Document:

Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

Endocardial Solutions, Inc.

1350 Energy Lane, Suite 110

St. Paul, Minnesota 55108

 

The undersigned (the “Investor”),
hereby confirms its agreement with you as follows:

 

1.                                      This Stock Purchase Agreement (the “Agreement”)
is made as of the date set forth below among Endocardial Solutions, Inc., a
Delaware corporation (the “Company”), and the Investor.

 

2.                                      The Company has authorized the sale and
issuance of up to 1,600,000 shares (the “Shares”) of common stock of the Company,
$.01 par value per share (the “Common Stock”), to certain investors in a
private placement (the “Offering”).

 

3.                                      The Company and the Investor agree that
the Investor will purchase from the Company and the Company will issue and sell
to the Investor              
Shares at a purchase price of $4.25 per Share, or an aggregate purchase price
of
$                                     ,
pursuant to the Terms and Conditions for Purchase of Shares attached hereto as
Annex I and incorporated herein by this reference as if fully set forth
herein.  Unless otherwise requested by
the Investor in Exhibit A, certificates representing the Shares purchased by
the Investor will be registered in the Investor’s name and address as set forth
below.

 

4.                                      The Investor represents that, except as
set forth below, (a) it has had no position, office or other material
relationship within the past three years with the Company or its affiliates,
(b) neither it, nor any group of which it is a member or to which it is
related, beneficially owns (including the right to acquire or vote) any
securities of the Company and (c) it has no direct or indirect affiliation or
association with any National Association of Securities Dealers, Inc. (“NASD”)
member.  Exceptions:

 

 

(If no exceptions, write “none.” 
If left blank, response will be deemed to be “none.”)

 

Please confirm that the
foregoing correctly sets forth the agreement between us by signing in the space
provided below for that purpose.

 

	
   

  	
  Dated as of:  August 20, 2003 and August 25, 2003

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “INVESTOR”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  
	
  AGREED AND
  ACCEPTED:

  	
   

  
	
  Endocardial
  Solutions, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								

 

1

 

ANNEX I

 

TERMS AND CONDITIONS
FOR PURCHASE OF SHARES

 

1.                                      Agreement to Sell and Purchase the Shares; Subscription Date.

 

1.1                               Purchase and Sale.  At the
Closing (as defined in Section 2), the Company will sell to the Investor, and
the Investor will purchase from the Company, upon the terms and conditions
hereinafter set forth, the number of Shares set forth in paragraph 3 of the
Stock Purchase Agreement to which these Terms and Conditions for Purchase of
Shares are attached as Annex I and at the purchase price set forth in such
paragraph.

 

1.2                               Other Investors.  As part of
the Offering, the Company proposes to also enter into a Stock Purchase
Agreement with certain other investors (the “Other Investors”), and the
Company expects to complete sales of Shares to them.  (The Investor and the Other Investors are hereinafter sometimes
collectively referred to as the “Investors,” and this Agreement and the
Stock Purchase Agreements executed by the Other Investors are hereinafter
sometimes collectively referred to as the “Agreements.”)  The Company may accept executed Agreements from Investors for the
purchase of Shares commencing upon the date on which the Company provides the
Investors with the proposed purchase price per Share and concluding upon the
date (the “Subscription Date”) on which the Company has notified U.S. Bancorp
Piper Jaffray Inc. (in its capacity as placement agent for the Shares, the “Placement
Agent”) in writing that it is no longer accepting Agreements for the
purchase of Shares in the Offering (which shall not be later than the Closing
Date).  Each Investor must complete the
Stock Purchase Agreement, the Stock Certificate Questionnaire (attached as
Exhibit A hereto) and the Investor Questionnaire (attached as Exhibit B hereto)
in order to purchase Shares in the Offering.

 

1.3                               Placement Agent Fee.  Investor
acknowledges that the Company intends to pay the Placement Agent a fee in
respect of the sale of Shares to the Investor.

 

The Company shall
indemnify and hold harmless the Investor from and against all fees, commissions
or other payments owing by the Company to the Placement Agent or any other
person or firm acting on behalf of the Company hereunder.

 

2.                                      Delivery of the Shares at Closing.  The
completion of the purchase and sale of the Shares (the “Closing”) shall occur at a
place and time, no later than August 22, 2003 (the “Closing Date”), to be
specified by the Company and the Placement Agent, and of which the Investors
will be notified in advance by the Placement Agent.  At the Closing, the Company shall deliver to the Investor one or
more stock certificates representing the number of Shares set forth in
paragraph 3  of the Stock Purchase
Agreement, each such certificate to be registered in the name of the Investor
or, if so indicated on the Stock Certificate Questionnaire attached hereto as
Exhibit A, in the name of a nominee designated by the Investor provided that,
if requested by the Investor, stock certificates representing such Shares shall
be delivered in escrow to such Investor’s agent prior to the Closing, to be
held until the completion of the Closing. 
In addition, on or prior to the Closing Date, the Company shall cause
counsel to the Company to deliver to the Investors a legal opinion
substantially in the form attached hereto as Exhibit D.

 

The Company’s
obligation to issue and sell the Shares to the Investor shall be subject to the
following conditions, any one or more of which may be waived by the Company:
(a) receipt by the Company of a certified bank check or wire transfer of funds
in the full amount of the purchase price for the Shares being purchased
hereunder as set forth in paragraph 3 of the Stock Purchase Agreement; (b)
completion of purchases and sales under the Agreements with the Other Investors
of not less than           
shares of Common Stock; and (c) the accuracy of the representations and
warranties made by the Investors and the fulfillment of those undertakings of
the Investors to be fulfilled prior to the Closing.

 

The Investor’s
obligation to purchase the Shares shall be subject to the following conditions,
any one or more of which may be waived by the Investor: (a) the completion by
the Company of the purchase and sale to the Investor and the Other Investors,
on the Closing Date, of not less than
                         
(             )
shares of Common

 

2

 

Stock; (b)
evidence satisfactory to the Investor that the Shares have been issued to the
Investor (which may be in the form of a facsimile transmission of a copy of the
certificate representing the Shares); (c) the delivery to the Investor by
counsel to the Company of a legal opinion in the form attached hereto as
Exhibit D; (d) the representations and warranties of the Company contained in
Section 3 being true and correct on and as of such Closing with the same
effect as though such representations and warranties had been made on and as of
the date of such Closing; (e) the absence of any order, writ, injunction,
judgment or decree that questions the validity of the Agreements or the right
of the Company to enter into such Agreements or to consummate the transactions
contemplated hereby and thereby; and (f) the delivery to the Investor by the
Secretary or Assistant Secretary of the Company of a certificate stating that
the condition specified in part (d) of this paragraph has been fulfilled.

 

3.                                      Representations, Warranties and Covenants of the Company. 
Except as otherwise described in the Company’s Annual Report on Form
10-K for the year ended December 31, 2002 (and any amendments thereto
filed prior to the date hereof), the Company’s Proxy Statement for its 2003
Annual Meeting of Stockholders, or the Company’s Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2003 and June 30, 2003 (and any amendments
thereto filed prior to the date hereof) or any of the Company’s Current Reports
on Form 8-K filed since January 1, 2003 (collectively, the “SEC Reports”),
the Company hereby represents and warrants to, and covenants with, the Investor
as of the date hereof and the Closing Date, as follows:

 

3.1                               Organization.  Each of the Company and its Subsidiaries
(as defined in Rule 405 under the Securities Act, as amended (the “Securities
Act”)) is duly incorporated and validly existing in good standing
under the laws of the jurisdiction of its incorporation.  Each of the Company and its Subsidiaries has
full power and authority to own, operate and occupy its properties and to
conduct its business as presently conducted and is registered or qualified to
do business and in good standing in each jurisdiction in which it owns or leases
property or transacts business and where the failure to be so qualified would
have a material adverse effect upon the Company and its Subsidiaries taken as a
whole, or the business, financial condition, properties, operations or assets
of the Company and its Subsidiaries taken as a whole, or the Company’s ability
to perform its obligations under the Agreements (“Material Adverse Effect”),
and no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.

 

3.2                               Due Authorization.  The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreements,
and the Agreements have been duly authorized and validly executed and delivered
by the Company and constitute legal, valid and binding agreements of the
Company enforceable against the Company in accordance with their terms, except
as rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

3.3                               Non-Contravention.  The execution and delivery of the
Agreements, the issuance and sale of the Shares to be sold by the Company under
the Agreements, the fulfillment of the terms of the Agreements and the
consummation of the transactions contemplated thereby will not (A) result
in conflict with or constitute a violation of, or default (with the passage of
time or otherwise) under, (i) any bond, debenture, note or other evidence
of indebtedness, or any lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or their respective properties are bound, where such conflict,
violation or default is reasonably expected to result in a Material Adverse
Effect, (ii) the certificate of incorporation, by-laws or other
organizational documents of the Company or any of its Subsidiaries, or
(iii) any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority binding upon the Company
or any of its Subsidiaries or their respective properties, where such conflict,
violation or default is likely to result in a Material Adverse Effect or
(B) result in the creation or imposition of any lien, encumbrance, claim,
security interest or restriction whatsoever upon any of the material properties
or assets of the Company or any of its Subsidiaries or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in
any material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject. 
No consent,

 

3

 

approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body in the United States is required for the
execution and delivery of the Agreements by the Company and the valid issuance
or sale of the Shares by the Company pursuant to the Agreements, other than
such as have been made or obtained, and except for any filings required to be
made under federal or state securities laws.

 

3.4                               Capitalization.  The outstanding capital stock of the
Company as of June 30, 2003 is as described in the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2003.  The Company has not issued any capital stock
since June 30, 2003 other than pursuant to (i) the exercise of
employee stock options under the stock option plans disclosed in the SEC
Reports and (ii) the exercise of rights under the Company’s Employee Stock
Purchase Plan disclosed in the SEC Reports. 
The Shares to be sold pursuant to the Agreements have been duly
authorized, and when issued and paid for in accordance with the terms of the
Agreements, will be duly and validly issued, fully paid and nonassessable.  The outstanding shares of capital stock of
the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with the registration
requirements of federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities.  Except for options
issued under the Company’s stock option plans, warrants outstanding as
described in the SEC Reports and rights under the Company’s Employee Stock
Purchase Plan or Rights Agreement with Wells Fargo Bank Minnesota (formerly
Norwest Bank Minnesota) as Rights Agent, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company, or any
contract, commitment, agreement, understanding or arrangement of any kind, in
either case to which the Company is a party and providing for the issuance or
sale of any capital stock of the Company, any such convertible or exchangeable
securities or any such rights, warrants or options.  Without limiting the foregoing, no preemptive right, co-sale
right, registration right, right of first refusal or other similar right exists
with respect to the issuance and sale of the Shares, except as provided in the
Agreements.  There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Common Stock to which the Company is a party. 
Other than one share held by the Chief Executive Officer of the Company
for compliance with local law, the Company owns the entire equity interest in
the Subsidiaries, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest.

 

3.5                               Legal Proceedings.  There is no material legal or
governmental proceeding pending, or to the knowledge of the Company,
threatened, to which the Company or any of its Subsidiaries is a party or of
which the business or property of the Company or any of its Subsidiaries is
subject that is required to be disclosed and that is not so disclosed in the
SEC Reports.  Neither the Company nor
any of its Subsidiaries is a party to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other government body which is material to the business or operation of the
Company and its Subsidiaries, taken as a whole.

 

3.6                               No Violations.  Neither the Company nor any of its Subsidiaries
is in violation of its certificate of incorporation, bylaws or other
organizational documents, or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or any of its Subsidiaries, which
violation, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect, nor is the Company or any of its Subsidiaries in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in the performance of any bond,
debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound or by which the property of the Company or any
of its Subsidiaries is bound, which default is reasonably likely to have a
Material Adverse Effect.

 

3.7                               Governmental Permits, Etc. 
With the
exception of the matters which are dealt with separately in Sections 3.1,
3.11, 3.12 and 3.21, each of the Company and its Subsidiaries has all necessary
franchises, licenses, certificates and other authorizations from any foreign,
federal, state or local government or governmental agency, department or body
that are currently necessary for the operation of the business of the Company
and its Subsidiaries as currently conducted, except where the failure to
currently possess such franchises, licenses, certificates and other
authorizations is not reasonably be expected to have a Material Adverse Effect.

 

4

 

3.8                               Intellectual Property.

 

(a)                                  Except for matters which are not
reasonably likely to have a Material Adverse Effect, (i) each of the Company
and its Subsidiaries has ownership of, or a license or other legal right to
use, all patents, copyrights, trade secrets, trademarks, customer lists,
designs, manufacturing or other processes, computer software, systems, data
compilation, research results or other proprietary rights used in the business
of the Company or its Subsidiaries (collectively, “Intellectual Property”) and
(ii) all of the Intellectual Property owned by the Company or its Subsidiaries
consisting of patents, registered trademarks and registered copyrights have
been duly registered in, filed in or issued by the United States Patent and
Trademark Office, the United States Register of Copyrights or the corresponding
offices of other jurisdictions and have been maintained and renewed in
accordance with all applicable provisions of law and administrative regulations
in the United States and/or such other jurisdictions.

 

(b)                                  Except for matters which are not
reasonably likely to have a Material Adverse Effect, all material licenses or
other material agreements under which (i) the Company or any of its
Subsidiaries employs rights in Intellectual Property, or (ii) the Company or
any of its Subsidiaries has granted rights to others in Intellectual Property
owned or licensed by the Company or any of its Subsidiaries, are in full force
and effect, and there is no default by the Company or any of its Subsidiaries
with respect thereto.

 

(c)                                  The Company believes that it has taken
all steps reasonably required in accordance with sound business practice and
business judgment to establish and preserve the Company’s ownership of all
material Intellectual Property owned by the Company or its Subsidiaries.

 

(d)                                  Except for matters which are not reasonably
likely to have a Material Adverse Effect, to the knowledge of the Company, (i)
the present business, activities and products of the Company and its
Subsidiaries do not infringe any intellectual property of any other person;
(ii) neither the Company nor any of its Subsidiaries is making unauthorized use
of any confidential information or trade secrets of any person; and (iii) the
activities of any of the employees on behalf of the Company or any of its
Subsidiaries do not violate any agreements or arrangements related to
confidential information or trade secrets of persons other than the Company or
its Subsidiaries or restricting any such employee’s engagement in business
activities of any nature.

 

(e)                                  No proceedings are pending, or to the
knowledge of the Company, threatened, which challenge the rights of the Company
or any of its Subsidiaries in respect of the Company’s or any of its
Subsidiaries’ right to the use of the Intellectual Property, except for matters
which are not reasonably likely to have a Material Adverse Effect.

 

3.9                               Financial Statements. 
The
consolidated financial statements of the Company and the related notes
contained in the SEC Reports present fairly and accurately in all material
respects, in accordance with generally accepted accounting principles, the
consolidated financial position of the Company and its Subsidiaries as of the
dates indicated, and the results of their operations, cash flows and the
changes in stockholders’ equity for the periods therein specified, subject, in
the case of unaudited financial statements for interim periods, to normal
year-end audit adjustments.  Such
consolidated financial statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods therein specified, except that
unaudited financial statements may not contain all footnotes required by
generally accepted accounting principles.

 

3.10                        No Material Adverse Change.  Except as
disclosed in the SEC Reports or in Section 3.6, since June 30, 2003, there
has not been (i) a change that has had or is reasonably likely to have a
Material Adverse Effect, (ii) any obligation, direct or contingent, that is
material to the Company or any of its Subsidiaries considered as one
enterprise, incurred by the Company or any of its Subsidiaries, except
obligations incurred in the ordinary course of business, (iii) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company or any of its Subsidiaries, or (iv) any loss or damage (whether or not
insured) to the physical property of the Company or any of its Subsidiaries
which has been sustained which has a Material Adverse Effect.

 

5

 

3.11                        Nasdaq Compliance.  The Company’s Common Stock is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”), and is listed on the Nasdaq National Market (the “Nasdaq Stock
Market”), and the Company has taken no action designed to, or which
to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act or delisting the Common Stock from
the Nasdaq Stock Market.  The issuance
of the Shares does not require shareholder approval, including, without
limitation, pursuant to the Nasdaq Marketplace Rules.

 

3.12                        Reporting Status.  The Company
has timely made all filings required under the Exchange Act during the 12
months preceding the date of this Agreement, and all of those documents
complied in all material respects with the Securities and Exchange Commission’s
(the “SEC”)
requirements as of their respective filing dates, and the information contained
therein as of the respective dates thereof did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.  The Company is currently eligible to
register the resale of Common Stock in a secondary offering on a registration
statement on Form S-3 under the Securities Act.

 

3.13                        No Manipulation of Stock. 
The
Company has not taken and will not, in violation of applicable law, take any
action outside the ordinary course of business designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares.

 

3.14                        Accountants.  Ernst &
Young LLP, who expressed their opinion with respect to the consolidated
financial statements to be incorporated by reference from the Company’s Annual
Report on Form 10-K for the year ended December 31, 2002 into the
Registration Statement (as defined below) and the prospectus which forms a part
thereof (the “Prospectus”), have advised the Company that they are, and to the
knowledge of the Company they are, independent accountants as required by the
Securities Act and the rules and regulations promulgated thereunder (the “Rules and
Regulations”).

 

3.15                        Contracts.  Except for
matters which are not reasonably likely to have a Material Adverse Effect, the
contracts listed as exhibits to the SEC Reports that are material to the
Company, other than those contracts that are substantially or fully performed
or expired by their terms, are in full force and effect on the date hereof, and
none of the Company, its Subsidiaries nor, to the Company’s knowledge, any
other party to such contracts is in breach of or default under any of such
contracts.

 

3.16                        Taxes.  Except for matters which are
not reasonably expected to have a Material Adverse Effect, the Company has
filed all necessary federal, state and foreign income and franchise tax returns
and has paid or accrued all taxes shown as due thereon, and the Company has no
knowledge of a tax deficiency which has been asserted or threatened against the
Company.

 

3.17                        Transfer Taxes.  On the
Closing Date, all stock transfer or other taxes (other than income taxes) which
are required to be paid in connection with the sale and transfer of the Shares
hereunder will be, or will have been, fully paid or provided for by the Company
and the Company will have complied with all laws imposing such taxes.

 

3.18                        Investment Company.  The Company
is not an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for an investment company, within the meaning of the
Investment Company Act of 1940, as amended.

 

3.19                        Insurance.  The Company
and its Subsidiaries maintain insurance of the types and in the amounts that
the Company reasonably believes is adequate for their businesses, including,
but not limited to, insurance covering real and personal property owned or
leased by the Company and its Subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against by similarly
situated companies, all of which insurance is in full force and effect.

 

6

 

3.20                        Offering Materials.  The Company
has not in the past nor will it hereafter take any action to sell, offer for
sale or solicit offers to buy any securities of the Company which would bring
the offer or sale of the Shares as contemplated by this Agreement within the
provisions of Section 5 of the Securities Act.

 

3.21                        Listing.  The Company
shall comply with all requirements of the NASD with respect to the issuance of
the Shares and the prompt listing thereof on the Nasdaq Stock Market, as well
as the continued maintenance of such listing.

 

3.22                        Related Party Transactions.  Except as
disclosed in the SEC Reports, no transaction has occurred between or among the
Company, or any of its Subsidiaries and their affiliates, officers or directors
or any affiliate or affiliates of any such officer or director that with the
passage of time will be required to be disclosed pursuant to Section 13, 14 or
15(d) of the Exchange Act.

 

3.23                        Books and Records.  The books,
records and accounts of the Company and its Subsidiaries accurately and fairly
reflect, in reasonable detail, the transactions in, and dispositions of, the
assets of, and the operations of, the Company and its Subsidiaries.  The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

 

3.24                        Disclosure.  The Company confirms that neither it nor
any other Person acting on its behalf has provided Investor, or will provide
Investor without Investor’s written consent, with any information that
constitutes or might constitute material, nonpublic information, except the
material terms and conditions of this transaction, including the provisions of
the Agreement, which shall be fully disclosed pursuant to Section 6.6 hereof,
or Suspension Notices pursuant to Section 6.2(c). The Company understands and
confirms that Investor will rely on the foregoing representations in effecting
transactions in securities of the Company.

 

4.                                      Representations, Warranties and Covenants of the Investor.

 

4.1                               Investor Knowledge and Status.  The
Investor, solely on behalf of itself, represents and warrants to, and covenants
with, the Company that: (i) the Investor is an “accredited investor” as defined
in Regulation D under the Securities Act, is knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to,
investments in securities presenting an investment decision like that involved
in the purchase of the Shares, and has requested, received, reviewed and
considered all information it deemed relevant in making an informed decision to
purchase the Shares; (ii) the Investor understands that the Shares are
“restricted securities” and have not been registered under the Securities Act
and is acquiring the number of Shares set forth in paragraph 3 of the Stock
Purchase Agreement in the ordinary course of its business and for its own
account for investment only, has no present intention of distributing any of
such Shares and has no arrangement or understanding with any other persons regarding
the distribution of such Shares (this representation and warranty not
constituting a covenant by the Investor to hold the Shares for any minimum
period of time or limiting the Investor’s right to sell Shares at any time
pursuant to the Registration Statement or otherwise); (iii) the Investor will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose
of (or solicit any offers to buy, purchase or otherwise acquire or take a
pledge of) any of the Shares except in compliance with the Securities Act,
applicable state securities laws and the respective rules and regulations
promulgated thereunder; (iv) the Investor has answered all questions in
paragraph 3 of the Stock Purchase Agreement and the Investor Questionnaire
attached hereto as Exhibit B for use in preparation of the Registration
Statement and the answers thereto are true and correct as of the date hereof
and will be true and correct as of the Closing Date; (v) the Investor will
notify the Company promptly of any change in any of such information until such
time as the Investor has sold all of its Shares or until the Company is no
longer required to keep the Registration Statement effective; and (vi) the
Investor has, in connection with its decision to purchase the number of Shares
set forth in paragraph 3 of the Stock Purchase Agreement, relied only upon the
representations and warranties of the Company contained herein and all publicly
available information

 

7

 

disclosed by the Company.  Investor understands that the issuance of the Shares to the
Investor has not been registered under the Securities Act, or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of the Investor’s investment intent as expressed herein and the
information provided in the Investor Questionnaire.

 

4.2                               International Actions.  The Investor
acknowledges, represents and agrees that no action has been or will be taken in
any jurisdiction outside the United States by the Company or the Placement
Agent that would permit an offering of the Shares, or possession or
distribution of offering materials in connection with the issue of the Shares,
in any jurisdiction outside the United States. 
If the Investor is located outside the United States, it has or will
take all actions necessary for the sale of the Shares to comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.

 

4.3                               Registration Required.  The Investor
hereby covenants with the Company not to make any sale of the Shares without
complying with the provisions of this Agreement, including Section 6.2 hereof,
and without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied (unless the Investor is selling such Shares in a
transaction not subject to the prospectus delivery requirement), and the
Investor acknowledges that the certificates evidencing the Shares will be
imprinted with a legend that prohibits their transfer except in accordance
therewith.  The Investor acknowledges
that as set forth in, and subject to the provisions of, Section 6.2, there may
occasionally be times when the Company, based on the advice of its counsel,
determines that it must suspend the use of the Prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the SEC or
until the Company has amended or supplemented such Prospectus.

 

4.4                               Power and Authority.  The Investor
further represents and warrants to, and covenants with, the Company that (i)
the Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and (ii) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Investors herein may be legally
unenforceable.

 

4.5                               Short Positions.  The Investor
will not use any of the Shares acquired pursuant to this Agreement to cover any
short position in the Common Stock if doing so would be in violation of
applicable securities laws.

 

4.6                               No Investment, Tax or Legal Advice. 
The Investor understands that nothing in the SEC Reports, this
Agreement, or any other materials presented to the Investor in connection with
the purchase and sale of the Shares constitutes legal, tax or investment
advice.  The Investor has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of Shares.

 

4.7                               Confidential Information.  The Investor
covenants that from the date hereof it will maintain in confidence all material
terms and conditions of this transaction and the receipt and content of any
Suspension Notice (as defined in Section 6.2(c)) until such information (a)
becomes generally publicly available other than through a violation of this
provision by the Investor or its agents or (b) is required to be disclosed
in legal proceedings (such as by deposition, interrogatory, request for
documents, subpoena, civil investigation demand, filing with any governmental
authority or similar process); provided, however, that the foregoing obligation
is subject to Investor’s consent to receive such information as provided in
Section 3.24; provided, further, that before making any disclosure in reliance
on this Section 4.7, the Investor will give the Company at least 15 days prior
written notice (or such shorter period as required by law) specifying the
circumstances giving rise thereto and will furnish only that portion of the
non-public information which is legally required and will exercise its best
efforts to obtain reliable assurance that confidential treatment will be
accorded any non-public information so furnished.

 

8

 

4.8                               Acknowledgments Regarding Placement Agent. 
The Investor acknowledges that the Placement Agent has acted solely as
placement agent for the Company in connection with the Offering of the Shares
by the Company.

 

5.                                      Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to
this Agreement or by the Placement Agent, all covenants, agreements,
representations and warranties made by the Company and the Investor herein
shall survive the execution of this Agreement, the delivery to the Investor of
the Shares being purchased and the payment therefor.

 

6.                                      Registration of the Shares; Compliance with the Securities
Act.

 

6.1                               Registration Procedures and Expenses.  The Company shall:

 

(a)                                  subject to receipt of necessary
information from the Investors reasonably requested by the Company, prepare and
file with the SEC, within ten (10) business days after the Closing Date, a
registration statement on Form S-3 (the “Registration Statement”) to enable the
resale of the Shares by the Investors from time to time through the automated
quotation system of the Nasdaq Stock Market or in privately-negotiated
transactions, and provide the Investor at least two (2) business days to review
and provide comments to the Registration Statement before filing with the SEC;

 

(b)                                  use its best efforts, subject to receipt
of necessary information from the Investor reasonably requested by the Company,
to cause the Registration Statement to become effective as soon as practicable,
but in no event later than sixty (60) days after the Registration Statement is
filed by the Company. The Company shall notify each representative of the
Investor listed on the signature page to the Stock Purchase Agreement, if any,
of the effectiveness of the Registration Statement on the day that the SEC
declares the Registration Statement effective. 
If the Registration Statement has not been declared effective by the SEC
on or before the date that is 90 days after the Closing Date (the “Required
Effective Date”), the Company shall, on the 91st day and
each 30th day thereafter, make a payment to the Investor as partial
compensation for such delay (the “Late Registration Payments”) equal to 1% of
the purchase price paid for the Shares purchased by the Investor and not
previously sold by the Investor (but in no event to exceed 8% in the aggregate)
until the Registration Statement is declared effective by the SEC. The Late
Registration Payments will be prorated on a daily basis during each 30 day
period and will be paid to the Investor by wire transfer or check within five
business days after the earlier of (i) the end of each 30 day period
following the Required Effective Date or (ii) the effective date of the
Registration Statement;

 

(c)                                  use its best efforts to prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement current and effective for a period not exceeding, with
respect to each Investor’s Shares purchased hereunder, the earlier of (i) the
second anniversary of the Closing Date, (ii) the date on which the Investor may
sell all Shares then held by the Investor without restriction by the volume
limitations of Rule 144(e) of the Securities Act or (iii) such time as all
Shares purchased by such Investor in this Offering have been sold pursuant to a
registration statement, and to notify each Investor promptly upon the
Registration Statement and each post-effective amendment thereto, being
declared effective by the SEC;

 

(d)                                  furnish to the Investor with respect to
the Shares registered under the Registration Statement such number of copies of
the Registration Statement, Prospectuses (including supplemental prospectuses)
and preliminary versions of the Prospectus filed with the SEC (“Preliminary
Prospectuses”) in conformity with the requirements of the Securities
Act and such other documents as the Investor may reasonably request, in order
to facilitate the public sale or other disposition of all or any of the Shares
by the Investor;

 

(e)                                  file documents required of the Company
for normal blue sky clearance in states specified in writing by the Investor;
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 now so qualified or has not so consented;

 

9

 

(f)                                    bear all expenses (other than
underwriting discounts and commissions, if any) in connection with the
procedures in paragraph (a) through (e) of this Section 6.1 and the
registration of the Shares pursuant to the Registration Statement; and

 

(g)                                 advise the Investors, promptly after it
receives notice or obtains knowledge of the issuance of any stop order by the
SEC delaying or suspending the effectiveness of the Registration Statement or
of the initiation of any proceeding for that purpose; and it will promptly use
its commercially reasonable efforts to prevent the issuance of any stop order
or to obtain its withdrawal at the earliest possible moment if such stop order
should be issued.

 

With a view to
making available to the Investor the benefits of Rule 144 (or its successor
rule) and any other rule or regulation of the SEC that may at any time permit
the Investor to sell Shares to the public without registration, the Company
covenants and agrees to:  (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) such date as all of the Investor’s Shares
may be resold pursuant to Rule 144(k) or any other rule of similar effect or
(B) such date as all of the Investor’s Shares shall have been resold; (ii) file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and under the Exchange Act; and (iii) furnish
to the Investor upon request, as long as the Investor owns any Shares, (A) a
written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the
Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form
10-Q, and (C) such other information as may be reasonably requested in order to
avail the Investor of any rule or regulation of the SEC that permits the
selling of any such Shares without registration.

 

It shall be a
condition precedent to the obligations of the Company to take any action
pursuant to this Section 6.1 that the Investor shall furnish to the Company
such information regarding itself, the Shares to be sold by Investor, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Shares.

 

The Company
understands that the Investor disclaims being an underwriter, but the Investor
being deemed an underwriter by the SEC shall not relieve the Company of any
obligations it has hereunder.

 

6.2                               Transfer of Shares After Registration; Suspension.

 

(a)                                  The Investor agrees that it will not
effect any disposition of the Shares or its right to purchase the Shares that
would constitute a sale within the meaning of the Securities Act other than
transactions exempt from the registration requirements of the Securities Act,
except as contemplated in the Registration Statement referred to in Section 6.1
and as described below, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding
the Investor or its plan of distribution.

 

(b)                                  Except in the event that paragraph (c)
below applies, the Company shall: (i) if deemed necessary by the Company,
prepare and file from time to time with the SEC a post-effective amendment to
the Registration Statement or a supplement to the related Prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that such Registration Statement will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and so that, as thereafter delivered to purchasers of the Shares
being sold thereunder, such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; (ii) provide the Investor copies of
any documents filed pursuant to Section 6.2(b)(i); and (iii) upon request,
inform each Investor who so requests that the Company has complied with its
obligations in Section 6.2(b)(i) (or that, if the Company has filed a
post-effective amendment to the Registration Statement which has not yet been declared
effective, the Company will notify the Investor to that effect, will use its
reasonable efforts to secure the effectiveness of such post-effective amendment
as promptly as possible and will promptly notify the Investor pursuant to
Section 6.2(b)(i) hereof when the amendment has become effective).

 

10

 

(c)                                  Subject to paragraph (d) below, in the
event: (i) of any request by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to the Registration Statement or related Prospectus
or for additional information; (ii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose; or (iv) of any event or
circumstance which necessitates the making of any changes in the Registration
Statement or Prospectus, or any document incorporated or deemed to be
incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; then the Company shall promptly deliver a certificate in writing to
the Investor (the “Suspension Notice”) to the effect of the
foregoing (but not including any information which constitutes material
non-public information other than notice that one of the foregoing events has
occurred) and, upon receipt of such Suspension Notice, the Investor will
refrain from selling any Shares pursuant to the Registration Statement (a “Suspension”)
until the Investor’s receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus.  In
the event of any Suspension, the Company will use its reasonable best efforts
to cause the use of the Prospectus so suspended to be resumed as soon as
reasonably practicable after delivery of a Suspension Notice to the
Investors.  In addition to and without
limiting any other remedies (including, without limitation, at law or at
equity) available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions
of this Section 6.2(c).

 

(d)                                  Notwithstanding the foregoing paragraphs
of this Section 6.2, the Company shall use its best efforts to ensure that the
Investor shall not be prohibited from selling Shares under the Registration
Statement as a result of Suspensions on more than two occasions of not more
than 30 days in any twelve month period. 
If a Suspension is in effect for more than 60 days (consecutive or
non-consecutive) in any twelve-month period, the Company shall, on the 61st
day of the Suspension and each 30th day thereafter, make payments to
the Investor as partial compensation for such delay until the Suspension is
lifted.  The amount of the payments made
to the Investor will be equal to 1% of the purchase price paid for the Shares
purchased by the Investor and not previously sold by the Investor for each 30
days that sales cannot be made under the effective Registration Statement (but
in no event to exceed 8% in the aggregate) beyond the period allowed by the
previous sentence.  The number of Shares
not previously sold as specified in the previous sentence shall be determined
as of the end of the respective 30 day period. 
These payments will be prorated on a daily basis during the 30 day
period and will be paid to the Investor by check within five business days
following the later of the end of each month as to which payment is due
hereunder or two business days after the Investor has delivered to the Company
such information with respect to the number of Shares not previously sold by
the Investor (together with reasonable supporting documentation) as reasonably
requested by the Company.

 

(e)                                  If a Suspension is not then in effect,
the Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such
Shares.  Upon receipt of a request
therefor, the Company will provide an adequate number of current Prospectuses
to the Investor and to any other parties requiring such Prospectuses.

 

(f)                                    In the event of a sale of Shares by the
Investor pursuant to the Registration Statement, unless such requirement is
waived by the Company in writing, the Investor must also deliver to the
Company’s transfer agent, with a copy to the Company, a Certificate of
Subsequent Sale substantially in the form attached hereto as Exhibit C, so that
the shares may be properly transferred.

 

(g)                                 The Company agrees
that it shall, immediately prior to the Registration Statement being declared
effective, deliver to its transfer agent an opinion letter of counsel, opining
that at any time the Registration Statement is effective, the transfer agent
shall issue, in connection with the sale of the Shares,

 

11

 

certificates representing such
Shares without restrictive legend, provided the Shares are to be sold pursuant
to the prospectus contained in the Registration Statement and the transfer
agent receives a Certificate of Subsequent Sale in the form attached hereto as
Exhibit C.  Upon receipt of such
opinion, the Company shall cause the transfer agent to confirm, for the benefit
of the Investor, that no further opinion of counsel is required at the time of
transfer in order to issue such Shares without restrictive legend.

 

In the event of any sale of the Shares in accordance with this
Agreement, the restrictive legend shall be removed and the Company shall issue
a certificate without such legend to the purchaser of any such Shares, if (a)
the sale of such Shares is registered under the Registration Statement
(including registration pursuant to Rule 415 under the Securities Act); (b) the
holder has provided the Company with an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, to the
effect that a public sale or transfer of such Shares may be made without
registration under the Securities Act; or (c) such Shares are sold in
compliance with Rule 144 under the Securities Act.

 

6.3                               Indemnification.  For the purpose of this Section 6.3:

 

(a)                                  the term “Selling Stockholder” shall
include the Investor and each person, if any, who controls the Investor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act;

 

(b)                                  the term “Registration Statement” shall
include any final Prospectus, exhibit, supplement or amendment included in or
relating to, and any document incorporated by reference in, the Registration
Statement (or deemed to be a part thereof) referred to in Section 6.1; and

 

(c)                                  the term “untrue statement” shall
include any untrue statement or alleged untrue statement, or any omission or
alleged omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

(i)                                    The Company agrees to indemnify and hold
harmless each Selling Stockholder (including its investment advisor, auditors
and legal counsel) from and against any losses, claims, damages or liabilities
to which such Selling Stockholder may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon (i)
any untrue statement of a material fact contained in the Registration
Statement, (ii) any inaccuracy in the representations and warranties of the
Company contained in the Agreement or the failure of the Company to perform its
obligations hereunder or (iii) any failure by the Company to fulfill any
undertaking included in the Registration Statement, and the Company will
reimburse such Selling Stockholder for any reasonable legal expense or other
actual accountable out of pocket expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim,
provided, however, that the Company shall not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of, or is based upon,
an untrue statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the
Registration Statement or the failure of such Selling Stockholder to comply
with its covenants and agreements contained in Sections 4.1, 4.2, 4.3 or 6.2
hereof or any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Selling Stockholder prior to
the pertinent sale or sales by the Selling Stockholder.

 

(ii)                                The Investor agrees to indemnify and hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company
who signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, (i) any failure to comply with the covenants and agreements
contained in Section 4.1, 4.2, 4.3 or 6.2 hereof, or (ii) any untrue statement
of a material fact contained in the Registration Statement if such untrue
statement was made in reliance upon and in conformity

 

12

 

with written information furnished by or on behalf of
the Investor specifically for use in preparation of the Registration Statement,
and the Investor will reimburse the Company (or such officer, director or
controlling person), as the case may be, for any reasonable legal expense or
other actual accountable out-of-pocket expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim.  The Investor’s obligation to
indemnify the Company pursuant to this Section 6.3(d)(ii) shall be limited to
the extent the net amount of the proceeds received by the Investor from the
sale of the Shares pursuant to the Registration Statement exceeds the amount
paid for such Shares pursuant to this Agreement.

 

(iii)                            Promptly after receipt by any indemnified
person of a notice of a claim or the beginning of any action in respect of
which indemnity is to be sought against an indemnifying person pursuant to this
Section 6.3, such indemnified person shall notify the indemnifying person in writing
of such claim or of the commencement of such action, but the omission to so
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party under this Section 6.3 (except to the extent
that such omission materially and adversely affects the indemnifying party’s
ability to defend such action) or from any liability otherwise than under this
Section 6.3.  Subject to the provisions
hereinafter stated, in case any such action shall be brought against an indemnified
person, the indemnifying person shall be entitled to participate therein, and,
to the extent that it shall elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, shall be entitled to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person.  After notice from the indemnifying person to
such indemnified person of its election to assume the defense thereof (unless
it has failed to assume the defense thereof and appoint counsel reasonably
satisfactory to the indemnified party), such indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof, provided,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate, in the reasonable opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties.  In no event shall any indemnifying person be
liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld.  No indemnifying person shall, without the prior written consent
of the indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could reasonably
have been a party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional release of
such indemnified person from all liability on claims that are the subject
matter of such proceeding.

 

(iv)                               If the indemnification provided for in
this Section 6.3 is unavailable to or insufficient to hold harmless an
indemnified party under subsection (d)(i) or (d)(ii) above in respect of any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and the Investor on the other in connection with the statements or
omissions or other matters which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations.  The relative
fault shall be determined by reference to, among other things, in the case of
an untrue statement, whether the untrue statement relates to information
supplied by the Company on the one hand or the Investor on the other and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement. 
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by
pro rata allocation (even if the Investors were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d).  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim.  Notwithstanding the provisions
of this subsection (d), the Investor shall not be required to contribute any
amount in excess of the amount by which the net amount received by the Investor
from the sale of the Shares to which such loss relates exceeds the amount of
any damages which the Investor has otherwise been required to pay

 

13

 

by reason of such untrue statement.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  The
Investors’ obligations in this subsection to contribute are several in
proportion to their sales of Shares to which such loss relates and not joint.

 

(v)                                   The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented
by counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 6.3, and are fully informed
regarding said provisions.  They further
acknowledge that the provisions of this Section 6.3 fairly allocate the risks
in light of the ability of the parties to investigate the Company and its
business in order to assure that adequate disclosure is made in the
Registration Statement as required by the Securities Act and the Exchange Act.

 

6.4                               Termination of Conditions and Obligations.  The conditions precedent imposed by Section 4 or this
Section 6 upon the transferability of the Shares shall cease and terminate as
to any particular number of the Shares when such Shares shall have been
effectively registered under the Securities Act and sold or otherwise disposed
of in accordance with the intended method of disposition set forth in the
Registration Statement covering such Shares or at such time as an opinion of
counsel satisfactory to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.

 

6.5                               Information Available. 
So long as
the Registration Statement is effective covering the resale of Shares owned by
the Investor, the Company will furnish (or to the extent such information is
available electronically through the Company’s filings with the SEC, the
Company will make available) to the Investor:

 

(a)                                  as soon as practicable after it is
available, one copy of (i) its Annual Report to Stockholders (which Annual
Report shall contain financial statements audited in accordance with generally
accepted accounting principles by a national firm of certified public
accountants) and (ii) if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-K (the foregoing, in each case,
excluding exhibits);

 

(b)                                  upon the reasonable request of the
Investor, all exhibits excluded by the parenthetical to subparagraph (a)(ii) of
this Section 6.5 as filed with the SEC and all other information that is made
available to stockholders; and

 

(c)                                  upon the reasonable request of the
Investor, an adequate number of copies of the Prospectuses to supply to any
other party requiring such Prospectuses; and the Company, upon the reasonable
request of the Investor, will meet with the Investor or a representative
thereof at the Company’s headquarters to discuss all information relevant for
disclosure in the Registration Statement covering the Shares and will otherwise
reasonably cooperate with the Investor conducting an investigation for the
purpose of reducing or eliminating the Investor’s exposure to liability under
the Securities Act, including the reasonable production of information at the
Company’s headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with the
Investor until and unless the Investor shall have entered into a
confidentiality agreement in form and substance reasonably satisfactory to the
Company with the Company with respect thereto.

 

6.6                               Public Statements.  The Company
agrees to disclose the existence of the Offering and the material terms thereof
in a manner satisfying the requirements of Regulation FD on or before the
Closing Date.  The Company will not
issue any public statement, press release or any other public disclosure
listing Investor as one of the purchasers of the Shares without Investor’s
prior written consent, except as may be required by applicable law or rules of
any exchange on which the Company’s securities are listed.

 

7.                                      Notices.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed (A) if within
domestic United States by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express (or comparable service) or facsimile, and shall be deemed given
(i) if delivered by first-class registered or certified mail domestic, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one (1) business day after so mailed, (iii) if delivered by
International

 

14

 

Federal Express (or comparable service), two (2)
business days after so mailed, (iv) if delivered by facsimile, upon electric
confirmation of receipt and shall be delivered as addressed as follows:

 

(a)                                  if to the Company, to:

 

Endocardial Solutions, Inc.

1350 Energy Lane, Suite 110

St. Paul, MN 55108

Attention:                                         J. Robert Paulson, Jr.

Telephone:                                    (651) 523-6900

Telecopy:                                           (651) 644-7897

 

with a copy mailed to:

 

Dorsey & Whitney LLP

Suite 1500

50 South Sixth Street

Minneapolis, MN 55402

Attention:                                         Ken Cutler

Telephone:                                    (612) 340-2740

Telecopy:                                           (612) 340-7800

 

(b)                                  if to the Investor, at its address and to
the attention of the person listed, if any, on the signature page to the Stock
Purchase Agreement, or at such other address or addresses as may have been
furnished to the Company in writing in accordance with this Section 7.

 

8.                                      Changes.  This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Investor.

 

9.                                      Headings.  The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.

 

10.                               Severability.  If any provision contained in this
Agreement is determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

 

11.                               Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without giving effect to the principles of conflicts of law.

 

12.                               Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.

 

13.                               Independent Nature of Investors. 
The obligations of each Investor under any Agreement are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Agreement. The decision of each Investor to purchase Shares
as part of the Offering has been made by such Investor independently of any
other Investor.  Nothing contained
herein, and no action taken by any Investor pursuant hereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Offering. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement.

 

15Articles of Incorporation of Genoil

 

Exhibit 4.1

 

 

Articles of Incorporation of Genoil Inc. dated April 1, 1996

 

	 	 	 	 	 	 	 
	Canada Business

Corporations Act	 	
Loi regissant les societes

par actions de regime federal
	 	FORM 1

ARTICLES OF INCORPORATION

(SECTION 6)
	 	FORMULE 1

STATUTS CONSTITUTIFS

(ARTICLE 6)
	

	 	 	 
	1 — Name of Corporation	 	
Denomination de la societe
	 	 	 
	GENOIL INC.
	 	 
	

	2 — The place in Canada where the registered office is to be situated	 	
Lieu au Canada ou doit etre situe le siege social
	 	 	 
	Metropolitan Region of Montreal, Province of Quebec
	 	 
	

	3 — The classes and any maximum number of shares that
the corporation is authorized to issue	 	
Categories et tout nombre maximal d’actions que la societe est autorisee
a emettre
	 	 	 
	See Schedule 1 annexed hereto and forming an integral part
of these articles
	 	 
	 	 	 
	

	4 — Restrictions, if any, on share transfers	 	
Restrictions sur le transfert des actions, s’il y a lieu
	 	 	 
	Subject to the provisions of any unanimous shareholders agreement, no
transfer of shares in the capital of the Corporation shall be valid unless
approved by a resolution of the directors adopted according to the Canada
Business Corporations Act and the Corporation’s by-laws. However, the
effective date of a transfer of shares shall be the date on which such
transfer occurred, even though such approval may have been granted after
the said transfer.
	 	 
	

	5 — Number (or minimum and maximum number) of directors	 	
Nombre (ou nombre minimal et maximal) d’administrateurs
	 	 	 
	Minimum:
1            Maximum: 9
	 	 
	

	6 — Restrictions, if any, on business the corporation may carry on	 	
Limites imposees a l’activite commerciales de la societe, s’il y a lieu
	 	 	 
	N/A
	 	 
	

	7 — Other provisions, if any	 	
Autres dispositions, s’il y a lieu
	 	 	 
	See Schedule 2 annexed hereto and forming an integral part of
these articles.
	 	 
	

	8 — Incorporators — Fondateurs	 	 
	

	 	 	Address (include postal code)	 	 	 	 
	Name(s) — Nom(s)	 	Adresse (inclure le code postal)	 	Signature
	
	 	
	 	

	ETCOVITCH, Andrew S.
	 	1010 Sherbrooke Street West,

	 
	 	Suite 1100

	 
	 	Montreal, Quebec  H3A 2R7
	

	FOR DEPARTMENTAL USE ONLY — A L’USAGE DU MINISTERE SEULEMENT
	

	CORPORATION NO. — NO DE LA SOCIETE	 	
FILED — DEPOSEE
	

 

 

SCHEDULE 1

     The Corporation is authorized to issue an unlimited number of Class “A”,
Class “B”, Class “C”, Class “D”, Class “E” and Class “F” shares. The said
shares shall have the following rights, privileges, restrictions and
conditions.

1.     VOTING RIGHTS

	 	1.1.1	 	The holders of the Class “A”, Class “B”, Class “C” and Class “E” shares shall be entitled to one (1) vote for each Class “A”, Class “B”, Class “C” and Class “E” share held by them at all meetings of shareholders.
	 
	 	1.1.2	 	Except as hereinafter provided for, the holders of the Class “D” and Class “F” shares shall not be entitled to vote for the election of directors or for any other purpose nor shall they be entitled to attend shareholders’ meetings.

2.     LIQUIDATION, DISSOLUTION OR OTHER DISTRIBUTION OF ASSETS

	 	2.1.1	 	In the event of the voluntary or involuntary
liquidation, dissolution, winding-up or other distribution of
assets of the Corporation:
	 
	 	2.1.2	 	the holders of the Class “A” shares shall be entitled to
receive the remaining property of the Corporation to the exclusion
of the holders of shares of any other class;
	 
	 	2.1.3	 	the holders of the Class “E” shares shall be entitled to
receive for each Class “E” share, pro rata, before any
distribution of any part of the assets of the Corporation among
the holders of shares of any other class, an amount equal to its
Redemption Value and any dividends declared thereon and unpaid and
nothing more;
	 
	 	2.1.4	 	the holders of the Class “D” shares shall be entitled to
receive for each Class “D” share, pro rata, before any
distribution of any part of the assets of the Corporation among
the holders of shares of any other class, except Class “E” shares,
an amount equal to its Redemption Value and any dividends declared
thereon and unpaid and nothing more;
	 
	 	2.1.5	 	the holders of the Class “F” shares shall be entitled to
receive for each Class “F” share, pro rata, before any
distribution of any part of the assets of the Corporation among
the holders of Class “A”, Class “B” and Class “C” shares an amount
equal to its Redemption Value and any dividends declared thereon
and unpaid and nothing more;
	 
	 	2.1.6	 	the holders of the Class “C” shares shall be entitled to
receive for each Class “C” share, pro rata, before any
distribution of any part of the assets of the Corporation among
the holders of Class “A” and Class “B” shares an amount equal to
its Redemption Value and any dividends declared thereon and unpaid
and nothing more;

 

 

	 	2.1.7	 	the holders of the Class “B” shares shall be entitled to
receive for each Class “B” share, pro rata, before any
distribution of any part of the assets of the Corporation among
the holders of Class “A” shares, an amount equal to one hundred
percent (100%) of the amount paid up thereon and nothing more.

3.     DECLARATION OF DIVIDENDS AND RANKING AS TO DIVIDENDS

	 	3.1.1	 	The holders of the Class “B” shares shall not be
entitled to any dividend.
	 
	 	3.1.2	 	The holders of the Class “A” shares shall be entitled,
subject to the following provisions, to receive such dividends as
are declared by the directors of the Corporation.
	 
	 	3.1.3	 	The holders of the Class “E” shares shall, in each
fiscal year of the Corporation, in the discretion of the director
or directors, but always in preference and priority to any payment
of dividends on shares of any other class for such fiscal year, be
entitled, out of any or all profits or surplus available for
dividends, to non-cumulative dividends at the rate of ten percent
(10%) per annum on the Redemption Value of the Class “E” shares
held by them. If in any such fiscal year, after providing for the
dividend on the Class “E” shares, there shall remain any profits
or surplus available for dividends, such profits or surplus or any
part thereof may, in the discretion of the director or directors,
be applied to the dividends on shares of other classes. The
holders of the Class “E” shares shall not be entitled to any
dividend in excess of the non-cumulative dividends at the rate
hereinabove provided for.
	 
	 	3.1.4	 	The holders of the Class “D” shares shall, in each
fiscal year of the Corporation, in the discretion of the director
or directors, but always in preference and priority to any payment
of dividends on shares of any other class except Class “E” shares
for such fiscal year, be entitled, out of any or all profits or
surplus available for dividends, to non-cumulative dividends at
the rate of ten percent (10%) per annum on the Redemption Value of
the Class “D” shares held by them. If in any such fiscal year,
after providing for the dividend on the Class “D” shares, there
shall remain any profits or surplus available for dividends, such
profits or surplus or any part thereof may, in the discretion of
the director or directors, be applied to the dividends on shares
of other classes. The holders of the Class “D” shares shall not
be entitled to any dividend in excess of the non-cumulative
dividends at the rate hereinabove provided for.
	 
	 	3.1.5	 	The holders of the Class “F” shares shall, in each
fiscal year of the Corporation, in the discretion of the director
or directors, but always in preference and priority to any payment
of dividends on Class “A” and Class “C” shares for such fiscal
year, be entitled, out of any or all profits or surplus available
for dividends, to non-cumulative dividends at the rate of ten
percent (10%) per annum on the Redemption Value of the Class “F”
shares held by them. If in any such fiscal year, after providing
for the dividend on the Class “F” shares, there shall remain any
profits or surplus available for dividends, such profits or
surplus or any part thereof may, in the discretion of the director
or directors, be applied to the dividends on

- 2 -

 

	 	 	 	shares of other classes. The holders of the Class “F” shares shall
not be entitled to any dividend in excess of the non-cumulative
dividends at the rate hereinabove provided for.
	 
	 	3.1.6	 	The holders of the Class “C” shares shall, in each
fiscal year of the Corporation, in the discretion of the director
or directors, but always in preference and priority to any payment
of dividends on Class “A” shares for such fiscal year, be
entitled, out of any or all profits or surplus available for
dividends, to non-cumulative dividends at the rate of ten percent
(10%) per annum on the Redemption Value of the Class “C” shares
held by them. If in any such fiscal year, after providing for the
dividend on the Class “C” shares, there shall remain any profits
or surplus available for dividends, such profits or surplus or any
part thereof may, in the discretion of the director or directors,
be applied to the dividends on shares of other classes. The
holders of the Class “C” shares shall not be entitled to any
dividend in excess of the non-cumulative dividends at the rate
hereinabove provided for.
	 
	 	3.1.7	 	Notwithstanding the foregoing, the Corporation shall not
be entitled to declare any dividend on shares of any class unless
it shall have, after the payment of such dividend, sufficient
assets to be legally entitled to acquire all of its Class “D” and
Class “E” shares pursuant to section 5 hereof.

4.     REDEMPTION OF SHARES AT THE OPTION OF THE CORPORATION

	 	4.1.1	 	Subject to the provisions of the Canada Business
Corporations Act (the “Act”), the Corporation may redeem, upon
giving notice as hereinafter provided, the whole or any part of
the Class “C”, Class “D”, Class “E” and Class “F;” shares without
preference or distinction, on payment for each share to be
redeemed of an amount equal to its Redemption Value together with
all dividends declared thereon and unpaid. If only part of the
then outstanding Class “C”, Class “D”, Class “E” and Class “F”
shares are, at any time, to be redeemed, the shares so to be
redeemed shall be selected in such manner as the director or
directors in their discretion shall decide and the director or
directors may choose to redeem shares of one class only or of
several classes or, if the director or directors so determine, the
shares to be redeemed may be redeemed pro rata, disregarding
fractions, and the director or directors may make such adjustments
as may be necessary to avoid the redemption of fractions of
shares. Not less than thirty (30) days’ notice in writing of such
redemption shall be given by mailing such notice to the registered
holders of the shares to be redeemed, specifying the date and
place or places of redemption. If notice of any such redemption
be given by the Corporation in the manner aforesaid and an amount
sufficient to redeem the shares be deposited with any trust
company of chartered bank in Canada as specified in the notice on
or before the date fixed for redemption, dividends on the shares
to be redeemed shall cease after the date so fixed for redemption
and the holders thereof shall thereafter have no rights against
the Corporation in respect thereof except, upon the surrender of
certificates for such shares, to receive payment thereof out of
the money so deposited. After the redemption price of such shares
has been deposited with any trust company or chartered bank in
Canada as aforesaid, notice shall be given to the holders of any

- 3 -

 

	 	 	 	share called for redemption who have failed to present certificates
representing shares to be redeemed within two (2) months of the date
specified for redemption that the money has been so deposited and
may be obtained by the holders of the said shares upon presentation
of the certificates representing such shares called for redemption
at the said trust company or chartered bank. Notwithstanding the
foregoing, the Corporation shall not be entitled to redeem shares of
any class unless it shall have, after such redemption, sufficient
assets to be legally entitled to acquire all of its Class “D” and
Class “E” shares pursuant to section 5 hereof.

5.     REDEMPTION OF SHARES AT THE OPTION OF THE HOLDER

	 	5.1.1	 	The holders of the Class “D” and Class “E” shares shall
be entitled to require the Corporation to redeem, at any time and
from time to time after the date of issue of any Class “D” or
Class “E” share upon giving notice as hereinafter provided, all or
any number of Class “D” and Class “E” shares registered in the
name of such holders in the books of the Corporation for a price
equal to their Redemption Value together with all dividends
declared thereon and unpaid.
	 
	 	5.1.2	 	The holder of the Class “D” and Class “E” shares
exercising his option to have the Corporation redeem his shares,
shall give notice to the Corporation, which notice shall set out
the date on which the Corporation is to redeem the said shares,
which date shall not be earlier than ten (10) days nor later than
thirty (30) days from the date of the notice and if the holder
desires to have less than all of the Class “D” and Class “E”
shares registered in his name redeemed by the Corporation, the
number of the holder’s shares to be redeemed. The date on which
the redemption, at the option of the holder, is to occur is
hereinafter referred to as the “Optional Redemption Date”.
	 
	 	5.1.3	 	Upon delivery to the Corporation of a share certificate
or of share certificates representing the Class “D” and Class “E”
shares which the holder desires to have the Corporation redeem,
the Corporation shall, on the Optional Redemption Date, to the
extent permitted by the applicable law, redeem such shares by
paying to the registered holder thereof the redemption price
therefor.
	 
	 	5.1.4	 	Upon payment of the redemption price of the Class “D”
and Class “E” shares so redeemed by the Corporation, the holders
thereof shall cease to be entitled to dividends or to exercise any
rights of the holders in respect thereof.
	 
	 	5.1.5	 	Should the redemption by the Corporation on any Optional
Redemption Date of any Class “D” and Class “E” shares to be
redeemed on such date be contrary to applicable law, the
Corporation shall not redeem more than the maximum number of Class
“D” and Class “E” shares, rounded to the next lower multiple of
one, which the Corporation determines it is then permitted to
redeem, such redemptions to be made, disregarding fractions of
shares and in proportion to the Redemption Value of the Class “D”
and Class “E” shares required to be redeemed, and the Corporation
shall issue. new certificates representing the Class “D” and
Class “E” shares not redeemed by the Corporation and the
Corporation shall redeem in the manner contemplated by

- 4 -

 

	 	 	 	paragraph 4.1 hereof on each redemption date thereafter the maximum
number of such Class “D” and Class “E” shares as would then not be
contrary to applicable law.

6.     PURCHASE OF SHARES

	 	6.1.1	 	The Corporation shall have the right, at its option at
any time and from time to time, subject to the provisions of the
Act, to purchase for cancellation out of surplus or subject to the
Act to purchase otherwise, the whole or any part of the Class “C”,
Class “D”, Class “E” and Class “F” shares then outstanding
pursuant to tenders received by the Corporation upon request for
tenders addressed to all holders of Class “C”, Class “D”, Class
“E” and Class “F” shares at the lowest price at which, in the
opinion of the director or directors, such shares are obtainable
but not exceeding their Redemption Value together with all
dividends declared thereon and unpaid. If, in response to an
invitation for tenders, two (2) or more shareholders submit
tenders for shares of the same class at the same price and if such
tenders are accepted by the Corporation in whole or in part, then,
unless the Corporation accepts all such tenders in whole, the
Corporation shall accept such tenders in proportion as near as may
be to the number of shares of the same class offered in each such
tender. The director or directors may choose to purchase for
cancellation or purchase otherwise shares of one class only or of
several classes. Notwithstanding the foregoing, the Corporation
shall not be entitled to purchase for cancellation or purchase
otherwise shares of any class, unless it shall have, after such
purchase, sufficient assets to be legally entitled to acquire all
of its Class “D” and Class “E” shares pursuant to section 5
hereof.

7.     REDEMPTION VALUE

	 	7.1.1	 	For purposes of application of the provisions hereof,
the Redemption Value of each Class “C”, Class “D”, Class “E” and
Class “F” share shall be equal to:
	 
	 	7.1.2	 	in the case of a share issued for a consideration in
money, the amount of the consideration for which it was issued;
	 
	 	7.1.3	 	in the case of a share issued for a consideration other
than money, the fair market value of the consideration for which
the share was issued. The fair market value of the consideration
for which the share was issued shall be determined by the director
or directors of the Corporation by resolution upon the issuance of
the share (“Determined Redemption Value”). The said determination
shall be final and binding provided that, if at any time the
Minister of National Revenue or the Minister of Revenue of any
province of Canada makes or proposes to make any tax assessment or
reassessment based on the assumption that the fair market value of
the consideration for which the share was issued was higher or
lower than the Determined Redemption Value, then the Redemption
Value of such share shall be increased or decreased so that it
shall be equal to the amount finally determined to The fair market
value of the consideration for which the share was issued. Any
such determination shall be deemed to be a final determination if
it is made pursuant to an assessment or reassessment by the
Minister of National Revenue or the Minister of Revenue of any
province of Canada and no appeal is taken therefrom or if any

- 5 -

 

	 	 	 	agreement is reached between any holder of the share and any such
taxing authority in settlement of a dispute regarding such
determination or if determined by a court or tribunal of competent
jurisdiction and no appeal is taken therefrom.
	 
	 	7.1.4	 	Should a redemption, either pursuant to section 4 or to
section 5 hereof, of Class “C”, Class “D”, Class “E” or Class “F”
shares have occurred or should the Corporation have paid dividends
calculated on the Determined Redemption Value of the Class “C”,
Class “D”, Class “E” or Class “F” shares before an increase or
decrease in the Redemption Value of the Class “C”, Class “D”,
Class “E” or Class “F” shares resulting from the application of
paragraph 7.1.2 hereof, then:
	 
	 	7.1.5	 	in case of an increase in the Redemption Value of shares
of any such class, the Corporation shall pay to any person whose
shares were redeemed at the Determined Redemption Value for shares
of such class an amount equal to the difference between the
increased Redemption Value for shares of such class and the
Determined Redemption Value for shares of such class and shall pay
to any person who received dividends based on the Determined
Redemption Value for shares of such class the difference between
such dividends and dividends as calculated on the increased
Redemption Value: for shares of such class, which amount shall
bear interest at the annual prime rate of the Royal Bank of
Canada, running from the date of the redemption or the date of the
payment of the dividend, whichever may be the case;
	 
	 	7.1.6	 	in case of a decrease in the Redemption Value for shares
of such class, the person whose shares were redeemed either
pursuant to section 4 or to section 5 hereof at the Determined
Redemption Value for shares of such class or who received
dividends calculated on the Determined Redemption Value for shares
of such class shall reimburse to the Corporation an amount equal
to the difference between the Determined Redemption Value for
shares of such class and the decreased Redemption Value for shares
of such class in the case of a redemption and the difference
between the dividend calculated on the Determined Redemption Value
for shares of such class and the dividend calculated on the
decreased Redemption Value for shares of such class in the case of
the payment of a dividend, which amount shall bear interest at the
annual prime rate of the Royal Bank of Canada, running from the
date of the redemption or the date of the payment of the dividend,
whichever may be the case.

8.     AMENDMENTS SUBJECT TO CONFIRMATION BY ARTICLES OF AMENDMENT

	 	8.1.1	 	Subject to confirmation by articles of amendment and the
issue of a Certificate of Amendment, the director or directors of
the Corporation may, at any time or times or from time to time,
adopt a resolution or resolutions whereby the terms hereof and of
the foregoing paragraphs may be altered, amended or repealed or
the application thereof suspended in any particular case and
changes made in the rights, privileges, restrictions and
conditions attached to the shares of the Corporation, but no such
resolution shall have any force or effect until after it has been
sanctioned by the vote of the holders of at least seventy-five
percent (75%) in

- 6 -

 

	 	 	 	value of the voting shares then outstanding and of at least
seventy-five percent (75%) in value of shares of each class affected
by such amendment, in each case voting separately as a class at a
meeting or meetings specially called for such purpose.

- 7 -

 

SCHEDULE 2

Closed Company

	1.	 	The Corporation will be a “closed company” as defined in the Securities
Act (Quebec) and accordingly:

	 	1.1	 	the free transfer of shares of its capital stock will
be restricted according to its articles;
	 
	 	1.2	 	the distribution to the public of securities issued
by the Corporation will be prohibited; and
	 
	 	1.3	 	the number of its shareholders, exclusive of present
or former employees of the Corporation or of a subsidiary, will
be limited to fifty (50).

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]