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EXHIBIT 4.4    
    

RESTRICTED STOCK AGREEMENT  

        THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made as of the 23rd day of March, 1999, between  FOREST OIL
CORPORATION, a New York corporation (the "Company"), and ROBERT S. BOSWELL (the "Employee"). 

        1.     Award. On the date of this Agreement, 26,891 shares (the "Restricted Shares") of the Company's common stock, par value
$.10, shall be issued as hereinafter provided in the Employee's name subject to certain restrictions thereon. The Restricted Shares shall be issued upon acceptance hereof by the Employee and upon
satisfaction of the conditions of this Agreement. 

        2.     Restricted Shares. The Employee hereby accepts the Restricted Shares when issued and agrees with respect thereto as
follows: 

        (a)   Forfeiture Restrictions. The Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions (as hereinafter defined), and in the event of termination of the Employee's employment with the Company
for any reason other than death, Disability, Involuntary Termination, or Retirement (as such terms are hereinafter defined), the Employee shall, for no consideration, forfeit to the Company all
Restricted Shares to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Shares to the Company upon
termination of employment are herein referred to as the "Forfeiture Restrictions." The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Shares. For
purposes of this Agreement, the following capitalized words and terms shall have the meanings indicated below: 

          (i)  "Code"
shall mean the Internal Revenue Code of 1986, as amended. 

         (ii)  "Corporate
Change" shall have the same meaning as assigned to such term in the Forest Oil Corporation Stock Incentive Plan, as in effect on the date hereof; provided,
however, that a Corporate Change shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record
holders of the voting stock of the Company immediately prior to such transaction or series of transactions continue to hold immediately following such transaction or series of transactions 50% or more
of the voting stock (based upon voting power) of (1) any entity which owns (directly or indirectly) the stock of the Company, (2) any entity with which the Company has merged, or
(3) any entity that owns an entity with which the Company has merged. 

        (iii)  "Disability"
shall mean that, as a result of the Employee's incapacity due to physical or mental illness, he shall have been absent from the full-time
performance of his duties for six-consecutive months and he shall not have returned to full-time performance of his duties within 30 days after written notice of
termination is given to the Employee by the Company (provided, however, that such notice may not be given prior to 30 days before the expiration of such six-month period). 

        (iv)  "Involuntary
Termination" shall mean any termination of the Employee's employment with the Company which does not result from a resignation by the Employee; provided,
however, that the term "Involuntary Termination" shall not include a termination as a result of death, Disability, or Retirement or a termination of the Employee's employment by the Company (or its
subsidiaries) by reason of the Employee's gross negligence or willful misconduct in the performance of his duties or final conviction of a misdemeanor involving moral turpitude or a felony. 

 

         (v)  "Retirement"
shall mean the Employee's resignation from employment with the Company on or after the date he reaches age sixty-five or the date he is eligible
for "Early Retirement" under the Forest Oil Corporation Pension Trust Agreement, as amended. 

        (vi)  "Section 16
Person" shall mean an officer, director or affiliate of the Company or a former officer, director or affiliate of the Company who is subject to
section 16 of the Securities Exchange Act of 1934, as amended. 

        (b)   Lapse of Forfeiture Restrictions. The Forfeiture Restrictions shall lapse as to the Restricted Shares in accordance with
the following schedule provided that the Employee has been continuously employed by the Company from the date of this Agreement through the lapse date: 

	Date of Lapse
 
	 	Percentage of Total Number of

Restricted Shares as to Which

Forfeiture Restrictions Lapse

	January 1, 2000	 	20%
	January 1, 2001	 	20%
	January 1, 2002	 	20%
	January 1, 2003	 	20%
	January 1, 2004	 	20%

        Notwithstanding
the foregoing, the Forfeiture Restrictions shall lapse as to all of the Restricted Shares then subject to the Forfeiture Restrictions on (i) the date of a
Corporate Change provided that the Employee has been continuously employed by the Company from the date of this Agreement to the date of such Corporate Change or (ii) the date the Employee's
employment with the Company is terminated by reason of death, Disability, Involuntary Termination, or Retirement. 

        (c)   Certificates. A certificate evidencing the Restricted Shares shall be issued by the Company in the Employee's name,
pursuant to which the Employee shall have all of the rights of a shareholder of the Company with respect to the Restricted Shares, including, without limitation, voting rights and the right to receive
dividends (provided, however, that dividends paid in shares of the Company's stock shall be subject to the Forfeiture Restrictions). The Employee may not sell, transfer, pledge, exchange, hypothecate
or otherwise dispose of the stock until the Forfeiture Restrictions have expired and a breach of the terms of this Agreement shall cause a forfeiture of the Restricted Shares. The certificate shall be
delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Board of Directors of the Company or an authorized committee thereof (the "Board") as a
depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. On the date of this Agreement, the Employee shall deliver to the Company a stock
power, endorsed in blank, relating to the Restricted Shares. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause a new certificate or certificates to be issued
without legend (except for any legend required pursuant to applicable securities laws or any
other agreement to which the Employee is a party) in the name of the Employee in exchange for the certificate evidencing the Restricted Shares. 

        (d)   Corporate Acts. The existence of the Restricted Shares shall not affect in any way the right or power of the Board or the
shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the
Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any
other corporate act or proceeding. The prohibitions of Section 2(a) hereof shall not apply to the transfer of Restricted Shares pursuant to a plan of reorganization of the Company, but
the stock, securities or other property received in exchange 

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therefor
shall also become subject to the Forfeiture Restrictions and provisions governing the lapsing of such Forfeiture Restrictions applicable to the original Restricted Shares for all purposes of
this Agreement and the certificates representing such stock, securities or other property shall be legended to show such restrictions. 

        3.     Withholding of Tax. To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions
results in compensation income to the Employee for federal or state income tax purposes, the Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount
of money as the Company may require to meet its obligation under applicable tax laws or regulations. The Employee may elect with respect to this Agreement to surrender or authorize the Company to
withhold shares of stock of the Company (valued at their fair market value on the date of surrender or withholding of such shares) to satisfy any tax required to be withheld by reason of compensation
income resulting under this Agreement. An election pursuant to the preceding sentence shall be referred to herein as a "Stock Withholding Election." All Stock Withholding Elections shall be made by
written notice to the Company at its principal executive office addressed to the attention of the Secretary. If the Employee is not a Section 16 Person, the Employee may revoke such election by
delivering to the Secretary written notice of such revocation prior to the date such election is implemented through actual surrender or withholding of shares of stock of the Company (the "Withholding
Date"). If the Employee is a Section 16 Person, the Stock Withholding Election must: 

          (i)  be
irrevocable and made six months prior to the Withholding Date, or 

         (ii)  (a) be
approved by the Board, either before or after such election is made, (b) be made, and the Withholding Date occur, during a period beginning on the
third business day following the date of release by the Company for publication of quarterly and annual summary statements of sales and earnings and ending on the twelfth business day following such
date, and (c) be made more than six months after the effective date of this Agreement. 

        If
the Employee fails to pay the required amount to the Company or fails to make a Stock Withholding Election, the Company is authorized to withhold from any cash remuneration (or, if
the Employee is not a Section 16 Person, stock remuneration, including withholding any Restricted Shares distributable to the Employee under this Agreement) then or thereafter payable to the
Employee any tax required to be withheld by reason of compensation income resulting under this Agreement or the disposition of Restricted Shares acquired under this Agreement. 

        4.     Status of Stock. The Employee shall have the right to require that any Restricted Shares received under this Agreement, as
they become free of any Forfeiture Restrictions, be registered for sale at the expense of the Company with the use of a "shelf registration" under the Securities Act of 1933, as amended, to remain
effective until such Restricted Shares are disposed of, become freely tradable without restrictions under the registration provisions of securities law, or may be sold in one transaction in accordance
with Rule 144 promulgated by the Securities and Exchange Commission. 

        The
Employee agrees that the Restricted Shares issued under this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable
federal or state securities laws. The Employee also agrees that (i) the certificates representing the Restricted Shares may bear such legend or legends as the Committee deems appropriate in
order to reflect the Forfeiture Restrictions and to assure compliance with applicable securities laws, (ii) the Company may refuse to register the transfer of the Restricted Shares on the stock
transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel satisfactory to the Company, of any applicable
securities law, and (iii) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares. 

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        5.     Employment Relationship. For purposes of this Agreement, the Employee shall be considered to be in the employment of the
Company as long as the Employee remains an employee of either the Company, any successor corporation or a parent or subsidiary corporation (as defined in section 424 of the Code) of the Company
or any successor corporation. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Board, and its
determination shall be final. 

        6.     Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case
of the Employee, such notices or communications shall be effectively delivered if hand delivered to the Employee at his principal place of employment or if sent by registered or certified mail to the
Employee at the last address he has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the
Company at its principal executive offices. 

        7.     Parachute Payment. In the event that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions
would constitute a parachute payment (within the meaning of section 280G of the Code) at a time when the Employee's Severance Agreement with the Company that is in effect as of the date hereof
(or any successor agreement) is in effect, then the amount of such parachute payment shall be treated as a payment to the Employee for purposes of determining the amount of any gross-up
payment to be made to the Employee under the terms of such Severance Agreement (or any successor agreement) with respect to the excise tax imposed by Section 4999 of the Code. 

        8.     Entire Agreement; Amendment. This Agreement replaces and merges all previous agreements and discussions relating to the
same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and the Company with respect to the subject matter of this Agreement.
This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement
unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. 

        9.     Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all
persons lawfully claiming under the Employee. 

        10.   Controlling Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New
York.

        IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee
has executed this Agreement, all as of the date first above written. 

	

 	
 	
FOREST OIL CORPORATION
	

 	
 	

 	
 	

/s/ Joan C. Sonnen

	 	 	Name:	 	Joan C. Sonnen
	 	 	Title:	 	Vice President
	

 	
 	

 	
 	

/s/ Robert S. Boswell
Robert S. Boswell

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EXHIBIT 4.4Exhibit 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 1,732,039 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.

 

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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.

 

15

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