Document:

exv10w44

 

EXHIBIT 10.44

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of June
18, 2003 among Introgen Therapeutics, Inc., a Delaware corporation (the
“Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”).

     WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to the Purchasers, and
the Purchasers, severally and not jointly, desire to purchase from the Company,
securities of the Company as more fully described in this Agreement.

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

ARTICLE I

DEFINITIONS

     1.1     Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:

		
	 	          “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. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary
basis by the same investment manager as such Purchaser will be deemed to
be an Affiliate of such Purchaser.
	 
	 	          “Bankruptcy Event” means any of the following events: (a) the
Company or any Subsidiary commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction relating to the Company or any Subsidiary thereof; (b) there
is commenced against the Company or any Subsidiary any such case or
proceeding that is not dismissed within 60 days after commencement; (c)
the Company or any Subsidiary is adjudicated insolvent or bankrupt or any
order of relief or other order approving any such case or proceeding is
entered; (d) the Company or any Subsidiary suffers any appointment of any
custodian or the like for it or any substantial part of its property that
is not discharged or stayed within 60 days; (e) the Company or any
Subsidiary makes a general assignment for the benefit of creditors; (f)
the Company or any Subsidiary fails to pay, or states that it is unable
to pay or is unable to pay, its debts generally as they become due; (g)
the Company or any Subsidiary calls a meeting of its creditors with a
view to arranging a composition, adjustment or restructuring of its
debts; or (h) the Company or any Subsidiary, by any act or failure to
act, expressly indicates its consent to, approval of or acquiescence in
any of the foregoing or takes any corporate or other action for the
purpose of effecting any of the foregoing.

 

 

		
	 	          “Closing” means the closing of the purchase and sale of the Shares
and the Warrants pursuant to Section 2.1.

		
	 	          “Closing Date” means the date of the Closing.
	 
	 	          “Closing Price” means, for any date, the price determined by the
first of the following clauses that applies: (a) if the Common Stock is
then listed or quoted on an Eligible Market or any other national
securities exchange, the closing price per share of the Common Stock for
such date (or the nearest preceding date) on the primary Eligible Market
or exchange on which the Common Stock is then listed or quoted; (b) if
prices for the Common Stock are then quoted on the OTC Bulletin Board,
the closing bid price per share of the Common Stock for such date (or the
nearest preceding date) so quoted; (c) if prices for the Common Stock are
then reported in the “Pink Sheets” published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by Purchasers holding a majority of the
Securities.
	 
	 	          “Commission” means the Securities and Exchange Commission.
	 
	 	          “Common Stock” means the common stock of the Company, par value
$0.001 per share.
	 
	 	          “Company Counsel” means Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel to the Company.
	 
	 	          “Effective Date” means the date that the Registration Statement is
declared effective by the Commission.
	 
	 	          “Eligible Market” means the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
	 
	 	          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
	 
	 	          “Filing Date” means the 30th calendar day following the Closing
Date.
	 
	 	          “Losses” means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including without limitation costs of
preparation and reasonable attorneys’ fees.
	 
	 	          “Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

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	 	          “Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened in
writing.
	 
	 	          “Prospectus” means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, or any amendment to the Registration Statement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.
	 
	 	          “Purchaser Counsel” means any counsel selected by Steelhead
Investments Ltd. hereunder.
	 
	 	          “Registrable Securities” means any Common Stock (including
Underlying Shares) issued or issuable pursuant to the Transaction
Documents, together with any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing.
	 
	 	          “Registration Statement” means each registration statement required
to be filed under Article VI, including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
	 
	 	          “Required Effectiveness Date” means the 90th day following the
Closing Date.
	 
	 	          “Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the Commission pursuant to the
Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
	 
	 	          “Securities” means the Shares, the Warrants and the Underlying
Shares.
	 
	 	          “Shares” means an aggregate of up to 2,500,000 shares of Common
Stock, which are being purchased by the Purchasers pursuant to this
Agreement, and any additional shares of Common Stock that are issued
pursuant to Section 4.9 below.
	 
	 	          “Subsidiary” means any Person in which the Company directly or
indirectly owns at least 50% of the outstanding capital stock or holds an
equity or similar interest.

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	 	          “Trading Day” means (a) any day on which the Common Stock is listed
or quoted and traded on its primary Trading Market, or (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market,
then a day on which trading occurs on the New York Stock Exchange (or any
successor thereto).
	 
	 	          “Trading Market” means the Nasdaq National Market or any other
market or trading or quotation facility, or any national securities
exchange on which the Common Stock is then listed or quoted.
	 
	 	          “Transaction Documents” means this Agreement, the Warrants and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.
	 
	 	          “Underlying Shares” means the shares of Common Stock issuable upon
exercise of the Warrants.
	 
	 	          “Warrant” means a Common Stock purchase warrant, in the form of
Exhibit A.

ARTICLE II

PURCHASE AND SALE

     2.1     Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Shares and the Warrants for a purchase price per share of $5.75. The
Closing shall take place at the offices of Purchaser Counsel immediately
following the execution hereof, or at such other location or time as the
parties may agree.

     2.2     Closing Deliveries.

          (a)     At (or in the case of clause (i) below, within three Trading Days
after) the Closing, the Company shall deliver or cause to be delivered to each
Purchaser the following:

		
	 	          (i)     one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in Section
4.1(b) hereof), evidencing the number of Shares indicated below such
Purchaser’s name on the signature page of this Agreement, registered in
the name of such Purchaser;
	 
	 	          (ii)     a Warrant, registered in the name of such Purchaser, pursuant
to which such Purchaser shall have the right to acquire the number of
shares of Common Stock indicated below such Purchaser’s name on the
signature page of this Agreement, on the terms set forth therein;
	 
	 	          (iii)     a legal opinion of Company Counsel, in the form of Exhibit B,
executed by such counsel and delivered to the Purchasers.

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          (b)     At the Closing, each Purchaser shall deliver or cause to be delivered
to the Company the purchase price indicated below such Purchaser’s name on the
signature page of this Agreement, in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing by the
Company for such purpose.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     3.1     Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:

          (a)     Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a). Except as disclosed in Schedule
3.1(a), the Company owns, directly or indirectly, all of the capital stock of
each Subsidiary free and clear of any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction (collectively,
“Liens”), and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights. If the Company has no subsidiaries, then
references in the Transaction Documents to the Subsidiaries will be
disregarded.

          (b)     Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise 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. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of
the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”).

          (c)     Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of each
of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of
the Transaction Documents has been (or upon delivery will be) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization

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or similar laws affecting creditors’ rights generally, to general principles
of equity and to limitations on the rights to indemnity and contribution that
exist by virtue of public policy.

          (d)     No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company or a Subsidiary is
bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not, individually or in the aggregate, have or result in a Material
Adverse Effect.

          (e)     Issuance of the Securities. The Securities (including the Underlying
Shares) are duly authorized and, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens (except for restrictions under
federal and state securities laws) and shall not be subject to preemptive
rights or similar rights of stockholders. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement and the Securities (including the
Underlying Shares).

          (f)     Capitalization. Except as set forth in Schedule 3.1(f), the number of
shares and type of all authorized, issued and outstanding capital stock,
options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of
the Company) are set forth in the Company’s Annual Report on Form 10-K, as
filed with the SEC on March 31, 2003 (the “Annual Report”). All outstanding
shares of capital stock are duly authorized, validly issued, fully paid and
nonassessable and have been issued in compliance with all applicable securities
laws. Except as disclosed in Schedule 3.1(f), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. There are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders), and the issue and sale of the Securities (including the
Underlying Shares) will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will
not result in a right of any holder of Company securities to adjust the

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exercise, conversion, exchange or reset price under such securities. To
the knowledge of the Company, except as specifically disclosed in the Annual
Report, no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire,
by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the outstanding Common Stock, ignoring for such
purposes any limitation on the number of shares of Common Stock that may be
owned at any single time.

          (g)     SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required
by law to file such reports) (the foregoing reports being collectively referred
to herein as the “SEC Reports” and, together with this Agreement and the
Schedules to this Agreement, the “Disclosure Materials”) on a timely basis or
has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension. The Company has
delivered to each Purchaser a copy of all SEC Reports filed within the 10 days
preceding the date hereof requested by each such Purchaser, if any. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments and the absence of footnotes. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included as
part of or specifically identified in the SEC Reports.

          (h)     Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that would reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) the Company has not issued

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any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans.

          (i)     Compliance. Neither the Company nor any Subsidiary (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal,
state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters,
except in each case as would not, individually or in the aggregate, reasonably
be expected to have or result in a Material Adverse Effect.

          (j)     Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of
all Liens, except for Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries. Any real property
and facilities held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases of which the Company and
the Subsidiaries are in compliance.

          (k)     Certain Fees. Except for the fees described in Schedule 3.1(k), 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.

          (l)     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

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is not a United States real property holding corporation within the meaning
of the Foreign Investment in Real Property Tax Act of 1980.

          (m)     Form S-3 Eligibility. The Company is eligible to register its Common
Stock for resale by the Purchasers under Form S-3 promulgated under the
Securities Act.

          (n)     Listing and Maintenance Requirements. The Company has not, in the two
years preceding the date hereof, received notice (written or oral) from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

          (o)     Registration Rights. Except as described in Schedule 3.1(o), 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 Commission or any other governmental authority.

          (p)     Application of Takeover Protections. Except as described in Schedule
3.1(p), 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 the Purchasers
as a result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

          (q)     Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that constitutes material, nonpublic information.
The Company understands and confirms that each of the Purchasers will rely on
the foregoing representations in effecting transactions in securities of the
Company. No event or circumstance has occurred or information exists with
respect to the Company or any of its 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
(assuming for this purpose that the Company’s reports filed under the Exchange
Act are being incorporated into an effective registration statement filed by
the Company under the Securities Act). The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2.

          (r)     Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries, which action, suit, claim, proceeding, inquiry or investigation
is required to

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be disclosed in the Company’s securities filings with the Commission and
which has not been so disclosed.

          (s)     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.

          (t)     Patents and Trademarks. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other
similar rights that are necessary for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
would reasonably be expected to have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violate or infringe upon the rights of any Person. To
the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.

          (u)     Going Concern. The Company and the Subsidiaries have no knowledge
(upon receipt of the proceeds of this transaction) that the Company will
receive a “going concern” opinion from the Company’s independent public
accountants in the Company’s Annual Report.

          (v)     Insurance. The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.

          (w)     Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect (“Material Permits”), and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.

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          (x)     Transactions With Affiliates and Employees. Except as set forth in
SEC Reports filed at least ten days prior to the date hereof, none of the
officers or directors of the Company and, to the knowledge of the Company, none
of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or
partner.

          (y)     Solvency. Based on the financial condition of the Company as of the
Closing Date, (i) the Company’s fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities)
as they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).

          (z)     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
GAAP 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.

     3.2     Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants
to the Company as follows:

          (a)     Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The purchase by such Purchaser of the Securities hereunder has been duly
authorized by all necessary action on the part of such Purchaser. This
Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and binding obligation of such Purchaser, enforceable
against it in accordance with its terms.

11

 

          (b)     Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof,
without prejudice, however, to such Purchaser’s right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act or under an
exemption from such registration and in compliance with applicable federal
and state securities laws. Such Purchaser understands and agrees that: (i) the
offer and sale of the Securities have not been registered under the Securities
Act by reason of the exemption from the registration provisions of the
Securities Act provided by Section 4(2) thereof and Rule 506 promulgated
thereunder, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Purchaser’s
representations, warranties and covenants as expressed herein; (ii) the Company
is relying on such Purchaser’s representations, warranties and covenants in
offering and selling the Securities hereunder; and (iii) the Securities may not
be transferred by such Purchaser except pursuant to an effective registration
statement under the Securities Act or an available exemption from such
registration and in compliance with all applicable federal and state securities
laws. Subject to compliance with the foregoing, nothing contained herein shall
be deemed a representation or warranty by such Purchaser to hold Securities for
any period of time. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

          (c)     Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants, it will be an “accredited investor” as defined in Rule
501(a) under the Securities Act.

          (d)     Experience of such Purchaser. Such Purchaser has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the Securities and, at
the present time, is able to afford a complete loss of such investment. The
Purchaser understands that its investment in the Securities involves a high
degree of risk.

          (e)     Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect
to the investment. Neither such inquiries nor any other investigation
conducted by or on behalf of such Purchaser or its representatives or counsel
shall modify, amend or affect such Purchaser’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents. Such
Purchaser acknowledges and agrees that the fact that the Company is seeking to
effect the offer and sale of the Securities hereunder may constitute material
non-public information

12

 

and disclosure of such information or use of such
information by such Purchaser or anyone receiving such information from such
Purchaser in connection with the purchase, sale or trade of the Company’s
securities, or any hedging, derivative or similar transactions or activities
involving the Company’s securities, may be a violation of securities laws.

          (f)     Residency. Such Purchaser is domiciled in the jurisdiction set forth
immediately below such Purchaser’s name on the signature page hereof and
intends that the securities or blue sky laws of such jurisdiction only govern
the offer and sale of Securities hereunder.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

     4.1     Transfer Restrictions.

          (a)     Securities may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the
transferor shall provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act or applicable state securities laws.
Notwithstanding the foregoing, 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 Purchaser to an Affiliate
of such Purchaser, provided that (i) the transferee certifies to the Company
that it is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and (ii) that no value has been transferred by the transferee to
transferor in connection with such transfer.

          (b)     The Purchasers agree to the imprinting, so long as is required by this
Section 4.1(b), 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 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.

13

 

Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, or (ii) following any
sale of such Securities pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act. 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 Purchaser to the Company or the Company’s transfer agent of a
legended certificate representing such Securities, deliver or cause to be
delivered to such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. 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.
For so long as any Purchaser owns Securities, the Company will not effect or
publicly announce its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical delivery of
certificates evidencing the Common Stock without prior notice to the Purchaser.

          (c)     The Company acknowledges and agrees that a Purchaser 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 and, if required under the terms of such
agreement, loan or arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. At the appropriate Purchaser’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 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 in the Prospectus.

     4.2     Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to use its best efforts 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 Purchaser, the Company shall deliver
to such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to
such laws, it will prepare and furnish to the Purchasers and make publicly
available in accordance with paragraph (c) of Rule 144 such information as is
required for the Purchasers to sell the Securities under Rule 144.

     4.3     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 it knows or should know 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 Purchasers, or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.

14

 

     4.4     Reservation of Securities. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. 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 Transaction Documents, the
Company shall promptly take such actions as may be required to increase the
number of authorized shares.

     4.5     Subsequent Placements.

               (a)     From the date hereof until the Effective Date, the Company will not,
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 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 for Common Stock (any such
offer, sale, grant, disposition or announcement being referred to as a
“Subsequent Placement”), unless (i) the Company delivers to each of the
Purchasers a written notice (the “Subsequent Placement Notice”) of its
intention to effect such Subsequent Placement, which Subsequent Placement
Notice shall describe in reasonable detail the proposed terms of such
Subsequent Placement, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Placement is proposed to be effected, and
attached to which shall be a term sheet or similar document relating thereto
and (ii) such Purchaser shall not have notified the Company by 6:30 p.m. (New
York City time) on the second Trading Day after its receipt of the Subsequent
Placement Notice of its willingness to provide (or to cause its designee to
provide), subject to completion of mutually acceptable documentation, all or
part of such financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to so notify the
Company of their willingness to participate in the full Subsequent Placement,
the Company may effect the remaining portion of such Subsequent Placement on
the terms and to the Persons set forth in the Subsequent Placement Notice;
provided that the Company must provide the Purchasers with a second Subsequent
Placement Notice, and the Purchasers will again have the right of first refusal
set forth above in this paragraph (a), if the Subsequent Placement subject to
the initial Subsequent Placement Notice is not consummated for any reason on
the terms set forth in such Subsequent Placement Notice within 30 Trading Days
after the date of the initial Subsequent Placement Notice with the Persons
identified in the Subsequent Placement Notice. If the Purchasers indicate a
willingness to provide financing in excess of the amount set forth in the
Subsequent Placement Notice, then each Purchaser will be entitled to provide
financing pursuant to such Subsequent Placement Notice up to an amount equal to
such Purchaser’s pro rata portion of the aggregate purchase price paid for the
Securities under this Agreement, but the Company shall not be required to
accept financing from the Purchasers in an amount in excess of the amount set
forth in the Subsequent Placement Notice.

               (b)     The restrictions contained in paragraph (a) of this Section shall not
apply to (i) any issuance of Common Stock or grant of options to employees,
officers, directors of or consultants or advisors to the Company, in each case,
pursuant to a stock-based plan duly approved by the Company’s board of
directors, (ii) upon exercise, conversion or exchange of any Common Stock
Equivalents (as defined herein) referenced in Section 3.1(f) or Schedule 3.1(f)
(provided that

15

 

such exercise or conversion occurs in accordance with the terms
thereof, without amendment or modification), (iii) the issuance of securities
pursuant to the Company’s bona fide acquisition of another corporation, or all
or a portion of its assets, 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, (iv) the issuance of
securities to banks or equipment lessors, provided such issuance is approved by
the Company’s board of directors and is not for the principal purpose of
raising equity capital, (v) the issuance of securities in connection with a
sponsored research, collaboration, technology license, OEM, marketing, joint
venture or development agreement or strategic partnership or similar agreement
approved by the Company’s board of directors, a primary purpose of which is not
to raise equity capital, or (vi) the issuance of Common Stock pursuant to
Section 4.9 hereof.

     4.6     Securities Laws Disclosure; Publicity. The Company shall, immediately
following the Closing on the Closing Date, issue a press release reasonably
acceptable to the Purchasers disclosing all material terms of the transactions
contemplated hereby. On or before 8:30 a.m., Eastern time, the second Trading
Day following the Closing Date, the Company shall file a Current Report on Form
8-K with the Commission describing the terms of the transactions contemplated
by the Transaction Documents and including, to the extent required under the
Exchange Act, as exhibits to such Current Report on Form 8-K this Agreement and
the form of Warrants, in the form required by the Exchange Act. Thereafter,
the Company shall use its best efforts to timely file any filings and notices
required by the Commission or applicable law with respect to the transactions
contemplated hereby. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements or
filings and other communications with the Commission 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 shall not publicly disclose the name of any Purchaser,
or include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except to the extent such disclosure (but not any disclosure as to
the controlling Persons thereof) is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure. Neither the Company nor any Person acting on its
behalf will provide any Purchaser with material, nonpublic information about
the Company unless such Purchaser consents to receive such information in
writing in advance.

     4.7     Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company’s business
and prior practices), to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation.

     4.8     Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling person, employee or agent of a
Purchaser or any of its Affiliates (a “Related

16

 

Person”) becomes involved in any
capacity in any Proceeding brought by or against any Person in connection with
or as a result of the transactions contemplated by the Transaction Documents
other than relating to the Registration Statement, Prospectus or other matter
contemplated by Article VI hereof, the Company will indemnify and hold harmless
such Purchaser or Related Person for its reasonable legal and other expenses
(including the costs of any investigation, preparation and travel) and for any
Losses incurred in connection therewith, as such expenses or Losses are
incurred, excluding only Losses to the extent that they result directly from
such Purchaser’s or Related Person’s gross negligence or willful misconduct.
In addition, the Company shall indemnify and hold harmless each Purchaser and
Related Person from and against any and all Losses, as incurred, arising out of
or relating to 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, or any allegation by a third party that, if true, would
constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a
result of the transactions contemplated by the Transaction Documents, except to
the extent that any losses, claims, damages, liabilities or expenses incurred
by the Company arise out of or result directly from the bad faith, gross
negligence or willful misconduct of the applicable Purchaser or Related Person
in connection with such transactions or arise out of or relate to any breach by
a Purchaser of any of the representations, warranties or covenants made by a
Purchaser in this Agreement or any other Transaction Document. If the Company
breaches its obligations under any Transaction Document, then, in addition to
any other liabilities the Company may have under any Transaction Document or
applicable law, the Company shall pay or reimburse the Purchasers on demand for
all costs of collection and enforcement (including reasonable attorneys fees and expenses). Without
limiting the generality of the foregoing, the Company specifically agrees to
reimburse the Purchasers on demand for all costs of enforcing the
indemnification obligations in this paragraph.

     4.9     Additional Issuance of Shares.

		
	 	       (a)     For purposes of this Section 4.9, the following definitions shall
apply:

		
	 	                   (i)     “Common Stock Equivalents” shall mean, collectively, shares of
Common Stock and Convertible Securities.

		
	 	                   (ii)     “Convertible Securities” shall mean any evidence of
indebtedness, shares, options, warrants or other securities directly or
indirectly convertible into or exercisable or exchangeable for shares of
Common Stock.

		
	 	                   (iii)     “Eligible Shares” shall mean, for each Purchaser, at the time
of an issuance of Common Stock Equivalents, the sum of (x) the lesser of
(A) the number of shares of Common Stock then held by such Purchaser
(other than shares of Common Stock acquired by such Purchaser upon
exercise of a Warrant or issued to such Purchaser pursuant to this

17

 

		
	 	     Section 4.9) and (B) the number of shares of Common Stock purchased by
such Purchaser hereunder and (y) the number of shares of Common Stock
acquired by such Purchaser upon exercise of a Warrant or issued to such
Purchaser pursuant to this Section 4.9.

		
	 	                   (iv)     “Excluded Stock” shall mean any shares of Common Stock issued
or issuable (A) to employees, officers, directors of or consultants or
advisors to the Company, in each case, pursuant to a stock-based plan
duly approved by the Company’s board of directors, (B) upon exercise,
conversion or exchange of any Common Stock Equivalents described in
Schedule 3.1(f) (provided that such exercise or conversion occurs in
accordance with the terms thereof, without amendment or modification),
(C) pursuant to the Company’s bona fide acquisition of another
corporation, or all or a portion of its assets, 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, (D) to banks or equipment lessors, provided such issuance is
approved by the Company’s board of directors and is not for the principal
purpose of raising equity capital, (E) in connection with a sponsored
research, collaboration, technology license, OEM, marketing, joint
venture or development agreement or strategic partnership or similar
agreement approved by the Company’s board of directors, a primary purpose
of which is not to raise equity capital, or (F) pursuant to this Section
4.9.

		
	 	                   (v)     “Reference Price” shall initially be the Purchase Price and, at
any time after additional shares of Common Stock are issued to a
Purchaser pursuant to this Section 4.9, shall be equal to the lowest
Issuance Price (as defined below).

          (b)         In the event that after the date hereof and prior to the Effective
Date the Company issues or agrees to issue any Common Stock Equivalents, other
than shares of Excluded Stock, for a net consideration to the Company per share
less than the Reference Price (the “Issuance Price”), each Purchaser shall be
entitled to receive such number of additional shares of Common Stock (upon
payment to the Company of an amount per share equal to the par value of such
additional shares of Common Stock), equal to the amount obtained by subtracting
(A) the number of Eligible Shares then held by such Purchaser from (B) the
quotient obtained by dividing the aggregate purchase price paid by such
Purchaser for such Purchaser’s Eligible Shares divided by the Issuance Price.

          (c)         For purposes of any issuances of additional shares of Common Stock to
a Purchaser under Section 4.9(b) above, the following provisions shall be
applicable:

	
	                        (i)     In connection with any issuance of any Common Stock Equivalents, (x)
the maximum number of shares of Common Stock potentially issuable at any time
upon conversion, exercise or exchange of such Common Stock Equivalents (the
“Deemed Number”) shall be deemed to be outstanding upon issuance of such Common
Stock Equivalents, and (y) the price per share applicable to such Common Stock
Equivalents shall be deemed to equal the minimum dollar value of consideration
payable to the Company to purchase such Common Stock Equivalents and to
convert, exercise or exchange them into Common Stock, divided by the Deemed
Number.

18

 

	
	                          (ii)     In the case of the issuance of Common Stock Equivalents for cash, the
amount of the consideration received by the Company shall be deemed to be the
aggregate amount of cash received by the Company for such Common Stock
Equivalents.
	 
	                          (iii)     In the case of the issuance of Common Stock Equivalents for a
consideration in whole or in part other than cash, including securities
acquired in exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of Directors of
the Company, irrespective of any accounting treatment.

                 (d)     Notwithstanding anything to the contrary contained in this Section
4.9, the number of shares of Common Stock that shall be issued to a Purchaser
pursuant hereto shall be limited to the extent necessary to insure that,
following such issuance, the total number of shares of Common Stock then
beneficially owned by such Purchaser and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be aggregated with the
Purchaser’s for purposes of Sections 13(d) and 16 of the Exchange Act, does not
exceed 9.999% (the “Maximum Percentage”) of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon exercise of all Warrants and other Convertible
Securities held by such Purchaser and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be so aggregated). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
The Company shall, instead of issuing shares of Common Stock in excess of the
limitation referred to in this Section 4.9(d), pay to such Purchaser an amount
in cash equal to the fair market value of the number of shares of Common Stock in excess of such limitation; provided, however,
that the Purchaser may, at its option, elect to waive the requirement to
deliver such cash and the Company’s obligation to issue shares in excess of the
foregoing limitation shall be suspended until such time, if any, as such shares
of Common Stock may be issued in compliance with such limitation.
Additionally, by written notice to the Company, the Purchaser may waive the
provisions of this Section or increase or decrease the Maximum Percentage to
any other percentage specified in such notice, but (i) any such waiver or
increase will not be effective until the 61st day after such notice is
delivered to the Company, and (ii) any such waiver or increase or decrease will
apply only to the Purchaser and not to any other Purchaser.

                 (e)     All shares to be issued pursuant to this Section 4.9, upon issuance,
shall be duly authorized, validly issued, fully paid and non-assessable and
free of any Liens or preemptive or similar rights. Upon the issuance of any
shares of Common Stock pursuant to this Section 4.9, such shares shall be
“Shares” and “Registrable Securities” for all purposes hereunder. Without
limiting the generality of the foregoing, the Purchasers shall have all of the
rights provided in Article VI below with respect to such additional Shares,
mutatis mutandis.

     4.10     Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the
Company or any other Person that any Purchaser is an “Acquiring Person” under
any such plan or in any way could be deemed to trigger the provisions of such
plan by virtue of receiving Securities under the Transaction Documents.

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ARTICLE V

CONDITIONS

     5.1     Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction by the Company (or waiver by such Purchaser), at or before the
Closing, of each of the following conditions:

               (a)     Representations and Warranties. The representations and warranties of
the Company contained herein shall be true and correct in all material respects
as of the date when made and as of the Closing as though made on and as of such
date; and

               (b)     Performance. The Company and each other Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing.

     5.2     Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction by the Purchasers (or waiver by the Company), at or before the
Closing, of each of the following conditions:

               (a)     Representations and Warranties. The representations and warranties of
the Purchasers contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on
and as of such date; and

               (b)     Performance. The Purchasers shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Purchasers at or prior to the Closing.

ARTICLE VI

REGISTRATION RIGHTS

     6.1     Shelf Registration

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

               (b)     The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective by the Commission as promptly
as possible after the filing thereof,

20

 

but in any event prior to the Required
Effectiveness Date, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until the second
anniversary of the Effective Date or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold (the
“Effectiveness Period”).

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

          (d)     Upon the occurrence of any Event (as defined below) and on every
monthly anniversary thereof until the applicable Event is cured, as relief for
the damages suffered therefrom by the Purchasers, the Company shall pay to each
Purchaser an amount in cash, as liquidated damages and not as a penalty, equal
to 1.0%, upon the occurrence of the Event, and 1.0%, upon each monthly
anniversary thereafter, of the aggregate purchase price paid by such Purchaser
hereunder. The liquidated damages payable pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of an
Event. In the event the Company fails to make a liquidated damages payment in
a timely manner, such payment until paid in full shall bear interest at the
rate of 1.5% per month or such lesser maximum rate that is permitted to be paid
by applicable law. For such purposes, each of the following shall constitute
an “Event”:

		
	 	            (i)     the Registration Statement is not filed on or prior to the
Filing Date or is not declared effective on or prior to the Required
Effectiveness Date;
	 
	 	or
	 
	 	            (ii)     the Company fails to have available a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock
available to issue Underlying Shares upon any exercise of the Warrants or
to satisfy its obligations under Section 4.9 above or, at any time
following the Effective Date, any Shares or Underlying Shares are not
listed on an Eligible Market.

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

               (a)     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 the Purchasers and Purchaser Counsel
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 such Purchasers and Purchaser 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 Purchasers
holding a majority of the Registrable Securities shall reasonably object.

21

 

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

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

          (d)     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) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as reasonably practicable.

          (e)     Furnish to each Purchaser and Purchaser Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the receipt of the
request of such Purchaser or Purchaser’s Counsel for a copy of the filing of
such documents with the Commission.

22

 

          (f)     Promptly deliver to each Purchaser and Purchaser 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 terms hereof, the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Purchasers in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

          (g)     (i) In the time and manner required by each Trading Market, if at all,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all steps
reasonably necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter; (iii) provide to
the Purchasers evidence of such listing; and (iv) maintain the listing of such
Registrable Securities on each such Trading Market or another Eligible Market.

          (h)     Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Purchasers and
Purchaser 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 Purchaser requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement.

          (i)     Upon the occurrence of any event described in Section 6.2(c)(vi), as
promptly as reasonably practicable, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

          (j)     Comply with all applicable rules and regulations of the Commission.

          (k)     Cooperate with the Purchasers 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 the Purchase Agreement consistent with
applicable laws, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Purchasers may request.

          (l)     Cooperate with any due diligence investigation undertaken by the
Purchasers 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

23

 

available to any Purchaser material,
nonpublic information unless such Purchaser specifically requests in writing in
advance to receive material, nonpublic information.

     6.3     Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, 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
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and up to $10,000 in the aggregate for
Purchaser Counsel for the Purchasers, and (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing,
each Purchaser shall pay all selling commissions, brokerage fees and stock
transfer taxes, if any, applicable to the Registrable Securities sold by such
Purchaser.

     6.4     Indemnification

               (a)     Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Purchaser,
the officers, directors, partners, members, agents, investment advisors and
employees of each of them, each Person who controls any such Purchaser (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable
law, from and against any and all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review), 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 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 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 upon information regarding
such Purchaser furnished in writing to the Company by such Purchaser expressly
for use therein, or (ii) in the case of an occurrence of an event of the type
specified in Section 6.2(c)(iv)-(vi), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in
writing that the Prospectus is outdated or defective and prior to the receipt
by such Purchaser of the Advice contemplated in Section 6.5. The Company shall
notify the Purchasers promptly of the institution or actual threat or assertion
of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.

                    (b)     Indemnification by Purchasers. Each Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
partners, members, 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

24

 

Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of or based
solely upon any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Purchaser 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 Purchaser furnished in writing to
the Company by such Purchaser expressly for use therein, or (ii) in the case of
an occurrence of an event of the type specified in Section 6.2(c)(iv)-(vi), the
use by such Purchaser of an outdated or defective Prospectus after the Company
has notified such Purchaser in writing that the Prospectus is outdated or
defective and prior to the receipt by such Purchaser of the Advice contemplated
in Section 6.5. In no event shall the liability of any selling Purchaser
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Purchaser upon the sale of the Registrable Securities giving
rise to such indemnification obligation.

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

25

 

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 ; provided,
that the Indemnifying Party shall reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder.

               (d)     Contribution. If a claim for indemnification under Section 6.4(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 6.4(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 6.4(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 6.4(d), no Purchaser
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Purchaser from the sale
of the Registrable Securities subject to the Proceeding exceeds the amount of
any damages that such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

     6.5     Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
6.2(c)(iv), (v) or (vi), such Purchaser will discontinue disposition of such
Registrable Securities

26

 

under the Registration Statement until such Purchaser’s
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement contemplated by Section 6.2(i), or until it is advised
in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

     6.6     No Piggyback on Registrations. Except as and to the extent specified
in Schedule 3.1(o), neither the Company nor any of its security holders (other
than the Purchasers 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 Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Purchaser written notice of such
determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.

ARTICLE VII

MISCELLANEOUS

     7.1     Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third business day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

     7.2     Fees and Expenses. At the Closing, the Company shall pay the
Purchasers, in proportion to their respective purchase prices, an amount
actually incurred in connection with the preparation and negotiation of the
Transaction Documents, such amount not to exceed $50,000. In lieu of the
foregoing payment, the Purchasers may retain such amount at the Closing or
require the Company to pay such amount directly to Purchaser Counsel. 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.

27

 

     7.3     Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules hereto and thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede
all prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver such
further documents as may be reasonably requested in order to give practical
effect to the intention of the parties under the Transaction Documents.

     7.4     Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day,
(c) the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
notices and communications are those set forth on the signature pages hereof,
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

     7.5     Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers holding or committed to hold a majority in
interest of the Securities or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Purchasers under
Article VI and that does not directly or indirectly affect the rights of other
Purchasers may be given by Purchasers holding at least a majority of the
Registrable Securities to which such waiver or consent relates.

     7.6     Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

     7.7     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 Purchasers. Any Purchaser
may assign its rights under this Agreement to any Person to whom such Purchaser
assigns or transfers any Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the “Purchasers.”

28

 

     7.8     No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third
party beneficiary of Section 4.8 and each Indemnified Party is an intended
third party beneficiary of Section 6.4 and (in each case) may enforce the
provisions of such Sections directly against the parties with obligations
thereunder.

     7.9     GOVERNING LAW; VENUE; WAIVER OF JURY TRAIL. THE CORPORATE LAWS OF THE
STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS. 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 TEXAS.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
STATE AND
FEDERAL COURTS SITTING IN THE CITY OF DALLAS, FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR 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
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, 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 HEREBY WAIVES ALL
RIGHTS TO A TRIAL BY JURY.

     7.10     Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery, exercise and/or
conversion of the Securities, as applicable, for a period of two years, except
that the provisions of Article VI shall apply for the periods set forth
therein.

     7.11     Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

     7.12     Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree

29

 

upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

     7.13     Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights.

     7.14     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
certificate or instrument.

     7.15     Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers 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 agree to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

     7.16     Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser 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 any Subsidiary that may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (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
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers 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 Purchaser acknowledges that no other Purchaser
has acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising

30

 

out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

     7.17     Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or pursuant to the other Transaction
Documents or any Purchaser 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.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]

31

 

     IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

	 	 	 	 	 
	 	 	
INTROGEN THERAPEUTICS, INC.	 	 
	 	 	 	 	 
	 	 	
By:
	/s/ David G. Nance
	 	 	 	 	

	 	 	
Name: 

Title:
	David G. Nance 

Chief Executive Officer
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
301 Congress Avenue, Suite 1850 

Austin, Texas 78701 

Facsimile No.: (512) 708-9311 

Telephone No.: (512) 708-9310 

Attn: David G. Nance	 	 
	 	 	 	 	 
	With a copy to:	 	
Wilson Sonsini Goodrich & Rosati 

8911 Capital of Texas Highway North 

Westech 360, Suite 3350 

Austin, Texas 78759-8497 

Attn: Christopher J. Ozburn, Esq.	 	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

Securities Purchase Agreement

 

 

	 	 	 	 	 
	 	 	
STEELHEAD INVESTMENTS LTD.	 	 
	 
	 	 	
By:
	/s/ William E. Rose
	 	 	 	 	

	 	 	
Name:

Title:
	William E. Rose

Authorized Signatory
	 	 	 	 	 
	 	 	
Jurisdiction of domicile:
	Cayman Islands
	 	 	 	 	 
	 	 	
Purchase Price:
	 	 	$7,762,500
	 	 	 	 	 
	 	 	
Number of Shares to be acquired:
	 	 	1,350,000
	 	 	 	 	 
	 	 	
Underlying Shares subject to Warrant:
	 	 	270,000
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
c/o HBK Investments L.P.

300 Crescent Court, Suite 700

Dallas, Texas 75201

Facsimile No.: 214-758-1207

Telephone No.: 214-758-6107

Attn:  General Counsel	 	 

Securities Purchase Agreement

 

 

	 	 	 	 	 
	 	 	
CRANSHIRE CAPITAL, L.P.	 	 
	 	 	 	 	 
	 	 	
By:
	/s/ Mitchell P. Kopin
	 	 	 	 	

	 	 	
Name:

Title:
	Mitchell P. Kopin

President
	 	 	 	 	 
	 	 	
Jurisdiction of domicile:
	Illinois
	 	 	 	 	 
	 	 	
Purchase Price:
	 	$2,300,000
	 	 	 	 	 
	 	 	
Number of Shares to be acquired:
	 	400,000
	 	 	 	 	 
	 	 	
Underlying Shares subject to Warrant:
	80,000
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
666 Dundee Road, Suite 1901

Northbrook, IL 60062

Attn: Mitchell P. Kopin

Phone: 847-562-9030

Fax: 847-562-9031	 	 

Securities Purchase Agreement

 

 

	 	 	 	 	 
	 	 	
SMITHFIELD FIDUCIARY LLC	 	 
	 	 	 	 	 
	 	 	
By:
	/s/ Adam J. Chill
	 	 	 	 	

	 	 	
Name:

Title:
	Adam J. Chill

Authorized Signatory
	 	 	 	 	 
	 	 	
Jurisdiction of domicile:
	Cayman Islands
	 	 	 	 	 
	 	 	
Purchase Price:
	 	$1,437,500
	 	 	 	 	 
	 	 	
Number of Shares to be acquired:
	 	250,000
	 	 	 	 	 
	 	 	
Underlying Shares subject to Warrant:
	50,000
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
c/o Highbridge Capital Management, LLC

9 West 57th Street, 27th Floor

New York, New York 10019

Facsimile: (212) 751-0755

Facsimile: (212) 751-0755

Attn: Ari J. Storch / Adam J. Chill	 	 

Securities Purchase AgreementQuickLinks
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Exhibit 10.1    
    

3,000,000
Shares of Common Stock 

VIASYS
HEALTHCARE INC. 

UNDERWRITING
AGREEMENT 

As
of June 17, 2003 

BEAR,
STEARNS & CO. INC.

J.P. MORGAN SECURITIES INC. 

As
Representatives of the

several Underwriters named in

Schedule I attached hereto (the "Representative(s)") 

c/o
Bear, Stearns & Co. Inc.

383 Madison Avenue

New York, New York 10179 

Ladies/Gentlemen: 

        VIASYS
Healthcare Inc., a corporation organized and existing under the laws of Delaware (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and
sell to the several underwriters named in Schedule I hereto (the "Underwriters") an aggregate of 3,000,000 shares (the "Firm Shares") of its common stock, par value $0.01 per share (the "Common
Stock") and, for the sole purpose of covering over-allotments in connection with the sale of the Firm Shares, at the option of the Underwriters, up to an additional 450,000 shares (the
"Additional Shares") of Common Stock. The Firm Shares and any Additional Shares purchased by the Underwriters are referred to herein as the "Shares". The Shares are more fully described in the
Registration Statement and Prospectus referred to below. Bear, Stearns & Co. Inc. ("Bear Stearns") and J.P. Morgan Securities Inc. ("JPMorgan") are acting as co-lead
managers (the "Lead Managers") in connection with the offering and sale of the Shares contemplated herein (the "Offering"). 

        1.    Representations and Warranties of the Company.    The Company represents and warrants to, and agrees with, each
of the Underwriters that: 

        (a)   The
Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3
(No. 333-104079), and amendments thereto, and related preliminary prospectuses for the registration under the Securities Act of 1933, as amended (the "Securities Act"), of the
Shares, which registration statement, as so amended, has been declared effective by the Commission and copies of which have heretofore been delivered to the Underwriters. The registration statement,
as amended at the time it became effective, including the prospectus, financial statements, schedules, exhibits and other information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is hereinafter referred to as the "Registration Statement." No other document with respect to the Registration Statement
has heretofore been filed with the Commission. All of the Shares have been registered under the Securities Act pursuant to the Registration Statement. No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission. The Company, if required by the Securities Act and the rules and
regulations of the Commission (the "Rules and Regulations"), proposes to file the Prospectus with the Commission pursuant to Rule 424(b) under the Securities Act ("Rule 424(b)"). The
prospectus, in the form in which it is to be filed with the Commission pursuant to Rule 424(b), or, if the prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
prospectus in the form included as part of the Registration Statement at the time the Registration Statement became effective, is hereinafter referred to as the "Prospectus," except that if any
revised prospectus or prospectus supplement shall be provided to the Underwriters by the Company for use in connection with the Offering which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to 

 

be
filed by the Company pursuant to Rule 424(b)), the term "Prospectus" shall also refer to such revised prospectus or prospectus supplement, as the case may be, from and after the time it is
first provided to the Underwriters for such use. Any preliminary prospectus or prospectus subject to completion included in the Registration Statement or filed with the Commission pursuant to
Rule 424 under the Securities Act is hereafter called a "Preliminary Prospectus." Any reference herein to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act (as defined below) on
or before the effective date of the Registration Statement, the date of such Preliminary Prospectus or the date of the Prospectus, as the case may be, and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include (i) the filing of any document under
the Exchange Act after the effective date of the Registration Statement, the date of such Preliminary Prospectus or the date of the Prospectus, as the case may be, which is incorporated therein by
reference and (ii) any such document so filed. All references in this Agreement to the Registration Statement, a Preliminary Prospectus and the Prospectus, or any amendments or supplements to
any of the foregoing, shall be deemed to include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). 

        (b)   At
the time of the effectiveness of the Registration Statement or the effectiveness of any post-effective amendment to the Registration Statement, when the
Prospectus is first filed with the Commission pursuant to Rule 424(b), when any supplement to or amendment of the Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed and at the Closing Date and the Additional Closing Date, if any (as hereinafter respectively defined), the Registration Statement and the Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects with the applicable provisions of the Securities Act, the Exchange Act and the Rules and Regulations and did not and
will not contain an untrue statement of a material fact and did not and will not omit to state any material fact required to be stated therein or necessary in order to make the statements therein
(i) in the case of the Registration Statement, not misleading and (ii) in the case of the Prospectus or any related Preliminary Prospectus in light of the circumstances under which they
were made, not misleading. When any Preliminary Prospectus was first filed with the Commission (whether filed as part of the registration statement for the registration of the Shares or any amendment
thereto or pursuant to Rule 424(a) under the Securities Act) and when any amendment thereof or supplement thereto was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied in all material respects with the applicable provisions of the Securities Act, the Exchange Act and the Rules and Regulations and did not contain an
untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The contracts filed as exhibits to the Company's Annual Report on Form 10-K constitute all the contracts required to be filed as exhibits
thereto under the Exchange Act. No representation and warranty is made in this subsection (b), however, with respect to any information contained in or omitted from the Registration Statement
or the Prospectus or any related Preliminary Prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Lead Managers specifically for use therein. The parties acknowledge and agree that such information provided by or on behalf of any Underwriter consists solely of
the material included in the third, tenth and eleventh paragraphs under the caption "Underwriting" in the prospectus supplement included in the Prospectus. 

        (c)   Ernst &
Young LLP, who have certified the financial statements and supporting schedules and information of the Company and its subsidiaries that are
included or incorporated by reference in the 

2

 

Registration
Statement, are independent public accountants as required by the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Rules and Regulations. 

        (d)   Subsequent
to the respective dates as of which information is given in the Registration Statement and the Prospectus, except as disclosed in the Registration Statement
and the Prospectus, the Company has not declared, paid or made any dividends or other distributions of any kind on or in respect of its capital stock and there has been no material adverse change,
whether or not arising from transactions in the ordinary course of business, in or affecting (i) the business, condition (financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and any subsidiary of the Company listed on Exhibit A hereto (the "Subsidiaries"), taken as a whole or (ii) the long-term debt or
capital stock of the Company or any of its Subsidiaries (a "Material Adverse Change"). Since the date of the latest balance sheet presented, or incorporated by reference, in the Registration Statement
and the Prospectus, neither the Company nor any Subsidiary has incurred or undertaken any liabilities or obligations, whether direct or indirect, liquidated or contingent, matured or unmatured, or
entered into any transactions, including any acquisition or disposition of any business or asset, which are material to the Company and the Subsidiaries taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Registration Statement and the Prospectus. 

        (e)   The
authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus in the column headed "Actual" under the caption "Capitalization"
and, after giving effect to the Offering and the other transactions contemplated by this Agreement, the Registration Statement and the Prospectus, will be as set forth in the column headed "As
Adjusted" under the caption "Capitalization". All of the issued and outstanding shares of capital stock of the Company are fully paid and non-assessable, have been duly and validly
authorized and issued and are not in violation of or subject to any preemptive or similar right that does or will entitle any person, upon the issuance or sale of any security, to acquire from the
Company or any Subsidiary any Common Stock or other security of the Company or any Subsidiary or any security convertible into, or exercisable or exchangeable for, Common Stock or any other such
security (any "Relevant Security"), except for such rights as may have been fully satisfied or waived prior to the effectiveness of the Registration Statement. The Shares to be delivered on the
Closing Date and the Additional Closing Date (as hereinafter respectively defined), if any, have been duly and validly authorized and, when delivered in accordance with this Agreement, will be duly
and validly issued, will be fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar right that does or will entitle any person
to acquire any Relevant Security from the Company or any Subsidiary upon issuance or sale of Shares in the Offering. The Common Stock and the Shares conform to the descriptions thereof contained in
the Registration Statement and the Prospectus. Except as disclosed in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary has outstanding warrants, options to
purchase, or any preemptive rights or other rights to subscribe for or to purchase, or any contracts or commitments to issue or sell, any Relevant Security. 

        (f)    The
Subsidiaries are the only subsidiaries of the Company within the meaning of Rule 405 under the Securities Act. Except for the Subsidiaries, the Company holds
no ownership or other interest, nominal or beneficial, direct or indirect, in any corporation, partnership, joint venture or other business entity. All of the issued shares of capital stock of or
other ownership interests in each Subsidiary have been duly and validly authorized and issued and are fully paid and non-assessable and are owned directly or indirectly by the Company free
and clear of any lien, charge, mortgage, pledge, security interest, claim, equity, trust or other encumbrance, preferential arrangement, defect or restriction of any kind whatsoever (any "Lien"),
except for the pledge on the shares of certain Subsidiaries in connection with the Credit Agreement dated May 31, 2002, among the Company, the banks parties thereto and certain other parties.
None of Bird Life Design Corporation, EME 

3

 

Medical Inc.,
EME Medical LLC, Erich Jaeger Inc. or Thermedics Polymer Products LLC is material to our business, condition (financial or otherwise) or results of
operations. 

        (g)   Each
of the Company and the Subsidiaries has been duly organized and validly exists as a corporation, partnership or limited liability company in good standing under the
laws of its jurisdiction of organization. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation, partnership or limited liability
company in each jurisdiction in which the location of its properties (owned, leased or licensed) or the nature or conduct of its business makes such qualification necessary, except for those failures
to be so qualified or in good standing which (individually and in the aggregate) could not reasonably be expected to have a material adverse effect on (i) the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or prospects of the Company and the Subsidiaries, taken as a whole, or (ii) the long-term debt or capital stock
of the Company or any of its Subsidiaries (a "Material Adverse Effect"). Each of the Company and the Subsidiaries has all requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses, filings and permits of, with and from all judicial, regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (collectively, the "Consents"), to own, lease and operate its properties and conduct its business as it is now being conducted and as disclosed in the Registration
Statement and the Prospectus, except for Consents the failure to obtain which could not reasonably be expected to have a Material Adverse Effect, and each such Consent is valid and in full force and
effect, and neither the Company nor any Subsidiary has received notice of any investigation or proceedings which results in or, if decided adversely to the Company or any Subsidiary, could reasonably
be expected to result in a Material Adverse Effect. Each of the Company and the Subsidiaries is in compliance with all applicable laws, rules, regulations, ordinances, directives, judgments, decrees
and orders, foreign and domestic, except where failure to be in compliance could not reasonably be expected to have a Material Adverse Effect. 

        (h)   The
Company has the corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions
contemplated by this Agreement, the Registration Statement and the Prospectus. This Agreement and the transactions contemplated by this Agreement, the Registration Statement and the Prospectus have
been duly and validly authorized by the Company. This Agreement has been duly and validly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 

        (i)    The
execution, delivery, and performance of this Agreement and consummation of the transactions contemplated by this Agreement, the Registration Statement and the
Prospectus do not and will not (i) conflict with, require consent under or result in a breach of any of the terms and provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement, instrument, franchise, license or permit to which the Company or any Subsidiary is a party or by which, to the
knowledge of the Company or any Subsidiary, the Company or any Subsidiary or their respective properties, operations or assets may be bound or (ii) violate or conflict with any provision of the
certificate or articles of incorporation, by-laws, certificate of formation, limited liability company agreement, partnership agreement or other organizational documents of the Company or
any Subsidiary, or (iii) violate or conflict with any law, rule, regulation, ordinance, directive, judgment, decree or order of any judicial, regulatory or other 

4

 

legal
or governmental agency or body, domestic or foreign, except (in the case of clauses (i) and (iii) above) as could not reasonably be expected to have a Material Adverse Effect. 

        (j)    No
Consent of, with or from any judicial, regulatory or other legal or governmental agency or body or any third party, foreign or domestic, is required for the
execution, delivery and performance of this Agreement or consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus, including the issuance, sale
and delivery of the Shares to be issued, sold and delivered hereunder, except the registration under the Securities Act of the Shares, which has become effective, and such Consents as may be required
under state securities or blue sky laws or the by-laws and rules of the National Association of Securities Dealers, Inc. (the "NASD") or NASD Regulation, Inc. ("NASDR") in
connection with the purchase and distribution of the Shares by the Underwriters, each of which has been obtained and is in full force and effect. 

        (k)   Except
as disclosed in the Registration Statement and the Prospectus, there is no judicial, regulatory, arbitral or other legal or governmental proceeding or other
litigation or arbitration, domestic or foreign, pending to which the Company or any Subsidiary is a party or of which any property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company or any Subsidiary, could reasonably be expected to have a Material Adverse Effect; and to the Company's knowledge, no
such proceeding, litigation or arbitration is threatened or contemplated. 

        (l)    The
financial statements and pro forma data, including the notes thereto, and the supporting schedules included or incorporated by reference in the Registration
Statement and the Prospectus, present fairly the financial position as of the dates indicated and the cash flows and results of operations for the periods specified of the Company and its consolidated
subsidiaries; except as otherwise stated in the Registration Statement and the Prospectus, said financial statements have been prepared in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods involved (except as otherwise noted therein); and the supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the information required to be stated therein. No other financial statements or supporting schedules are required to be included in the
Registration Statement. The other financial and statistical information included or incorporated by reference in the Registration Statement and the Prospectus present fairly the information included
therein and have been prepared on a basis consistent with that of the financial statements that are included or incorporated by reference in the Registration Statement and the Prospectus and the books
and records of the respective entities presented therein. 

        (m)  There
are no pro forma or as adjusted financial statements which are required to be included or incorporated by reference in the Registration Statement and Prospectus in
accordance with Regulation S-X. 

        (n)   The
statistical, industry-related and market-related data included in the Registration Statement and the Prospectus are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and such data agree with the sources from which they are derived. 

        (o)   The
Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and files reports with the Commission on the EDGAR System. The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act, the outstanding shares of Common Stock (other than the Shares) are listed on the NYSE (as defined in
Section 11(a) below) and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or
de-listing the Common Stock from the NYSE, nor has the Company received any notification that the Commission or the NYSE is contemplating terminating such registration or listing. 

5

 

        (p)   The
Company and its Subsidiaries maintain a system of internal accounting and other 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 conformity with United
States GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded
accounting for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 

        (q)   Neither
the Company nor any of its affiliates (within the meaning of Rule 144 under the Securities Act) has taken, directly or indirectly, any action which
constitutes or is designed to cause or result in, or which could reasonably be expected to constitute, cause or result in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Shares. 

        (r)   Except
as disclosed in the Registration Statement and the Prospectus, no holder of any Relevant Security has any rights to require registration of any Relevant Security
as part or on account of, or otherwise in connection with, the offer and sale of the Shares contemplated hereby, and any such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full force and effect. 

        (s)   The
conditions for use of Form S-3 to register the Offering under the Securities Act, as set forth in the General Instructions to such Form, have been
satisfied. 

        (t)    The
documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the Securities Act, the Exchange Act and the Rules and Regulations, and, when read together with the other information in the Prospectus,
do 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 the light of the circumstances
under which they were made, not misleading. 

        (u)   The
Company is not and, at all times up to and including consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus,
and after giving effect to application of the net proceeds of the Offering, will not be, subject to registration as an "investment company" under the Investment Company Act of 1940, as amended, and is
not and will not be an entity "controlled" by an "investment company" within the meaning of such act. 

        (v)   There
are no contracts or other documents (including, without limitation, any voting agreement), which are required to be described in the Registration Statement and the
Prospectus or filed as exhibits to the Registration Statement by the Securities Act, the Exchange Act or the Rules and Regulations and which have not been so described or filed. 

        (w)  No
relationship, direct or indirect, exists between or among any of the Company or any affiliate of the Company, on the one hand, and any director, officer, stockholder,
customer or supplier of the Company or any affiliate of the Company, on the other hand, which is required by the Securities Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement or the Prospectus which is not so described and described as required. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees of indebtedness by the Company to or for the benefit of any of the officers or directors of the Company or any of their respective family members, except as disclosed
in the Registration Statement and the Prospectus. The Company has not, in violation of the Sarbanes-Oxley Act, directly or indirectly, including through a Subsidiary, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any director or executive officer of the Company. 

6

 

        (x)   Except
as disclosed in the Registration Statement and the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder's fee or other like payment in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any arrangements, agreements, understandings, payments or issuance with respect to the Company or any of its officers,
directors, shareholders, partners, employees, Subsidiaries or affiliates that may affect the Underwriters' compensation as determined by the NASD. 

        (y)   The
Company and each Subsidiary owns or leases all such properties as are necessary to the conduct of its business as presently operated and as proposed to be operated
as described in the Registration and the Prospectus. The Company and the Subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real
and personal property that are material to the respective businesses of the Company and its Subsidiaries, in each case free and clear of all Liens except such as are described in the Registration
Statement and the Prospectus or such as do not materially affect the value of such property or materially interfere with the use made or proposed to be made of such property by the Company and the
Subsidiaries; and any real property and buildings held under lease or sublease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions
as are not material to, and do not materially interfere with, the use made and proposed to be made of such property and buildings by the Company and the Subsidiaries. Neither the Company nor any
Subsidiary has received any notice of any claim adverse to its ownership of any real or personal property or of any claim against the continued possession of any real property, whether owned or held
under lease or sublease by the Company or any Subsidiary. 

        (z)   The
Company and its Subsidiaries (i) own or possess adequate rights to use all patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses, formulae, customer lists and know-how and other intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures, "Intellectual Property") necessary for the conduct of their respective businesses as being conducted and as described in
the Registration Statement and Prospectus, except where the failure to own or possess rights to use any such Intellectual Property could not reasonably be expected to have a Material Adverse Effect,
and (ii) have no reason to believe that the conduct of their respective businesses does or will conflict with, and have not received any notice of any claim of conflict with, any such right of
others, except where any such conflict could not reasonably be expected to have a Material Adverse Effect. The Company has used commercially reasonable efforts to maintain in confidence all material
technical information developed by and belonging to the Company which has not been patented. Neither the Company nor any Subsidiary has granted or assigned to any other person or entity any right to
manufacture, have manufactured, assemble or sell the current products and services of the Company and its Subsidiaries or those products and services described in the Registration Statement and
Prospectus. There is no infringement by third parties of any such Intellectual Property; there is no pending or threatened action, suit, proceeding or claim by others challenging the Company's or any
Subsidiary's rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; and there is no pending or threatened
action, suit, proceeding or claim by others that the Company or any Subsidiary infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for any such claim, except in each case where any such circumstance could not reasonably be expected to have a Material
Adverse Effect. 

        (aa) The
Company and the Subsidiaries maintain insurance in such amounts and covering such risks as the Company reasonably considers adequate for the conduct of their
respective businesses and 

7

 

the
value of its properties and as is customary for companies engaged in similar businesses in similar industries, all of which insurance is in full force and effect, except where the failure to
maintain such insurance could not reasonably be expected to have a Material Adverse Effect. There are no material claims by the Company or any Subsidiary under any such policy or instrument as to
which any insurance company is denying liability or defending under a reservation of rights clause. The Company has no reason to believe that it will not be able to renew its existing insurance as and
when such coverage expires or will not be able to obtain replacement insurance adequate for the conduct of the business and the value of its properties at a cost that would not have a Material Adverse
Effect. 

        (bb) The
Company has in effect insurance covering the Company, its directors, officers and the Underwriters for liabilities or losses arising in connection with this
Offering, including, without limitation, liabilities or losses arising under the Securities Act, the Exchange Act, the Rules and Regulations and applicable foreign securities laws. 

        (cc) Each
of the Company and the Subsidiaries has timely filed all material federal, state, foreign and other tax returns that are required to be filed by it and has paid or
made provision for the payment of all taxes, assessments, governmental or other similar charges, including without limitation, all sales and use taxes and all taxes which the Company or any Subsidiary
is obligated to withhold from amounts owing to employees, creditors and third parties, with respect to the periods covered by such tax returns (whether or not such amounts are shown as due on any tax
return). No material deficiency assessment with respect to a proposed adjustment of the Company's or any Subsidiary' federal, state, local or foreign taxes is pending or, to the Company's knowledge,
threatened. The accruals and reserves on the books and records of the Company and the Subsidiaries in respect of tax liabilities for any taxable period not finally determined are adequate to meet any
assessments and related liabilities for any such period and, since December 28, 2002, the Company and the Subsidiaries have not incurred any liability for taxes other than in the ordinary
course of its business. There is no material tax lien, whether imposed by any federal, state, foreign or other taxing authority, outstanding against the assets, properties or business of the Company
or any Subsidiary. 

        (dd) No
labor disturbance by the employees of the Company or any Subsidiary exists or, to the Company's knowledge, is contemplated or threatened. 

        (ee) No
"prohibited transaction" (as defined in either Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")), "accumulated funding deficiency" (as defined in
Section 302 of ERISA) or other event to which Section 4043 of ERISA applies (other than events with respect to which the 30-day notice requirement under Section 4043
of ERISA has been waived) has occurred with respect to any employee benefit plan for which the Company or any Subsidiary would have any material liability; each employee benefit plan for which the
Company or any Subsidiary would have any liability is in compliance in all respects with applicable law, including (without limitation) ERISA and the Code, except for such occurrences or failures to
be in compliance that could not reasonably be expected to have a Material Adverse Effect; the Company has not incurred and does not expect to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from any "pension plan"; and each plan for which the Company would have any liability that is intended to be qualified under Section 401(a) of the
Code has been determined to be so qualified and nothing has occurred, whether by action or by failure to act, which could reasonably be expected to cause the loss of such qualification. As defined
herein, "employee benefit plan" means any pension plan, 401(k) plan, profit sharing plan, health or welfare plan, and any other employee benefit plan (within the meaning of Section 3(3) of
ERISA) that is maintained or sponsored by the Company or any other entity that would be treated as a commonly controlled company (within the meaning of Section 414 of the Code) with the Company
and its Subsidiaries (an "ERISA Affiliate"), or to which the Company or any ERISA Affiliate contributes or otherwise may have any liability, either directly or as a result of being a 

8

 

member
of a commonly controlled group of companies since the spin-off of the Company from Thermo Electron Corporation. 

        (ff)  To
the Company's knowledge, there has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission or other release of toxic or other
wastes or other hazardous substances by or on behalf of the Company or any Subsidiary (or, to the Company's knowledge, any other entity for whose acts or omissions the Company is liable) upon any
property owned or leased by the Company or any Subsidiary, or upon any other property, which is reasonably likely to be a violation of, or give rise to any liability under, any applicable law, rule,
regulation, order, judgment, decree or permit relating to pollution or protection of human health and the environment ("Environmental Law"). Neither the Company nor any Subsidiary has agreed to
assume, undertake or provide indemnification for any liability of any other person under any Environmental Law, including any obligation for cleanup or remedial action. There is no pending or, to the
best of the Company's knowledge, threatened administrative, regulatory or judicial action, claim or written notice of noncompliance or violation, investigation or proceedings under any Environmental
Law against the Company or any Subsidiary. 

        (gg) Neither
the Company, any Subsidiary nor, to the Company's knowledge, any of its employees or agents has at any time during the last five years (i) made any
unlawful contribution to any candidate for foreign office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States of any jurisdiction thereof. 

        (hh) Neither
the Company nor any Subsidiary (i) is in violation of its certificate or articles of incorporation, by-laws, certificate of formation,
limited liability company agreement, partnership agreement or other organizational documents, (ii) is in default under, and no event has occurred which, with notice or lapse of time or both,
would constitute a default under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which, to the knowledge of the Company or any Subsidiary, it is bound or to which any
of its property or assets is subject or (iii) is in violation in any respect of any law, rule, regulation, ordinance, directive, judgment, decree or order of any judicial, regulatory or other
legal or governmental agency or body, foreign or domestic, except (in the case clauses (ii) and (iii) above) violations or defaults that could not (individually or in the aggregate) reasonably
be expected to have a Material Adverse Effect and except (in the case of clause (ii) alone) for any lien, charge or encumbrance disclosed in the Registration Statement and the Prospectus. 

        (ii)   The
Company has implemented the "disclosure controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act)
required in order for the Chief Executive Officer and Chief Financial Officer of the Company to engage in the review and evaluation process mandated by the Exchange Act. The Company's "disclosure
controls and procedures" are designed to provide reasonable assurance that (i) all information (both financial and non-financial) required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Rules and Regulations, and (ii) all such
information is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive
Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports. 

        (jj)   Except
as disclosed in the Registration and the Prospectus, there are no outstanding guarantees or other contingent obligations of the Company or any Subsidiary that
could reasonably be expected to have a Material Adverse Effect. 

9

 

        Any
certificate signed by or on behalf of the Company and delivered to the Representatives or to counsel for the Underwriters in connection with the Offering shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters covered thereby. 

        2.    Purchase, Sale and Delivery of the Shares.    

        (a)   On
the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees
to sell to each Underwriter and each Underwriter, severally and not jointly, agrees to purchase from the Company, at a purchase price per share of $19.50, the number of Firm Shares set forth opposite
their respective names on Schedule I hereto together with any additional number of Shares which such Underwriter may become obligated to purchase pursuant to the provisions of Section 9
hereof. 

        (b)   Payment
of the purchase price for, and delivery of certificates representing, the Firm Shares shall be made at the office of Simpson Thacher & Bartlett
("Underwriters' Counsel"), or at such other place as shall be agreed upon by the Lead Managers and the Company, at 10:00 A.M., New York City time, on the third or (as permitted under
Rule 15c6-1 under the Exchange Act) fourth business day (unless postponed in accordance with the provisions of Section 9 hereof) following the date of the effectiveness of
the Registration Statement (or, if the Company has elected to rely upon Rule 430A under the Securities Act, the third or (as permitted under Rule 15c6-1 under the Exchange
Act) fourth business day after the determination of the public offering price of the Shares), or such other time not later than ten business days after such date as shall be agreed upon by the Lead
Managers and the Company (such time and date of payment and delivery being herein called the "Closing Date"). 

        Payment
of the purchase price for the Firm Shares shall be made by wire transfer in same day funds to the Company upon delivery of certificates for the Firm Shares to the Representatives
through the facilities of The Depository Trust Company for the respective accounts of the several Underwriters. Certificates for the Firm Shares shall be registered in such name or names and shall be
in such denominations as the Lead Managers may request at least two business days before the Closing Date. The Company will permit the Lead Managers to examine and package such certificates for
delivery at least one full business day prior to the Closing Date. 

        (c) In
addition, on the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company
hereby grants to the Underwriters, acting severally and not jointly, the option to purchase up to 450,000 Additional Shares at the same purchase price per share to be paid by the Underwriters for the
Firm Shares as set forth in Section 2(a) above, for the sole purpose of covering over-allotments in the sale of Firm Shares by the Underwriters. This option may be exercised at any
time and from time to time, in whole or in part on one or more occasions, on or before the thirtieth day following the date of the Prospectus, by written notice from the Lead Managers to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to which the option is being exercised and the date and time, as reasonably determined by the Lead Managers, when the
Additional Shares are to be delivered (any such date and time being herein sometimes referred to as the "Additional Closing Date"); provided,  however, that
no Additional Closing Date shall occur earlier than the Closing Date or earlier than the second full business day after the date on which
the option shall have been exercised nor later than the eighth full business day after the date on which the option shall have been exercised (unless such time and date are postponed in accordance
with the provisions of Section 9 hereof). Upon any exercise of the option as to all or any portion of the Additional Shares, each Underwriter, acting severally and not jointly, agrees to
purchase from the Company the number of Additional Shares that bears the same proportion of the total number of Additional Shares then being purchased as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto (or such number increased as set forth in Section 9 hereof) bears to the total number of Firm Shares that the Underwriters have agreed
to 

10

 

purchased
hereunder, subject, however, to such adjustments to eliminate fractional shares as the Lead Managers in their sole discretion shall make. 

        (d)   Payment
of the purchase price for, and delivery of certificates representing, the Additional Shares shall be made at the office of Underwriters' Counsel, or at such
other place as shall be agreed upon by the Lead Managers and the Company, at 10:00 A.M., New York City time, on the Additional Closing Date (unless postponed in accordance with the provisions
of Section 9 hereof), or such other time as shall be agreed upon by the Lead Managers and the Company. 

        Payment
of the purchase price for the Additional Shares shall be made by wire transfer in same day funds to the Company upon delivery of certificates for the Additional Shares to the
Representatives through the facilities of The Depository Trust Company for the respective accounts of the several Underwriters. Certificates for the Additional Shares shall be registered in such name
or names and shall be in such denominations as the Lead Managers may request at least two business days before the Additional Closing Date. The Company will permit the Lead Managers to examine and
package such certificates for delivery at least one full business day prior to the Additional Closing Date. 

        3.    Offering.    Upon authorization of the release of the Firm Shares by the Lead Managers, the Underwriters propose
to offer the Shares for sale to the public upon the terms and conditions set forth in the Prospectus. 

        4.    Covenants of the Company.    The Company covenants and agrees with the Underwriters that: 

        (a)   If
Rule 430A is used or the filing of the Prospectus is otherwise required under Rule 424(b), the Company will file the Prospectus (properly completed if
Rule 430A has been used) pursuant to Rule 424(b) within the prescribed time period and will provide evidence satisfactory to the Lead Managers of such timely filing. 

        The
Company will notify you promptly (and, if requested by the Lead Managers, will confirm such notice in writing) (i) when the Registration Statement and any amendments thereto
become effective, (ii) of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information, (iii) of the
Company's intention to file or prepare any supplement or amendment to the Registration Statement or the Prospectus, (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment thereto or of the initiation, or the threatening, of any proceedings therefor, it being understood that the
Company shall use reasonable best efforts to avoid the issuance of any such stop order, (v) of the receipt of any comments from the Commission with respect to any post-effective
amendment, and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall propose or enter a stop order at any time, the Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as possible. The Company will not file any amendment to the Registration Statement or any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to Rule 424(b)) that differs from the prospectus on file at the time of the effectiveness of the Registration Statement or
file any document under the Exchange Act if such document would be deemed to be incorporated by reference into the Prospectus to which the Lead Managers shall reasonably object in writing after being
timely furnished in advance a copy thereof. The Company will provide the Lead Managers with copies of all such amendments, filings and other documents in sufficient time prior to any filing or other
publication thereof to permit the Lead Managers a reasonable opportunity to review and comment thereon. 

11

   
        (b)   The Company shall comply with the Securities Act and the Exchange Act to permit completion of the distribution as contemplated in this Agreement, the Registration
Statement and the Prospectus. If at any time when a prospectus relating to the Shares is required to be delivered under the Securities Act or the Exchange Act in connection with the sales of Shares,
any event shall have occurred as a result of which the Prospectus as then amended or supplemented would, in the judgment of the Underwriters or the Company, include an 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 existing at the time of delivery to the purchaser,
not misleading, or if to comply with the Securities Act, the Exchange Act or the Rules and Regulations it shall be necessary at any time to amend or supplement the Prospectus or Registration
Statement, or to file any document incorporated by reference in the Registration Statement or the Prospectus or in any amendment thereof or supplement thereto, the Company will notify you promptly and
prepare and file with the Commission, subject to Section 4(a) hereof, an appropriate amendment or supplement (in form and substance satisfactory to the Lead Managers) which will correct such
statement or omission or which will effect such compliance and will use its reasonable best efforts to have any amendment to the Registration Statement declared effective as soon as possible. 

        (c)   The
Company will promptly deliver to each of you and Underwriters' Counsel a signed copy of the Registration Statement, as initially filed and all amendments thereto,
including all consents and exhibits filed therewith, and will maintain in the Company's or Company's counsel's files manually signed copies of such documents for at least five years after the date of
filing. The Company will promptly deliver to each of the Underwriters such number of copies of any Preliminary Prospectus, the Prospectus, the Registration Statement and all amendments of and
supplements to such documents, if any, and (except to the extent available through the Commission's EDGAR system) all documents incorporated by reference in the Registration Statement and Prospectus
or any amendment thereof or supplement thereto, as you may reasonably request. Prior to 10:00 A.M., New York time, on the business day next succeeding the date of this Agreement and from time
to time thereafter, the Company will furnish the Underwriters with copies of the Prospectus in New York City in such quantities as you may reasonably request. 

        (d)   The
Company consents to the use and delivery of the Preliminary Prospectus by the Underwriters in accordance with Rule 430 and Section 5(b) of the
Securities Act. 

        (e)   The
Company will use its reasonable best efforts, in cooperation with the Lead Managers, at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to the offering or sale of the Shares of such jurisdictions, domestic or foreign, as the Lead Managers may designate and to
maintain such qualification in effect for so long as required for the distribution thereof, except that in no event shall the Company be obligated in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process. 

        (f)    The
Company will make generally available to its security holders and to the Underwriters as soon as practicable, but in any event not later than twelve months after the
effective date of the Registration Statement (as defined in Rule 158(c) under the Securities Act), an earnings statement of the Company and the Subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158). 

        (g)   During
the period of 90 days from the date of the Prospectus, without the prior written consent of the Lead Managers, the Company (i) will not, directly or
indirectly, issue, offer, sell, agree to issue, offer or sell, solicit offers to purchase, grant any call option, warrant or other right to purchase, purchase any put option or other right to sell,
pledge or otherwise dispose of any Relevant Security, or make any announcement of any of the foregoing, (ii) will not establish or increase any "put equivalent position" or liquidate or
decrease any "call equivalent position" (in each case within the 

12

 

meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder) with respect to any Relevant Security, and (iii) will not otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in whole or in part, any economic consequence of ownership of a Relevant Security, whether or not such transaction is to be
settled by delivery of Relevant Securities, other securities, cash or other consideration; and the Company will use its reasonable best efforts to obtain an undertaking in substantially the form of
Annex III hereto of each of its executive officers and directors not to engage in any of the aforementioned transactions on their own behalf, other than the sale of Shares as contemplated by
this Agreement and the Company's issuance of Common Stock upon (i) the exercise of currently outstanding options and (ii) the grant and exercise of options under, or the issuance and
sale of shares pursuant to, employee stock option plans and employee stock purchase plans in effect on the date hereof, each as described in the Registration Statement and the Prospectus. During the
period of 90 days from the date of the Prospectus, without the prior written consent of the Lead Managers, the Company will not file a registration statement under the Securities Act in
connection with any transaction by the Company or any person that is prohibited pursuant to the foregoing, except for registration statements on Form S-8 relating to employee
benefit plans or on Form S-4 relating to corporate reorganizations or other transactions under Rule 145. 

        (h)   During
the period of five years from the effective date of the Registration Statement, the Company will, as soon as reasonably practicable, furnish to you (except to the
extent available through the Commission's EDGAR system) (i) copies of any reports, financial statements and proxy or information statements delivered to shareholders or to the Commission and
(ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request;  provided that in the case of (i) and (ii) above,
such information is furnished or filed with the Commission, is published or otherwise publicly
disseminated by the Company or is covered by a confidentiality agreement in a form reasonably acceptable to the Company executed by you. 

        (i)    The
Company will apply the net proceeds from the sale of the Shares as set forth under the caption "Use of Proceeds" in the Prospectus. 

        (j)    The
Company will use its reasonable best efforts to effect and maintain the listing of the Shares on the NYSE. 

        (k)   The
Company, during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act, will file all documents required to be filed
with the Commission pursuant to the Securities Act, the Exchange Act and the Rules and Regulations within the time periods required thereby. 

        (l)    The
Company will use its best efforts to do and perform all things required to be done or performed under this Agreement by the Company prior to the Closing Date or the
Additional Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Firm Shares and the Additional Shares. 

        (m)  The
Company will not take, directly or indirectly, any action which constitutes or is designed to cause or result in, or which could reasonably be expected to
constitute, cause or result in, the stabilization or manipulation of the price of any security to facilitate the sale or resale of the Shares. 

        5.    Payment of Expenses.    Whether or not the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus are consummated or this Agreement is terminated, the Company hereby agrees to pay all costs and expenses incident to the performance of its obligations hereunder,
including the following: (i) all expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and any and all
amendments and supplements thereto and the mailing and delivering of copies thereof to the 

13

 

Underwriters
and dealers; (ii) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Shares under the Securities Act and the
Offering; (iii) the cost of producing this Agreement and other instruments, agreements or documents in connection with the Offering; (iv) all expenses in connection with the
qualification of the Shares for offering and sale under state or foreign securities or blue sky laws as provided in Section 4(e) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with any blue sky survey; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, securing any required review by the NASD of the terms of the Offering; (vi) all fees and expenses in connection with listing the Shares on the NYSE; and (vii) all travel
expenses of the Company's officers and employees and any other expense of the Company incurred in connection with attending or hosting meetings with prospective purchasers of the Shares. The Company
also will pay or cause to be paid: (x) the cost of preparing stock certificates representing the Shares; (y) the cost and charges of any transfer agent or registrar for the Shares; and
(z) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 5. It is understood, however,
that except as provided in this Section, and Sections 7, 8 and 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel and stock transfer
taxes on resale of any of the Shares by them. Notwithstanding anything to the contrary in this Section 5, in the event that this Agreement is terminated pursuant to Section 6 or 11(b)
hereof, or subsequent to a Material Adverse Change, the Company will pay all out-of pocket expenses of the Underwriters (including but not limited to fees and disbursements of counsel to
the Underwriters) incurred in connection herewith. 

        6.    Conditions of Underwriters' Obligations.    The obligations of the Underwriters to purchase and pay for the Firm
Shares and the Additional Shares, as provided herein, shall be subject to the accuracy of the representations and warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the Closing Date for the Firm Shares and any Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished to you or to Underwriters' Counsel pursuant to this Section 6 of any misstatement or omission, to the
performance by the Company of its obligations hereunder, and to each of the following additional conditions: 

        (a)   The
Registration Statement shall have become effective and all necessary regulatory or stock exchange approvals shall have been received not later than 5:30 P.M.,
New York time, on the date of this Agreement, or at such later time and date as shall have been consented to in writing by the Lead Managers; if the Company shall have elected to rely upon
Rule 430A under the Securities Act, the Prospectus shall have been filed with the Commission in a timely fashion in accordance with Section 4(a) hereof and a form of the Prospectus
containing information relating to the description of the Shares and the method of distribution and similar matters shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period; and, at or prior to the Closing Date no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened by the Commission. 

        (b)   At
the Closing Date you shall have received the written opinion of Morgan, Lewis & Bockius LLP, U.S. counsel for the Company, dated the Closing Date and
addressed to the Underwriters in the form attached hereto as Annex I. 

        (c)   At
the Closing Date you shall have received the written opinion of Morgan, Lewis & Bockius LLP, German counsel for the Company, dated the Closing Date and
addressed to the Underwriters in the form attached hereto as Annex II. 

        (d)   All
proceedings taken in connection with the sale of the Firm Shares and the Additional Shares as herein contemplated shall be satisfactory in form and substance to the
Lead Managers and to 

14

 

Underwriters'
Counsel, and the Underwriters shall have received from Underwriters' Counsel a favorable written opinion, dated as of the Closing Date, with respect to the issuance and sale of the
Shares, the Registration Statement and the Prospectus and such other related matters as the Lead Managers may require, and the Company shall have furnished to Underwriters' Counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such matters. 

        (e)   At
the Closing Date you shall have received a certificate of the Chief Executive Officer or another senior executive officer of the Company satisfactory to the Lead
Managers and Chief Financial Officer or principal accounting officer of the Company, dated the Closing Date and given in their capacities as officers of the Company, to the effect that (i) the
condition set forth in subsection (a) of this Section 6 has been satisfied, (ii) as of the date hereof and as of the Closing Date, the representations and warranties of the
Company set forth in Section 1 hereof are accurate, (iii) as of the Closing Date all agreements, conditions and obligations of the Company to be performed or complied with hereunder on
or prior thereto have been duly performed or complied with, (iv) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the
Company and the Subsidiaries have not sustained any material loss or interference with their respective businesses or properties from fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or governmental proceeding, (v) no stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings therefor have been initiated or threatened by the Commission and (vi) subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus there has not been any material adverse change or any development involving a prospective material adverse change, whether
or not arising from transactions in the ordinary course of business, in or affecting (x) the business, condition (financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and the Subsidiaries, individually or taken as a whole; (y) the long-term debt or capital stock of the Company or any of its Subsidiaries; or
(z) the Offering or consummation of any of the other transactions contemplated by this Agreement, the Registration Statement and the Prospectus. 

        (f)    At
the time this Agreement is executed and at the Closing Date, you shall have received a comfort letter from Ernst & Young LLP, independent public accountants
for the Company, dated, respectively, as of the date of this Agreement and as of the Closing Date addressed to the Underwriters and in form and substance satisfactory to the Underwriters and
Underwriters' Counsel; provided, that the letter delivered on the Closing Date shall use a "cut-off" date no more than three business days
prior to such Closing Date. 

        (g)   You
shall have received from Ernst & Young LLP a letter stating that the Company's system of internal accounting controls taken as a whole is sufficient to
meet the broad objectives of internal accounting controls insofar as those objectives pertain to the prevention or detection of errors or irregularities in amounts that would be material in relation
to the financial statements of the Company and its subsidiaries. 

        (h)   Subsequent
to the execution and delivery of this Agreement or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any
amendment thereof occurring on or after June 18, 2003) and the Prospectus (exclusive of any supplement thereto), there shall not have been any change in the capital stock or
long-term debt of the Company or any Subsidiary or any change or development involving a change, whether or not arising from transactions in the ordinary course of business, in the
business, condition (financial or otherwise), results of operations, stockholders' equity, properties or prospects of the Company and the Subsidiaries, taken as a whole, including but not limited to
the occurrence of any fire, flood, storm, explosion, accident or other calamity at any of the properties owned or leased by the Company or any of its Subsidiaries, the effect of which, in any such
case described above, is, in the judgment of the Lead Managers, so 

15

 

material
and adverse as to make it impracticable or inadvisable to proceed with the Offering on the terms and in the manner contemplated in the Prospectus (exclusive of any supplement). 

        (i)    No
action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Shares; and no injunction or order of any federal, state or foreign court shall have been issued that
would, as of the Closing Date, prevent the issuance or sale of the Shares. 

        (j)    You
shall have received a duly executed lock-up agreement from each person who is a director or executive officer of the Company, in each case substantially
in the form attached hereto as Annex III. 

        (k)   At
the Closing Date, the Shares shall have been approved for listing upon notice of issuance on the NYSE. 

        (l)    At
the Closing Date, the NASD shall have confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and
arrangements. 

        (m)  The
Company shall have furnished the Underwriters and Underwriters' Counsel with such other certificates, opinions or other documents as they may have reasonably
requested. 

        If
any of the conditions specified in this Section 6 shall not have been fulfilled when and as required by this Agreement, or if any of the certificates, opinions, written
statements or letters furnished to you or to Underwriters' Counsel pursuant to this Section 6 shall not be satisfactory in form and substance reasonably satisfactory to the Lead Managers and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be cancelled by the Lead Managers at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional Shares may be cancelled by the Lead Managers at, or at any time prior to, the Additional Closing Date. Notice of such
cancellation shall be given to the Company in writing, or by telephone. Any such telephone notice shall be confirmed promptly thereafter in writing. The Lead Managers may in their sole discretion
waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder. 

        7.    Indemnification.    

        (a)   The
Company shall indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited to attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the
Company will not be liable in any such case to the extent but only to the extent that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Underwriter through
the Lead Managers expressly for use therein. The parties agree that such information provided by or on behalf of any Underwriter through the Lead Managers consists solely of the material referred to
in the last 

16

 

sentence
of Section 1(b) hereof. This indemnity agreement will be in addition to any liability which the Company may otherwise have, including but not limited to other liability under this
Agreement. The foregoing indemnity agreement with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter who failed to deliver a Prospectus (as then amended or
supplemented, provided by the Company to the several Underwriters in the requisite quantity and on a timely basis to permit proper delivery on or prior to the Closing Date) to the person asserting any
losses, claims, damages and liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged
material misstatement or omission was cured, as determined by a court of competent jurisdiction in a decision not subject to further appeal, in such Prospectus and such Prospectus was required by law
to be delivered at or prior to the written confirmation of sale to such person. 

        (b)   Each
Underwriter, severally and not jointly, shall indemnify and hold harmless the Company, each of the directors of the Company, each of the officers of the Company who
shall have signed the Registration Statement, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they
or any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereof, or any related Preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information furnished in writing to the Company by or on behalf
of such Underwriter through the Lead Managers specifically for use therein; provided, however, that in
no case shall any Underwriter be liable or responsible for any amount in excess of the underwriting discount applicable to the Shares to be purchased by such Underwriter hereunder. The parties agree
that such information provided by or on behalf of any Underwriter through the Lead Managers consists solely of the material referred to in the last sentence of Section 1(b) hereof. This
indemnity will be in addition to any liability which any Underwriter may otherwise have, including but not limited to other liability under this Agreement. 

        (c)   Promptly
after receipt by an indemnified party under subsection (a) or (b) above of notice of any claims or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall not relieve the indemnifying party from any liability which it may have under this Section 7. In case any such
claim or action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate, at its own expense
in the defense of such action, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel satisfactory to such indemnified party; provided however, that counsel to the indemnifying party shall not (except with
the written consent of the indemnified party) also be counsel to the indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or 

17

 

their
own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have
been authorized in writing by one of the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of commencement of the action, (iii) the indemnifying party does not diligently defend the action after assumption of the defense,
or (iv) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the indemnifying parties. No indemnifying party shall, without the prior written consent of the indemnified parties, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or threatened claim, investigation, action or proceeding in respect of which indemnity or contribution may be or could have been
sought by an indemnified party under this Section 7 or Section 8 hereof (whether or not the indemnified party is an actual or potential party thereto), unless (x) such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such claim, investigation, action or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or any failure to act, by or on behalf of the indemnified party, and (y) the indemnifying party confirms in writing its
indemnification obligations hereunder with respect to such settlement, compromise or judgment. 

        8.    Contribution.    In order to provide for contribution in circumstances in which the indemnification provided for
in Section 7 hereof is for any reason held to be unavailable from any indemnifying party or is insufficient to hold harmless a party indemnified thereunder, the Company and the Underwriters
shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and
expenses suffered by the Company, any contribution received by the Company from persons, other than the Underwriters, who may also be liable for contribution, including persons who control the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, officers of the Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be subject, in such proportions as is appropriate to reflect the relative benefits received by the Company and the Underwriters
from the Offering or, if such allocation is not permitted by applicable law, in such proportions as are appropriate to reflect not only the relative benefits referred to above but also the relative
fault of the Company and the Underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the Underwriters shall be deemed to be in the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts and commissions but before deducting expenses) received by the Company bears to (y) the underwriting discount or commissions received by the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault of each of the Company and of the Underwriters shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in this Section. The aggregate amount of 

18

 

losses,
liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any judicial, regulatory or other legal or governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this
Section 8, (i) no Underwriter shall be required to contribute any amount in excess of the amount by which the discounts and commissions applicable to the Shares underwritten by it and
distributed to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) 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. For purposes of this Section 8, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of the immediately preceding sentence. Any party entitled to contribution will, promptly after receipt of notice of
commencement of
any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. The obligations of the Underwriters to contribute pursuant to this Section 8 are several in proportion to the respective number of Shares to be purchased by each
of the Underwriters hereunder and not joint. 

        9.    Underwriter Default.    

        (a)   If
any Underwriter or Underwriters shall default in its or their obligation to purchase Firm Shares or Additional Shares hereunder, and if the Firm Shares or Additional
Shares with respect to which such default relates (the "Default Shares") do not (after giving effect to arrangements, if any, made by the Lead Managers pursuant to subsection (b) below) exceed
in the aggregate 10% of the number of Firm Shares or Additional Shares, each non-defaulting Underwriter, acting severally and not jointly, agrees to purchase from the Company that number
of Default Shares that bears the same proportion of the total number of Default Shares then being purchased as the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto bears to the aggregate number of Firm Shares set forth opposite the names of the non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Lead Managers in their sole discretion shall make. 

        (b)   In
the event that the aggregate number of Default Shares exceeds 10% of the number of Firm Shares or Additional Shares, as the case may be, the Lead Managers may in
their discretion arrange for themselves or for another party or parties (including any non-defaulting Underwriter or Underwriters who so agree) to purchase the Default Shares on the terms
contained herein. In the event that within five calendar days after such a default the Lead Managers do not arrange for the purchase of the Default Shares as provided in this Section 9, this
Agreement or, in the case of a default with respect to the Additional Shares, the obligations of the Underwriters to purchase and of the Company to sell the Additional Shares shall thereupon
terminate, without liability on the part of the Company with respect thereto (except in each case as provided in Sections 5, 7, 8, 10 and 11(d)) or the Underwriters, but nothing in this Agreement
shall relieve a defaulting Underwriter or Underwriters of its or their liability, if any, to the other Underwriters and the Company for damages occasioned by its or their default hereunder. 

19

 

        (c)   In
the event that any Default Shares are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid,
the Lead Managers or the Company shall have the right to postpone the Closing Date or Additional Closing Date, as the case may be for a period, not exceeding five business days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may thereby be made necessary or advisable. The term "Underwriter" as used in this Agreement
shall include any party substituted under this Section 9 with like effect as if it had originally been a party to this Agreement with respect to such Firm Shares and Additional Shares. 

        10.    Survival of Representations and Agreements.    All representations and warranties, covenants and agreements of
the Underwriters and the Company contained in this Agreement or in certificates of officers of the Company or any Subsidiary submitted pursuant hereto, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution agreements contained in Section 8, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter or any controlling person thereof or by or on behalf of the Company, any of its officers and directors or any controlling person thereof,
and shall survive delivery of and payment for the Shares to and by the Underwriters. The representations contained in Section 1 and the agreements contained in Sections 5, 7, 8, 10 and
11 hereof shall survive any termination of this Agreement, including termination pursuant to Section 9 or 11 hereof. 

        11.    Effective Date of Agreement; Termination.    

        (a)   The
Lead Managers shall have the right to terminate this Agreement at any time prior to the Closing Date or to terminate the obligations of the Underwriters to purchase
the Additional Shares at any time prior to the Additional Closing Date, as the case may be, if (i) any domestic or international event or act or occurrence has materially disrupted, or in the
opinion of the Lead Managers will in the immediate future materially disrupt, the market for the Company's securities or securities in general; or (ii) trading on The New York Stock Exchange
("the NYSE") or The NASDAQ National Market (the "NASDAQ") shall have been suspended or been made subject to material limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the NYSE or the NASDAQ or by order of the Commission or any other governmental authority having jurisdiction; or (iii) a
banking moratorium has been declared by any state or federal authority or if any material disruption in commercial banking or securities settlement or clearance services shall have occurred; or
(iv) (A) there shall have occurred any outbreak or escalation of hostilities or acts of terrorism involving the United States or there is a declaration of a national emergency or war by
the United States or (B) there shall have been any other calamity or crisis or any change in political, financial or economic conditions if the effect of any such event in (A) or (B), in the
judgment of the Lead Managers, makes it impracticable or inadvisable to proceed with the offering, sale and delivery of the Firm Shares or the Additional Shares, as the case may be, on the terms and
in the manner contemplated by the Prospectus. 

        (b)   Any
notice of termination pursuant to this Section 11 shall be in writing. 

        (c)   If
this Agreement shall be terminated pursuant to any of the provisions hereof (other than pursuant to Section 9(b) hereof), or if the sale of the Shares provided
for herein is not consummated because any condition to the obligations of the Underwriters set forth herein is not satisfied or because of any refusal, inability or failure on the part of the Company
to perform any agreement herein or comply with any provision hereof, the Company will, subject to demand by the Lead Managers, reimburse the Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the Underwriters in connection herewith. Notwithstanding any termination of this 

20

 

Agreement,
the provisions of this Section 11 and of Sections 1, 5, 7, 8 and 12 through 17, inclusive, shall be in full force and effect at all times after the execution hereof. 

        12.    Notices.    All communications hereunder, except as may be otherwise specifically provided herein, shall be in
writing, and: 

        (a)   if
sent to any Underwriter, shall be mailed, delivered, or faxed and confirmed in writing, to such Underwriter c/o Bear, Stearns & Co. Inc.,
383 Madison Avenue, New York, New York 10179, Attention: Stephen Parish, Senior Managing Director, Equity Capital Markets, with a copy to Simpson Thacher & Bartlett at
425 Lexington Avenue, New York, New York 10017, Attention: Gary L. Sellers; 

        (b)   if
sent to the Company, shall be mailed, delivered, or faxed and confirmed in writing to the Company and its counsel at the addresses set forth in the Registration
Statement, Attention: Martin P. Galvan, Chief Financial Officer, with a copy to Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania 19103,
Attention: Stephen A. Jannetta. 

provided, however, that any notice to an Underwriter pursuant to Section 7 shall be delivered or sent by mail or facsimile transmission to such
Underwriter at its address set forth in its acceptance facsimile to the Lead Managers, which address will be supplied to any other party hereto by the Lead Managers upon request. Any such notices and
other communications shall take effect at the time of receipt thereof. 

        13.    Parties.    This Agreement shall inure solely to the benefit of, and shall be binding upon, the Underwriters
and the Company and the controlling persons, directors, officers, employees and agents referred to in Sections 7 and 8 hereof, and their respective successors and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and said controlling persons and their respective successors, officers, directors, heirs
and legal representatives, and it is not for the benefit of any other person, firm or corporation. The term
"successors and assigns" shall not include a purchaser, in its capacity as such, of Shares from any of the Underwriters. 

        14.    Governing Law; Waiver of Jury Trial.    This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS EQUITY HOLDERS
AND CREDITORS) AND EACH OF THE UNDERWRITERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS. 

        15.    Amendments.    No amendment or waiver of any provision of this Agreement, nor any consent or approval to any
departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 

        16.    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile transmission shall constitute valid and
sufficient delivery thereof. 

        17.    Headings.    The headings herein are inserted for convenience of reference only and are not intended to be part
of, or to affect the meaning or interpretation of, this Agreement. 

21

 

        18.    Time is of the Essence.    Time shall be of the essence of this Agreement. As used herein, the term "business
day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 

        19.    Knowledge Qualifier.    The phrases "to the Company's knowledge" and "to the knowledge of the Company or any
Subsidiary," as used in this Agreement, means knowledge based on an investigation that is reasonable in light of the Company's obligations under the Securities Act and sufficient to provide a
reasonable basis for making the statements so qualified. 

[signature
page follows] 

22

        If
the foregoing correctly sets forth your understanding, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement
among us. 

	 	 	 	 	 	 	Very truly yours,
	

 	
 	

 	
 	

 	
 	

VIASYS HEALTHCARE INC.
	

 	
 	

 	
 	

 	
 	

By:	
 	

/s/  RANDY H. THURMAN      

	 	 	 	 	 	 	 	 	Name:	 	Randy H. Thurman
	 	 	 	 	 	 	 	 	Title:	 	Chief Executive Officer and

Chairman of the Board of Directors
	

Accepted as of the date first above written
	

BEAR, STEARNS & CO. INC.
	

By:	
 	

    
	
 	

 	
 	

 	
 	

 
	 	 	Name:	 	Stephen Parish	 	 	 	 	 	 
	 	 	Title:	 	Senior Managing Director	 	 	 	 	 	 
	

J.P. MORGAN SECURITIES INC.
	

By:	
 	

    
	
 	

 	
 	

 	
 	

 
	 	 	Name:	 	Sonia Lee	 	 	 	 	 	 
	 	 	Title:	 	Vice President	 	 	 	 	 	 

On
behalf of themselves and the other

Underwriters named in Schedule I hereto. 

 
 

SCHEDULE I    
    

	Underwriter
	 	Total Number of Firm

Shares to be Purchased
	 	Number of Additional

Shares to be Purchased if

Option is Fully Exercised

	Bear, Stearns & Co. Inc.	 	1,035,000	 	155,250
	J.P. Morgan Securities Inc.	 	1,035,000	 	155,250
	CIBC World Markets Corp.	 	330,000	 	49,500
	Needham & Company, Inc.	 	330,000	 	49,500
	CJS Securities, Inc.	 	135,000	 	20,250
	Wm Smith Securities, Incorporated	 	135,000	 	20,250
	 	Total	 	3,000,000	 	450,000
	 	 	
	 	

 
 

EXHIBIT A
  
    Subsidiaries    
    

	Subsidiary
	 	Jurisdiction
	 	Ownership
	 
	Bird Products Corporation	 	California	 	100	%
	 	Bird Life Design Corporation	 	California	 	100	%
	Corpak LLC	 	Delaware	 	100	%
	E.M.E. (Electro Medical Equipment) Limited	 	England	 	100	%
	 	EME Medical Limited	 	England	 	100	%
	 	Synchromed Limited	 	England	 	100	%
	 	Synchrony Limited	 	England	 	100	%
	EME Medical Inc.	 	Delaware	 	100	%
	 	EME Medical LLC	 	Nevada	 	100	%
	Grason-Stadler, Inc.	 	Massachusetts	 	100	%
	Nicolet Biomedical Japan Inc.	 	Japan	 	100	%
	Nicolet Biomedical Ltd.	 	England	 	100	%
	Nicolet Vascular Inc.	 	Delaware	 	100	%
	Scimed Limited	 	England	 	100	%
	SensorMedics Corporation	 	California	 	100	%
	 	Erich Jaeger Holding Deutschland GmbH	 	Germany	 	100	%
	 	 	VIASYS Healthcare GmbH	 	Germany	 	100	%
	 	 	 	HMS Health Management Systems GmbH	 	Germany	 	100	%
	 	 	 	Erich Jaeger Inc.	 	Delaware	 	100	%
	 	 	 	Sensormedics B.V.	 	Netherlands	 	100	%
	 	 	 	 	Erich Jaeger Benelux B.V.	 	Netherlands	 	100	%
	 	 	Erich Jaeger Ges.m.H.	 	Austria	 	100	%
	 	 	Erich Jaeger U.K. Ltd.	 	England	 	100	%
	 	 	Nicolet EME GmbH	 	Germany	 	100	%
	 	 	SensorMedics GmbH	 	Germany	 	100	%
	Tecomet Inc.	 	Massachusetts	 	100	%
	Thermedics Polymer Products LLC	 	Delaware	 	100	%
	VIASYS Healthcare S.A.R.L.	 	France	 	100	%

  

 
 

ANNEX I    
    
    Form of Opinion of U.S. Counsel to the Company    
    

        1.     The
Company has been duly incorporated, and each of the Company and the Subsidiaries listed on Exhibit A (collectively, the "Material U.S. Subsidiaries") validly
exists or subsists, as applicable, as a corporation or limited liability company in good standing under the laws of its jurisdiction of incorporation or formation, with the corporate or limited
liability company power and authority, as applicable, to own its properties and conduct its business as described in the Registration Statement and the Prospectus. 

        2.     The
Company has an authorized capitalization as set forth in the Registration Statement and the Prospectus under the caption "Capitalization". The Shares to be delivered
on the Closing Date and the Additional Closing Date, if any, have been duly authorized and, when issued and delivered in accordance with the Underwriting Agreement, will be validly issued, fully paid
and non-assessable and will not have been issued in violation of or subject to statutory preemptive rights, preemptive rights under the Company's charter or by-laws or, to such
counsel's knowledge, similar rights that entitle or will entitle any person to acquire any Shares from the Company upon issuance or sale thereof. All of the issued shares of capital stock of each
Material U.S. Subsidiary of the Company are owned directly or indirectly by the Company. The Common Stock, the Firm Shares and the Additional Shares conform to the descriptions thereof contained in
the Registration Statement and the Prospectus. 

        3.     To
such counsel's knowledge, there are no judicial, regulatory or other legal or governmental proceedings pending to which the Company or any of its Subsidiaries is a
party or of which any property of the Company or any of its Material U.S. Subsidiaries is the subject that are required to be described in the Registration Statement or the Prospectus and are not so
described. 

        4.     The
execution, delivery, and performance of the Underwriting Agreement and consummation of the transactions contemplated by Underwriting Agreement, the Registration
Statement and the Prospectus do not and will not (A) conflict with or result in a breach of any of the terms and provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Material U.S.
Subsidiaries pursuant to, any material contract filed with the Securities and Exchange Commission as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 2002 or (B) violate or conflict with any provision of the certificate of incorporation or by-laws of the Company or any of its Material U.S. Subsidiaries, or
(C) to the knowledge of such counsel, any judgment, decree, order, statute, rule or regulation of any court or any judicial, regulatory or other legal or governmental agency or body having
jurisdiction over the Company, any of its Material U.S. Subsidiaries or any of their respective property or assets, except, in the case of clauses (A) and (C) above, for any such
conflict, breach, default or violation that would not, in the aggregate, have a material adverse effect on the Company. 

        5.     No
consent, approval, authorization, order, registration, filing, qualification, license or permit of or with any court or any judicial, regulatory or other legal or
governmental agency or body is required for the execution, delivery and performance of the Underwriting Agreement or consummation of the transactions contemplated by the Underwriting Agreement, the
Registration Statement and the Prospectus, except for (1) such as may be required under applicable state securities or blue sky laws in connection with the purchase and distribution of the
Shares by the Underwriters (as to which such counsel need express no opinion), (2) such as have been made or obtained under the Securities Act and (3) such as are required by the NASD. 

        6.     The
Registration Statement and the Prospectus and any amendments thereof or supplements thereto (other than the financial statements and notes thereto, schedules and
other financial data included or incorporated by reference therein, as to which no opinion need be rendered), when they 

1

 

became
effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Securities Act, the Exchange Act and the Rules and
Regulations. The documents filed under the Exchange Act and incorporated by reference in the Registration Statement and the Prospectus or any amendment thereof or supplement thereto (other than the
financial statements and notes thereto, schedules and other financial data included or incorporated by reference therein, as to which no opinion need be rendered), when they became effective or were
filed with the Commission, as the case may be, complied as to form in all material respects with the Securities Act or the Exchange Act, as applicable, and the Rules and Regulations. 

        7.     The
statements under the captions "Description of Capital Stock" and "Plan of Distribution" in the Prospectus; the statements in Item 15 of Part II of the
Registration Statement; and "Legal Proceedings" in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2002 incorporated by reference in the
Registration Statement, insofar as such statements constitute a summary of the legal matters, documents or proceedings referred to therein, fairly present the information called for with respect to
such legal matters, documents and proceedings. The statements under the captions "Business—Government Regulation—United States" and "—Third Party Reimbursement"
(insofar as such statements relate to the United States) in the Form 10-K incorporated by reference in the Registration Statement constitute an accurate summary of the legal
matters, documents or proceedings referred to therein. 

        8.     The
Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Registration Statement
and the Prospectus, will not be, an "investment company," as such term is defined in the Investment Company Act of 1940, as amended. 

        9.     Based
upon the oral advice of the members of the staff of the Division of Corporation Finance of the Commission, the Registration Statement was declared effective under
the Securities Act as of June 5, 2003, and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been initiated or threatened by the Commission and all filings required by Rule 424(b) under the Securities Act have been
made. 

        10.   The
Company has the corporate power and authority to execute and deliver this Agreement, to deliver the Shares and to perform its obligations hereunder, and all
corporate action required to be taken for the due authorization, execution and delivery of this Agreement, the delivery of the Shares and the consummation of the transactions contemplated by
Underwriting Agreement, the Registration Statement and the Prospectus and as described in the Registration Statement and the Prospectus have been duly and validly taken. The Underwriting Agreement has
been duly executed and delivered by the Company. 

        11.   To
the knowledge of such counsel, no contract or agreement is required to be filed as an exhibit to the Registration Statement that is not so filed. 

        12.   To
the knowledge of such counsel, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the
Company to include any securities of the Company owned or to be owned by such person in the securities registered pursuant to the Registration Statement. 

        In
addition, such opinion shall also contain a statement (a) that such counsel has participated in conferences with officers and representatives of the Company, representatives of
the independent public accountants for the Company and the Underwriters at which the contents of the Registration Statement and the Prospectus were discussed and, although such counsel does not pass
upon and does not assume any responsibilities for the accuracy, completeness or fairness of the statements contained in the Registration Statement or Prospectus (except to the extent set forth in
paragraph 8 above), no 

2

 

facts
have come to the attention of such counsel which would lead such counsel to believe that either the Registration Statement, at the time it became effective (including the information deemed to
be part of the Registration Statement at the time of effectiveness pursuant to Rule 430A(b), if applicable), or any amendment thereof made prior to the Closing Date, as of the date of such
amendment, contained or incorporated by reference any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements
therein not misleading or (b) that the Prospectus (including the documents incorporated by reference therein), as of its date (or any amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement) and as of the Closing Date, contained or contains an untrue statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that, with respect to clauses
(a) and (b) above, such counsel need make no statement with respect to the financial statements and notes thereto, financial schedules and other financial data included or incorporated
by reference therein). 

3

 
 
 

EXHIBIT A TO FORM OF OPINION OF U.S. COUNSEL TO THE COMPANY    
    

	Subsidiary
	 	Jurisdiction
	 	Ownership
	 
	Bird Products Corporation	 	California	 	100	%
	Corpak LLC	 	Delaware	 	100	%
	Grason-Stadler, Inc.	 	Massachusetts	 	100	%
	Nicolet Vascular Inc.	 	Delaware	 	100	%
	SensorMedics Corporation	 	California	 	100	%
	Tecomet Inc.	 	Massachusetts	 	100	%

4

  

 
 

ANNEX II
  
    Form of Opinion of German Counsel to the Company    
    

        1.     Each
of Erich Jaeger Holding Deutschland GmbH, VIASYS Healthcare GmbH, HMS Health Management Systems GmbH, Nicolet EME GmbH and SensorMedics GmbH (collectively, the
"German Subsidiaries") is a private company with limited liability (GmbH) duly incorporated and validly existing under the laws of the Federal Republic
of Germany. Each of the German Subsidiaries has the requisite corporate power and authority to own its properties and assets and to carry on its business as currently being conducted. 

        2.     The
share capital of each of the German Subsidiaries, as reflected in the certified excerpts from the Commercial Registers referred to under paragraphs II.1, II.3,
II.5, II.7 and II.9, constitutes all the respective German Subsidiary share capital, and there are no outstanding commitments to issue any additional shares. The share capital for each of the German
Subsidiaries has been fully paid, is non-assessable and owned directly or indirectly by the Company, free and clear of all Liens, except for the pledge on the shares of certain of the
German Subsidiaries in connection with the Credit Agreement dated May 31, 2002, among the Company, the banks parties thereto and certain other parties. 

        3.     To
the knowledge of such counsel, there are no material pending judicial, regulatory or other legal or governmental proceedings to which any of the German Subsidiaries is
a party or of which any property of any of the German Subsidiaries is the subject. 

        4.     The
execution, delivery, and performance of the Underwriting Agreement and consummation of the transactions contemplated by Underwriting Agreement, the Registration
Statement and the Prospectus do not and will not (A) violate or conflict with any provision of the organizational documents of any German Subsidiary or (B) to the knowledge of such
counsel, violate or conflict with any judgment, decree, order, statute, rule or regulation of any court or any judicial, regulatory or other legal or governmental agency or body in Germany, except, in
the case of clause (B) above, for any such conflict, breach, default or violation that would not, individually or in the aggregate, have a Material Adverse Effect. 

        5.     No
consent, approval, authorization, order, registration, filing, qualification, license or permit with any court or any judicial, regulatory or other legal or
governmental agency or body in Germany is required for the execution, delivery and performance of the Underwriting Agreement or consummation of the transactions contemplated by the Underwriting
Agreement, the Registration Statement and the Prospectus. 

1

 
 

ANNEX III
  
    Form of Lock-Up Agreement    
    

Bear,
Stearns & Co. Inc.

J.P. Morgan Securities Inc.

As Representatives of the several

Underwriters referred to below 

c/o
Bear, Stearns & Co. Inc.

383 Madison Avenue

New York, New York 10179

Attention: Equity Capital Markets 

VIASYS Healthcare Inc. Lock-Up Agreement  

Ladies
and Gentlemen: 

        This
letter agreement (this "Agreement") relates to the proposed public offering (the "Offering") by VIASYS Healthcare Inc., a Delaware corporation (the "Company"), of its common
stock, par value $0.01 per share (the "Stock"). 

        In
order to induce you and the other underwriters for which you act as representatives (the "Underwriters") to underwrite the Offering, the undersigned hereby agrees that, without the
prior written consent of Bear, Stearns & Co. Inc. ("Bear Stearns") and J.P. Morgan Securities Inc. ("JPMorgan"), during the period from the date hereof until ninety
(90) days from the date of the final prospectus for the Offering (the "Lock-Up Period"), the undersigned (a) will not, directly or indirectly, offer, sell, agree to offer or
sell, solicit offers to purchase, grant any call option or purchase any put option with respect to, pledge, borrow or otherwise dispose of any Relevant Security (as defined below), and (b) will
not establish or increase any "put equivalent position" or liquidate or
decrease any "call equivalent position" with respect to any Relevant Security (in each case within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder), or otherwise enter into any swap, derivative or other transaction or arrangement that transfers to another, in whole or in part, any economic consequence of
ownership of a Relevant Security, whether or not such transaction is to be settled by delivery of Relevant Securities, other securities, cash or other consideration. As used herein "Relevant Security"
means the Stock, any other equity security of the Company or any of its subsidiaries and any security convertible into, or exercisable or exchangeable for, any Stock or other such equity security. 

        The
undersigned hereby authorizes the Company during the Lock-Up Period to cause any transfer agent for the Relevant Securities to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to, Relevant Securities for which the undersigned is the record holder and, in the case of Relevant Securities for which the
undersigned is the beneficial but not the record holder, agrees during the Lock-Up Period to cause the record holder to cause the relevant transfer agent to decline to transfer, and to
note stop transfer restrictions on the stock register and other records relating to, such Relevant Securities. The undersigned hereby further agrees that, without the prior written consent of Bear
Stearns and JPMorgan, during the Lock-up Period the undersigned (x) will not file or participate in the filing with the Securities and Exchange Commission of any registration
statement, or circulate or participate in the circulation of any preliminary or final prospectus or other disclosure document with respect to any proposed offering or sale of a Relevant Security and
(y) will not exercise any rights the undersigned may have to require registration with the Securities and Exchange Commission of any proposed offering or sale of a Relevant Security. 

        The
undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement and that this Agreement constitutes the legal, valid and
binding obligation of the undersigned, enforceable in accordance with its terms. Upon request, the undersigned will execute any additional documents necessary in connection with enforcement hereof.
Any obligations of 

 

the
undersigned shall be binding upon the successors and assigns of the undersigned from the date first above written. 

        This
Agreement shall be governed by and construed in accordance with the laws of the State of New York. Delivery of a signed copy of this letter by facsimile transmission shall be
effective as delivery of the original hereof. 

	 	 	Very truly yours,
	

 	
 	

By:	
 	

    

	

 	
 	

Print Name:	
 	

    

2

QuickLinks

Exhibit 10.1

SCHEDULE I

EXHIBIT A Subsidiaries

ANNEX I Form of Opinion of U.S. Counsel to the Company

EXHIBIT A TO FORM OF OPINION OF U.S. COUNSEL TO THE COMPANY

ANNEX II Form of Opinion of German Counsel to the Company

ANNEX III Form of Lock-Up Agreement

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