company shall perform the

following obligations as expeditiously as reasonably possible:

 

(a)           The Company shall prepare and file

with the Commission a Registration Statement with respect to such Warrant

Shares and use its best efforts to cause such Registration Statement to become

effective, provided, that before filing a Registration Statement or any

amendments or supplements thereto, the Company will furnish to the Holder and

the underwriters, if any, copies of all such documents proposed to be filed,

which documents will be subject to review by the Holder and underwriters, and

the Company will not file any Registration Statement pursuant to Section 5.02

or any amendments or supplements thereto to which the Holder or such managing

underwriters, if any, shall reasonably object unless otherwise required by law.

 

(b)           The Company shall prepare and file

with the Commission such amendments and supplements to such Registration

Statement and the prospectus used in connection with such Registration Statement

as may be necessary to comply with the provisions of the Securities Act with

respect to the disposition of all securities covered by such Registration

Statement and will take all actions necessary to keep the Registration

Statement effective for 360 days, or such shorter period as will terminate when

all Warrant Shares covered thereby have been sold.

 

(c)           The Company shall furnish to the

Holder such number of copies of the prospectus, including a prospectus subject

to completion, in conformity with the requirements of the Securities Act, and

such other documents as it may reasonably request in order to facilitate the

disposition of Warrant Shares.

 

(d)           The Company shall use its best

efforts to register and qualify the securities covered by such Registration

Statement under such other securities or Blue Sky laws of such jurisdiction as

shall be reasonably requested by the Holder; provided, however, that the

Company shall not be required in connection therewith or as a condition thereto

to qualify to do business or to file a general consent to service of process in

any such states or jurisdictions.

 

(e)           The Company shall notify the Holder

and the managing underwriters, if any, promptly, and (if requested by any such

person) confirm such advice in writing, (i) when the prospectus or any

prospectus supplement or post-effective amendment has been filed, and, with

respect to the Registration Statement or any post-effective amendment, when the

same has become effective, (ii) of any request by the Commission for amendments

or supplements to the Registration Statement or the prospectus or for

additional information, (iii) of the issuance by the Commission of any stop

order of which the Company or its counsel is aware suspending the effectiveness

of the Registration Statement or the initiation of any proceedings for that

purpose, (iv) of the receipt by the Company of any notification with respect to

the suspension of the qualification of the Warrant Shares for sale in any

jurisdiction or the initiation or threatening of any proceeding for such

purpose and (v) of the Company’s becoming aware that the prospectus (including

any document incorporated therein by reference), as then in effect, includes an

untrue statement of material fact therein or omits to state a material fact

required to be stated therein or necessary to make the statements not

misleading in light of the circumstances then existing.

 

Section 5.04.          Obligations of the Holder.  It shall be a condition precedent to the

obligations of the Company to take any action pursuant to this Warrant with

respect to the Warrant Shares of the Holder that (i) the Holder shall furnish

to the Company such information regarding itself, the Warrant Shares held by

it, and the intended method of distribution of such securities as shall be

required to effect the registration of the Holder’s Warrant Shares and (ii) in

the event of any underwritten public offering, the 

 

9

 

Holder shall enter into

and perform its obligations under an underwriting agreement with the managing

underwriter of such offering.

 

Section 5.05.          Expenses of Registration.  All expenses other than underwriting

discounts and commissions incurred in connection with registrations, filings or

qualifications pursuant to Sections 5.01 and 5.02, including (without

limitation) all registration, filing and qualification fees, printers’ and

accounting fees, fees and disbursements of counsel for the Company and the

reasonable fees and disbursements of one counsel for the Holder shall be borne

by the Company; provided, however, that the Company shall not be

required to pay for any expenses of any registration proceeding begun pursuant

to Section 5.02 if the registration request is subsequently withdrawn at the

request of the Holder.

 

Section 5.06.          Delay of Registration.  No Holder shall have any rights to obtain or

seek an injunction restraining or otherwise delaying any registration by the

Company as the result of any controversy that may arise with respect to the

interpretation or implementation of this Article V.

 

Section 5.07.          Expiration of Registration Rights.  The right to require registration of

Registrable Shares under this Article V shall terminate upon the first to occur

of (i) the first anniversary of the expiration of the Warrant, and (ii) such

time as the Holder is able to offer for sale all Registrable Shares

beneficially owned by it pursuant to Rule 144(k) promulgated under the

Securities Act; provided, however, that the Holder’s rights under this

Article V shall continue following such expiration in respect of any demand or

request for registration made before such expiration.

 

Section 5.08.          Indemnification.  In the event any Warrant Shares are included

in a Registration Statement under this Warrant:

 

(a)           To the extent permitted by law, the

Company will indemnify and hold harmless the Holder, the officers and directors

of the Holder, any underwriter (as defined in the Securities Act) for such

Holder and each person, if any who controls such Holder or underwriter within

the meaning of the Securities Act or the Securities Exchange Act of 1934, as

amended (the “1934 Act”), against any losses, claims, damages, or liabilities

(joint or several) to which they may become subject under the Securities Act,

the 1934 Act or other federal or state law, including any of the

foregoing incurred in settlement of any litigation, commenced or threatened,

insofar as such losses, claims, damages, or liabilities (or actions in respect

thereof) arise out of or are based upon any of the following statements,

omissions or violations (each of which is referred to herein as a “Violation”):  (i) any untrue statement or alleged untrue

statement of a material fact contained in such registration statement,

including any prospectus subject to completion or final prospectus contained

therein or any amendments or supplements thereto, (ii) the omission or alleged

omission to state therein a material fact required to be stated therein, or

necessary to make the statements therein not misleading or (iii) any violation

or alleged violation by the Company of the Securities Act, the 1934 Act, any

state securities law or any rule or regulation promulgated under the Securities

Act, the 1934 Act or any state securities laws and the Company will reimburse

the Holder, officer, director, underwriter or controlling person for any legal

or other expenses reasonably incurred by them, on an as-incurred basis, in

connection with investigating or defending any such loss, claim, damage,

liability, or action.

 

(b)           Notwithstanding Section 5.08(a), the

indemnity provisions contained in this Section 5.08 shall not apply to amounts

paid in settlement of any such loss, claim, damage, liability, or action if

such settlement is effected without the written consent of the Company (which

consent shall not be unreasonably withheld), nor shall the Company be liable in

any such case for any such loss, claim, damage, liability, or action to the

extent that it arises out of a Violation that 

 

10

 

results from reliance upon written information

furnished expressly for use in connection with such registration by the Holder,

officer, director, underwriter or controlling person of the Holder.

 

(c)           To the extent permitted by law, the

Holder shall indemnify and hold harmless the Company, each of its directors,

each of its officers who have signed the registration statement, each person,

if any, who controls the Company within the meaning of the Securities Act, any

underwriter against any losses, claims, damages, or liabilities (joint or

several) to which the Company (or any director, officer, controlling person)

may become subject, under the Securities Act, the 1934 Act or other federal or

state law, insofar as such losses, claims, damages or liabilities (or action in

respect thereto) arise out of any Violation, in each case to the extent (and

only to the extent) that such Violation results from reliance upon written

information furnished by the Holder expressly for use in connection with such

registration.

 

(d)           The Holder will reimburse any legal

or other expenses reasonably incurred by the Company (or any director, officer,

controlling person), or underwriter (or controlling person) in connection with

investigating or defending any such loss, claim, damage, liability, or action; provided,

however, that the indemnity agreement contained in this Section 5.08 shall

not apply to amounts paid in settlement of any such loss, claim, damage,

liability or action if such settlement is effected without the written consent

of the Holder, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, the liability

of the Holder under this Section 5.08 shall be limited to an amount equal to

the gross proceeds received by the Holder from the offering of shares sold by

the Holder, unless such liability arises out of or is based on willful

misconduct of the Holder.

 

Section 5.09.          Conduct of Indemnification

Proceedings.  Within a reasonable

time after receipt by an indemnified party of notice of the commencement of any

action (including any governmental action) under this Article V, such

indemnified party shall, if a claim in respect thereof is to be made against

any indemnifying party under this Article V, deliver to the indemnifying party

a written notice of the commencement thereof. 

Such indemnifying party shall have the right to participate in and

subject to the consent of the indemnified party, which consent shall not be

unreasonably withheld, if the indemnifying party so desires, jointly with any

other indemnifying party similarly noticed, to assume the defense of such

action with counsel mutually satisfactory to the parties; provided, however,

that the indemnified party shall cooperate with the indemnifying party, and

that if representation of an indemnified party by the counsel retained by the

indemnifying party would be inappropriate due to actual or potential differing

interest between such indemnified party and any other party represented by such

counsel in such proceeding, such indemnified party shall have the right to

retain its own counsel, with the reasonable fees and reasonable expenses to be

paid by the indemnifying party.

 

Section 5.10.          Failure to Notify.  The failure of an indemnified party to

deliver written notice to the indemnifying party within a reasonable time of

the commencement of any such action, if such failure is prejudicial to the

indemnifying party, shall relieve such indemnifying party of any liability to

the indemnified party under this Article V to the extent such party is prejudiced.  However, the omission of the indemnified

party to deliver such written notice to the indemnifying party will not relieve

such indemnifying party of any liability that it may have to any indemnified

party otherwise than under this Article V.

 

Section 5.11.          Contribution.  If the indemnification provided for in this

Article V is held by a court of competent jurisdiction to be unavailable to an

indemnified party with respect to any loss, claim, 

 

11

 

damage, liability, or

action referred to therein, then the indemnifying party, in lieu of

indemnifying such indemnified party hereunder, shall contribute to the amount

paid or payable by such indemnified party as a result of such loss, claim,

damage, liability or action in such proportion as is appropriate to reflect the

relative fault of the indemnifying party on the one hand and of the indemnified

party on the other in connection with the statements or omissions that resulted

in such loss, claim, damage, liability or action as well as any other relevant

equitable considerations.  The relative

fault of the indemnifying party and of the indemnified party shall be

determined by reference to, among other things, whether the untrue or alleged

untrue statement of a material fact or the omission to state a material fact

relates to information supplied by the indemnifying party and the parties’

relative intent, knowledge, access to information, and opportunity to correct

or prevent such statement or omission.

 

Section 5.12.          Underwriting Agreement Controls.  Notwithstanding the foregoing, to the extent

that the provisions on indemnification and contribution contained in the

underwriting agreement entered into in connection with the underwritten public

offering are in conflict with the foregoing provisions, the provisions in the

underwriting agreement shall control.

 

ARTICLE

VI

 

RIGHT OF

FIRST REFUSAL

 

Section 6.01.          Right of First Refusal.

 

(a)      Except with respect to issuance of shares

of capital stock by the Company as set forth in Section 4.01(d) hereof, the

Company shall not issue, sell or exchange, agree to issue, sell or exchange, or

reserve or set aside for issuance, sale or exchange, (i) any shares of its

Common Stock, (ii) any other equity securities of the Company, including,

without limitation, shares of preferred stock, (iii) any option, warrant or

other right to subscribe for, purchase or otherwise acquire any equity

securities of the Company, or (iv) any debt securities convertible into equity

securities of the Company (collectively, the “Offered Securities”),

unless in each such case the Company shall have first complied with this

Article VI.

 

(b)      The Company shall deliver to each Holder a

written notice of any proposed or intended issuance, sale or exchange of

Offered Securities (the “Offer”), which Offer shall (i) identify and

describe the Offered Securities, (ii) describe the price and other terms upon

which they are to be issued, sold or exchanged, and the number or amount of the

Offered Securities to be issued, sold or exchanged, (iii) identify the persons

or entities, if known, to which or with which the Offered Securities are to be

offered, issued, sold or exchanged, and (iv) offer to issue and sell to or

exchange with such Holder (x) that number of the Offered Securities which

represents the same percentage of the total Offered Securities as the number of

shares of Common Stock held by such Holder (including all shares of the

Company’s capital stock convertible into Common Stock, counting such shares as

if converted) represents of the total number of outstanding shares of Common

Stock (including all shares of the Company’s capital stock convertible into

Common Stock, counting such shares as if converted) (the “Basic Amount”),

and (y) such additional portion of the Offered Securities as such Holder shall

indicate it will purchase should the other Holders subscribe for less than

their Basic Amounts (the “Undersubscription Amount”).  Each Holder shall have the right, for a

period of 15 days following delivery of the Offer, to accept the Offer in the

manner provided in paragraph (c) below. 

The Offer by its term shall remain open and irrevocable for such 15-day

period.

 

12

 

(c)      To accept an Offer, in whole or in part,

an Holder must deliver a written notice to the Company prior to the end of the

15-day period of the Offer, setting forth the portion of the Holder’s Basic

Amount that the Holder elects to purchase and, if such Holder shall elect to

purchase all of its Basic Amount, the Undersubscription Amount (if any) that

such Holder elects to purchase (the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all

Holders are less than the total Basic Amounts, then each Holder who has set

forth an Undersubscription Amount in its Notice of Acceptance shall be entitled

to purchase, in addition to the Basic Amounts subscribed for, the

Undersubscription Amount it has subscribed for; provided, however, that

should the Undersubscription Amounts subscribed for exceed the difference

between the total Basic Amounts and the Basic Amounts subscribed for (the  “Available Undersubscription Amount”),

each Holder that has subscribed for any Undersubscription Amount shall be

entitled to purchase only that portion of the Available Undersubscription

Amount as the Undersubscription Amount subscribed for by such Holder bears to

the total Undersubscription Amounts subscribed for by all Holders, subject to

rounding by the Board of Directors to the extent it reasonably deems necessary.

 

(d)      In the event that Notices of Acceptance

are not given by Holders in respect of all the Offered Securities, the Company

shall have 90 days from the expiration of the 15-day period set forth in

Section 6.01(b) hereof, to issue, sell or exchange all or any part of such

Offered Securities as to which a Notice of Acceptance has not been given by the

Holders (the “Refused Securities”), but only to the offerees or purchasers

described in the Offer and only upon terms and conditions (including, without limitation,

unit prices and interest rates) which are not more favorable, in the aggregate,

to the acquiring person or persons or less favorable to the Company than those

set forth in the Offer.

 

(e)      In the event the Company shall propose to

sell less than all the Refused Securities, then each Holder may, at its sole

option and in its sole discretion, reduce the number or amount of the Offered

Securities specified in its Notice of Acceptance to an amount that shall be not

less than the number or amount of the Offered Securities that the Holder

elected to purchase pursuant to Section 6.01(c) hereof, multiplied by a

fraction (i) the numerator of which shall be the number or amount of Offered

Securities the Company actually proposes to issue, sell or exchange (including

Offered Securities to be issued or sold to the Holders pursuant to

Section 6.01(c) hereof prior to such reduction) and (ii) the denominator

of which shall be the amount of all Offered Securities.  In the event that a Holder so elects to

reduce the number or amount of Offered Securities specified in its Notice of

Acceptance, the Company may not issue, sell or exchange more than the reduced

number or amount of the Offered Securities unless and until such securities

have again been offered to the Holders in accordance with Section 6.01(b)

hereof.

 

(f)       Upon the closing of the issuance, sale or

exchange of all or less than all the Refused Securities, the Holders shall

acquire from the Company, and the Company shall issue to the Holders, the

number or amount of Offered Securities specified in the Notices of Acceptance,

as reduced pursuant to Section 6.01(e) hereof if the Holders have so elected,

upon the terms and conditions specified in the Offer.  The purchase by a Holder of any Offered Securities is subject in

all cases to the preparation, execution and delivery by the Company and the

participating Holders of a purchase agreement relating to such Offered

Securities reasonably satisfactory in form and substance to such Holders and

the Company.

 

13

 

(g)      Any Offered Securities not acquired by the

Holders or other persons in accordance with Section 6.01(d) hereof may not be

issued, sold or exchanged until they are again offered to the Holders under the

procedures specified in this Article VI.

 

Section 6.02.          Expiration

of Right of First Refusal.  The

rights granted under this Article VI shall terminate upon the first to occur of

the (i) expiration of the Warrant, and (ii) first date that the Holder no

longer holds, or has rights to purchase, at least 5,000 Warrant Shares.

 

ARTICLE

VII

 

MISCELLANEOUS

 

Section 7.01.          No Dilution or Impairment.  The Company will not, by amendment of its

certificate of incorporation or through any reorganization, transfer of assets,

consolidation, merger, dissolution, issue or sale of securities or any other

voluntary action, avoid or seek to avoid the observance or performance of any

of the terms of this Warrant, but will at all times in good faith assist in the

carrying out of all such terms and in the taking of all such action as any be

necessary or appropriate in order to protect the rights of the holder of this

Warrant against dilution or other impairment. 

Without limiting the generality of the foregoing, the Company (a) will

not increase the par value of any shares of stock receivable on the exercise of

this Warrant above the amount payable therefor on such exercise and (b) will

not effect a subdivision or split-up of shares or similar transaction with

respect to any class of the Common Stock without effecting an equivalent

transaction with respect to all other classes of Common Stock.

 

Section 7.02.          Confidentiality.  The Holder agrees to hold in confidence and

trust all information provided to the Holder in connection with its board

observer rights under Section 5.01 of the Warrant, except to the extent that

such information (i) is in the public domain at the time that it is provided to

the Holder, (ii) enters the public domain after it is provided to the Holder

through no fault of the Holder or the observer appointed by the Holders or

(iii) is required by law to be disclosed to a third party.

 

Section 7.03.          Binding Agreement.  All of the covenants and provisions of this

Warrant by or for the benefit of the Company shall bind and inure to the

benefit of its respective successors and assigns hereunder.  Nothing expressed in this Warrant and

nothing that may be implied from any of the provisions hereof is intended, or

shall be construed, to confer upon or give to any person or corporation, other

than the Company and the Holder, any legal or equitable right, remedy or claim

under or by reason of this Warrant or of any covenant, condition, stipulation,

promise or agreement herein, and all covenants, conditions, stipulations,

promises and agreements contained in this Warrant shall be for the sole and

exclusive benefit of the Company, the Holder and their respective successors

and assigns.

 

Section 7.04.          GOVERNING LAW.  THIS WARRANT SHALL BE GOVERNED BY AND

CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING

EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

 

Section 7.05.          Headings.  The Article and Section headings herein are

for convenience only and are not part of this Warrant and shall not affect the

interpretation hereof.

 

14

 

Section 7.06.          Counterparts.  This Warrant may be executed in any number

of counterparts, each of which so executed shall be deemed to be an original,

and all such counterparts shall together constitute but one and the same

instrument.

 

Section 7.07.          Survival.  Any obligation of the Company or the Holder

under this Warrant, including, without limitations obligations set forth in

Article V, the complete performance of which may require performance beyond the

term of this Warrant, shall survive the expiration of such term.

 

Section 7.08.          Amendments and Waivers.  The respective rights and obligations of the

Company and the Holder may be modified or waived only by a writing executed by

the party against whom the amendment or waiver is to be enforced.

 

[Signature is on the

following page.]

 

15

 

IN WITNESS

WHEREOF, the Company has caused this Warrant to be duly executed and delivered.

 

	

   

  	

  INVERNESS MEDICAL INNOVATIONS,

  INC.

  
	

   

  	

   

  
	

   

  	

  By:  

  	

  /s/ Paul T. Hempel

  
	

   

  	

   

  	

  Name:  Paul T. Hempel

  
	

   

  	

   

  	

  Title:  General Counsel and Secretary

  
	

   

  	

   

  
	

   

  	

  Dated:  December 20, 2001

  
	

   

  	

   

  

 

ACCEPTED AND

AGREED:

 

RBS MEZZANINE

LIMITED

 

	

  By:

  	

   /s/ Alison M. Rose

  	

   

  
	

   

  	

  Name:  Alison M. Rose

  
	

   

  	

  Title:  Director

  
	

   

  	

   

  

 

16

 

FORM OF NOTICE OF EXERCISE

 

(To be executed only upon exercise of Warrant)

 

To ____________________________

 

The undersigned registered holder of the within Warrant hereby

irrevocably exercises such Warrant for, and purchases thereunder, ____ (1)

shares of Common Stock of Inverness Medical Innovations, Inc. and herewith

makes payment of $___________ therefor and requests that the certificates for

such shares be issued in the name of, and delivered to_____________  whose address is 

______________________________________________.

 

	

  Dated:

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  (Signature must

  conform in all respects to name of holder as specified on the face of this

  Warrant)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  (Street Address)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  (City)

  	

  (State)

  	

  (Zip Code)

  

(1)           Insert here the number

of shares called for on the face of this Warrant (or, in the case of a partial

exercise, the portion thereof as to which this Warrant is being exercised), in

either case without making any adjustment for additional Common Stock or any

other stock or other securities or property or cash which, pursuant to the

adjustment provisions of this Warrant, may be delivered upon exercise. In the

case of a partial exercise, a new Warrant or Warrants will be issued and

delivered, representing the unexercised portion of this Warrant, to the holder

surrendering the same.

 

17

 

FORM OF

ASSIGNMENT

 

(To be executed only upon transfer of Warrant)

 

For value received, the undersigned registered holder of the within

Warrant hereby sells, assigns and transfers unto ____________________ the right

represented by such Warrant to purchase ________  shares of Common Stock of Inverness Medical Innovations, Inc. to

which such Warrant relates, and appoints________________  Attorney to make such transfer on the books

of ____________________ maintained for such purpose, within full power of

substitution in the premises.

 

 

	

  Dated:

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  (Signature must

  conform in all respects to name of holder as specified on the face of this

  Warrant)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  (Street Address)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  (City)

  	

  (State)

  	

  (Zip Code)

  

 

 

Signed in the presence of:

 

18Form of Founder Warrant for Delaware corporation

Exhibit

10.28

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF

1933, AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER ANY

APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED

UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES

ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR  (B) EXEMPTIONS FROM SUCH REGISTRATION OR

QUALIFICATION REQUIREMENTS ARE AVAILABLE. AS A CONDITION TO PERMITTING ANY

TRANSFER OF THESE SECURITIES, THE COMPANY MAY REQUIRE THAT IT BE FURNISHED WITH

AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT NO

REGISTRATION OR QUALIFICATION IS LEGALLY REQUIRED FOR SUCH TRANSFER.

 

	

  For the Purchase

  
	

  of 385,000

  shares of

  
	

  Common Stock

  
	

   

  

 

WARRANT FOR THE PURCHASE

OF

SHARES OF COMMON STOCK

OF

INVERNESS

MEDICAL INNOVATIONS, INC.

 

VOID AFTER 5:00 P.M., EASTERN STANDARD TIME, ON DECEMBER 19, 2006

 

Inverness Medical

Innovations, Inc., a Delaware corporation (the “Company”), hereby certifies

that Zwanziger Family Ventures, LLC, or its registered assigns (the “Registered

Holder”), is entitled, subject to the terms set forth below, to purchase from

the Company, at any time or from time to time on or before the earlier of (a)

December 19, 2006 at not later than 5:00 p.m. (Eastern Standard Time) and (b)

the termination of this Warrant as provided in Section 9 below, 385,000 shares

of Common Stock, $.001 par value, of the Company (“Common Stock”), at a

purchase price of $17.15 per share.  The

number of shares purchasable upon exercise of this Warrant, and the purchase

price per share, each as adjusted from time to time pursuant to the provisions

of this Warrant, are hereinafter referred to as the “Warrant Stock” and the

“Purchase Price,” respectively.

 

1.             Exercise.

 

(a)           This Warrant may be exercised by the

Registered Holder, in whole or in part, by surrendering this Warrant, with the

purchase form appended hereto as Exhibit I duly executed by such

Registered Holder, at the principal office of the Company, or at such other

office or agency as the Company may designate, accompanied by payment in full,

as provided in subsection 1(b) below, of the aggregate Purchase Price payable

in respect of the number of shares of Warrant Stock purchased upon such

exercise.

 

(b)           The aggregate Purchase Price may be

paid, at the Registered Holder’s election, at any time during the term of this

Warrant, (i) by cash (including by wire transfer of 

 

 

 

immediately available

funds to an account designated by the Company) or certified or bank check in

lawful money of the United States or (ii) by exercise of the “net issuance”

right described below in this subsection 1(b) (“Net Issuance”).  If the Registered Holder elects the Net

Issuance method, the Company will issue Common Stock to the Registered Holder

upon exercise of this Warrant in accordance with the following formula:

 

X = Y(A-B)

A

 

Where:       X =       the

number of shares of Common Stock that shall be issued to the Registered Holder.

 

Y =      the number of shares of Common Stock

requested to be exercised under  this

Warrant.

 

A =      the current fair market value of one (1)

share of Common Stock at the time of issuance of such shares of Common Stock.

 

B =      the Purchase Price.

 

For purposes of the above

calculation, current fair market value of each share of Common Stock shall be

determined as follows:

 

(i)            if the Common Stock is traded on a

national securities exchange, the fair market value shall be deemed to be the

average of the closing prices of the Common Stock over the ten (10) trading day

period ending immediately prior to the day as of which the current fair market

value of the Common Stock is being determined; or

 

(ii)           if the Common Stock is traded

over-the-counter, the fair market value shall be deemed to be the product of

the average of the closing bid and asked prices of the Common Stock quoted on

the NASDAQ System (or similar system) over the ten (10) trading day period

ending immediately prior to the day as of which the current fair market value

of the securities is being determined; or

 

(iii)          if at any time the Common Stock is not

listed on any national securities exchange or quoted in the NASDAQ System (or

similar system) or the over-the-counter market, the current fair market value

of the Common Stock shall be as determined in good faith by the Company’s Board

of Directors.

 

(c)           Each exercise of this Warrant shall

be deemed to have been effected immediately prior to the close of business on

the day on which this Warrant shall have been surrendered to the Company as

provided in subsection 1(a) above.  At

such time, the person or persons in whose name or names any certificates for

Warrant Stock shall be issuable upon such exercise as provided in subsection

1(d) below shall be deemed to have become the holder or holders of record of

the Warrant Stock represented by such certificates.

 

(d)           As soon as practicable after the

exercise of this Warrant in full or in part and whether by payment by cash or

check or by Net Issuance, and in any event within fifteen (15) days thereafter,

the Company, at its expense, will cause to be issued in the name of, and

delivered to, the Registered Holder, or, subject to the terms and conditions

hereof, as such 

 

2

 

Registered Holder (upon

payment by such Registered Holder of any applicable transfer taxes) may direct:

 

(i)            a certificate or certificates for

the number of full shares of Warrant Stock to which such Registered Holder

shall be entitled upon such exercise plus, in lieu of any fractional share to

which such Registered Holder would otherwise be entitled, cash in an amount

determined pursuant to Section 3 hereof, and

 

(ii)           in case such exercise is in part

only, a new warrant or warrants (dated the date hereof) of like tenor, representing

the right to purchase in the aggregate the number of shares of Warrant Stock

equal (without giving effect to any adjustment therein) to the number of such

shares called for on the face of this Warrant minus the number of such shares

purchased or exercised by the Registered Holder upon such exercise as provided

in subsections 1(a) and 1(b) above.

 

(e)           To the extent this Warrant is not

previously exercised as to all of the Warrant Stock subject hereto, and if the

fair market value of one share of Common Stock is greater than the Purchase

Price then in effect, this Warrant shall be deemed automatically exercised

pursuant to the Net Issuance method as provided in subsection 1(b) above (even

if not surrendered) immediately before its expiration.  For purposes of such automatic exercise, the

fair market value of one (1) share of the Common Stock upon such expiration

shall be determined pursuant to the Net Issuance provisions of subsection

1(b).  To the extent this Warrant or any

portion thereof is deemed automatically exercised pursuant to this subsection

1(e), the Company agrees to promptly notify the Registered Holder hereof of the

number of shares of Warrant Stock, if any, that the Registered Holder hereof is

to receive by reason of such automatic exercise.

 

2.             Adjustments.

 

(a)           If outstanding shares of the Common

Stock shall be subdivided into a greater number of shares or a dividend in

Common Stock shall be paid in respect of Common Stock, the Purchase Price in

effect immediately prior to such subdivision or at the record date of such

dividend shall simultaneously with the effectiveness of such subdivision or

immediately after the record date of such dividend be proportionately

reduced.  If outstanding shares of Common

Stock shall be combined into a smaller number of shares, the Purchase Price in

effect immediately prior to such combination shall, simultaneously with the

effectiveness of such combination, be proportionately increased.  When any adjustment is required to be made

in the Purchase Price, the number of shares of Warrant Stock purchasable upon

the exercise of this Warrant shall be changed to the number determined by

dividing (i) an amount equal to the number of shares issuable upon the exercise

of this Warrant immediately prior to such adjustment, multiplied by the

Purchase Price in effect immediately prior to such adjustment, by (ii) the

Purchase Price in effect immediately after such adjustment.

 

(b)           If there shall occur any capital

reorganization or reclassification of the Common Stock (other than a change in

par value or a subdivision or combination as provided for in subsection 2(a)

above), then, as part of any such reorganization or reclassification, lawful

provision shall be made so that the Registered Holder of this Warrant shall

have the right 

 

3

 

thereafter to receive

upon the exercise hereof the kind and amount of shares of stock or other

securities or property which such Registered Holder would have been entitled to

receive if, immediately prior to any such reorganization or reclassification,

such Registered Holder had held the number of shares of Common Stock which were

then purchasable upon the exercise of this Warrant.  In any such case, appropriate adjustment (as reasonably

determined by the Board of Directors of the Company) shall be made in the

application of the provisions set forth herein with respect to the rights and

interests thereafter of the Registered Holder of this Warrant such that the

provisions set forth in this Section 2 (including provisions with respect to

adjustment of the Purchase Price) shall thereafter be applicable, in as nearly

equivalent a manner as may be practicable, in relation to any shares of stock

or other securities or property thereafter deliverable upon the exercise of

this Warrant.

 

(c)           Subject to the provisions of Section

8, if there shall be a merger or consolidation of the Company with or into

another corporation (other than a merger or reorganization involving only a

change in the state of incorporation of the Company or the acquisition by the

Company of other businesses where the Company survives as a going concern), or

the sale of all or substantially all of the Company’s capital stock or assets

to any other person, then as a part of such transaction, provision shall be

made so that the Registered Holder shall thereafter be entitled to receive the

number of shares of stock or other securities or property of the Company, or of

the successor corporation resulting from the merger, consolidation or sale, to

which the Registered Holder would have been entitled if the Registered Holder

had exercised its rights pursuant to the Warrant immediately prior

thereto.  In any such case, appropriate

adjustment shall be made in the application of the provisions of this Section 2

to the end that the provisions of this Section 2 shall be applicable after that

event in as nearly equivalent a manner as may be practicable.

 

(d)           When any adjustment is required to be

made in the Purchase Price, the Company shall promptly mail to the Registered

Holder a certificate setting forth the Purchase Price after such adjustment and

setting forth a brief statement of the facts requiring such adjustment.  Such certificate shall also set forth the kind

and amount of stock or other securities or property into which this Warrant

shall be exercisable following the occurrence of any of the events specified in

this Section 2.

 

3.             Fractional

Shares.  The Company shall not be

required upon the exercise of this Warrant to issue any fractional shares, but

shall make an adjustment therefor in cash on the basis of the closing market

price of the Common Stock on the American Stock Exchange or, if applicable, any

other national securities exchange on the trading day immediately prior to the

date of exercise or on the basis of the mean between the low bid and high asked

prices of the Common Stock on the over-the-counter market as reported by the

NASDAQ System (or similar system), whichever is applicable, or if neither is

applicable, then on the basis of the then current market value of the Common

Stock as shall be reasonably determined by the Company’s Board of Directors.

 

4.             Limitation

on Sales, etc.  Each holder of this

Warrant acknowledges that this Warrant and the Warrant Stock have not been

registered under the Securities Act of 1933, as now in force or hereafter

amended, or any successor legislation (the “Securities Act”), and agrees not to

sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this

Warrant 

 

4

 

or any Warrant Stock issued upon its exercise unless (a) there is an

effective registration statement under the Securities Act as to this Warrant or

such Warrant Stock and this Warrant or such Warrant Stock has been registered or

qualified under any applicable state securities or “blue sky” laws then in

effect, or (b) the Company receives an opinion of counsel, satisfactory to the

Company, that such registration and qualification are not required.

 

Without limiting the generality of the foregoing,

unless the offering and sale of the Warrant Stock to be issued upon the

particular exercise of the Warrant shall have been effectively registered under

the Securities Act, the Company shall be under no obligation to issue the

shares covered by such exercise unless and until the Registered Holder shall

have executed an investment letter in form and substance satisfactory to the

Company, including a warranty at the time of such exercise that it is acquiring

such shares for its own account, for investment and not for, with a view to, or

in connection with, the distribution or resale of any such shares, and the

holder of this Warrant shall be bound by the provisions of the following legend

or a legend in substantially similar form which shall be endorsed upon the

certificate(s) evidencing the Warrant Stock issued pursuant to such exercise:

 

“THESE SECURITIES

HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED

(“SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE

SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED UNLESS (A) COVERED BY

AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND REGISTERED OR

QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR  (B) EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION

REQUIREMENTS ARE AVAILABLE. AS A CONDITION TO PERMITTING ANY TRANSFER OF THESE

SECURITIES, THE COMPANY MAY REQUIRE THAT IT BE FURNISHED WITH AN OPINION OF

COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION OR

QUALIFICATION IS LEGALLY REQUIRED FOR SUCH TRANSFER.”

 

In addition, without limiting the generality of the

foregoing, the Company may delay issuance of the Warrant Stock until completion

of any action or obtaining of any consent, which the Company deems necessary

under any applicable law (including, without limitation, state securities or

“blue sky” laws).

 

5.             Registration.

 

(a)           Incidental

Registration; Registration Procedures and Expenses, etc.

 

(i)            (A)          Whenever the Company proposes to file

a Registration Statement (as defined below) at any time and from time to time,

it shall, prior to such filing, give written notice to the Registered Holder of

its intention to do so and, upon the written request of the Registered Holder,

given within ten (10) business days after the Company provides such notice

(which request shall state the intended method of disposition of the

Registrable Shares (as defined below) requested to be registered), the Company

shall use its reasonable best efforts to cause all Registrable Shares which the

Company has been requested by the Registered Holder to register to be so

registered under the Securities Act to the extent 

 

5

 

necessary to permit their sale or other disposition in accordance with

the intended methods of distribution specified in the request of the Registered

Holder; provided, however, that the Company shall have the right

to postpone or withdraw any registration effected pursuant to this subsection

5(a) without obligation to the Registered Holder.  As used in this Warrant, the term “Registration Statement” shall

mean a registration statement filed by the Company with the Securities and

Exchange Commission (the “Commission”) for a public offering and sale of Common

Stock by the Company (other than a registration statement on Form S-8 or Form

S-4, or their successors, or any other form for a similar limited purpose, or

any registration statement covering only securities proposed to be issued in

exchange for securities or assets of another company).  As used in this Warrant, the term

“Registrable Shares” shall mean (i) any Common Stock issued or issuable upon

exercise of this Warrant and (ii) any shares of Common Stock issued in respect

of such shares (because of stock splits, stock dividends, reclassifications,

recapitalizations, or similar events).

 

(B)           In

connection with any registration under this subsection 5(a) involving an

underwriting, the Company shall not be required to include any Registrable

Shares in such registration unless the Registered Holder accepts the terms of

the underwriting as agreed upon between the Company and the underwriters

selected by it.  If in the opinion of

the managing underwriter it is desirable because of marketing factors to limit

the number of Registrable Shares to be included in the offering, then the

Company shall be required to include in the registration only that number of

Registrable Shares, if any, that the managing underwriter believes should be

included therein.

 

(ii)           If

and whenever the Company is required by the provisions of this subsection 5(a)

to use its reasonable best efforts to effect the registration of any

Registrable Shares under the Securities Act, the Company shall:

 

(A)          so

long as such Registration Statement is effective covering any Registrable

Shares owned by the Registered Holder, furnish to the Registered Holder such

number of copies of prospectuses and such other documents as the Registered

Holder may reasonably request in order to facilitate the public sale or other

disposition of all or any of such Registrable Shares by the Registered Holder;

 

(B)           file

documents required of the Company for blue sky clearance in states specified in

writing by the Registered Holder; provided,  however, that the

Company shall not be required to qualify to do business or consent to service

of process in any jurisdiction in which it is not so qualified or has not so

consented; and

 

(C)           bear

all expenses in connection with the procedures in paragraphs (A) and (B) of

this subsection 5(a)(ii) and the registration of the Registrable Shares

pursuant to such Registration Statement, and the reasonable legal fees and

expenses, if any, of one (1) counsel to the Registered Holder and all other

selling stockholders, if any, under such Registration Statement, and except for

any underwriting discounts, brokerage fees and commissions incurred by the

Registered Holder and/or such other selling stockholders, if any.

 

6

 

(b)           Additional

Obligations.

 

(i)            With

a view to making available to the Registered Holder the benefits of Rule 144

promulgated by the Commission under the Securities Act (or its successor rule)

(“Rule 144”) and any other rule or regulation of the Commission that may at any

time permit the Registered Holder to sell the Registrable Shares to the public

without registration, the Company covenants and agrees to: (A) make and keep

public information available, as those terms are understood and defined in Rule

144, until the earlier of (x) such date as all of the Registered Holder’s

Registrable Shares may be resold within a given three-month period pursuant to

Rule 144 or any other rule of similar effect or (y) such date as all of the

Registered Holder’s Registrable Shares shall have been resold and (B) file with

the Commission in a timely manner all reports and other documents required of

the Company under the Securities Act and under the Securities Exchange Act of

1934, as amended (the “Exchange Act”).

 

(ii)           If

the Registered Holder owns Registrable Shares included in any Registration

Statement and the Company has delivered preliminary or final prospectuses to

the Registered Holder in connection therewith, and after such delivery the

prospectus is amended to comply with the requirements of the Securities Act,

the Company shall promptly notify the Registered Holder and, if requested, the

Registered Holder shall immediately cease making offers of Registrable Shares

and return all prospectuses to the Company. 

The Company shall promptly provide the Registered Holder with revised

prospectuses and, following receipt of the revised prospectuses, the Registered

Holder shall be free to resume making offers of the Registrable Shares.

 

(iii)          In

the event that, in the judgment of the Company, it is advisable to suspend use

of a prospectus included in a Registration Statement due to pending material

developments or other events that have not yet been publicly disclosed and as

to which the Company believes public disclosure would be detrimental to the

Company, the Company shall notify the Registered Holder to such effect, and,

upon receipt of such notice, the Registered Holder shall immediately

discontinue any sales of Registrable Shares pursuant to such Registration

Statement until the Registered Holder has received copies of a supplemented or

amended prospectus or until the Registered Holder is advised in writing by the

Company that the then current prospectus may be used and has received copies of

any additional or supplemental filings that are incorporated or deemed

incorporated by reference in such prospectus. 

Notwithstanding anything to the contrary herein, the Company shall not

exercise its rights under this clause (iii) to suspend sales of Registrable

Shares for a period in excess of 90 days in any 365-day period.

 

(iv)          If

the Registered Holder includes any Registrable Shares in any Registration

Statement, the Registered Holder shall furnish to the Company such information

regarding the Registered Holder as the Company may reasonably request and as

shall be required in connection with any registration, qualification or

compliance referred to in this Warrant.

 

(v)           The

Registered Holder covenants with the Company not to make any sale of the

Registrable Shares without satisfying the prospectus delivery requirements

under the Securities Act, if any.

 

7

 

(vi)          The

Registered Holder covenants to provide to the Company an updated, accurate and

complete plan of distribution at all times during which the Company is required

to keep in effect any Registration Statement covering any Registrable Shares

held by the Registered Holder.

 

(c)           Indemnification.  For the purpose of this subsection 5(c):

 

(1)           the term “Registered Holder” shall

include the Registered Holder and any affiliate of the Registered Holder; and

 

(2)           the term “Registration Statement”

shall include any final prospectus, exhibit, supplement or amendment included

in or relating to any Registration Statement referred to in subsection 5(a)

above.

 

(i)            In

the event of any registration of any Registrable Shares under the Securities

Act pursuant to this Warrant, the Company agrees to indemnify and hold harmless

the Registered Holder and each person, if any, who controls the Registered

Holder within the meaning of the Securities Act against any losses, claims,

damages, liabilities or expenses, joint or several, to which the Registered

Holder or any such controlling person may become subject, under the Securities

Act, the Exchange Act, or any other federal or state statutory law or

regulation, or at common law or otherwise (including in settlement of any

litigation, if such settlement is effected with the written consent of the

Company), insofar as such losses, claims, damages, liabilities or expenses (or

actions in respect thereof as contemplated below) arise out of or are based

upon any untrue statement or alleged untrue statement of any material fact

contained in any Registration Statement covering any Registrable Shares,

including the prospectus, financial statements and schedules, and all other

documents filed as a part thereof, as amended at the time of effectiveness of

such Registration Statement, including any information deemed to be a part

thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,

or pursuant to Rule 434, under the Securities Act, or the prospectus, in the

form first filed with the Commission pursuant to Rule 424(b) under the

Securities Act, or filed as part of such Registration Statement at the time of

effectiveness if no Rule 424(b) filing is required (a “Prospectus”), or any

amendment or supplement thereto, or arise out of or are based upon the omission

or alleged omission to state a material fact required to be stated in such

Registration Statement, Prospectus or any amendment or supplement thereto or

necessary to make the statements therein, in light of the circumstances in

which they were made, not misleading, and will reimburse the Registered Holder

and each such controlling person for any legal and other expenses reasonably

incurred, as such expenses are reasonably incurred, by the Registered Holder or

such controlling person in connection with investigating, defending, settling,

compromising or paying any such loss, claim, damage, liability, expense or

action; provided, however, that the Company will not be liable in

any such case to the extent that any such loss, claim, damage, liability or

expense arises out of or is based upon (A) an untrue statement or alleged

untrue statement or omission or alleged omission made in any Registration

Statement, Prospectus or any amendment or supplement thereto in reliance upon

and in conformity with written information furnished to the Company by or on

behalf of the Registered Holder expressly for use therein, or (B) the failure

of the Registered Holder to comply with subsection 5(b)(v) hereof respecting

any sale of the Registrable Shares, or (C) the inaccuracy of any

representations made by the Registered Holder in this Warrant or in any

investment 

 

8

 

representation letter executed by the Registered Holder in connection

with the issuance or exercise of this Warrant  or (D) any statement or

omission in any Prospectus that is corrected in any subsequent Prospectus that

was delivered to Registered Holder prior to the pertinent sale or sales by the

Registered Holder.

 

(ii)           In

the event of any registration of any Registrable Shares under the Securities

Act pursuant to this Warrant, the Registered Holder thereto will indemnify and

hold harmless the Company, each of its directors, each of its officers who sign

any Registration Statement covering any Registrable Shares and each person, if

any, who controls the Company within the meaning of the Securities Act, against

any losses, claims, damages, liabilities or expenses to which the Company, each

of its directors, each of its officers who signed such Registration Statement

or controlling person may become subject, under the Securities Act, the

Exchange Act, or any other federal or state statutory law or regulation, or at

common law or otherwise (including in settlement of any litigation, if such

settlement is effected with the written consent of the Registered Holder)

insofar as such losses, claims, damages, liabilities or expenses (or actions in

respect thereof as contemplated below) arise out of or are based upon (A) any

failure by the Registered Holder to comply with subsection 5(b)(v) hereof

respecting any sale of the Registrable Shares, or (B) the inaccuracy of any

representation made by the Registered Holder in this Warrant or in any

investment representation letter executed by the Registered Holder in

connection with the issuance or exercise of this Warrant or (C) any untrue or

alleged untrue statement of any material fact contained in any Registration

Statement, Prospectus or any amendment or supplement thereto, or the omission

or alleged omission to state a material fact required to be stated therein or

necessary to make the statements therein, in light of the circumstances in

which they were made, not misleading, in each case to the extent, but only to

the extent, that such untrue statement or alleged untrue statement or omission

or alleged omission was made in such Registration Statement, Prospectus or any

amendment or supplement thereto, in reliance upon and in conformity with

written information furnished to the Company by or on behalf of the Registered

Holder expressly for use therein, and will reimburse the Company, each of its

directors, each of its officers who signed Registration Statement and each such

controlling person for any legal and other expense reasonably incurred, as such

expenses are reasonably incurred, by the Company, each of its directors, each

of its officers who signed such Registration Statement or such controlling

person in connection with investigating, defending, settling, compromising or

paying any such loss, claim, damage, liability, expense or action.

 

(iii)          Promptly

after receipt by an indemnified party under this subsection 5(c) of notice of

the threat or commencement of any action, such indemnified party will, if a

claim in respect thereof is to be made against an indemnifying party under this

subsection 5(c), promptly notify the indemnifying party in writing thereof, but

the omission so to notify the indemnifying party will not relieve it from any

liability which it may have to any indemnified party for contribution or

otherwise to the extent it is not actually prejudiced as a result of such

failure.  In case any such action is

brought against any indemnified party and such indemnified party seeks or

intends to seek indemnity from an indemnifying party, the indemnifying party

will be entitled to participate in, and, to the extent that it may wish,

jointly with all other indemnifying parties similarly notified, to assume the

defense thereof with counsel reasonably satisfactory to such indemnified party;

provided, however, that if the defendants in any such action

include both the indemnified party and the indemnifying party 

 

9

 

and the indemnified party shall have reasonably concluded that there

may be a conflict between the positions or defenses of the indemnifying party

and the indemnified party in conducting the defense of any such action, the

indemnified party or parties shall have the right to select separate counsel to

assume such legal defenses and to otherwise participate in the defense of such

action on behalf of such indemnified party or parties.  Upon receipt of notice from the indemnifying

party to such indemnified party of its election so to assume the defense of

such action and approval by the indemnified party of counsel, the indemnifying

party will not be liable to such indemnified party under this subsection 5(c)

for any legal or other expenses subsequently incurred by such indemnified party

in connection with the defense thereof unless: (A) the indemnified party shall

have employed such counsel in connection with the assumption of legal defenses

in accordance with the proviso to the preceding sentence (it being understood,

however, that the indemnifying party shall not be liable for the expenses of

more than one separate counsel, reasonably satisfactory to the indemnifying

party, representing the indemnified parties who are parties to such action and

all other purchasers of Registrable Shares, if any, who may be parties to such

action; provided, however, that if any indemnified party shall

have reasonably concluded that there may be a conflict between the positions or

defenses of such indemnified party and the positions or defenses of other

indemnified parties or other purchasers in conducting the defense of any such

action, the indemnified party shall have the right to select a separate counsel

to assume such legal defenses) or (B) the indemnifying party shall not have

employed counsel reasonably satisfactory to the indemnified party to represent

the indemnified party within a reasonable time after notice of commencement of

action, in each of which cases the reasonable fees and expenses of counsel

shall be at the expense of the indemnifying party.  The indemnity agreements contained in subsections 5(c)(i) and

(ii) shall not apply to amounts paid in settlement of any action if such

settlement is effected without the prior written consent of the indemnifying

party (which consent shall not be unreasonably withheld or delayed), or to

amounts paid in settlement of any action if the indemnifying party is not fully

released under such settlement from any claim or liability under such action.

 

(iv)          If

the indemnification provided for in this subsection 5(c) is required by its

terms but is for any reason held to be unavailable to or otherwise insufficient

to hold harmless an indemnified party under paragraphs (i), (ii) or (iii) of

this subsection 5(c) in respect to any losses, claims, damages, liabilities or

expenses referred to herein, then each applicable indemnifying party shall

contribute to the amount paid or payable by such indemnified party as a result

of any losses, claims, damages, liabilities or expenses referred to herein (A)

in such proportion as is appropriate to reflect the relative benefits received

by the Company and the Registered Holder from the issuance of this Warrant or

(B) if the allocation provided by clause (A) above is not permitted by

applicable law, in such proportion as is appropriate to reflect not only the

relative benefits referred to in clause (A) above but the relative fault of the

Company and the Registered Holder in connection with the statements or

omissions or inaccuracies in the representations and warranties in this Warrant

which resulted in such losses, claims, damages, liabilities or expenses, as

well as any other relevant equitable considerations.  The respective relative benefits received by the Company on the

one hand and the Registered Holder on the other shall be deemed to be in the

same proportion as the amount paid by the Registered Holder to the Company

pursuant to this Warrant for the Registrable Shares that were sold pursuant to

any Registration Statement bears to the difference (the “Difference”) between

the amount the Registered Holder paid for such Registrable Shares and 

 

10

 

the amount received by the Registered Holder from the sale of such

Registrable Shares.  The relative fault

of the Company and the Registered Holder 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 or

the inaccurate or the alleged inaccurate representation and/or warranty relates

to information supplied by the Company or by the Registered Holder and the

parties’ relative intent, knowledge, access to information and opportunity to

correct or prevent such statement or omission. 

The amount paid or payable by a party as a result of the losses, claims,

damages, liabilities and expenses referred to above shall be deemed to include,

subject to the limitations set forth in paragraph (iii) of this subsection

5(c), any legal or other fees or expenses reasonably incurred by such party in

connection with investigating or defending any action or claim.  The provisions set forth in paragraph (iii)

of this subsection 5(c) with respect to the notice of the threat or commencement

of any threat or action shall apply if a claim for contribution is to be made

under this paragraph (iv); provided, however, that no additional

notice shall be required with respect to any threat or action for which notice

has been given under paragraph (iii) for purposes of indemnification.  The Company and the Registered Holder agree

that it would not be just and equitable if contribution pursuant to this

subsection 5(c) were determined solely by pro rata allocation or by any other

method of allocation which does not take account of the equitable

considerations referred to in this paragraph. 

Notwithstanding the provisions of this subsection 5(c), the Registered

Holder shall not be required to contribute any amount in excess of the amount

by which the Difference exceeds the amount of any damages that the Registered

Holder 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.

 

6.             Notices

of Record Date, etc.  In case:

 

(a)           the

Company shall take a record of the holders of its Common Stock (or other stock

or securities at the time deliverable upon the exercise of this Warrant) for

the purpose of entitling or enabling them to receive any dividend or other

distribution, or to receive any right to subscribe for or purchase any shares

of stock of any class or any other securities, or to receive any other right;

or

 

(b)           of

any capital reorganization of the Company, any reclassification of the capital

stock of the Company, any consolidation or merger of the Company with or into

another corporation (other than a consolidation or merger in which the Company

is the surviving entity), or any transfer of all or substantially all of the

assets of the Company; or

 

(c)           of

the voluntary or involuntary dissolution, liquidation or winding-up of the

Company;

 

then, and in each such

case, the Company will mail or cause to be mailed to the Registered Holder of

this Warrant a notice specifying, as the case may be, (i) the date on which a

record is to be taken for the purpose of such dividend, distribution or right,

and stating the amount and character of such dividend, distribution or right,

or (ii) the effective date on which such reorganization, reclassification,

consolidation, merger, transfer, dissolution, liquidation or 

 

11

 

winding-up is to take

place, and the time, if any is to be fixed, as of which the holders of record

of Common Stock (or such other stock or securities at the time deliverable upon

the exercise of this Warrant) shall be entitled to exchange their shares of

Common Stock (or such other stock or securities) for securities or other

property deliverable upon such reorganization, reclassification, consolidation,

merger, transfer, dissolution, liquidation or winding-up.  Such notice shall be mailed at least ten

(10) days prior to the record date or effective date for the event specified in

such notice.

 

7.             Reservation

of Stock.  The Company will at all

times reserve and keep available, solely for issuance and delivery upon the

exercise of this Warrant, such shares of Common Stock and other stock,

securities and property, as from time to time shall be issuable upon the

exercise of this Warrant.

 

8.             Replacement

of Warrants.  Upon receipt of

evidence reasonably satisfactory to the Company of the loss, theft, destruction

or mutilation of this Warrant and (in the case of loss, theft or destruction)

upon delivery of an indemnity agreement (with surety if reasonably required) in

an amount reasonably satisfactory to the Company, or (in the case of

mutilation) upon surrender and cancellation of this Warrant, the Company will

issue, in lieu thereof, a new Warrant of like tenor.

 

9.             Termination

In Certain Events.  In the event of

a transfer of all or substantially all of the assets of the Company or a merger

or consolidation of the Company with or into any other entity (other than a

merger the sole purpose of which is to change the state of incorporation of the

Company) or a dissolution or winding-up or the adoption of a plan of

liquidation of the Company, this Warrant shall terminate on the effective date

of such transfer, merger, consolidation, dissolution, winding-up or adoption

(the “Transaction Effective Date”) and shall become null and void, provided

that the Registered Holder shall have received the prior notice with respect to

such transaction or event required by Section 6 hereof, and provided further,

however, that if this Warrant shall not have otherwise terminated or

expired, the Registered Holder hereof shall have the right until 5:00 p.m.

(Eastern Standard Time) on the day immediately prior to the Transaction

Effective Date to exercise its rights hereunder to the extent not previously

exercised.

 

10.           Warrant

Register; Transfers, etc.

 

(a)           The

Company will maintain a register containing the names and addresses of the

Registered Holders of this Warrant.  Any

Registered Holder may change its, his or her address as shown on the warrant

register by written notice to the Company requesting such change.

 

(b)           This

Warrant shall not be transferable by the Registered Holder without the prior written

consent of the Company and shall be exercisable only by the Registered

Holder.  Without the prior written

consent of the Company, the Warrant shall not be assigned, pledged or

hypothecated in any way (whether by operation of law or otherwise) and shall

not be subject to execution, attachment or similar process.  Any attempted transfer, assignment, pledge,

hypothecation or other disposition of the Warrant or of any rights granted

hereunder 

 

12

 

contrary to the provisions of this Paragraph, or the levy of any

attachment or similar process upon the Warrant or such rights, shall be null

and void.

 

(c)           Until

any transfer of this Warrant is made in the warrant register, the Company may

treat the Registered Holder of this Warrant as the absolute owner hereof for

all purposes; provided, however, that if and when this Warrant is

properly assigned in blank, the Company may (but shall not be obligated to)

treat the bearer hereof as the absolute owner hereof for all purposes,

notwithstanding any notice to the contrary.

 

11.           Mailing

of Notices, etc.  Any notice

required or permitted to be given to the Company or the Registered Holder under

this Warrant shall be made in writing at the address or facsimile number of such

person specified below (or such other address or facsimile number as such

person may specify in a written notice to the other party) and shall be deemed

to have been given, if delivered personally or sent via electronic facsimile

transmission with confirmation received, on the date of delivery or, if sent

via nationally recognized overnight express courier with established tracking

capability marked for delivery on the next business day, on the earlier of the

date of delivery, as demonstrated by the tracking records of the courier, or

two (2) business days after deposit of the notice with the courier:

 

if to the Company, to:

 

Inverness Medical Innovations, Inc.

51 Sawyer Road, Suite 200

Waltham, Massachusetts 02453

Facsimile: 

(781) 674-3939

Attention:  Ron Zwanziger, President

 

with a copy to:

 

Foley, Hoag & Eliot, LLP

One Post Office Square

Boston, Massachusetts

02109

Facsimile: (617) 832-7000

Attention:  John D. Patterson, Jr., Esq.

 

if to the Registered Holder of this Warrant, to the address furnished to

the Company in writing by the last Registered Holder of this Warrant who shall

have furnished an address to the Company in writing.

 

12.           No

Rights as Stockholder.  Until the

exercise of this Warrant, the Registered Holder of this Warrant shall not have

or exercise any rights by virtue hereof as a stockholder of the Company.

 

13.           Change

or Waiver.  Any term of this Warrant

may be changed or waived only by an instrument in writing signed by the party

against which enforcement of the change or waiver is sought.

 

13

 

14.           Headings.  The headings in this Warrant are for

purposes of reference only and shall not limit or otherwise affect the meaning

of any provision of this Warrant.

 

15.           Governing

Law.  This Warrant shall be governed

by, and construed and enforced in accordance with, the substantive laws of the

Commonwealth of Massachusetts without regard to its principles of conflicts of

laws.  Any dispute arising out of or relating

to this Warrant shall be filed and prosecuted in any court of competent subject

matter jurisdiction located in Massachusetts. 

The Company and the Registered Holder hereby consent to the personal

jurisdiction of such courts over them, stipulate to the convenience, fairness

and efficiency of proceeding in such courts, and covenant not to assert any

objection to proceeding in such courts based on any alleged lack of

jurisdiction or any alleged inconvenience, unfairness or inefficiency of such

courts.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

14

 

 

IN WITNESS WHEREOF, the undersigned has caused this

Warrant to be executed by its duly authorized officer as of the date written

below.

 

	

  Date: As of December

  20, 2001

  	

  INVERNESS MEDICAL

  INNOVATIONS, INC.

  
	

   

  	

   

  
	

   

  	

  By: 

  	

  /s/ Duane L. James

  
	

   

  	

   

  	

  Name:  Duane L. James

  
	

  [Corporate Seal]

  	

   

  	

  Title:  Treasurer

  
	

   

  	

   

  
	

  ATTEST:

  	

   

  
	

   

  	

   

  
	

  /s/ Jay McNamara

  	

   

  	

   

  
	

   

  	

   

  
				

 

ACCEPTED AND AGREED:

 

ZWANZIGER FAMILY

VENTURES, LLC

 

	

  By:

  	

  /s/ Ron Zwanziger

  	

   

  
	

   

  	

  Name: Ron Zwanziger

  	 

	

   

  	

  Title: Manager

  	 

	

   

  	

   

  	 

				

 

 

EXHIBIT I

 

PURCHASE FORM

 

	

  To:

  	

  INVERNESS

  MEDICAL INNOVATIONS, INC.

  	

   

  	

  Dated:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  

 

 

The undersigned, pursuant

to the provisions set forth in the attached Warrant, hereby irrevocably elects

to purchase            shares of the

Common Stock (the “Common Stock”) covered by such Warrant and [cash or

check payment:  herewith

tenders payment of $________]  [Net Issuance:  elects pursuant to Section 1(b) of the Warrant to effect a Net

Issuance],

representing the full purchase price for such shares at the price per share

provided for in such Warrant.

 

[The provisions set forth below will

be revised appropriately by the Company in the event that the shares of Common

Stock purchased by the undersigned have been registered under the Securities Act.]

 

The undersigned is aware

that the Common Stock has not been registered under the Securities Act of 1933,

as amended (the “Securities Act”), or any state securities laws.  The undersigned understands that the reliance

by the Company on exemptions under the Securities Act is predicated in part

upon the truth and accuracy of the statements of the undersigned in this

Purchase Form.

 

The undersigned

represents and warrants that (1) it has been furnished with all information

which it deems necessary to evaluate the merits and risks of the purchase of

the Common Stock; (2) it has had the opportunity to ask questions concerning

the Common Stock and the Company and all questions posed have been answered to

its satisfaction; (3) it has been given the opportunity to obtain any

additional information it deems necessary to verify the accuracy of any

information obtained concerning the Common Stock and the Company; and (4) it

has such knowledge and experience in financial and business matters that it is

able to evaluate the merits and risks of purchasing the Common Stock and to

make an informed investment decision relating thereto.

 

The undersigned is an

“accredited investor,” as such term is defined in Rule 501 promulgated by the

Securities and Exchange Commission (the “SEC”) under the Securities Act.

 

The undersigned hereby

represents and warrant that it is purchasing the Common Stock for its own

account for investment and not for, with a view to, or in connection with, the

distribution or resale of all or any part of the Common Stock.

 

The undersigned

understands that because the Common Stock have not been registered under the

Securities Act, it must continue to bear the economic risk of the investment

for an indefinite time and the Common Stock cannot be sold unless the Common

Stock is subsequently registered under applicable federal and state securities

laws or an exemption from such registration is available.

 

 

 

The undersigned agrees

that it will in no event sell or distribute or otherwise dispose of all or any

part of the Common Stock unless (1) there is an effective registration

statement under the Securities Act and registration or qualification under

applicable state securities laws covering any such transaction involving the

Common Stock or (2) the Company receives an opinion of its legal counsel

(concurred in by legal counsel for the Company) stating that such transaction

is exempt from registration and qualification or the Company otherwise

satisfies itself that such transaction is exempt from registration and

qualification.

 

The undersigned consents

to the placing of a legend on its certificate for the Common Stock stating that

the Common Stock has not been registered and setting forth the restriction on

transfer contemplated hereby and to the placing of a stop transfer order on the

books of the Company and with any transfer agents against the Common Stock

until the Common Stock may be legally resold or distributed without

restriction.

 

The undersigned

understands that, at the present time, the undersigned may not be entitled to

rely on Rule 144 promulgated by the SEC under the Securities Act for the resale

or distribution of the Securities.  The

undersigned understands that, except as set forth in the Warrant or as may

otherwise have been separately and expressly agreed by the Company and the

Registered Holder, the Company has no obligation to the undersigned to register

the Common Stock under the Securities Act and has not represented that it will

register the Common Stock.

 

The undersigned has

considered the federal and state income tax implications of the exercise of the

Warrant and the purchase and subsequent sale of the Common Stock.

 

____________________

 

Dated:_______________

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