Document:

exv10w1

 

EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

Compex Technologies, Inc.

1811 Old Highway 8

New Brighton, Minnesota 55112-3493

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

     1.     This Securities Purchase Agreement is made as of the date set forth below
between Compex Technologies, Inc., a Minnesota corporation (the “Company”), and
the Investor.

     2.     The Company has authorized the sale and issuance of up to one million
(1,000,000) units (the “Units”), each Unit consisting of one share of the
common stock of the Company, $.10 par value per share (the “Common Stock”), and
an Additional Investment Right, in the form of Exhibit A to this Securities
Purchase Agreement, to acquire 25% of a share of 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
____________ Units at a purchase
price of $8.9072 per Unit, or an aggregate purchase price of $
___________ (the “Purchase
Price”), subject to the Terms and Conditions for Purchase of Units attached
hereto as Annex I and incorporated herein by reference as if fully set forth
herein. Unless otherwise requested by the Investor in Exhibit B, certificates
representing the shares of Common Stock 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, and (b) 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.”)

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

 

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: November 18, 2003
	 
	 	 

[Investor]
	 
	 	By:
	 
	 	 

	 	Name:
	 	Title:
	 
	 	Address:

Agreed and Accepted:

COMPEX TECHNOLOGIES, INC.

By:

Name: Dan W. Gladney

Title: President and Chief Executive Officer

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List of Annexes and Exhibits

	 	 	 
	Annex I	 	
Terms and Conditions for Purchase of Securities
	Exhibit A	 	
Form of Additional Investment Right
	Exhibit B	 	
Stock Certificate Questionnaire
	Exhibit C	 	
Investor Questionnaire
	Exhibit D	 	
Form of Legal Opinion of Company Counsel
	Exhibit E	 	
Subsidiaries
	Exhibit F	 	
Transfer Agent Instructions
	Exhibit G	 	
Plan of Distribution
	Exhibit H	 	
Investor Affidavit
	Exhibit I	 	
Certificate of Subsequent Sale

3

 

EXECUTION COPY

ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SECURITIES

     1.     Agreement to Sell and Purchase the Units; 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 subject to the conditions set forth herein, and at
the Purchase Price, the number of Units described in paragraph 3 of the
Securities Purchase Agreement attached hereto (collectively with this Annex I
and the other exhibits attached hereto, this “Agreement”).
	 
	 	     1.2 Other Investors. As part of the Offering, the Company proposes to
enter into Securities Purchase Agreements in the same form as this Agreement
with, and to issue Additional Investment Rights to, certain other investors
(the “Other Investors”), and the Company expects to complete sales of Units to
them. The Investor and the Other Investors are sometimes collectively referred
to herein as the “Investors.” This Agreement and the Securities Purchase
Agreements executed by the Other Investors are sometimes collectively referred
to herein as the “Agreements,” and the Additional Investment Right issued
pursuant to this Agreement and the Additional Investment Rights issued to the
Other Investors are sometimes collectively referred to herein as the
“Additional Investment Rights.” The Company may accept executed Agreements
from Investors for the purchase of Units commencing upon the date on which the
Company provides the Investors with the proposed purchase price per Unit and
concluding upon the date (the “Subscription Date”) on which the Company has
notified Credit Lyonnais Securities (USA) Inc. (in its capacity as placement
agent for the Units, the “Placement Agent”) in writing that it will no longer
accept Agreements for the purchase of Units in the Offering, but in no event
shall the Subscription Date be later than November 19, 2003. Each Investor
must complete a Securities Purchase Agreement, a Stock Certificate
Questionnaire (in the form attached as Exhibit B hereto) and an Investor
Questionnaire (in the form attached as Exhibit C hereto) in order to purchase
Units in the Offering.
	 
	 	     1.3 Placement Agent Fee. The Investor acknowledges that the Company
intends to pay to the Placement Agent a fee in the amount equal to 5.75% of the
gross proceeds from the sale of the Securities to the Investor and to reimburse
the Placement Agent for not more than $25,000 of its accountable expenses.

     2. Delivery of the Units at Closing. The completion of the purchase and
sale of the Units (the “Closing”) shall occur on a date mutually agreed upon by
the Company and the Investor (the “Closing Date”), which date shall not be
later than November 20, 2003 (the “Outside Date”), and of which the Other
Investors will be notified in advance by the Placement Agent. The Closing shall
take place at the New York City offices of Proskauer Rose LLP or at such other
location as mutually agreed upon by the Investor and Company. At the Closing,
the Company shall deliver to the Investor: (a) one or more stock certificates
representing the number of shares of Common Stock equal to the number of Units
set forth in paragraph 3 of the Securities Purchase Agreement (the “Shares”),
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 B,
in the name of a nominee designated by the Investor, (ii) an Additional
Investment Right, in the name of the Investor, pursuant to which such Investor
shall have the right to acquire a number of shares of Common Stock equal to 25%
of the number of Units set forth in paragraph 3 of the Securities Purchase
Agreement (the “Underlying Shares"), (iii) a legal opinion from Dorsey &
Whitney

 

 

LLP (“Company Counsel”), dated the Closing Date, substantially in the form
attached hereto as Exhibit D (the “Legal Opinion”), and (iv) duly executed
Transfer Agent Instructions, substantially in the form of Exhibit F,
acknowledged by the Company’s transfer agent (the “Transfer Agent
Instructions”). In exchange for the delivery of the Additional Investment
Right and the stock certificates representing the Shares, the Investor shall
deliver or cause to be delivered the Purchase Price to the Company by wire
transfer of immediately available funds pursuant to the Company’s written
instructions.

     The Company’s obligation to issue and sell the Units to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) prior receipt by the Company of an executed copy of this
Agreement; (b) the accuracy of the representations and warranties made by the
Investor in this Agreement and the fulfillment of the obligations of the
Investor to be fulfilled by it under this Agreement on or prior to the Closing;
and (c) the absence of any order, writ, injunction, judgment or decree that
questions the validity of the Agreements or the right of the Company or the
Investor to enter into such Agreements or to consummate the transactions
contemplated hereby and thereby.

     The Investor’s obligation to purchase the Units shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) the completion of purchases and sales under the Agreements with the Other
Investors for not less than 1,000,000 shares; (b) the delivery of the Legal
Opinion to the Investor by counsel to the Company; (c) the accuracy of the
representations and warranties made by the Company in this Agreement on the
date hereof and, if different, on the Closing Date; (d) the fulfillment of the
obligations of the Company to be fulfilled by it under this Agreement on or
prior to the 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 or the Investor to enter into such Agreements or to consummate the
transactions contemplated hereby and thereby; (f) the delivery to the Investor
by the Company of an officer’s certificate stating that the conditions
specified in this paragraph have been fulfilled; and (g) the delivery of a duly
executed Transfer Agent Instruction. In the event that the Closing does not
occur on or before the Outside Date as a result of the Company’s failure to
satisfy any of the conditions set forth above (and such condition has not been
waived by the Investor), the Company shall return any and all funds paid
hereunder to the Investor no later than one Business Day following the Outside
Date and the Investor shall have no further obligations hereunder. For
purposes of this Agreement, “Business Day” shall mean any day other than a
Saturday, Sunday or other day on which the Nasdaq National Market or commercial
banks located in New York are permitted or required by law to close.

     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 June 30, 2003 (and any amendments thereto filed at least two (2) Business
Days prior to the date hereof), the Company’s Proxy Statement for its 2003
Annual Meeting of Shareholders, or the Company’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003 (and any amendments thereto filed at
least two (2) Business Days prior to the date hereof) or any of the Company’s
Current Reports on Form 8-K filed since July 1, 2003 and at least two (2)
Business Days prior to the date hereof (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. The Company is duly incorporated and validly existing
in good standing under the laws of the State of Minnesota. The Company 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
could have (i) a material adverse effect upon the Company and its subsidiaries
taken as a whole, (ii) a material adverse effect upon the business,

 

 

		
	 	financial condition, properties, operations or assets of the Company and
its subsidiaries taken as a whole, (iii) an adverse effect on the Company’s
ability to perform its obligations under the Agreements in all material
respects, or (iv) an adverse effect on the legality, validity or enforceability
of any of the Agreements (any of (i),(ii),(iii), or (iv), a “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. The Company has no “subsidiaries” (as
defined in Rule 405 under the Securities Act of 1933, as amended (the
“Securities Act”)), other than those set forth on Exhibit E to this Agreement
(the “Subsidiaries”). Except with respect to Compex SA, a Swiss organization
(the “Significant Subsidiary”), none of the Subsidiaries is a significant
subsidiary as defined in Rule 1-02 of Regulation S-X. The Significant
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted.
	 
	 	     3.2 Due Authorization. The Company has all requisite power and authority
to execute, deliver and perform its obligations under the Agreements. The
execution and delivery of the Agreements, and the consummation by the Company
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action and no further action on the part of the Company or
its Board of Directors or shareholders is required. The Agreements have been
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 to the extent (i) rights to indemnity and contribution
may be limited by state or federal securities laws or the public policy
underlying such laws, (ii) such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and (iii) such
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 Units and the Underlying Shares (collectively, the
“Securities”) 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 a 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 material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any of the Significant
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
their respective properties are bound, (ii) the Articles of Incorporation,
bylaws or other organizational documents of the Company, as amended, 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 the Significant Subsidiaries or their respective properties 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 the Significant 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 the Significant Subsidiaries is a
party or by which it is bound or to which any of the property or assets of the
Company is subject. No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body is required for the execution and delivery
of the Agreements by the Company and the valid issuance or sale of the
Securities 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
September 30, 2003 is as described in the Company’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2003. The Company has not issued any
capital stock since September 30, 2003 other than pursuant to the purchase of
shares under the Company’s employee stock purchase plan and the exercise of
stock options, in each case as disclosed in the SEC Reports. The Securities
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, subject to no lien, claim or encumbrance (except for any such
lien, claim or encumbrance created, directly or indirectly, by the Investor).
The Company has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock issuable upon exercise of the Additional
Investment Right. The outstanding shares of capital stock of the Company and
each Significant Subsidiary 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. With the exception of director qualifying shares, the
Company owns all of the outstanding capital stock of the Significant
Subsidiaries, free and clear of all liens, claims and encumbrances. 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 the Significant Subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind to which the Company or any
of the Significant Subsidiaries is a party and providing for the issuance or
sale of any capital stock of the Company or any of the Significant
Subsidiaries, any such convertible or exchangeable securities or any such
rights, warrants or options. Without limiting the foregoing, no preemptive
right, co-sale right, right of first refusal or other similar right exists with
respect to the issuance and sale of the Securities, except as provided in the
Agreements. There are no shareholders agreements, voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a
party.
	 
	 	     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 the Significant Subsidiaries is a party or of which the
business or property of the Company or any of the Significant 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 the Significant Subsidiaries is
subject to any injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other government body.
	 
	 	     3.6 No Violations. Neither the Company nor any of the Significant
Subsidiaries is in violation of its Articles of Incorporation, bylaws or other
organizational documents, as amended, 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 the
Significant Subsidiaries, which violation, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect, and neither the Company
nor any of the Significant Subsidiaries is 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 the Significant
Subsidiaries is a party or by which the Company or any of the Significant
Subsidiaries or their respective properties are bound, which default is
reasonably likely to have a Material Adverse Effect.
	 
	 	     3.7 Governmental Permits, Etc. Each of the Company and the Significant
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 the Significant Subsidiaries as
currently conducted, except where the failure to currently possess such
franchises, licenses, certificates and other authorizations is not reasonably
likely to have a Material Adverse Effect.

 

 

		
	 	     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 the 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 (collectively,
“Intellectual Property”) and (ii) all of the Intellectual Property owned by the
Company or by the 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 the Subsidiaries employs rights in Intellectual
Property, or (ii) the Company or any of the Subsidiaries has granted rights to
others in Intellectual Property owned or licensed by the Company or any of the
Subsidiaries are in full force and effect, and there is no default by the
Company or any of the 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 ownership of all material Intellectual Property owned by the
Company or the 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 or the Subsidiaries do not infringe any
intellectual property of any other person; (ii) neither the Company nor any of
the Subsidiaries is making unauthorized use of any confidential information or
trade secrets of any person; and (iii) the activities of any of the employees
of the Company or the Subsidiaries, acting on behalf of the Company or the
Subsidiaries, do not violate any agreements or arrangements related to
confidential information or trade secrets of third parties.
	 
	 	     (e) No proceedings are pending, or to the knowledge of the Company,
threatened, which challenge the rights of the Company or the Subsidiaries to
the use of Intellectual Property, except for matters which are not reasonably
likely to have a Material Adverse Effect.

		
	 	     3.9 Financial Statements. The financial statements of the Company and the
related notes contained in the SEC Reports present fairly and accurately in all
material respects the financial position of the Company as of the dates therein
indicated, and the results of its operations, cash flows and the changes in
shareholders’ equity for the periods therein specified, subject, in the case of
unaudited financial statements for interim periods, to normal year-end audit
adjustments. Such financial statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis at the times and 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 any press release issued by the Company at least two (2) Business Days
prior to the date of this Agreement, since September 30, 2003, there has not
been (i) an event, circumstance or change that has had or is reasonably likely
to have a Material Adverse Effect, (ii) any obligation incurred by the Company

 

 

		
	 	or the Significant Subsidiaries, direct or contingent, that is material to
the Company, (iii) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company, or (iv) any loss or damage (whether
or not insured) to the physical property of the Company or the Significant
Subsidiaries which has had a Material Adverse Effect.
	 
	 	     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 intended 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 Securities does not require
shareholder approval, including, without limitation, pursuant to Nasdaq
Marketplace Rule 4350(i).
	 
	 	     3.12 Reporting Status. The Company has timely made all filings required
under the Exchange Act during the twenty-four (24) months preceding the date of
this Agreement, and all of those documents complied in all material respects
with the SEC’s 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 by the
Investors pursuant to a registration statement on Form S-3 under the Securities
Act (the “Registration Statement”).
	 
	 	     3.13 No Manipulation; Disclosure of Information. The Company has not
taken and will not take any action designed to or that might reasonably be
expected to cause or result in an unlawful manipulation of the price of the
Common Stock to facilitate the sale or resale of the Securities. The Company
acknowledges and agrees that each of the Investors is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company has not disclosed any material
non-public information to the Investors. The Company understands and confirms
that each of the Investors will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided
to the Investors regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company are true and correct and, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Significant Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed. The Company
acknowledges and agrees that no Investor makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 4.
	 
	 	     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 June
30, 2003 into the Registration Statement and the prospectus which will form 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.
	 
	 	     3.15 Contracts. Except for matters which are not reasonably likely to
have a Material Adverse Effect and those contracts that are substantially or
fully performed or expired by their terms, the contracts listed as exhibits to
or described in the SEC Reports that are material to the Company and all

 

 

		
	 	amendments thereto, are in full force and effect on the date hereof, and
neither the Company 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 likely have a
Material Adverse Effect, each of the Company and the Subsidiaries 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 or the Subsidiaries.
	 
	 	     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 Units 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, and will not be deemed an “investment company” as a result of the
transactions contemplated by this Agreement.
	 
	 	     3.19 Insurance. Each of the Company and the Subsidiaries maintains
insurance of the types and in the amounts that the Company reasonably believes
is adequate for its businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company or the
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.
	 
	 	     3.20 Offering Prohibitions. Neither the Company nor any person acting on
its behalf or at its direction has in the past or will in the future 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 Securities 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 Securities and the listing of the Shares
and the Underlying Shares on the Nasdaq National Market.
	 
	 	     3.22 Related Party Transactions. No transaction has occurred between or
among the Company or any of its 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
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the operations of, the Company. 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 Form S-3 Eligibility. The Company is eligible to register its Common
Stock for resale by the Purchasers using Form S-3 promulgated under the
Securities Act.
	 
	 	     3.25 Certain Fees. Except for the fees described in Schedule 3.25, all of
which are payable to registered broker-dealers, no brokerage or finder’s fees
or commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this Agreement,
and the Company has not taken any action that would cause any Purchaser to be
liable for any such fees or commissions.
	 
	 	     3.26 Private Placement. Neither the Company nor any Person acting on the
Company’s behalf has sold or offered to sell or solicited any offer to buy the
Securities by means of any form of general solicitation or advertising.
Neither the Company nor any of its Affiliates nor any person acting on the
Company’s behalf has, directly or indirectly, at any time within the past six
months, made any offer or sale of any security or solicitation of any offer to
buy any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities Act
in connection with the offer and sale of the Securities as contemplated hereby
or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of
any applicable law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market. The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended. The Company is not
a United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980.
	 
	 	     3.27 Acknowledgment Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to this Agreement and
the transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
	 
	 	     3.28 Registration Rights. Except as described in Schedule 3.28, the
Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company
registered with the SEC or any other governmental authority that have not been
satisfied.
	 
	 	     3.29 Application of Takeover Protections. Except as disclosed in Schedule
3.29, there is no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s charter documents or the laws of
its state of incorporation that is or could become applicable to any of the
Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Agreements, including, without
limitation, as a result of the Company’s issuance of the Securities and the
Investors’ ownership of the Securities.
	 
	 	     3.30 Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance 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
conformity 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.
	 
	 	     3.31 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Investors or that
would be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market.
	 
	 	     3.32 Furnishing of Information. As long as any Investor owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed
by the Company after the date hereof pursuant to the Exchange Act. Upon the
request of any Investor, the Company shall deliver to such Investor a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence.
	 
	 	     3.33 Other Registration Statements. Except for registration statements on
Form S-4 and S-8, the Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities.

     4.     Representations, Warranties and Covenants of the Investor.

		
	 	     4.1 Investor Knowledge and Status. The Investor represents and warrants
to, and covenants with, the Company that as of the Closing Date: (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 similar to that involved in the purchase of
the Securities, (ii) the Investor has received and reviewed the SEC Reports,
including, without limitation, the risks relating to the Company described in
the Company’s annual report on Form 10-K for the year ended June 30, 2003 and
quarterly report on Form 10-Q for the quarter ended September 30, 2003, and has
requested, received, reviewed and considered all other information it deemed
relevant in making an informed decision to purchase the Securities; (iii) the
Investor understands that the Securities are “restricted securities” and have
not been registered under the Securities Act and is acquiring the Securities in
the ordinary course of its business and for its own account for investment
only, has no present intention of distributing any of such Securities (this
representation and warranty not limiting the Investor’s right to sell
Securities pursuant to the Registration Statement or otherwise or, other than
with respect to any claim arising out of a breach of this representation and
warranty, the Investor’s right to indemnification under Section 6.3); (iv) the
Investor will not, directly or indirectly, offer, sell or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire) any of the
Securities except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated
thereunder; (v) the Investor has answered all questions in paragraph 4 of the
Securities Purchase Agreement and the Investor Questionnaire attached hereto as
Exhibit C for use in preparation of the Registration Statement and the answers
thereto are true and correct as of the date thereof, and (vi) the Investor has,
in connection with its decision to purchase the Securities, relied only upon
the representations and warranties of the Company contained herein and the
information contained in the SEC Reports. The Investor understands that the
issuance of the Securities 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 representations made by the
Investor in this Agreement. No person (including without limitation the
Placement Agent) is authorized by the Company to provide any representation
that is inconsistent with or in addition to those contained herein or in the
SEC Reports, and the Investor acknowledges that it has not received or relied
on any such representations.

		
	 	     4.2 Transfer of Securities. The Investor agrees that it will not make any
sale, transfer or other disposition of the Securities (a “Disposition”) other
than Dispositions that are made pursuant to the Registration Statement in
compliance with any applicable prospectus delivery requirements or that are
exempt from registration under the Securities Act.
	 
	 	     4.3 Power and Authority. The Investor represents and warrants to 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 to the extent (i) rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, (ii) such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and (iii) such
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
	 
	 	     4.4 Short Position. The Investor has not, from the period beginning on
the signing of the Term Sheet dated November 10, 2003 between and among the
Investor and the Company, and ending on the Closing Date, established any hedge
or other position in the Common Stock that is a Disposition by the Investor or
any other person or entity. For purposes hereof, a “hedge or other position”
would include, without limitation, effecting any short sale or having in effect
any short position (whether or not such sale or position is against the box and
regardless of when such position was entered into) or any purchase, sale or
grant of any right (including, without limitation, any put or call option) with
respect to the Common Stock or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock.
	 
	 	     4.5 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 Securities
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 Securities.
	 
	 	     4.6 Confidential Information. The Investor acknowledges that the Investor
has received no material nonpublic information from the Company, excepting the
execution of this Agreement which shall be disclosed in the press release set
forth in Section 6.5. The Investor covenants that from the date hereof until
the press release required by Section 6.5 it will maintain in confidence such
information regarding the Offering.
	 
	 	     4.7 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 Securities by the Company, and that the
Placement Agent has made no representation or warranty whatsoever with respect
to the accuracy or completeness of information, data or other related
disclosure material that has been provided to the Investor. The Investor
further acknowledges that in making its decision to enter into this Agreement
and to purchase the Securities, it has relied on its own examination of the
Company and the terms of, and consequences of holding, the Securities. The
Investor

 

 

		
	 	further acknowledges that the provisions of this Section 4.7 are for the
benefit of, and may be enforced by, the Placement Agent.
	 
	 	     4.8 Additional Acknowledgement. The Investor acknowledges that it has
independently evaluated the merits of the transactions contemplated by this
Agreement, that it has independently determined to enter into the transactions
contemplated hereby, that it is not relying on any advice from or evaluation by
any Other Investor, and that it is not acting in concert with any Other
Investor in making its purchase of the Securities hereunder. The Investor and,
to its knowledge, the Company acknowledge that the Investors have not taken any
actions that would deem the Investors to be members of a “group” for purposes
of Section 13(d) of the Exchange Act.

     5.     Transfer of Securities and Other Agreements.

		
	 	     5.1 Transfers to Affiliates; Pledges. Notwithstanding the anything
contained in of the Agreements to the contrary, the Company hereby consents to
and agrees to register on the books of the Company and with its transfer agent,
without any such legal opinion, any transfer of Securities by a Investor to an
Affiliate of such Investor, provided that the transferee certifies to the
Company that it is an “accredited investor” as defined in Rule 501(a) under the
Securities Act. For purposes hereof “Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144 under the Securities Act. The Company
acknowledges and agrees that a Investor may from time to time pledge or grant a
security interest in some or all of the Securities in connection with a bona
fide margin agreement or other loan or financing arrangement secured by the
Securities provided such pledge or grant of a security interest is consistent
with all applicable laws, rules and regulations, including applicable
securities laws (a “Bona Fide Pledge Arrangement”). If required under the terms
of such Bona Fide Pledge Arrangement, such Investor may transfer pledged or
secured Securities to the pledgees or secured parties, provided such transfer
is consistent with all applicable laws, rules and regulations, including
applicable securities laws. Such a pledge or transfer pursuant to a Bona Fide
Pledge Arrangement would not be subject to approval of the Company and no legal
opinion of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At
the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including the preparation and filing of any required prospectus supplement that
may be required under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling
Stockholders under any prospectus that is part of a Registration Statement
filed in accordance with Section 6 hereunder.
	 
	 	     5.2 Legends. The Investors agree to the imprinting, so long as is
required by this Section 5.2, of the following legend on any certificate
evidencing Securities:

		
	 	     [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE

 

 

		
	 	FOREGOING, THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY SUCH SECURITIES.

Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) following any sale of such Securities pursuant to the
Registration Statement (as defined below) or pursuant to Rule 144, (ii) if such
Securities are eligible for sale under Rule 144(k), or (iii) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the SEC).

		
	 	     5.3 Legend Removal. Subject to, and contingent upon, receipt by counsel
of affidavits of the Investor in form of Exhibit H hereto, the Company shall
cause its counsel to issue a legal opinion to the Company’s transfer agent as
soon as practicable, but in no event greater than 2 days, after the date the
Registration Statement, as defined in Section 6.1(a), is first declared
effective by the SEC (the “Effective Date”) facilitating the reissuance of the
certificates representing the Securities or the transfer thereof, without
restrictive legend as provided herein; provided, however, that no such
affidavit shall be requiried if the Investor delivers to the Company’s transfer
agent a certificate of subsequent sale in the form attached as Exhibit I. .
Following the Effective Date or at such earlier time as a legend is no longer
required for certain Securities, the Company will no later than three Trading
Days following the delivery by a Investor to the Company or the Company’s
transfer agent of a legended certificate representing such Securities, deliver
or cause to be delivered to such Investor a certificate representing such
Securities that is free from all restrictive and other legends. The Investor
covenants and agrees that it will comply with the prospectus delivery
requirements set forth in Section 5 of the Securities Act of 1933, as amended,
in connection with any sale of Securities pursuant to the Registration
Statement. For purposes of this Agreement, “Trading Day” means (a) any day on
which the Common Stock is listed or quoted and traded on its primary Trading
Market, (b) if the Common Stock is not then listed or quoted and traded on any
such market, then a day on which trading occurs on the NASDAQ National Market
(or any successor thereto), or (c) if trading ceases to occur on the NASDAQ
National Market (or any successor thereto), any Business Day. For the purposes
of this Agreement the term “Eligible Market” means any of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ National Market or the NASDAQ
SmallCap Market, and the term “Trading Market” means the Nasdaq National Market
or any other Eligible Market, or any national securities exchange, market or
trading or quotation facility on which the Common Stock is then listed or
quoted. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
	 
	 	     5.4 Reimbursement. If any Investor or any of its Affiliates or any
officer, director, partner, controlling person, employee or agent of a Investor
or any of its Affiliates (a “Related Person”) becomes involved in any capacity
in any Proceeding (a “Proceeding”) brought by any third party or against any
Person in connection with or as a result of the transactions contemplated by
the Agreement, the Additional Investment Rights, the Transfer Agent
Instructions and any other documents or agreements executed in connection with
the transactions contemplated hereunder (collectively, the “Transaction
Documents”), the Company will indemnify and hold harmless such Investor or
Related Person for its reasonable legal and other expenses (including the costs
of any investigation, preparation and travel) and for any losses, claims,
damages, liabilities, settlement costs and expenses resulting from such
Proceeding (collectively “Losses”) incurred in connection therewith, as such
expenses or Losses are incurred, excluding only Losses that result directly
from a breach by such Investor or Related Person’s obligations under the
Transaction Documents, or such Investor’s or Related Person’s negligence or
misconduct. In addition, the Company shall indemnify and hold harmless each
Investor and Related Person from and against any and all Losses, as incurred,
arising out of any Proceeding resulting from any breach by the

 

 

		
	 	Company of any of the representations, warranties or covenants made by the
Company in this Agreement or any other Transaction Document. The conduct of
any Proceedings for which indemnification is available under this paragraph
shall be governed by Section 6.3(c) below. Without limiting the generality of
the foregoing, the Company specifically agrees to reimburse the Investors on
demand for all costs of enforcing the indemnification obligations in this
paragraph.

     6.     Registration Rights; Compliance with the Securities Act.

		
	 	     6.1 Registration Procedures and Expenses. The Company:

		
	 	     (a) shall, not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), (i) furnish to each Investor and any
counsel designated by any Investor (each, a “Investor Counsel”, and Mainfield
Enterprises, Inc. has initially designated Proskauer Rose LLP) copies of all
such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
review of each Investor and Investor Counsel, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file a Registration Statement or any
such Prospectus or any amendments or supplements thereto to which Investors
holding a majority of the Registrable Securities shall reasonably object;
	 
	 	     (b) shall, subject to receipt of necessary information from the Investors,
prepare and file with the Securities and Exchange Commission (“SEC”) as
promptly as possible, and in any event within twenty (20) days after the
Closing Date (the “Filing Date”), a Registration Statement on Form S-3 (the
“Registration Statement”), which shall contain (except if otherwise directed by
the Investors) the Plan of Distribution attached hereto as Exhibit G, to enable
the resale of any Common Stock (including the Underlying Shares) issued or
issuable pursuant to this Agreement, together with any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing (collectively, the “Registrable
Securities”) by the Investors on a continuous basis pursuant to Rule 415 of the
Securities Act;
	 
	 	     (c) shall use its best efforts, subject to receipt of necessary
information from the Investors, to cause the Registration Statement to become
effective as soon as practicable, but in no event later than ninety (90) days
after the Closing Date, such efforts to include, without limiting the
generality of the foregoing, preparing and filing with the SEC in such 20-day
period any financial statements that are required to be filed prior to the
effectiveness of such Registration Statement;
	 
	 	     (d) shall use its best efforts to (i) prepare and file with the SEC such
amendments and supplements to the Registration Statement and the Prospectus as
may be necessary to keep the Registration Statement current and effective for a
period (the “Effectiveness Period”) ending on the earlier of (A) the later of
the second anniversary of (x) the Closing Date, or (y) the last date on which
shares are issued upon exercise of Additional Investment Rights, (B) the date
on which the Investor may sell Registrable Securities pursuant to paragraph (k)
of Rule 144 under the Securities Act or any successor rule (“Rule 144”) or (C)
such time as all Registrable Securities purchased by such Investor in this
Offering have been sold pursuant to a registration statement or Rule 144; (ii)
notify each Investor promptly upon the Registration Statement, and each
post-effective amendment thereto, being declared effective by the SEC; (iii)
respond as promptly as reasonably possible, but in any event within 10 days, to
any comments received from the SEC with respect to the Registration Statement
or any amendment thereto and as promptly as reasonably possible provide the
Investors true and complete copies of all

 

 

		
	 	correspondence from and to the SEC relating to the Registration Statement;
and (iv) comply in all material respects with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the applicable period
in accordance with the intended methods of disposition by the Investors thereof
set forth in the Registration Statement as so amended or in such Prospectus as
so supplemented;
	 
	 	     (e) shall bear all expenses of the Company incident to the performance of
or compliance with this Agreement by the Company, including without limitation
(a) all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, any Trading Market and in connection
with applicable state securities or Blue Sky laws, (b) printing expenses
(including without limitation expenses of printing certificates for Registrable
Securities and of printing prospectuses requested by the Investors), (c)
messenger, telephone and delivery expenses, (d) fees and disbursements of
counsel for the Company, (e) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions
contemplated by this Agreement, and (f) all listing fees to be paid by the
Company to the Trading Market; but excluding any fees or expenses of the
Investors or their agents, or any underwriting or brokerage fees or
commissions;
	 
	 	     (f) shall, with a view to making available to the Investor the benefits of
Rule 144 and any other rule or regulation of the SEC that may at any time,
permit the Investor to sell Registrable Securities to the public without
registration, the Company covenants and agrees to use its commercially
reasonable efforts 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 Registrable Securities 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 Registrable Securities 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 Registrable
Securities, (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 Registrable Securities without
registration;
	 
	 	     (g) shall not, and shall use its best efforts to ensure that no Affiliate
of the Company shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Investors or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market;
	 
	 	     (h) shall notify the Investors of Registrable Securities to be sold and
each Investor Counsel as promptly as reasonably possible, and (if requested by
any such Person) confirm such notice in writing no later than 1 Trading Day
thereof, of any of the following events: (i) the SEC notifies the Company
whether there will be a “review” of any Registration Statement; (ii) the SEC
comments in writing on any Registration Statement (in which case the Company
shall deliver to each Investor a copy of such comments and of all written
responses thereto); (iii) any Registration Statement or any post-effective
amendment is declared effective; (iv) the SEC or any other Federal or state
governmental authority requests any amendment or supplement to any Registration
Statement or Prospectus or requests additional information related thereto; (v)
the SEC issues any stop order suspending the effectiveness of any Registration
Statement or initiates any Proceedings for that purpose; (vi) the Company
receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or
the initiation or threat of any Proceeding for such purpose; or (vii) the
financial

 

 

		
	 	statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
	 
	 	     (i) shall use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of any
Registration Statement, or (ii) except as permitted under Section 6.2(b), any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, as soon as possible;
	 
	 	     (j) shall furnish to each Investor and Investor Counsel, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules promptly after the filing
of such documents with the SEC, and to the extent requested by such Person all
documents incorporated or deemed to be incorporated therein by reference and
all exhibits (including those previously furnished or incorporated by
reference);
	 
	 	     (k) shall promptly deliver to each Investor and Investor Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. Subject to the provisions of this Agreement, including
provisions related to any Suspension (as hereafter defined), the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Investors in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto;
	 
	 	     (l) shall (i) in the time and manner required by each Trading Market,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all
reasonable steps necessary to cause such Registrable Securities to be approved
for listing on each Trading Market as soon as possible thereafter; (iii)
provide to the Investors evidence of such listing; and (iv) maintain the
listing of such Registrable Securities on each such Trading Market or another
Eligible Market;
	 
	 	     (m) shall, prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling Investors and
respective Investor Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Investor requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period; 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;
	 
	 	     (n) shall cooperate with the Investors to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Investors may request;
	 
	 	     (o) shall, upon the occurrence of any event described in Section
6.1(h)(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document

 

 

		
	 	incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
	 
	 	     (p) shall cooperate with any due diligence investigation undertaken by the
Investors in connection with the sale of Registrable Securities, including,
without limitation, by making available any documents and information; provided
that the Company will not deliver or make available to any Investor material,
nonpublic information unless such Investor specifically requests in advance to
receive material, nonpublic information in writing; and

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 Registrable Securities to be
sold by Investor, and the intended method of disposition of such securities as
shall be required to effect the registration of the Registrable Securities.

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

		
	 	     6.2 Transfer of Registrable Securities After Registration; Suspension.

		
	 	     (a) The Investor agrees that it will not effect any Disposition of the
Registrable Securities or its right to purchase the Registrable Securities that
would constitute a sale within the meaning of the Securities Act other than
transactions exempt from the registration requirements of the Securities Act,
as contemplated in the Registration Statement and as described below, and that
it will promptly notify the Company of any material changes in the information
set forth in the Registration Statement regarding the Investor or its plan of
distribution.
	 
	 	     (b) Subject to paragraph (c) 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 Registrable
Securities for sale in any jurisdiction or the initiation of any proceeding for
such purpose; or (iv) of any event or circumstance that the Board of Directors
determines in good faith, by appropriate resolutions, that, as a result of such
event it would be materially detrimental to the Company (other than relating
solely to the price of the Common Stock) and 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 and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a “Suspension”) until the Investors are 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 best
efforts to cause the use of the Prospectus so suspended to be resumed as soon
as possible after delivery of a Suspension Notice to the Investors, and in any
event within five trading days; provided, however, that in the event of a
Suspension pursuant to this Section 6.2(b), the Suspension may be for a period
of not more than 30 consecutive days; provided further that the Investor shall
not be prohibited from selling Registrable Securities as a result of more than
two Suspensions during any twelve month period. 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(b). Notwithstanding anything to the contrary, the Company
shall not be permitted to cause a Suspension prior to 60 Trading Days following
the Effective Date.
	 
	 	     (c) If a Suspension is not then in effect, the Investor may sell
Registrable Securities under the Registration Statement, provided that it
complies with any applicable prospectus delivery requirements.
	 
	 	     (d) The Company shall cause its transfer agent to issue a certificate
without any restrictive legend to the Investor or any purchaser of any
Registrable Securities if (a) the Registration Statement has been declared
effective by the SEC; (b) the purchaser or Investor 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 Registrable Securities may be made without registration under
the Securities Act; or (c) such Registrable Securities are sold by the Investor
in compliance with Rule 144 under the Securities Act.

		
	 	     6.3 Indemnification.

		
	 	     (a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Investor,
the officers, directors, partners, members, agents, brokers (including brokers
who offer and sell Registrable Securities as principal as a result of a pledge
or any failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any such
Investor (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Investor furnished
in writing to the Company by such Investor expressly for use therein, or to the
extent that such information relates to such Investor or such Investor’s
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Investor expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of any
Suspension, the use by such Investor of an outdated or defective Prospectus
after the Company has provided the Investor with a Suspension Notice and prior
to the receipt by such Investor in writing by the Company advising such
Investor that the use of the applicable Prospectus may be resumed. The Company
shall notify the Investors promptly of the

 

 

		
	 	institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.
	 
	 	     (b) Indemnification by Investors. Each Investor shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out of
any omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under which
they were made) not misleading to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished in
writing by such Investor to the Company specifically for inclusion in such
Registration Statement or such Prospectus or to the extent that (i) such untrue
statements or omissions are based solely upon information regarding such
Investor furnished in writing to the Company by such Investor expressly for use
therein, or to the extent that such information relates to such Investor or
such Investor’s proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Investor expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto or (ii) in the case of a Suspension,
the use by such Investor of an outdated or defective Prospectus after the
Company has provided the Investor with a Suspension Notice and prior to the
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement, or until it is advised in writing by the Company that
the use of the applicable Prospectus may be resumed. In no event shall the
liability of any selling Investor hereunder be greater in amount than the
dollar amount of the net proceeds received by such Investor upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
	 
	 	     (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.
	 
	 	     An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any

 

 

		
	 	settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
	 
	 	     All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
	 
	 	     (d) Contribution. If a claim for indemnification that would otherwise be
available under Section 6.3(a) or (b) is unavailable to an Indemnified Party
(by reason of public policy or otherwise), then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include, subject to the limitations set forth in Section
6.3(c), any reasonable attorneys’ or other reasonable fees or expenses incurred
by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.
	 
	 	     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.3(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.3(d), no Investor
shall be required to contribute, in the aggregate, any amount in excess of the
amount of the proceeds actually received by such Investor from the sale of the
Registrable Securities subject to the Proceeding. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
	 
	 	     The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

		
	 	     6.4 Information Available. So long as the Registration Statement is
effective covering the resale of Registrable Securities 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 Shareholders (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 Shareholders, 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 shareholders; 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 during the Company’s normal business hours to discuss all
information relevant for disclosure in the Registration Statement covering the
Registrable Securities 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.

		
	 	     6.5 Public Statements. The Company shall, on or before 9:30 a.m., New
York City time, on November 19, 2003, issue a press release acceptable to the
Investors disclosing all material terms of the transactions contemplated
hereby. The Company agrees to disclose on a Current Report on Form 8-K the
existence of the Offering and the material terms, thereof, including pricing,
on the Closing Date. Such Current Report on Form 8-K shall include a form of
this Agreement and a form of the Additional Investment Right as exhibits
thereto. Thereafter, the Company shall timely file any filings and notices
required by the SEC or applicable law with respect to the transactions
contemplated hereby and provide copies thereof to the Investors promptly after
filing. Except with respect to such initial press release and Form 8-K, the
Company shall, at least two Trading Days prior to the filing or dissemination
of any disclosure required by this paragraph, provide a copy thereof to the
Investors for their review. The Company and the Investors shall consult with
each other in issuing any press releases or otherwise making public statements
or filings and other communications with the SEC or any regulatory agency or
Trading Market with respect to the transactions contemplated hereby, and
neither party shall issue any such press release or otherwise make any such
public statement, filing or other communication without the prior consent of
the other, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement, filing or other communication. Notwithstanding the
foregoing, the Company will not issue any public statement, press release or
any other public disclosure listing the Investor as one of the purchasers of
the Units without the 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. The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors,
employees and agents not to, provide any Investor with any material nonpublic
information regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing without the express written consent of such Investor.
In the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Investor shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material nonpublic information after notive and with the approval of
the Company, which approval shall not be unreasonably withheld or delayed. No
Investor shall have any liability to the Company, its Subsidiaries, or any of
its or their respective officers,

 

 

		
	 	directors, employees, shareholders or agents for any such disclosure.
Subject to the foregoing, neither the Company nor any Investor shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Investor, to make any press release or other
public disclosure with respect to such transactions (i) in
 substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) each Investor shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release).
	 
	 	     6.6 No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Investors in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other than
the Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right to any of its security
holders.
	 
	 	     6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the SEC a registration statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Investor written notice of such
determination and if, within fifteen days after receipt of such notice, any
such Investor shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Investor requests to be registered.

     7.     Subsequent Placements.

		
	 	     (a) Except for (i) the issuance of Common Stock, options or other
stock-based benefits to employees, officers, directors of, or consultants or
advisors to the Company pursuant to a stock-based plan duly approved by the
Company’s board of directors, (ii) the issuance of any securities pursuant to
rights to purchase or acquire Common Stock or Common Stock Equivalents
outstanding as of the date of this Agreement, (iii) the issuance of securities
in connection with any bona fide acquisition by the Company of another entity,
or all or substantially all of the assets of another entity, by merger,
purchase of assets or other corporate reorganization, in each case as approved
by the Company’s board of directors and not for the principal purpose of
raising cash, and (iv) the issuance of securities in connection with a joint
venture or development agreement or strategic partnership or similar agreement
approved by the Company’s board of directors and not for the principal purpose
of raising cash (collectively, an “Excluded Transaction”), the Company will
not, prior to the Effective Date, directly or indirectly, offer, sell, grant
any option to purchase, or otherwise dispose of (or announce any offer, sale,
grant or any option to purchase or other disposition of) any of its or the
Significant Subsidiaries’ equity or equity equivalent securities, including
without limitation any debt, preferred stock or other instrument or security
that is, at any time during its life and under any circumstances, convertible
into or exchangeable or exercisable for Common Stock or any security
convertible exercisable or exchangeable for Common Stock (collectively know as
“Common Stock Equivalents”) (any such offer, sale, grant, disposition or
announcement that is not an Excluded Transaction being referred to as a
“Subsequent Placement”).
	 
	 	     (b) Until the one year anniversary of the date of this Agreement, the
Company will use its reasonable commercial best efforts to notify the Investor
of any Subsequent Placement that is to be completed by the Company without
registration under the Securities Act (a “Private Placement”) and use its
reasonable commercial best efforts to allow the Investor to

 

 

		
	 	participate in such Private Placement on the same terms as any other
purchaser of securities in such Private Placement. For purposes of this
Section 7(b), reasonable commercial efforts shall mean that the Company shall
use its best efforts to (i) offer to sell, or sell, to each Investor an amount
of the Common Stock or Common Stock Equivalents offered in such Private
Placement (the “Offered Securities”) equal to such Investor’s pro rata portion
of twenty-five percent (25%) of the Offered Securities based on such Investor’s
pro rata portion of the aggregate purchase price paid by the Investors for all
of the Shares purchased hereunder, and (ii) notify the Investor not less than 2
Trading Days prior to the closing of such Private Placement or if earlier
within one day after reaching a preliminary agreement with another purchaser;
provided, however, that such reasonable commercial efforts shall not (x)
obligate the Company to notify the Investor of a Private Placement prior to
commencement of negotiations with another purchaser, or in any event more than
10 days prior to closing of the Private Placement or (y) to offer to the
Investor any Offered Securities that are not purchased by any other Investor.

     8.     Reservation of Securities. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Additional Investment Rights in such amount as may be required to fulfill its
obligations in full thereunder. In the event that at any time the then
authorized shares of Common Stock are insufficient for the Company to satisfy
its obligations in full under the Additional Investment Rights, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares.

     9.     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 Securities being purchased and
the payment therefor.

     10.     Fees and Expenses. At the Closing, the Company shall pay to Mainfield
Enterprises, Inc. an aggregate of $25,000 for their legal fees and expenses
incurred in connection with its due diligence and the preparation and
negotiation of the Transaction Documents. In lieu of the foregoing payment,
Mainfield Enterprises, Inc. may retain such amount at the Closing or require
the Company to pay such amount directly to Proskauer Rose, LLP. Except as
expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all transfer agent fees, stamp taxes and
other taxes and duties levied in connection with the issuance of the
Securities.

     11. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be delivered (A) if within the United
States, by first-class registered or certified airmail, or nationally
recognized overnight express courier, postage prepaid, or by facsimile, or (B)
if 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, upon the Business Day
received, (ii) if delivered by nationally recognized overnight carrier, one (1)
Business Day after timely delivery to such carrier, (iii) if delivered by
International Federal Express (or comparable service), two (2) Business Days
after timely delivery to such carrier, (iv) if delivered by facsimile, upon
electric confirmation of receipt; and shall be addressed as follows, or to such
other address or addresses as may have been furnished in writing by a party to
another party pursuant to this paragraph:

 

 

		
	                    (a) if to the Company, to:
	 
	 	Compex Technologies, Inc.

1811 Old Highway 8

New Brighton, Minnesota 55112-3493

Attention: Dan W. Gladney, President and Chief Executive Officer

Telephone: (763) 631-0590

Facsimile: (651) 638-0477

with a copy to:

Dorsey & Whitney LLP

Suite 1500, 50 South Sixth Street

Minneapolis, Minnesota 55402-1498

Attn: Thomas O. Martin, Esq.

Telephone: (612) 340-2600

Facsimile: (612) 340-7800

		
	 	     (b) if to the Investor, at its address on the signature page to the
Securities Purchase Agreement.

     12.     Amendments; Waiver. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Investor. Any waiver of a provision of this Agreement must be in writing and
executed by the party against whom enforcement of such waiver is sought.

     13.     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.

     14.     Entire Agreement; Severability. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof and supersedes all prior and contemporaneous agreements, negotiations
and understandings between the parties, both oral and written relating to the
subject matter hereof. 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.

     15.     Governing Law; Venue; Waiver Of Jury Trial. ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT
BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR

 

 

PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH
SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY
RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND
INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

     16.     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.

     17.     Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Investors. No Investor may
assign its rights under this Agreement, except to (i) an Affiliate, (ii)
pursuant to a Bona Fide Pledge Transaction, or (iii) to up to two additional
Persons who are direct transferees (but not to any transferee of such
transferee) from such Investor; provided, however, that in each such case, such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the “Investors.”
Notwithstanding anything herein, nothing herein shall restrict the Investor
from transferring, pledging or selling the Securities hereunder in accordance
with the Securities Act.

     18.     Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity, if requested. The applicants for a new certificate
or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities.

     19.     Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

     20.     Payment Set Aside. To the extent that the Company makes a payment or
payments to any Investor hereunder or pursuant to the Additional Investment
Rights, or any Investor enforces or exercises its rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise

 

 

restored to the Company by a trustee, receiver or any other person under
any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.

     21.     Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly shares of Common Stock), combination
or other similar recapitalization or event occurring after the date hereof,
each reference in any Transaction Document to a number of shares or a price per
share shall be amended to appropriately account for such event.

     22.     Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under any Transaction Document 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 Transaction Document. The decision of each Investor to
purchase Shares pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Significant Subsidiary which
may have been made or given by any other Investor or by any agent or employee
of any other Investor, and no Investor or any of its agents or employees shall
have any liability to any other Investor (or any other person) relating to or
arising from any such information, materials, statements or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Investor pursuant thereto, 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 Transaction Document. Each Investor acknowledges that no other Investor
has acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor
in connection with monitoring its investment hereunder. Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose.<PAGE>

                                                                     Exhibit 4.1

                               WATERS CORPORATION

                           2003 EQUITY INCENTIVE PLAN

<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                TABLE OF CONTENTS
<TABLE>
<S>                                                                       <C>
1.   Purpose...........................................................    1

2.   Definitions.......................................................    1

3.   Term of the Plan..................................................    3

4.   Stock Subject to the Plan.........................................    4

5.   Administration....................................................    4

6.   Authorization and Eligibility.....................................    5

7.   Specific Terms of Awards..........................................    5

8.   Adjustment Provisions.............................................   11

9.   Settlement of Awards..............................................   12

10.  Reservation of Stock..............................................   13

11.  No Special Employment or Other Rights.............................   14

12.  Nonexclusivity of the Plan........................................   14

13.  Termination and Amendment of the Plan.............................   14

14.  Notices and Other Communications..................................   14

15.  Governing Law.....................................................   15
</TABLE>

<PAGE>

                               WATERS CORPORATION

                           2003 EQUITY INCENTIVE PLAN

1.       PURPOSE

         This Plan is intended to encourage ownership of Common Stock by
employees, consultants and directors of the Company and its Affiliates and to
provide additional incentive for them to promote the success of the Company's
business. The Plan is intended to be an incentive stock option plan within the
meaning of Section 422 of the Code, but not all Awards are required to be
Incentive Options.

2.       DEFINITIONS

         As used in this Plan, the following terms shall have the following
meanings:

         2.1.     ACCELERATE, ACCELERATED, and ACCELERATION, when used with
respect to an Option or Stock Appreciation Right, means that as of the time of
reference the Option or Stock Appreciation Right will become exercisable with
respect to some or all of the shares of Common Stock for which it was not then
otherwise exercisable by its terms, and, when used with respect to Restricted
Stock, means that the Risk of Forfeiture otherwise applicable to the Stock shall
expire with respect to some or all of the shares of Restricted Stock then still
otherwise subject to the Risk of Forfeiture.

         2.2.     ACQUISITION means a merger or consolidation of the Company
with or into another person or the sale, transfer, or other disposition of all
or substantially all of the Company's assets to one or more other persons in a
single transaction or series of related transactions, unless securities
possessing more than 50% of the total combined voting power of the survivor's or
acquiror's outstanding securities (or the securities of any parent thereof) are
held by a person or persons who held securities possessing more than 50% of the
total combined voting power of the Company immediately prior to that
transaction.

         2.3.     AFFILIATE means any corporation, partnership, limited
liability company, business trust, or other entity controlling, controlled by or
under common control with the Company.

         2.4.     AWARD means any grant or sale pursuant to the Plan of Options,
Restricted Stock, Stock Appreciation Rights or Stock Grants.

         2.5.     AWARD AGREEMENT means an agreement between the Company and the
recipient of an Award, setting forth the terms and conditions of the Award.

         2.6.     BOARD means the Company's Board of Directors.

         2.7.     CHANGE OF CONTROL means any of the following transactions:

<PAGE>
                                      -2-

                  (a)      any Acquisition, or

                  (b)      any person or group of persons (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in
effect from time to time), other than the Company or an Affiliate, directly or
indirectly acquires beneficial ownership (determined pursuant to Securities and
Exchange Commission Rule 13d-3 promulgated under the said Exchange Act) of
securities possessing more than 50% of the total combined voting power of the
Company's outstanding securities pursuant to a tender or exchange offer made
directly to the Company's stockholders that the Board does not recommend such
stockholders to accept, or

                  (c)      over a period of 36 consecutive months or less, there
is a change in the composition of the Board such that a majority of the Board
members (rounded up to the next whole number, if a fraction) ceases, by reason
of one or more proxy contests for the election of Board members, to be composed
of individuals who either (A) have been Board members continuously since the
beginning of that period, or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in the preceding clause (A) who were still in office at the time that
election or nomination was approved by the Board.

         2.8.     CODE means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto, and any regulations issued from
time to time thereunder.

         2.9.     COMMITTEE means any committee of the Board delegated
responsibility by the Board for the administration of the Plan, as provided in
Section 5 of the Plan. For any period during which no such committee is in
existence "Committee" shall mean the Board and all authority and responsibility
assigned to the Committee under the Plan shall be exercised, if at all, by the
Board.

         2.10.    COMMON STOCK or STOCK means common stock, par value $.01 per
share, of the Company.

         2.11.    COMPANY means Waters Corporation, a corporation organized
under the laws of the State of Delaware.

         2.12.    GRANT DATE means the date as of which an Option is granted, as
determined under Section 7.1(a).

         2.13.    INCENTIVE OPTION means an Option which by its terms is to be
treated as an "incentive stock option" within the meaning of Section 422 of the
Code.

         2.14.    MARKET VALUE means the value of a share of Common Stock on any
date as determined by the Committee.

         2.15.    NONSTATUTORY OPTION means any Option that is not an Incentive
Option.

<PAGE>
                                      -3-

         2.16.    OPTION means an option to purchase shares of Common Stock.

         2.17.    OPTIONEE means a Participant to whom an Option shall have been
granted under the Plan.

         2.18.    PARTICIPANT means any holder of an outstanding Award under the
Plan.

         2.19.    PLAN means this 2003 Equity Incentive Plan of the Company, as
amended from time to time, and including any attachments or addenda hereto.

         2.20.    RESTRICTED STOCK means a grant or sale of shares of Common
Stock to a Participant subject to a Risk of Forfeiture.

         2.21.    RESTRICTION PERIOD means the period of time, established by
the Committee in connection with an Award of Restricted Stock, during which the
shares of Restricted Stock are subject to a Risk of Forfeiture described in the
applicable Award Agreement.

         2.22.    RISK OF FORFEITURE means a limitation on the right of the
Participant to retain Restricted Stock, including a right in the Company to
reacquire the Shares at less than their then Market Value, arising because of
the occurrence or non-occurrence of specified events or conditions.

         2.23.    STOCK APPRECIATION RIGHT means the right described in Section
7.3 hereof.

         2.24.    STOCK GRANT means the grant of shares of Common Stock not
subject to restrictions or other forfeiture conditions.

         2.25.    TEN PERCENT OWNER means a person who owns, or is deemed within
the meaning of Section 422(b)(6) of the Code to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
(or any parent or subsidiary corporations of the Company, as defined in Sections
424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent
Owner shall be determined with respect to an Option based on the facts existing
immediately prior to the Grant Date of the Option.

         2.26.    TERMINATION means the last day of an employee's active
employment or a non-employee's other association, except as otherwise required
by applicable local law.

3.       TERM OF THE PLAN

         Unless the Plan shall have been earlier terminated by the Board, Awards
may be granted under this Plan at any time in the period commencing on the date
of approval of the Plan by the Board and ending immediately prior to the tenth
anniversary of the earlier of the adoption of the Plan by the Board or approval
of the Plan by the Company's stockholders. Awards granted pursuant to the Plan
within that period shall not expire solely by reason of the termination of the
Plan. Awards of Incentive Options granted prior to stockholder approval of the
Plan are expressly conditioned upon such approval,

<PAGE>
                                      -4-

but in the event of the failure of the stockholders to approve the Plan shall
thereafter and for all purposes be deemed to constitute Nonstatutory Options.

4.       STOCK SUBJECT TO THE PLAN

         At no time shall the number of shares of Common Stock issued pursuant
to or subject to outstanding Awards granted under the Plan exceed 5,697,290 plus
the number of any shares subject to awards granted under the Waters Corporation
1996 Long-Term Performance Incentive Plan, the Waters Corporation 1996
Non-Employee Director Stock Option Plan and the Waters Corporation 1994 Stock
Option Plan which would have become available for additional awards thereunder
by reason of the expiration or termination of those awards, SUBJECT, HOWEVER, to
the provisions of Section 8 of the Plan. Notwithstanding the foregoing
limitation, Awards for Incentive Stock Options shall not exceed 5,697,290
shares. For purposes of applying the foregoing limitation, if any Option or
Stock Appreciation Right expires, terminates, or is cancelled for any reason
without having been exercised in full, or if any Award of Restricted Stock is
forfeited by the recipient, the shares not purchased or received by the
Participant or forfeited by the recipient shall again be available for Awards to
be granted under the Plan. Shares of Common Stock issued pursuant to the Plan
may be either authorized but unissued shares or shares held by the Company in
its treasury.

5.       ADMINISTRATION

         The Plan shall be administered by the Committee; PROVIDED, HOWEVER,
that at any time and on any one or more occasions the Board may itself exercise
any of the powers and responsibilities assigned the Committee under the Plan and
when so acting shall have the benefit of all of the provisions of the Plan
pertaining to the Committee's exercise of its authorities hereunder; and
PROVIDED FURTHER, HOWEVER, that the Committee may delegate to an executive
officer or officers the authority to grant Awards hereunder to employees who are
not officers, and to consultants, in accordance with such guidelines as the
Committee shall set forth at any time or from time to time. Subject to the
provisions of the Plan, the Committee shall have complete authority, in its
discretion, to make or to select the manner of making all determinations with
respect to each Award to be granted by the Company under the Plan including the
employee, consultant or director to receive the Award, the form of Award and any
acceleration or extension of an Award (without regard to whether such
acceleration or extension is embodied in the applicable Award Agreement). In
making such determinations, the Committee may take into account the nature of
the services rendered by the respective employees, consultants, and directors,
their present and potential contributions to the success of the Company and its
Affiliates, and such other factors as the Committee in its discretion shall deem
relevant. Subject to the provisions of the Plan, the Committee shall also have
complete authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective Award Agreements (which need not be identical), and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee's determinations made in good faith on

<PAGE>
                                      -5-

matters referred to in the Plan shall be final, binding and conclusive on all
persons having or claiming any interest under the Plan or an Award made pursuant
to hereto.

6.       AUTHORIZATION AND ELIGIBILITY

         The Committee may grant from time to time and at any time prior to the
termination of the Plan one or more Awards, either alone or in combination with
any other Awards, to any employee of or consultant to one or more of the Company
and its Affiliates or to non-employee member of the Board or of any board of
directors (or similar governing authority) of any Affiliate. However, only
employees of the Company, and of any parent or subsidiary corporations of the
Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall
be eligible for the grant of an Incentive Option. Further, in no event shall the
number of shares of Common Stock covered by Options or other Awards granted to
any one person in any one calendar year exceed One Million (1,000,000) shares of
Common Stock.

         Each grant of an Award shall be subject to all applicable terms and
conditions of the Plan (including but not limited to any specific terms and
conditions applicable to that type of Award set out in the following Section),
and such other terms and conditions, not inconsistent with the terms of the
Plan, as the Committee may prescribe. No prospective Participant shall have any
rights with respect to an Award, unless and until such Participant has executed
an agreement evidencing the Award, delivered a fully executed copy thereof to
the Company, and otherwise complied with the applicable terms and conditions of
such Award.

7.       SPECIFIC TERMS OF AWARDS

         7.1.     OPTIONS.

                  (a)      DATE OF GRANT. The granting of an Option shall take
place at the time specified in the Award Agreement. Only if expressly so
provided in the applicable Award Agreement shall the Grant Date be the date on
which the Award Agreement shall have been duly executed and delivered by the
Company and the Optionee.

                  (b)      EXERCISE PRICE. The price at which shares of Common
Stock may be acquired under each Incentive Option shall be not less than 100% of
the Market Value of Common Stock on the Grant Date, or not less than 110% of the
Market Value of Common Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The price at which shares of Common Stock may be acquired under each
Nonstatutory Option shall be not less than 100% of the Market Value of Common
Stock on the Grant Date.

                  (c)      OPTION PERIOD. No Incentive Option may be exercised
on or after the tenth anniversary of the Grant Date, or on or after the fifth
anniversary of the Grant Date if the Optionee is a Ten Percent Owner. No
Nonstatutory Option may be exercised on or after the tenth anniversary of the
Grant Date.

<PAGE>
                                      -6-

                  (d)      EXERCISABILITY. An Option may be immediately
exercisable or become exercisable in such installments, cumulative or
non-cumulative, as the Committee may determine. In the case of an Option not
otherwise immediately exercisable in full, the Committee may Accelerate such
Option in whole or in part at any time; PROVIDED, HOWEVER, that in the case of
an Incentive Option, any such Acceleration of the Option would not cause the
Option to cease to be an Incentive Option in accordance with the provisions of
Section 422 of the Code or the Optionee consents to the Acceleration.

                  (e)      TERMINATION FROM THE COMPANY. If the Optionee has a
Termination from the Company and its Affiliates for any reason, including the
Optionee's employer ceasing to be an Affiliate, the Optionee may exercise the
Option only for the number of shares and only during the period specified,
whether originally or by amendment, in the Award Agreement governing the Option.
Military or sick leave or other bona fide leave shall not be deemed a
Termination, PROVIDED that it does not exceed the longer of ninety (90) days or
the period during which the absent Optionee's reemployment rights, if any, are
guaranteed by statute or by contract.

                  (f)      TRANSFERABILITY. Except as otherwise provided in this
subsection (f), Options shall not be transferable, and no Option or interest
therein may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. All
of a Participant's rights in any Option may be exercised during the life of the
Participant only by the Participant or the Participant's legal representative.
However, the Committee may, at or after the grant of a Nonstatutory Option,
provide that such Option may be transferred by the recipient to a family member;
PROVIDED, HOWEVER, that any such transfer is without payment of any
consideration whatsoever and that no transfer of an Option shall be valid unless
first approved by the Committee, acting in its sole discretion. For this
purpose, "family member" means any child, stepchild, grandchild, parent,
stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the employee's household
(other than a tenant or employee), a trust in which the foregoing persons have
more than fifty (50) percent of the beneficial interests, a foundation in which
the foregoing persons (or the Participant) control the management of assets, and
any other entity in which these persons (or the Participant) own more than fifty
(50) percent of the voting interests.

                  (g)      METHOD OF EXERCISE. An Option may be exercised by the
Optionee giving written notice, in the manner provided in Section 14, specifying
the number of shares with respect to which the Option is then being exercised.
The notice shall be accompanied by payment in the form of cash or check payable
to the order of the Company in an amount equal to the exercise price of the
shares to be purchased or, to the extent not prohibited by applicable law and if
the Committee had so authorized on the grant of an Incentive Option or on or
after grant of an Nonstatutory Option (and subject to such conditions, if any,
as the Committee may deem necessary to avoid adverse accounting effects to the
Company) by delivery to the Company of

<PAGE>
                                      -7-

                           (i)      shares of Common Stock having a Market Value
                  equal to the exercise price of the shares to be purchased, or

                           (ii)     the Optionee's executed promissory note in
                  the principal amount equal to the exercise price of the shares
                  to be purchased and otherwise in such form as the Committee
                  shall have approved.

To the extent permitted by applicable law, payment of any exercise price may
also be made through and under the terms and conditions of any formal cashless
exercise program authorized by the Company entailing the sale of the Stock
subject to an Option in a brokered transaction (other than to the Company).
Receipt by the Company of such notice and payment in any authorized or
combination of authorized means shall constitute the exercise of the Option.
Within thirty (30) days thereafter but subject to the remaining provisions of
the Plan, the Company shall deliver or cause to be delivered to the Optionee or
his agent a certificate or certificates for the number of shares then being
purchased. Such shares shall be fully paid and nonassessable.

                  (h)      LIMIT ON INCENTIVE OPTION CHARACTERIZATION. An
Incentive Option shall be considered to be an Incentive Option only to the
extent that the number of shares of Common Stock for which the Option first
becomes exercisable in a calendar year do not have an aggregate Market Value (as
of the date of the grant of the Option) in excess of the "current limit". The
current limit for any Optionee for any calendar year shall be $100,000 MINUS the
aggregate Market Value at the date of grant of the number of shares of Common
Stock available for purchase for the first time in the same year under each
other Incentive Option previously granted to the Optionee under the Plan, and
under each other incentive stock option previously granted to the Optionee under
any other incentive stock option plan of the Company and its Affiliates. Any
shares of Common Stock which would cause the foregoing limit to be violated
shall be deemed to have been granted under a separate Nonstatutory Option,
otherwise identical in its terms to those of the Incentive Option.

                  (i)      NOTIFICATION OF DISPOSITION. Each person exercising
any Incentive Option granted under the Plan shall be deemed to have covenanted
with the Company to report to the Company any disposition of such shares prior
to the expiration of the holding periods specified by Section 422(a)(1) of the
Code and, if and to the extent that the realization of income in such a
disposition imposes upon the Company federal, state, local or other withholding
tax requirements, or any such withholding is required to secure for the Company
an otherwise available tax deduction, to remit to the Company an amount in cash
sufficient to satisfy those requirements.

                  (j)      RIGHTS PENDING EXERCISE. No person holding an Option
shall be deemed for any purpose to be a stockholder of the Company with respect
to any of the shares of Stock issuable pursuant to his Option, except to the
extent that the Option shall have been exercised with respect thereto and, in
addition, a certificate shall have been issued therefor and delivered to such
holder or his agent.

<PAGE>
                                      -8-

         7.2.     Restricted Stock.

                  (a)      PURCHASE PRICE. Shares of Restricted Stock shall be
issued under the Plan for such consideration, in cash, other property or
services, or any combination thereof, as is determined by the Committee.

                  (b)      ISSUANCE OF CERTIFICATES. Each Participant receiving
a Restricted Stock Award, subject to subsection (c) below, shall be issued a
stock certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant, and, if
applicable, shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Award substantially in the following form:

         The transferability of this certificate and the shares represented by
         this certificate are subject to the terms and conditions of the Waters
         Corporation 2003 Equity Incentive Plan and an Award Agreement entered
         into by the registered owner and Waters Corporation. Copies of such
         Plan and Agreement are on file in the offices of Waters Corporation.

                  (c)      ESCROW OF SHARES. The Committee may require that the
stock certificates evidencing shares of Restricted Stock be held in custody by a
designated escrow agent (which may but need not be the Company) until the
restrictions thereon shall have lapsed, and that the Participant deliver a stock
power, endorsed in blank, relating to the Stock covered by such Award.

                  (d)      RESTRICTIONS AND RESTRICTION PERIOD. During the
Restriction Period applicable to shares of Restricted Stock, such shares shall
be subject to limitations on transferability and a Risk of Forfeiture arising on
the basis of such conditions related to the performance of services, Company or
Affiliate performance or otherwise as the Committee may determine and provide
for in the applicable Award Agreement. No Award of Restricted Stock shall have a
Restriction Period of less than 3 years except: (i) as may be recommended by the
Committee and approved by the Board or (ii) with respect to any Award of
Restricted Stock which provides solely for a performance-based Risk of
Forfeiture. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it
deems appropriate.

                  (e)      RIGHTS PENDING LAPSE OF RISK OF FORFEITURE OR
FORFEITURE OF AWARD. Except as otherwise provided in the Plan or the applicable
Award Agreement, at all times prior to lapse of any Risk of Forfeiture
applicable to, or forfeiture of, an Award of Restricted Stock, the Participant
shall have all of the rights of a stockholder of the Company, including the
right to vote, and the right to receive any dividends with respect to, the
shares of Restricted Stock. The Committee, as determined at the time of Award,
may permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested in additional Restricted Stock to the extent
shares are available under Section 4.

<PAGE>
                                      -9-

                  (f)      TERMINATION FROM THE COMPANY. Unless the Committee
shall provide otherwise for any Award of Restricted Stock, whether originally or
by amendment, upon a Participant's Termination from the Company and its
Affiliates during the Restriction Period for any reason, including the
Participant's employer ceasing to be an Affiliate during the Restriction Period,
all shares of Restricted Stock still subject to Risk of Forfeiture shall be
forfeited or otherwise subject to return to or repurchase by the Company on the
terms specified in the Award Agreement; PROVIDED, HOWEVER, that military or sick
leave or other bona fide leave shall not be deemed a Termination, if it does not
exceed the longer of ninety (90) days or the period during which the absent
Participant's reemployment rights, if any, are guaranteed by statute or by
contract.

                  (g)      LAPSE OF RESTRICTIONS. If and when the Restriction
Period expires without a prior forfeiture of the Restricted Stock, the
certificates for such shares shall be delivered to the Participant promptly if
not theretofore so delivered.

         7.3.     STOCK APPRECIATION RIGHTS.

                  (a)      GRANT OF STOCK APPRECIATION RIGHTS. The Committee may
grant Stock Appreciation Rights either alone, or in conjunction with Stock
Options, either at the time of grant or by amendment thereafter. Each Award of
Stock Appreciation Rights granted under the Plan shall comply with the terms and
conditions set forth herein, and with such other terms and conditions,
including, but not limited to, restrictions upon the Award of Stock Appreciation
Rights or the Common Stock issuable upon exercise thereof, as the Committee, in
its discretion, shall establish. An Award of Stock Appreciation Rights shall
entitle the Participant (or any person entitled to act under the provisions of
paragraph (d) below) to exercise such Award and surrender unexercised the
Option, if any, to which the Stock Appreciation Right is attached (or any
portion of such Option) to the Company and to receive from the Company in
exchange thereof, without payment to the Company, that number of shares of
Common Stock having an aggregate value equal to (or, in the discretion of the
Committee, less than) the excess of the fair market value of one share at the
time of such exercise, over the exercise price (or Option Price, as the case may
be), times the number of shares subject to the Award or the Option, or portion
thereof, which is so exercised or surrendered, as the case may be. The Committee
shall be entitled in its discretion to elect to settle the obligation arising
out of the exercise of a Stock Appreciation Right by the payment of cash or
property, or other forms of payment, or any combination thereof, as determined
by the Committee, equal to the aggregate value of the Common Stock it would
otherwise be obligated to deliver. Any such election by the Committee shall be
made as soon as practicable after the receipt by the Committee of written notice
of the exercise of the Stock Appreciation Right.

                  (b)      PRICE. The Stock Appreciation Right shall be granted
with a hurdle price in an amount determined by the Committee, but not less than
100% of the Market Value of Common Stock on the Grant Date.

                  (c)      NUMBER OF SHARES. The Committee shall determine the
number of shares of Common Stock to be subject to each Award of Stock
Appreciation Rights. The
<PAGE>

                                      -10-

number of shares of Common Stock subject to an outstanding Award of Stock
Appreciation Rights may be reduced on a share-for-share or other appropriate
basis, as determined by the Committee, to the extent that Common Stock under
such Award of Stock Appreciation Rights are used to calculate the cash, Common
Stock, or property, or other forms of payment, or any combination thereof,
received pursuant to exercise of an Option attached to such Award of Stock
Appreciation Rights, or to the extent that any other Award granted in
conjunction with such Award of Stock Appreciation Rights is paid.

                  (d)      TRANSFERABILITY. Except as otherwise provided in this
subsection (d), Stock Appreciation Rights shall not be transferable, and no
Stock Appreciation Right or interest therein may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. All of a Participant's rights in any Stock
Appreciation Right may be exercised during the life of the Participant only by
the Participant or the Participant's legal representative. However, the
Committee may, at or after the grant of a Stock Appreciation Right, provide that
such Stock Appreciation Right may be transferred by the recipient to a family
member; PROVIDED, HOWEVER, that any such transfer is without payment of any
consideration whatsoever and that no transfer of a Stock Appreciation Right
shall be valid unless first approved by the Committee, acting in its sole
discretion. For this purpose, "family member" means any child, stepchild,
grandchild, parent, stepparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which the
foregoing persons have more than fifty (50) percent of the beneficial interests,
a foundation in which the foregoing persons (or the Participant) control the
management of assets, and any other entity in which these persons (or the
Participant) own more than fifty (50) percent of the voting interests.

                  (e)      EXERCISABILITY. No Award of Stock Appreciation Rights
may be exercised on or after the tenth anniversary of the Grant Date. Any Award
of Stock Appreciation Rights may be exercised only as set forth herein or at
such time or times and in such installments as the Committee may establish.

                  (f)      TERMINATION FROM THE COMPANY. If the Participant has
a Termination from the Company and its Affiliates for any reason, including the
Participant's employer ceasing to be an Affiliate, the Participant may exercise
the Stock Appreciation Right only for the number of shares and only during the
period specified, whether originally or by amendment, in the Award Agreement
governing the Stock Appreciation Right. Military or sick leave or other bona
fide leave shall not be deemed a Termination, provided that it does not exceed
the longer of ninety (90) days or the period during which the absent
Participant's reemployment rights, if any, are guaranteed by statute or by
contract.

                  (g)      DEEMED EXERCISE. A Stock Appreciation Right may
provide that it shall be deemed to have been exercised at the close of business
on the business day preceding the expiration date of the Stock Appreciation
Right or of the related Option, or

<PAGE>

                                      -11-

such other date as specified by the Committee, if at such time such Stock
Appreciation Right has a positive value. Such deemed exercise shall be settled
or paid in the same manner as a regular exercise thereof.

         7.4.     STOCK GRANTS. Stock Grants shall be awarded solely in
recognition of significant contributions to the success of the Company or its
Affiliates, in lieu of compensation otherwise already due and in such other
limited circumstances as the Committee deems appropriate. Stock Grants shall be
made without forfeiture conditions of any kind.

         7.5.     AWARDS TO PARTICIPANTS OUTSIDE THE UNITED STATES. The
Committee may modify the terms of any Award under the Plan granted to a
Participant who is, at the time of grant or during the term of the Award,
resident or primarily employed outside of the United States in any manner deemed
by the Committee to be necessary or appropriate in order that the Award shall
conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant's residence or
employment abroad, shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States. An Award
may be modified under this Section 7.5 in a manner that is inconsistent with the
express terms of the Plan, so long as such modifications will not contravene any
applicable law or regulation.

8.       ADJUSTMENT PROVISIONS

         8.1.     ADJUSTMENT FOR CORPORATE ACTIONS. All of the share numbers set
forth in the Plan reflect the capital structure of the Company as of December
31, 2002. Subject to Section 8.2, if subsequent to that date the outstanding
shares of Common Stock (or any other securities covered by the Plan by reason of
the prior application of this Section) are increased, decreased, or exchanged
for a different number or kind of shares or other securities, or if additional
shares or new or different shares or other securities are distributed with
respect to shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all the property of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other distribution with respect to such shares of Common
Stock, or other securities, an appropriate and proportionate adjustment will be
made in (i) the maximum numbers and kinds of shares provided in Sections 4 and
6, (ii) the numbers and kinds of shares or other securities subject to the then
outstanding Awards, (iii) the exercise or hurdle price for each share or other
unit of any other securities subject to then outstanding Options or Stock
Appreciation Rights (without change in the aggregate purchase price as to which
such Options or Stock Appreciation Rights remain exercisable), and (iv) the
repurchase price of each share of Restricted Stock then subject to a Risk of
Forfeiture in the form of a Company repurchase right.

         8.2.     CHANGE IN CONTROL. In the event of a Change in Control
(including a Change of Control which is an Acquisition), any Restricted Stock
Award still then

<PAGE>

                                      -12-

subject to a Risk of Forfeiture and any outstanding Option or Stock Appreciation
Right not then exercisable in full shall fully vest whether or not the
repurchase rights for Restricted Stock are acquired by an acquiring entity and
whether or not outstanding Options or Stock Appreciation Rights are assumed by
an acquiring entity or replaced by comparable options to purchase shares of the
capital stock of a successor or acquiring entity or parent thereof or stock
appreciation rights.

         8.3.     DISSOLUTION OR LIQUIDATION. Upon dissolution or liquidation of
the Company, other than as part of an Acquisition or similar transaction, each
outstanding Option or Stock Appreciation Right shall terminate, but the
Participant (if at the time in the employ of or otherwise associated with the
Company or any of its Affiliates) shall have the right, immediately prior to the
dissolution or liquidation, to exercise the Option or Stock Appreciation Right
to the extent exercisable on the date of dissolution or liquidation.

         8.4.     RELATED MATTERS. Any adjustment in Awards made pursuant to
this Section 8 shall be determined and made, if at all, by the Committee and
shall include any correlative modification of terms, including of Option or
Stock Appreciation Right, exercise or hurdle prices, rates of vesting or
exercisability, Risks of Forfeiture and applicable repurchase prices for
Restricted Stock, which the Committee may deem necessary or appropriate so as to
ensure the rights of the Participants in their respective Awards are not
substantially diminished nor enlarged as a result of the adjustment and
corporate action other than as expressly contemplated in this Section 8. No
fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by an Award
shall cause such number to include a fraction of a share, such number of shares
shall be adjusted to the nearest smaller whole number of shares. No adjustment
of an Option exercise price or Stock Appreciation Right hurdle price per share
pursuant to this Section 8 shall result in an exercise price or hurdle price
which is less than the par value of the Stock.

9.       SETTLEMENT OF AWARDS

         9.1.     VIOLATION OF LAW. Notwithstanding any other provision of the
Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion
of the Company, the issuance of shares of Common Stock covered by an Award may
constitute a violation of law, then the Company may delay such issuance and the
delivery of a certificate for such shares until (i) approval shall have been
obtained from such governmental agencies, other than the Securities and Exchange
Commission, as may be required under any applicable law, rule, or regulation and
(ii) in the case where such issuance would constitute a violation of a law
administered by or a regulation of the Securities and Exchange Commission, one
of the following conditions shall have been satisfied:

                  (a)      the shares are at the time of the issue of such
shares effectively registered under the Securities Act of 1933; or

<PAGE>

                                      -13-

                  (b)      the Company shall have determined, on such basis as
it deems appropriate (including an opinion of counsel in form and substance
satisfactory to the Company) that the sale, transfer, assignment, pledge,
encumbrance or other disposition of such shares or such beneficial interest, as
the case may be, does not require registration under the Securities Act of 1933,
as amended or any applicable State securities laws.

The Company shall make all reasonable efforts to bring about the occurrence of
said events.

         9.2.     CORPORATE RESTRICTIONS ON RIGHTS IN STOCK. Any Stock to be
issued pursuant to Awards granted under the Plan shall be subject to all
restrictions upon the transfer thereof which may be now or hereafter imposed by
the charter, certificate or articles, and by-laws, of the Company.

         9.3.     INVESTMENT REPRESENTATIONS. The Company shall be under no
obligation to issue any shares covered by any Award unless the shares to be
issued pursuant to Awards granted under the Plan have been effectively
registered under the Securities Act of 1933, as amended.

         9.4.     PLACEMENT OF LEGENDS; STOP ORDERS; ETC. Each share of Common
Stock to be issued pursuant to Awards granted under the Plan may bear a
reference to any applicable restriction under the Plan and the terms of the
Award. All certificates for shares of Common Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

         9.5.     TAX WITHHOLDING. Whenever shares of Stock are issued or to be
issued pursuant to Awards granted under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount sufficient to
satisfy federal, state, local or other withholding tax requirements if, when,
and to the extent required by law (whether so required to secure for the Company
an otherwise available tax deduction or otherwise) prior to the delivery of any
certificate or certificates for such shares. The obligations of the Company
under the Plan shall be conditional on satisfaction of all such withholding
obligations and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
recipient of an Award.

10.      RESERVATION OF STOCK

         The Company shall at all times during the term of the Plan and any
outstanding Options or Stock Appreciation Rights granted hereunder reserve or
otherwise keep available such number of shares of Stock as will be sufficient to
satisfy the requirements of the Plan (if then in effect) and the Options and
shall pay all fees and expenses necessarily incurred by the Company in
connection therewith.

<PAGE>

                                      -14-

11.      NO SPECIAL EMPLOYMENT OR OTHER RIGHTS

         Nothing contained in the Plan or in any Award Agreement shall confer
upon any recipient of an Award any right with respect to the continuation of his
or her employment or other association with the Company (or any Affiliate), or
interfere in any way with the right of the Company (or any Affiliate), subject
to the terms of any separate employment or consulting agreement or provision of
law or corporate charter, certificate or articles, or by-laws, to the contrary,
at any time to terminate such employment or consulting agreement or to increase
or decrease, or otherwise adjust, the other terms and conditions of the
recipient's employment or other association with the Company and its Affiliates.

12.      NONEXCLUSIVITY OF THE PLAN

         Neither the adoption of the Plan by the Board nor the submission of the
Plan to the stockholders of the Company shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including without limitation, the granting of stock
options and restricted stock other than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

13.      TERMINATION AND AMENDMENT OF THE PLAN

         The Board may at any time terminate the Plan or make such modifications
of the Plan as it shall deem advisable PROVIDED, HOWEVER, that (i) no material
amendment which is to the benefit of management or the Board shall be effective
unless and until the same is approved by stockholders of the Company or (ii) no
amendment shall be effective unless and until the same is approved by the
stockholders of the Company where the failure to obtain such approval would
adversely affect the compliance of the Plan with applicable law, and PROVIDED
FURTHER, that no Award of Options may be amended to effect the exchange or
repricing of such Options without the approval of the stockholders of the
Company. Unless the Board otherwise expressly provides, no amendment of the Plan
shall affect the terms of any Award outstanding on the date of such amendment.
In any case, no termination or amendment of the Plan may, without the consent of
any recipient of an Award granted hereunder, adversely affect the rights of the
recipient under such Award.

         The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, provided that the Award as amended is consistent
with the terms of the Plan, but no such amendment shall impair the rights of the
recipient of such Award without his or her consent.

14.      NOTICES AND OTHER COMMUNICATIONS

         Any notice, demand, request or other communication hereunder to any
party shall be deemed to be sufficient if contained in a written instrument
delivered in person or duly sent by first class registered, certified or
overnight mail, postage prepaid, or telecopied with a confirmation copy by
regular, certified or overnight mail, addressed or telecopied,

<PAGE>

                                      -15-

as the case may be, (i) if to the recipient of an Award, at his or her residence
address last filed with the Company and (ii) if to the Company, at its principal
place of business, addressed to the attention of its Treasurer, or to such other
address or telecopier number, as the case may be, as the addressee may have
designated by notice to the addressor. All such notices, requests, demands and
other communications shall be deemed to have been received: (i) in the case of
personal delivery, on the date of such delivery; (ii) in the case of mailing,
when received by the addressee; and (iii) in the case of facsimile transmission,
when confirmed by facsimile machine report.

15.      GOVERNING LAW

         The Plan and all Award Agreements and actions taken thereunder shall be
governed, interpreted and enforced in accordance with the laws of the State of
Delaware, without regard to the conflict of laws principles thereof.

<PAGE>

                                ATTACHMENT A (1)

                    PROVISIONS APPLICABLE TO AWARD RECIPIENTS
                             RESIDENT IN CALIFORNIA

         Until such time as the Company's Common Stock has been effectively
registered under the Securities Act and if required by any applicable law, the
following additional terms shall apply to Awards, and Common Stock issued
pursuant to such Awards, granted under the Plan to persons resident in
California as of the date of grant of the Award (each such person, a "California
Recipient"). Capitalized terms not defined in this Attachment shall have the
respective meanings set forth in the Plan.

         1.       In the event of an Option that is:

                  (a)      granted to a California Recipient who, as of the
Grant Date, is a Ten Percent Owner, the price at which shares of Common Stock
may be acquired under such Option shall not be less than 110% of the Market
Value of the Common Stock on the Grant Date; and

                  b)       granted to any other California Recipient, the price
at which shares of Common Stock may be acquired under such Option shall not be
less than 85% of the Market Value of the Common Stock on the Grant Date.

         2.       In the event that an Award of Restricted Stock is granted to a
California Recipient, the price at which shares of Common Stock may be acquired
under such Award shall not be less than 85% of the Market Value of the Common
Stock on the date such award is granted, or, in the case of a Ten Percent Owner,
the price shall not be less than 100% of the Market Value of the Common Stock on
the date such Award is granted. Stock Grants shall not be available to
California Recipients.

         3.       If an Option is issued to any California Recipient who is not
an officer, director or consultant of the Company, such Option shall become
exercisable at the rate of at least 20% per year over five years from the
Option's Grant Date. If an Award of Restricted Stock is issued to any California
Recipient who is not an officer, director or consultant of the Company, any
repurchase option in favor of the Company shall lapse at the rate of at least
20% per year over five years from the date of the Award, shall be exercisable
for at most 90 days following Termination and shall be exercisable (at least
the original purchase price) solely for cash or cancellation of purchase money
indebtedness.

         4.       No Option issued to any California Recipient shall be
transferable other than by gift to an immediate family member as that term is
defined under applicable

---------------------------

         (1) Include for qualifying grants made by private companies under
California's version of SEC Rule 701. In such cases, also ensure that the
authorized number of shares represent less than 30% of the fully diluted
outstanding shares. Note further that there is a California filing required
within 30 days of the first grant to a California resident.

<PAGE>

                                       -2-

California securities law (or by will or the laws of descent and distribution).
No other right to acquire Stock pursuant to an Award granted a California
Recipient shall be transferable other than by will or the laws of descent and
distribution.

         5.       The following limitations shall apply to the early expiration
of Options granted California Recipients on account of Termination:

                  (a)      Subject to Section 5(b) below, in the event an
Optionee who is a California Resident has a Termination, whether voluntary or
otherwise and including on account of an entity ceasing to be an Affiliate of
the Company, such California Recipient shall have at least 30 days after the
date of such termination (but in no event later than the expiration of the term
of such Option as set forth in the Award Agreement) to exercise such Option to
the extent exercisable as of the date of such termination.

                  (b)      In the event that an Optionee who is a California
Resident has a Termination from the Company and its Affiliates as a result of
death or disability, such California Recipient shall have at least 6 months
after the date of such termination (but in no event later than the expiration of
the term of such Option as set forth in the Award Agreement) to exercise such
Option to the extent exercisable as of the date of such termination.

         6.       The Company shall provide financial statements at least
annually to each California Recipient during the period he or she holds any
Award under the Plan, or any Common Stock acquired pursuant to an Award granted
under the Plan. The Company shall not be required to provide such information if
the issuance of Awards under the Plan is limited to key employees whose duties
in connection with the Company assure their access to equivalent information.

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