Document:

Exhibit 10.1

 

CONTRACT WORK AUTHORIZATION (Form 1) RELEASE
NO. 10

 

for

ENGINEERING AND

CONSTRUCTION MANAGEMENT SERVICES

 

Between

 

ACUSPHERE, INC. (“ACUSPHERE/OWNER”)

 

and

 

PARSONS COMMERCIAL TECHNOLOGY GROUP INC. (“PARSONS”)

 

 

All work
authorized by Acusphere and performed by Parsons in accordance with this
Contract Work Authorization shall be governed by the “Terms and Conditions for
Engineering, Procurement and Construction Management Services between Acusphere, Inc.
and Parsons Commercial Technology Group Inc.” (the EPCM), effective date July 6,
2004.

 

 

8/31/05 – RELEASE 10

CONTRACT WORK
AUTHORIZATION RELEASE 10

(Form 1)

FOR

ENGINEERING AND CONSTRUCTION MANAGEMENT SERVICES

 

THIS Contract Work
Authorization for the continuing performance of engineering, construction
management, procurement services and placement of subcontracts (where
applicable) is executed September 6, 2005 and between ACUSPHERE, INC.,
with principal offices at 500 Arsenal Street, Watertown, Massachusetts 02472 (“Acusphere/Owner”)
and PARSONS COMMERCIAL TECHNOLOGY GROUP INC. (“PARSONS”), with principal
offices for this project located at 150 Federal Street, Boston, Massachusetts
02110.

 

 

This Contract Work
Authorization, the scope of which is defined below, is intended to cover
engineering, construction management, procurement services and placement of
subcontracts (where applicable) (authorized to date by Acusphere) to be
provided by Parsons for Acusphere from July 6, 2004 through September 30,
2005. This Contract Work Authorization (Form 1) Release 10 extends Parsons
performance period from August 31, 2005, as previously authorized per
Contract Work Authorization (Form 1) Release 9, to September 30,
2005.

 

IN CONSIDERATION of the
covenants hereinafter set forth, the parties hereto mutually agree as follows:

 

ARTICLE I            SCOPE OF SERVICES

 

1.1          Description
of Services

 

Parsons
shall continue to perform engineering construction management and other
services as required (hereinafter referred to as the “Services”) in connection
with Owner’s aseptic pharmaceutical manufacturing facility located at 890 East
Street, Tewksbury, Massachusetts (the “Facilities”), as previously set forth
and described in Exhibit 1, which is attached to Contract Work
Authorization (Form 1) Release Number 1, which was executed by the parties
November 11, 2004.

 

ARTICLE II           ESTIMATED
COST

 

	
  Previous total
  estimated cost up through and including Contract Work Authorization
  (Form 1) Release Number 9

  	
   

  	
  $

  	
  23,500,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Estimated increase based on Contract Work
  Authorization (Form 1) Release Number 10

  	
   

  	
  $

  	
  1,560,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Revised total
  estimated cost up through this Contract Work Authorization (Form 1)
  Release Number 10

  	
   

  	
  $

  	
  25,060,000.00

  	
   

  

 

It is
anticipated that the revised estimated costs added herein will be incurred
prior to September 30, 2005 and that, in accordance with the terms of the
EPCM and Contract Work Authorization (Form 1) Release Nos. 1, 2, 3, 4, 5,
6, 7, 8, 9 and 10 if Acusphere were to terminate this contract during this term
or elect to not extend this contract beyond September 30, 2005, Acusphere
will be liable for costs which may exceed the amounts stated above.

 

ARTICLE III          TERMS AND CONDITIONS

 

THE PARTIES ACKNOWLEDGE AND AGREE THE TERMS AND
CONDITIONS OF THIS AGREEMENT HAVE BEEN FREELY, FAIRLY AND THOROUGHLY

 

 

NEGOTIATED. FURTHER, THE PARTIES ACKNOWLEDGE AND AGREE
SUCH TERMS AND CONDITIONS, INCLUDING BUT NOT LIMITED TO THOSE RELATING TO
WAIVERS, ALLOCATIONS OF, RELEASES FROM, INDEMNITES AGAINST AND LIMITATIONS OF
LIABILITY, WHICH MAY REQUIRE CONSPICUOUS IDENTIFICATION, HAVE NOT BEEN SO
IDENTIFIED BY MUTUAL AGREEMENT AND THE PARTIES HAVE ACTUAL KNOWLEDGE OF THE
INTENT AND EFFECT OF SUCH TERMS AND CONDITIONS. EACH PARTY ACKNOWLEDGES THAT IN
EXECUTING THIS AGREEMENT IT RELIED SOLELY ON ITS OWN JUDGEMENT, BELIEF, AND
KNOWLEDGE, AND SUCH ADVICE AS IT MAY HAVE RECEIVED FROM ITS OWN COUNSEL,
AND IT HAS NOT BEEN INFLUENCED BY ANY REPRESENTATION OR STATEMENTS MADE BY ANY
OTHER PARTY OR SUCH OTHER PARTY’S COUNSEL. NO PROVISION IN THIS AGREEMENT IS TO
BE INTERPRETED FOR OR AGAINST ANY PARTY BECAUSE THAT PARTY OR ITS COUNSEL
DRAFTED SUCH PROVISION.

 

ARTICLE IV          SCHEDULE

 

	
   

  	
  It is estimated that the work covered by the
  Contract Work Authorization shall commence and be completed as noted below:

  
	
   

  	
   

  
	
   

  	
  Work commenced on July 6, 2004 and shall be
  suspended at the end of the day September 30, 2005 unless a subsequent
  authorization to continue is received by Parsons from Acusphere on or prior
  to September 30, 2005.

  

 

All other terms and conditions for the Contract for
Engineering, Procurement and Construction Management Services, as previously
amended by Contract Work Authorization Numbers 1 through 9 remain unchanged.

 

 

IN WITNESS WHEREOF, the
parties hereto have executed this contract, document as of the date and year first
above written.

 

	
  ACUSPHERE, INC.
  (“ACUSPHERE”)

  	
  PARSONS COMMERCIAL
  TECHNOLOGY GROUP

  INC. (“PARSONS”)

  
	
   

  	
   

  	
   

  
	
  By:    /s/
  John Thero

  	
   

  	
  By:    /s/
  Daniel Mariani

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Sr. Vice President and CFO

  	
  Title Sr. Vice PresidentEXHIBIT 4.1

 

STOCK PURCHASE AGREEMENT

 

Conceptus, Inc.

1021 Howard Avenue

San Carlos, CA  94070

 

Ladies &
Gentlemen:

 

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

 

1.             This Stock Purchase Agreement
(together with Annex I and its exhibits attached hereto, the “Agreement”)
is made effective as of August 9, 2005 between Conceptus, Inc., a
Delaware corporation (the “Company”), and the Investor.

 

2.             The Company has authorized the
issuance and sale of up to 3,186,389 shares (the “Shares”) of common
stock of the Company, $0.003 par value per share (the “Common Stock”),
subject to adjustment by the Company’s Board of Directors, to certain investors
in a private placement (the “Offering”).

 

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

 

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

 

	
   

  
	
  .

  

 

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

 

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

 

 

	
   

  	
   

  
	
   

  	
  “INVESTOR”

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
  Tax ID No.:

  	
   

  
	
   

  	
  Contact name:

  	
   

  
	
   

  	
  Telephone:

  	
   

  
	
   

  	
  Name in which shares
  should be registered

  
	
   

  	
  (if different):

  	
   

  
								

 

 

	
  AGREED AND ACCEPTED:

  
	
  CONCEPTUS, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Mark Sieczkarek

  
	
   

  	
  President and Chief
  Executive Officer

  

 

 

ANNEX
I

 

TERMS
AND CONDITIONS FOR PURCHASE OF SHARES

 

1.             Authorization and Sale of the
Shares.  Upon the terms and subject
to the conditions of this Agreement, the Company has authorized the sale of up
to 3,186,389 Shares.  The Company reserves
the right to increase or decrease this number.

 

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

 

2.1           At
the Closing (as defined in Section 3), the Company will sell to the
Investor, and the Investor will purchase from the Company, upon the terms and
subject to the conditions hereinafter set forth, the number of Shares set forth
on the signature page hereto at the purchase price set forth on such
signature page.

 

2.2           The
Company is entering into this same form of Stock Purchase Agreement with
certain other investors (the “Other Investors”) effective as of the date
hereof (the “Subscription Date”) and expects to complete sales of Shares
to them; provided  that the Company may sell Shares to the Other
Investors who are directors and officers at a price of
$8.10 per share and to the remaining Other Investors at $7.20 per share.  (The Investor and the Other Investors are
hereinafter sometimes collectively referred to as the “Investors,” and
this Agreement and the Stock Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the “Agreements.”)

 

3.             Delivery of the Shares at
Closing.  The completion of the
purchase and sale of the Shares (the “Closing”) shall occur (the “Closing
Date”) on the third business day after the Subscription Date (or upon such
earlier date as the Company and the Investors shall agree), at the offices of
the Company’s counsel.  At the Closing,
the Company shall deliver to the Investor one or more stock certificates
representing the number of Shares set forth on the signature page hereto,
each such certificate to be registered in the name of the Investor or, if so
indicated on the signature page hereto, in the name of a nominee
designated by the Investor.  The Company’s
obligation to issue the Shares to the Investor shall be subject to the
following conditions, any one or more of which may be waived by the Company: (a) receipt
by the Company of a certified or official bank check or wire transfer of funds
in the full amount of the purchase price for the Shares being purchased
hereunder as set forth on the signature page hereto; provided, however,
that any Investor subject to the Investment Company Act of 1940, as amended
(the “Investment Act”), shall not be required to deliver the applicable
purchase price prior to the physical delivery and review by Investor of the
certificates representing the Shares purchased by such Investor, in compliance
with the provisions of the Investment Act; (b) completion of the purchases
and sales under the Agreements with the Other Investors; and (c) the
accuracy of the representations and warranties made by the Investors and the
fulfillment of those undertakings of the Investors to be fulfilled prior to the
Closing.  The Investor’s obligation to
purchase the Shares shall be subject to the following conditions, any one or
more of which may be waived by the Investor (provided that no such waiver shall
be deemed given unless in writing and executed by the Investor): (a) receipt
by the Investor of a counter-signed copy of this Agreement executed by the
Company; (b) receipt by the Investor of one or more stock certificates
representing the number of Shares set forth on the signature page hereto; (c) receipt
by the Investor of an opinion letter, dated as of the Closing Date, from Latham &
Watkins LLP, counsel to the

 

1

 

Company, in form and substance reasonably satisfactory to the Investor;
(d) the accuracy of the representations and warranties made by the Company
and the fulfillment of those undertakings of the Company to be fulfilled prior
to the Closing; (e) on the Closing Date, no legal action, suit or
proceeding shall be pending or threatened which seeks to restrain or prohibit
the transactions contemplated by the Agreements; (f) the Company shall
have delivered to the Investors its certificate, dated the Closing Date, duly
executed by its Chief Executive Officer to the effect set forth in clause (d) above;
(g) the receipt by the Investors of a certificate, dated the Closing Date,
of the Secretary or Assistant Secretary of the Company certifying (i) the
certificate of incorporation and bylaws of the Company as in effect on the
Closing Date, (ii) all resolutions of the board of directors (and
committees thereof) of the Company relating to the Agreements and the
transactions contemplated thereby and (iii) the incumbency of all officers
of the Company executing the Agreements and any other agreement or document
contemplated thereby; and (h) a minimum investment at Closing of not less
than $22,000,000.

 

4.             Representations, Warranties and
Covenants of the Company.  The
Company hereby represents and warrants to, and covenants with, the Investor as
of the Closing Date, as follows:

 

4.1           Organization.  Each of the Company and its Subsidiaries (as
defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities
Act”))  is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization.  Each of the Company and
its Subsidiaries has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is registered
or qualified to do business and in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect upon the financial condition or
business, operations, assets or prospects of the Company and its Subsidiaries,
considered as one enterprise, or a material adverse effect upon the Company’s
ability to perform in any material respect its obligations under the
Agreements, and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.

 

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

 

4.3           Non-Contravention.  The execution and delivery of the Agreements,
the issuance and sale of the Shares to be sold by the Company under the
Agreements, the fulfillment of the terms of the Agreements and the consummation
of the transactions contemplated thereby will not (A) conflict with or
constitute a violation of, or default (with or without the giving of notice or
the passage of time or both) under, (i) any material bond, debenture, note
or other evidence of indebtedness, or under any material lease, indenture,
mortgage, deed of trust, loan agreement, joint

 

2

 

venture or other agreement or instrument to which the Company or any
Subsidiary is a party or by which it or any of its Subsidiaries or their
respective properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, or (B) result in the creation
or imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or any
Subsidiary or an acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any material bond, debenture, note or any
other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of the
property or assets of the Company or any Subsidiary is subject.  No consent, approval, authorization or other
order of, or registration, qualification or filing with, any regulatory body,
administrative agency, self-regulatory organization, stock exchange or market,
or other governmental body in the United States is required for the execution
and delivery of the Agreements and the valid issuance and sale of the Shares to
be sold pursuant to the Agreements, other than such as have been made or
obtained, and except for any securities filings required to be made under
federal or state securities laws.  The
Company and its Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or, except for Delaware General
Corporate Law Section 203, the laws of its state of incorporation that is
or could become applicable to the Investors as a result of the Investors and
the Company fulfilling their obligations or exercising their rights under the
Agreements, including without limitation the Company’s issuance of the Shares
and the Investors’ ownership of the Shares.

 

4.4           Reporting Status.  The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), during the 12 months
preceding the date of this Agreement. 
The following documents complied in all material respects with the SEC’s
requirements as of their respective filing dates, and the information contained
therein as of the date thereof did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
where they were made not misleading, except to the extent that information
contained in any such document has been revised or superseded by a later filed
SEC Document (as defined below):

 

(i)                         The
Company’s Annual Report on Form 10-K for the year ended December 31,
2004, including the exhibits thereto (the “Form 10-K”); and

 

(ii)                      all other
documents, including the exhibits thereto, filed by the Company with the SEC
since December 31, 2004 pursuant to the reporting requirements of the
Exchange Act (together with the Form 10-K, the “SEC Documents”).

 

The SEC Documents
(together with press releases and other documents made publicly available by
the Company), when taken together as a whole, as of the date hereof, do not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated

 

3

 

therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.

 

4.5           Capitalization.  As of  June 30,
2005, the authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock and 3,000,000 shares of preferred stock, par value $.003 per
share, of the Company (the “Preferred Stock”).  As of July 27, 2005, there were
approximately (i)  25,703,311 
shares of Common Stock issued and outstanding, (ii) no shares of
Preferred Stock issued and outstanding, (iii)  7,360,000 shares of Common
Stock reserved for issuance under the Company’s 2001 Equity Incentive Plan,
1993 Stock Plan and 1995 Directors’ Option Plan, including 3,599,216 shares
issuable upon exercise of outstanding stock options issued by the Company to
current or former employees, consultants and directors of the Company and its
Subsidiaries, (iv) an aggregate of 100,779 shares of Common Stock reserved for issuance pursuant to
the Company’s 1995 Employee Stock Purchase Plan, a portion of which are issued
and outstanding, and (v) no other shares or options, warrants or other
rights to acquire shares of capital stock of the Company or securities
convertible into capital stock of the Company.  Since July 27, 2005, the
Company has not issued any shares or options, warrants or other rights to
acquire shares of capital stock of the Company or securities convertible into
capital stock of the Company other than (i) pursuant to option exercises, (ii) the
Shares, as contemplated by the Agreements, (iii) such securities as may be
issued automatically to the new director elected to the Board, as contemplated
by Section 8 hereof and shares of restricted stock granted to directors and
(iv) ordinary course grants of options to non-management employees.  The Company is, directly or
indirectly, the registered and beneficial owner of all of the outstanding
shares of capital stock of each of its Subsidiaries.  All outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and nonassessable, free from any
liens or any other encumbrances created by the Company with respect to the
issuance and delivery thereof and not subject to preemptive rights.  Other than as disclosed in the SEC Documents,
there are no outstanding rights, options, warrants, preemptive rights, rights
of first refusal agreements, commitments or similar rights for the purchase or
acquisition from the Company of any securities of the Company.  The Shares to be sold pursuant to the
Agreements have been duly authorized, and when issued and paid for in
accordance with the terms of the Agreements will be duly and validly issued,
fully paid and nonassessable, free and clear of all pledges, liens, encumbrances
and other restrictions (other than those arising under federal or state
securities laws as a result of the private placement of the Shares to the
Investors).  No preemptive right, co-sale
right, right of first refusal or other similar right exists with respect to the
Shares or the issuance and sale thereof. 
No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale of the
Shares.  Except as set forth in the SEC
Documents, no holder of any of the securities of the Company or any of its
Subsidiaries has any rights (“demand,” “piggyback” or otherwise) to have such
securities registered by reason of the intention to file, filing or
effectiveness of a Registration Statement (as defined in Section 7.1
hereof).

 

4.6           Legal Proceedings.  There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary or any officer or director of the Company or any Subsidiary
in their capacity as such officer or director is or may be a party or of which
the business or property of the Company or any Subsidiary is subject that is
not disclosed in the SEC Documents. 
There is no action, suit, proceeding, inquiry or investigation before or
by any court, public board or body (including, without limitation, the SEC)
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of

 

4

 

its Subsidiaries wherein an unfavorable decision, ruling or finding
could adversely affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under the Agreements.

 

4.7           No Violations.  Neither the Company nor any Subsidiary is in
violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or authority applicable to the
Company or any Subsidiary, which violation, individually or in the aggregate,
would be reasonably likely to have a material adverse effect on the business,
operations, assets or prospects or financial condition of the Company and its
Subsidiaries, considered as one enterprise, or is in default (and there exists
no condition which, with or without the passage of time or giving of notice or
both, would constitute a default) in any material respect in the performance of
any bond, debenture, note or any other evidence of indebtedness in any
indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or by which the properties of the Company or
any Subsidiary are bound, which would be reasonably likely to have a material
adverse effect upon the business, operations, assets or prospects or financial
condition of the Company and its Subsidiaries, considered as one enterprise.  The Company is in compliance with all
provisions of the Sarbanes-Oxley Act and the rules and regulations
promulgated thereunder and with all provisions of the NASD (as defined in Section 4.12
hereof), in each case as to which the Company is required to be in
compliance.  The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including its Subsidiaries,
is made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s most recently filed
periodic report under the Exchange Act, as the case may be, is being
prepared.  The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the last day of the fiscal period (such date, the “Evaluation
Date”) covered by the most recently filed periodic report under the
Exchange Act.  The Company presented in
its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no
significant changes in the Company’s internal controls (as such term is defined
in Item 307(b) of Regulation S-K under the Exchange Act) or, to the
Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls.

 

4.8           Governmental Permits, Etc.  Each of the Company and its Subsidiaries has
all necessary franchises, licenses, certificates and other authorizations from
any foreign, federal, state or local government or governmental agency,
department, or body that are currently necessary for the operation of the
business of the Company and its Subsidiaries as currently conducted, except
where the failure to currently possess could not reasonably be expected to have
a material adverse effect upon the business, operations, assets or prospects or
financial condition of the Company and its Subsidiaries, considered as one
enterprise (the “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.

 

5

 

4.9           Intellectual Property.  Each of the Company and its Subsidiaries owns
or possesses sufficient rights to use all patents, patent rights, trademarks,
copyrights, licenses, inventions, trade secrets, trade names and know-how
(collectively, “Intellectual Property”) that are necessary for the
conduct of its business as now conducted except where the failure to currently
own or possess would not have a material adverse effect on the financial
condition, business, operations, assets or prospects of the Company and its
Subsidiaries considered as one enterprise, free and clear of any liens,
encumbrances, claims, security interests or restrictions, except for such as do
not materially interfere with the conduct of the Company’s business as
presently conducted and as currently proposed to be conducted by the
Company.  Except as set forth in the SEC
Documents, (i) neither the Company nor any of its Subsidiaries has
received any notice of, or has any knowledge of, any infringement of asserted
rights of a third party with respect to any Intellectual Property that,
individually or in the aggregate, would have a material adverse effect on the
financial condition or business, operations, assets or prospects of the Company
and its Subsidiaries considered as one enterprise and (ii) neither the
Company nor any of its Subsidiaries has received any notice of any infringement
rights by a third party with respect to any Intellectual Property that,
individually or in the aggregate, would have a material adverse effect upon the
business, operations, assets or prospects or financial condition of the Company
and its Subsidiaries, considered as one enterprise.

 

4.10         Financial Statements.  The financial statements of the Company and
the related notes thereto included in the SEC Documents present fairly, in
accordance with generally accepted accounting principles, the financial
position of the Company and its Subsidiaries as of the dates indicated, and the
results of its operations and cash flows for the periods therein
specified.  Such financial statements
(including the related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified, except as set forth in the SEC Documents and subject in the
case of unaudited financial statements, to normal year-end audit adjustments.

 

4.11         No Material Adverse Change.  Except as disclosed in the SEC Documents,
since March 31, 2005 there has not been (i) any material adverse
change, or any event, development or circumstance which could reasonably be
expected to result in a material adverse change, in the financial condition,
earnings or prospects of the Company and its Subsidiaries considered as one
enterprise nor has any material adverse event occurred to the Company or its
Subsidiaries, (ii) any material adverse event affecting the Company or any
of its Subsidiaries, (iii) any obligation, direct or contingent, that is
material to the Company and its Subsidiaries considered as one enterprise,
incurred by the Company, except obligations incurred in the ordinary course of
business, (iv) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or any of its Subsidiaries, (v) any
loss or damage (whether or not insured) to the physical property of the Company
or any of its Subsidiaries which has been sustained which has a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its Subsidiaries considered
as one enterprise or (vi) any notice from or by the Securities and
Exchange Commission and/or any other state or federal securities regulatory
agency, the NASD and/or the Nasdaq with respect to (a) any investigation
of the Company’s activities or financial results, (b) the Company’s
compliance with applicable laws, rules or regulations or (c) issues
regarding the continued trading of the Common Stock on the Nasdaq National
Market.  Except as disclosed in the SEC
Documents, neither the Company nor any of its Subsidiaries has (i) sold,
assigned, transferred, abandoned, mortgaged, pledged or subjected to lien any
of its material

 

6

 

properties, tangible or intangible, or rights under any material
contract, permit, license, franchise or other agreement or (ii) waived or
cancelled any indebtedness or other obligations owed to the Company or any such
Subsidiary.

 

4.12         NASDAQ Listing.  The Company’s Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on The
Nasdaq Stock Market, Inc. National Market (the “Nasdaq National Market”),
trading in the Common Stock has not been suspended, 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 Nasdaq National Market, nor to the Company’s knowledge is
the National Association of Securities Dealers, Inc. (“NASD”)
currently contemplating terminating such listing.  The Company and the Common Stock meet the
criteria for continued listing and trading on the Nasdaq National Market.

 

4.13         Listing of the Shares.  The Company shall comply with all
requirements of the National Association of Securities Dealers, Inc. with
respect to the issuance of the Shares and the listing thereof on the Nasdaq
National Market.  In furtherance thereof,
the Company shall use its best efforts to take such actions as may be necessary
and as soon as practicable and in no event later than 20 days after the Closing
Date (if not filed prior to the Closing Date) to file with the Nasdaq National
Market an application or other document required by the Nasdaq National Market
and pay all applicable fees when due for the listing of the Shares with the
Nasdaq National Market and shall provide evidence of such filing to the
Investors.  The Company knows of no
reason why the Shares will not be eligible for listing on the Nasdaq National
Market.  Company stockholder approval for
the transactions contemplated by this Agreement will not be required.

 

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

 

4.15         S-3 Status.  The Company meets the requirements for the
use of Form S-3 for the registration of the resale of the Shares by the
Investors and will use its best efforts to maintain S-3 status with the SEC
during the Registration Period (as defined in Section 7.1(c)).

 

4.16         Insurance.  The Company maintains and will continue to
maintain insurance against loss or damage by fire or other casualty and such
other insurance, including, but not limited to, product liability insurance, in
such amounts and covering such risks as is reasonably adequate consistent with
industry practice for the conduct of its business and the value of its
properties, all of which insurance is in full force and effect.

 

4.17         Tax Matters.  The Company has filed all material federal,
state and local income and franchise and other tax returns required to be filed
and has paid all taxes due in accordance therewith, and no tax deficiency has
been determined adversely to the Company which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined adversely to the
Company, might have) a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or prospects of the Company and its
Subsidiaries considered as one enterprise.

 

7

 

4.18         Investment Company.  The Company is not, and immediately after
receipt of the payments for the Shares will not be, an “investment company”
within the meaning of such term under the Investment Company Act of 1940 and
the rules and regulations of the SEC thereunder.

 

4.19         No Registration.  Assuming the accuracy of the representations
and warranties made by, and compliance with the covenants of, the Investors in Section 5
hereof, no registration of the Shares under the Securities Act is required in
connection with the offer and sale of the Shares by the Company to the
Investors as contemplated by the Agreements. 
Other than the
Investors, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company on the
Registration Statement (as defined in Section 7.1 below).

 

4.20         Internal Accounting Controls.  The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the Company’s
board of directors, to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

 

4.21         Form D; General Solicitation.  The Company agrees to file one or more Forms
D with respect to the Shares on a timely basis as required under Regulation D
under the Securities Act to claim the exemption provided by Rule 506 of
Regulation D and to provide a copy thereof to the Investors and their counsel
promptly after such filing.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Shares by any form of
general solicitation or general advertising. 
The Company has offered the Shares for sale only to the Investors and
certain other “accredited investors” within the meaning of Rule 501 under
the Securities Act.

 

4.22         Certain Future Financings and
Related Actions.

 

(a)           The Company will not sell, offer to
sell, solicit offers to buy or otherwise negotiate in respect of any “security”
(as defined in the Securities Act) that is or could be integrated with the sale
of the Shares in a manner that would require the registration of the Shares
under the Securities Act.

 

(b)           The Company shall not offer, sell,
contract to sell or issue (or engage any person to assist the Company in taking
any such action) any equity securities or securities convertible into,
exchangeable for or otherwise entitling the holder to acquire, any Common Stock
until the later of (x) the 120th day after the Closing Date, and (y)
the 60th day after the Registration Statement is declared effective;
provided, however, that nothing in this Section 4.22(b) shall
prohibit the Company from issuing securities (v) to employees, directors,
officers, advisors or consultants of the Company; (w) upon exercise of
conversion, exchange, purchase or similar rights issued, granted or given by
the Company and outstanding as of the date of this Agreement; (x) pursuant to a
public offering underwritten on a firm commitment basis registered under the
Securities Act; (y) for the

 

8

 

purpose of funding the acquisition of securities or assets of any
entity in a single transaction or a series of related transactions; or (z)
pursuant to a strategic partnership or alliance agreement, loan agreement,
equipment lease or similar commercial agreement (including licensing and
similar arrangements).

 

4.23         Use of Proceeds.  The Company will use the net proceeds from
the sale of the Shares for working capital and other general corporate
purposes.

 

4.24         Disclosure.  All disclosure provided by the Company to the
Investors regarding the Company, its business and the transactions contemplated
hereby furnished by or on the behalf of the Company are true and correct in all
material respects and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.  To the Company’s knowledge,
no event or circumstance has occurred or information exists with respect to the
Company or any of its Subsidiaries or its or their condition (financial or
otherwise), results of operations, business, operations, assets or prospects,
which, under applicable law, rule or regulation, requires current public
disclosure by the Company but which has not been so publicly disclosed.

 

4.25         Acknowledgment Regarding Investors’
Purchase of Securities.  Based upon
the assumption that the transactions contemplated by this Agreement are
consummated in all material respects in conformity with this Agreement, the
Company acknowledges and agrees that each of the Investors is acting solely in
the capacity of an arm’s length purchaser with respect to this Agreement and
the transactions contemplated hereby. 
The Company further acknowledges that no Investor 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 Investor or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby and thereby is merely incidental to the Investors’ purchase of the
Shares.  The Company further represents
to each Investor 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.

 

4.26         Integration.  The Company shall not, and shall use its best
efforts to ensure that none of its affiliates shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Investors or that
would be integrated with the offer or sale of the Shares for purposes of the rules and
regulations of the Nasdaq National Market.

 

4.27         Securities Laws Disclosure;
Publicity.  On the Closing Date, the
Company shall file a Current Report on Form 8-K with the Securities and
Exchange Commission (the “8-K Filing”) describing the terms of the
transactions contemplated by this Agreement and including as exhibits to such
Current Report on Form 8-K this Agreement in the form required by the
Exchange Act.  Thereafter, the Company
shall timely file any filings and notices required by the Securities and
Exchange Commission, the NASD or Nasdaq National Market or applicable law with
respect to the transactions contemplated hereby and provide or make available
copies thereof to the Investors promptly after filing.  The Company shall not publicly disclose the
name of any Investor, or include

 

9

 

the name of any Investor in any press release without the prior written
consent of such Investor; provided, however, that the Investor
acknowledges and agrees that the name of such Investor shall be disclosed in
the Registration Statement.

 

5.             Representations, Warranties and
Covenants of the Investor.

 

5.1           The
Investor represents and warrants to, and covenants with, the Company that: (i) the
Investor is an “accredited investor” as defined in Regulation D under the
Securities Act and the Investor has the knowledge, sophistication and
experience necessary to make, and is qualified to make decisions with respect
to, investments in shares presenting an investment decision like that involved
in the purchase of the Shares, including investments in securities issued by
the Company and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in making
an informed decision to purchase the Shares; (ii) the Investor is acquiring
the number of Shares set forth on the signature page hereto for its own
account for investment only and with no present intention of distributing any
of such Shares in violation of the Securities Act or any arrangement or
understanding with any other persons regarding the distribution of such Shares; (iii) the Investor will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares except in compliance with the Securities Act, applicable
state securities laws and the respective rules and regulations promulgated
thereunder; (iv) the Investor has filled in all requested information on
the signature page hereto for use in preparation of the Registration
Statement and the answers thereto are true and correct as of the date hereof
and will be true and correct as of the Closing Date; (v) the Investor will
notify the Company promptly of any change in any of such information until such
time as the Investor has sold all of its Shares or until the Company is no
longer required to keep the Registration Statement effective; and (vi) the
Investor has, in connection with its decision to purchase the number of Shares
set forth on the signature page hereto, relied only upon the SEC
Documents, other publicly available information and the representations and
warranties of the Company contained herein. 
The Investor understands that its acquisition of the Shares has not been
registered under the Securities Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of the Investor’s
investment intent as expressed herein.

 

5.2           The
Investor acknowledges that the Company has represented that no action has been
or will be taken in any jurisdiction outside the United States by the Company
that would permit an offering of the Shares, or possession or distribution of
offering materials in connection with the issue of the Shares, in any
jurisdiction outside the United States where action for that purpose is
required.  If the Investor is located or
domiciled outside the United States it agrees to comply with all applicable
laws and regulations in each foreign jurisdiction in which it purchases,
offers, sells or delivers Shares or has in its possession or distributes any
offering material, in all cases at its own expense.

 

5.3           The
Investor hereby covenants with the Company not to make any sale of the Shares
without complying with the provisions of this Agreement, including Section 7.2
hereof, provided that the Company complies with its obligations under Section 7.1,
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, if applicable, and the Investor acknowledges
that the certificates evidencing the Shares will be imprinted with a

 

10

 

legend that prohibits their transfer except in accordance therewith.  The Investor acknowledges that there may
occasionally be times when the Company, based on the advice of its counsel,
determines that, subject to the limitations of Section 7.2, it must
suspend the use of the Prospectus (as defined in Exhibit A) forming
a part of the Registration Statement until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the SEC or until the Company has amended or supplemented such Prospectus.

 

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

 

5.5           Investor
will not, prior to the effectiveness of the Registration Statement, sell, offer
to sell, solicit offers to buy, dispose of, loan, pledge or grant any right
with respect to (collectively, a “Disposition”) the Shares in violation
of the Securities Act, nor will Investor engage in any hedging or other
transaction which is designed to or could reasonably be expected to lead to or
result in a Disposition of Shares by the Investor or any other person or entity
in violation of the Securities Act.

 

5.6           Between
the time such Investor learned about the Offering and the public announcement
of the Offering, such Investor has not taken, and prior to the public
announcement of the Offering will not take, any action that has caused or will
cause such Investor to have, directly or indirectly, sold or agreed to sell any
shares of Common Stock, effected any short sale, whether or not against the
box, established any “put equivalent position” (as defined in Rule 16a-1(h) under
the Securities Exchange Act of 1934, as amended) with respect to the Common
Stock, granted any other right (including, without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that
includes, relates to or derived any significant part of its value from the
Common Stock, whether or not, directly or indirectly, in order to hedge its position
in the Shares, nor has such Investor, directly or indirectly, caused any person
to engaged in any short sales or similar transactions with respect to the
Common Stock.

 

5.7           The Investor further represents that
no broker, investment banker, financial advisor or other person is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission
in connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of the Investor.

 

6.             Survival of Representations,
Warranties and Agreements. 
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Investor herein shall survive for a period of two (2) years
following the Closing Date.

 

11

 

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

 

7.1           Registration
Procedures and Expenses.  The Company
shall:

 

(a)         subject
to receipt of necessary information from the Investors, use its best efforts to
prepare and file with the SEC, within 30 days after the Closing Date, a
registration statement (the “Registration Statement”) on Form S-3
to enable the resale of the Registrable Shares (as defined below) by the
Investors on a delayed or continuous basis under Rule 415 of the
Securities Act.  “Registrable Shares”
means (a) all shares of Common Stock purchased in the Offering, and (b) any
shares of capital stock issued or issuable, from time to time, upon any
reclassification, share combination, share subdivision, stock split, share
dividend, merger, consolidation or similar transaction or event or otherwise as
a distribution on, in exchange for or with respect to any of the foregoing, in
each case held at the relevant time by an Investor;

 

(b)         use
commercially reasonable best efforts, subject to receipt of necessary
information from the Investor, to cause the Registration Statement to become
effective within 120 days after the Closing Date;

 

(c)           use its best
efforts to prepare and file with the SEC such amendments and supplements to the
Registration Statement and the Prospectus used in connection therewith and take
all such other actions as may be necessary to keep the Registration Statement
current and effective for a period (the “Registration Period”) not
exceeding, with respect to each Investor’s Registrable Shares, the earlier of (i) the
second anniversary of the Closing Date, (ii) the date on which the
Investor may sell all Shares then held by the Investor without restriction by
the volume limitations of Rule 144(e) of the Securities Act, and (iii) such
time as all Registrable Shares held by such Investor have been sold (A) pursuant
to a registration statement, (B) to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, and/or (C) in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act under Section 4(1) thereof so that all transfer
restrictions and restrictive legends with respect thereto, if any, are removed
upon the consummation of such sale. Notwithstanding anything herein to the contrary, Section 7.1(c)(i) shall
not apply with respect to a Registration Statement effected hereunder for so
long as the Company has a contractual obligation  to a non-Investor
security holder to keep effective a registration
statement  with respect to the resale of such security holder’s
shares.

 

(d)         promptly
furnish to the Investor with respect to the Shares registered under the
Registration Statement such number of copies of the Registration Statement,
Prospectuses and Preliminary Prospectuses in conformity with the requirements
of the Securities Act and such other documents as the Investor may reasonably
request, in order to facilitate the public sale or other disposition of all or
any of the Shares by the Investor;

 

(e)         promptly
take such action as may be necessary to qualify, or obtain, an exemption for
the Registrable Shares under such of the state securities laws of United States
jurisdictions as shall be necessary to qualify, or obtain an exemption for, the
sale of the Registrable Shares in states specified in writing by the
Investor;  provided, however, that the
Company shall not be required to qualify to do business or consent to service
of process in any jurisdiction in which it is not now so qualified or has not
so consented;

 

12

 

(f)          bear
all expenses in connection with the procedures in paragraph (a) through (e) of
this Section 7.1 and the registration of the Shares pursuant to the
Registration Statement, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing
fees and expenses (including filings made with the NASD); (ii) fees and
expenses of compliance with federal securities and state “blue sky” or
securities laws; (iii) expenses of printing (including printing
certificates for the Registrable Shares and Prospectuses), messenger and
delivery services and telephone; (iv) all application and filing fees in
connection with listing the Registrable Shares on a national securities
exchange or automated quotation system pursuant to the requirements hereof; and
(v) all fees and disbursements of counsel of the Company and independent
certified public accountants of the Company (including the expenses of any
special audit and “cold comfort” letters required by or incident to such
performance); provided, however, that each Investor shall be
responsible for paying the underwriting commissions or brokerage fees, and
taxes of any kind (including, without limitation, transfer taxes) applicable to
any disposition, sale or transfer of such Investor’s Registrable Shares.  The Company shall, in any event, bear its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, rating agency fees and the fees and expenses of any
person, including special experts, retained by the Company;

 

(g)         advise
the Investors, within two business days by e-mail, fax or other type of
communication, and, if requested by such person, confirm such advice in
writing: (i) after it shall receive notice or obtain knowledge of the issuance
of any stop order by the SEC delaying or suspending the effectiveness of the
Registration Statement or of the initiation or threat of any proceeding for
that purpose, or any other order issued by any state securities commission or
other regulatory authority suspending the qualification or exemption from
qualification of such Registrable Shares under state securities or “blue sky”
laws; and it will promptly use its best efforts to prevent the issuance of any
stop order or other order or to obtain its withdrawal at the earliest possible
moment if such stop order or other order should be issued; (ii) when the
Prospectus or any Prospectus Supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment thereto, when the same has become effective; and (iii) after the
Company shall receive notice or obtain knowledge of the existence of any fact
or the happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading;

 

(h)         otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC;

 

(i)          use its best efforts to maintain the
quotation of the Registrable Shares on the Nasdaq National Market; and

 

(j)          use commercially reasonable best
efforts to take all other steps necessary to effect the registration of the
Registrable Shares contemplated hereby and to enable the Investors to sell the
Shares under Rule 144.

 

13

 

(k)         The Company further agrees that, in the
event that the Registration Statement has not (i) been filed with the SEC
within 30 days after the Closing Date or (ii) been declared effective by
the SEC within 120 days after the Closing Date (each such event referred to in
clauses (i) and (ii), a “Registration Default”), for all or part of
each 30-day period (a “Penalty Period”) during which the Registration
Default remains uncured, the Company shall issue or pay, as applicable, to each
Investor an amount in cash, as liquidated damages and not as a penalty, equal
to 1% of the aggregate purchase price paid by the Investor for its Shares, for
each Penalty Period, on a pro-rated basis for the number of days during which
there remains a Registration Default. 
The Company shall deliver said cash payment to the Investor by the fifth
business day after the end of each such Penalty Period.  Notwithstanding anything to the contrary in Section 7.3
or any other provision of this Agreement, provided that the Company complies
with its obligations under Section 7.1 and the penultimate sentence under Section 7.2(c) hereof,
the payment of cash as provided in this Section 7.1(k) shall be the
Investor’s sole and exclusive remedy with respect to any Registration Default; provided,
however, that (i) the Investor shall be entitled to seek specific
performance and injunctive or other equitable relief and (ii) if the
foregoing remedy is deemed unenforceable by a court of competent jurisdiction
then the Investor shall have all other remedies available at law or in
equity.  The Company’s obligations to pay
any liquidated damages or other amounts owing under the Agreements is a
continuing obligation of the Company and shall not terminate until all
unpaid  liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security
pursuant to which such liquidated damages or other amounts are due and payable
shall have been canceled.  In addition to
and without limiting any other remedies (including, without limitation, at law
or at equity) available to the Investor, the Investor shall be entitled to
specific performance in the event that the Company fails to comply with its
obligations under this Section 7.1.

 

7.2           Transfer
of Shares; Suspension.

 

(a)         The
Investor agrees that it will not effect any Disposition of the Shares or its
right to purchase the Shares that would constitute a sale within the meaning of
the Securities Act except as contemplated in the Registration Statement
referred to in Section 7.1 and as described below or otherwise in
accordance with the Securities Act, and that it will promptly notify the
Company of any changes in the information set forth in the Registration
Statement regarding the Investor or its plan of distribution.  In no event, and notwithstanding anything
contained herein to the contrary, will any Company securities owned, held,
purchased or otherwise acquired by the Investor (other than the Shares
purchased hereunder) be subject to restrictions on transfer pursuant to the terms
of this Agreement.

 

(b)         Except
in the event that paragraph (c) below applies, the Company shall, at all
times during the Registration Period, promptly (i) prepare and file from
time to time with the SEC a post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Shares being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in

 

14

 

light of the circumstances under which they were made, not misleading; (ii) provide
the Investor copies of any documents filed pursuant to Section 7.2(b)(i);
and (iii) inform each Investor that the Company has complied with its
obligations in Section 7.2(b)(i) (or that, if the Company has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Company will notify the Investor to that effect, will
use its best efforts to secure the effectiveness of such post-effective
amendment as promptly as possible and will promptly notify the Investor
pursuant to Section 7.2(b)(i) hereof when the amendment has become
effective).

 

(c)         Subject
to paragraph (d) below, in the event (i) of any request by the SEC or
any other federal or state governmental authority during the period of effectiveness
of the Registration Statement for amendments or supplements to a Registration
Statement or related Prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; or (iv) of any event or circumstance which necessitates
the making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; then
the Company shall deliver a certificate in writing to the Investor (the “Suspension
Notice”) to the effect of the foregoing and, upon receipt of such
Suspension Notice, the Investor will refrain from selling any Registrable
Shares pursuant to the Registration Statement (a “Suspension”) until the
Investor’s receipt of copies of a supplemented or amended Prospectus prepared
and filed by the Company, or until it is advised in writing by the Company that
the current Prospectus may be used, and has received copies of any additional
or supplemental filings that are incorporated or deemed incorporated by
reference in any such Prospectus.  In the
event of any Suspension, the Company will use its best efforts to cause the use
of the Prospectus so suspended to be resumed as soon as reasonably practicable
after the delivery of a Suspension Notice to the Investor.  In addition to and without limiting any other
remedies (including, without limitation, at law or at equity) available to the
Investor, the Investor shall be entitled to specific performance in the event
that the Company fails to comply with the provisions of this Section 7.2(c).

 

(d)         Notwithstanding
the foregoing paragraphs of this Section 7.2, the Investor shall not be
prohibited from selling Registrable Shares under the Registration Statement as
a result of Suspensions on more than two occasions (for two separate suspension
events) of not more than 30 days each in any twelve month period.

 

(e)         Provided
that a Suspension is not then in effect, the Investor may sell Registrable
Shares under the Registration Statement, provided that it arranges for
delivery of a current Prospectus to the transferee of such Shares.  Upon receipt of a request therefor, the
Company has agreed to provide, at its own expense, an adequate number of
current Prospectuses (including

 

15

 

documents incorporated by reference therein) to the Investor and to
supply copies to any other parties requiring such Prospectuses.

 

(f)          In
the event of a sale of Registrable Shares by the Investor under the
Registration Statement, the Investor must also deliver to the Company’s
transfer agent, with a copy to the Company, a Certificate of Subsequent Sale
substantially in the form attached hereto as Exhibit A, so that the
Registrable Shares may be properly transferred.

 

7.3           Indemnification.  For the purpose of this Section 7.3:

 

(i)            the term “Selling Stockholder”
shall mean the Investor;

 

(ii)           the term “Registration Statement”
shall include any final Prospectus, exhibit, supplement or amendment included
in or relating to the Registration Statement referred to in Section 7.1;
and

 

(iii)          the term “untrue statement” shall
include any untrue statement or alleged untrue statement, or any omission or
alleged omission to state in the Registration Statement or Prospectus 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.

 

(a)         The
Company agrees to indemnify and hold harmless each Selling Stockholder from and
against any losses, claims, damages, liabilities or expenses to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of, or are based upon (i) any
untrue statement and/or omission of a material fact contained in the
Registration Statement or Prospectus, (ii) any failure by the Company to
fulfill any undertaking included in the Registration Statement, or (iii) any
breach of any representation, warranty or covenant made by the Company in this
Agreement, and the Company will promptly reimburse such Selling Stockholder for
any reasonable legal or other expenses incurred in investigating, defending or
preparing to defend, settling, compromising or paying any such action,
proceeding or claim, provided, however, that the Company shall
not be liable in any such case to the extent that such loss, claim, damage,
liability or expense arises solely out of, or is based solely upon, an untrue
statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder specifically for use in preparation of the Registration Statement
or the failure of such Selling Stockholder to comply with its covenants and
agreements contained in Section 5.3 respecting sale of the Shares or any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Investor at least three business days
prior to the pertinent sale or sales by the Investor.  Notwithstanding the foregoing, the Company
shall not be liable to any Selling Stockholder for any consequential damages
solely with respect to losses, claims, damages, liabilities or expenses to
which such Selling Stockholder may become subject arising out of, or based
upon, any breach of any representation, warranty or covenant made by the
Company in this Agreement.

 

(b)         The
Investor agrees (severally and not jointly with any other Investor) to
indemnify and hold harmless the Company (and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, each
officer of the Company who signs the

 

16

 

Registration Statement and each director of the Company) from and
against any losses, claims, damages, liabilities or expenses to which the
Company (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise), insofar as such losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) arise solely out of, or are based solely upon, (i) any failure to
comply with the covenants and agreements contained in Section 5.3 hereof
respecting sale of the Shares, or (ii) any untrue statement of a material
fact contained in the Registration Statement if such untrue statement was made
in reliance upon and in conformity with written information furnished by the
Investor specifically for use in preparation of the Registration Statement (provided,
however, that no Investor shall be liable in any such case for any
untrue statement in any Registration Statement or Prospectus if such statement
has been corrected in writing by such Investor and delivered to the Company at
least three business days prior to the pertinent sale or sales by the
Investor), and the Investor will reimburse the Company (or such officer,
director or controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing to
defend, settling, compromising or paying any such action, proceeding or
claim.  Notwithstanding the foregoing,
(x) the Investor’s aggregate liability pursuant to this subsection (b) and
subsection (d) shall be limited to the net amount received by the
Investor from the sale of the Shares and (y) the Investor shall not be liable
to the Company for any consequential damages solely with respect to losses,
claims, damages, liabilities or expenses to which the Company (or any officer,
director or controlling person as set forth above) may become subject (under
the Securities Act or otherwise), arising out of, or based upon, any failure to
comply with the covenants and agreements contained in Section 5.3 hereof
respecting sale of the Shares.

 

(c)         Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 7.3, such indemnified person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party’s ability to
defend such action) or from any liability otherwise than under this Section 7.3.  Subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person, the
indemnifying person shall be entitled to participate therein, and, to the
extent that it shall elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party,
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified person. 
After notice from the indemnifying person to such indemnified person of
its election to assume the defense thereof, such indemnifying person shall not
be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof, provided
further, however, that if there exists or shall exist a conflict
of interest that would make it inappropriate, in the opinion of counsel to the
indemnified person, for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense
of such indemnifying person; provided, however, that no
indemnifying person shall be responsible for the fees and expenses of more than
one separate counsel (together with appropriate local counsel) for all
indemnified parties.  In no event shall
any indemnifying person be liable in respect of any amounts paid in settlement
of any action unless the indemnifying person shall have approved the terms of

 

17

 

such settlement; provided that such consent shall not be
unreasonably withheld.  No indemnifying
person shall, without the prior written consent of the indemnified person,
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified person is or could have been a party and indemnification
could have been sought hereunder by such indemnified person, unless such
settlement includes an unconditional release of such indemnified person from
all liability on claims that are the subject matter of such proceeding.

 

(d)         If
the indemnification provided for in this Section 7.3 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
the Investor on the other in connection with the statements or omissions or
other matters which resulted in such losses, claims, damages, liabilities or
expenses (or actions in respect thereof), as well as any other relevant
equitable considerations.  The relative
fault shall be determined by reference to, among other things, in the case of
an untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or an Investor on the other and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement.  The
Company and the Investors agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Investors were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d).  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.  Notwithstanding the provisions
of this subsection (d), no Investor shall be required to contribute any
amount in excess of the net amount received by the Investor from the sale of
the Shares.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.  The Investors’ obligations in this subsection to
contribute are several in proportion to their sales of Shares to which such
loss relates and not joint.

 

(e)         The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of this Section 7.3, and are fully informed regarding said provisions.

 

7.4           Rule 144.  For a period of two years following the date
hereof, the Company agrees with each holder of Registrable Shares to:

 

(a)           comply with the requirements of Rule 144(c) under
the Securities Act with respect to current public information about the Company;

 

18

 

(b)           use its best efforts to file with the
SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act (at any time it is subject to
such reporting requirements); and

 

(c)           furnish to any holder of Registrable
Shares upon request (i) a written statement by the Company as to its
compliance with the requirements of said Rule 144(c) and the
reporting requirements of the Securities Act and the Exchange Act (at any time
it is subject to such reporting requirements), (ii) a copy of the most
recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the SEC allowing it to
sell any such securities without registration.

 

7.5           Termination of Conditions and
Obligations.  The conditions
precedent imposed by Section 5 or this Section 7 upon Dispositions of
the Registrable Shares by the Investor shall cease and terminate as to any
particular number of the Registrable Shares and the restrictive legend shall be
removed when such Registrable Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Registrable Shares or at such time as an opinion of counsel
reasonably satisfactory to the Company shall have been rendered to the effect
that such conditions are not necessary in order to comply with the Securities
Act (provided that such opinion shall not be required if the Company
shall be furnished with written documentation reasonably satisfactory to it
that such Registrable Shares are being transferred in a customary transaction
exempt from registration under Rule 144 under the Securities Act).

 

8.             Board
of Directors.  VantagePoint Venture Partners IV (Q),
L.P., VantagePoint Venture Partners IV, L.P. and VantagePoint Venture Partners
IV Principals Fund, L.P. (collectively, “VantagePoint”) are each
Investors party to this Agreement.  Upon VantagePoint’s acquisition of the Shares
under this Agreement, and so long as VantagePoint continues to collectively
hold at least 1,500,000 Shares (as adjusted for stock splits, stock
dividends, recapitalizations and the like),
the Company agrees to use its reasonable best efforts to have a nominee of
VantagePoint, reasonably acceptable to the Nominating and Corporate Governance
Committee of the Company’s Board of Directors (the “Board”) and the full
Board, elected to the Board.  Provided
however if at any time while such VantagePoint nominee is serving on the Board,
VantagePoint holds less than 1,500,000 Shares (as adjusted for stock splits,
stock dividends, recapitalizations and the like), VantagePoint agrees to have its nominee resign from the Board, upon
request by the Board. If at any time after VantagePoint’s acquisition of the
Shares, a representative of VantagePoint is not a member of the Board, then, so
long as VantagePoint continues to collectively hold at least 1,500,000 Shares (as
adjusted for stock splits, stock dividends, recapitalizations and the like), VantagePoint shall be entitled to consult
with and advise management of the Company on significant business issues,
including without limitation management’s proposed quarterly and annual
operating plans.  If at any time after
VantagePoint’s acquisition of the Shares, a representative of VantagePoint is
not a member of the Board, then, so long as VantagePoint continues to
collectively hold at least 1,500,000 Shares (as adjusted for stock
splits, stock dividends, recapitalizations and the like), and upon request by VantagePoint, management of the Company shall
meet with authorized representatives of VantagePoint, at a mutually agreeable
time and place, within thirty days after the end of each fiscal

 

19

 

quarter of the Company for such consultation
and advice and to review the Company’s progress in achieving such plans.

 

9.             Notices. 
Except as specifically permitted by Section 7.1(g), all notices,
requests, consents and other communications hereunder shall be in writing,
shall be mailed (A) if within domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (B) if delivered from
outside the United States, by International Federal Express or facsimile, and
shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if
delivered by nationally recognized overnight carrier, one business day after so
mailed, (iii) if delivered by International Federal Express, two business
days after so mailed, and (iv) if delivered by facsimile, upon electric
confirmation of receipt and shall be delivered as addressed as follows:

 

(a)           if to the
Company, to:

 

Conceptus, Inc.

1021 Howard Ave.

San Carlos, CA  94070

Attn:  President and Chief Executive
Officer

Phone:  (650) 628-4700

Telecopy:  (650) 628-4748

 

with a
copy to:

 

Latham & Watkins
LLP

135 Commonwealth Drive

Menlo Park, CA  94025

Attn:  Ora T. Fisher, Esq.

Phone:  (650) 328-4600

Telecopy:  (650) 463-2600

 

(b)           if to the Investor, at its address on
the signature page hereto, or at such other address or addresses as may
have been furnished to the Company in writing.

 

10.           Changes.  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 Investor 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.

 

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

 

12.           Severability.  In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining

 

20

 

provisions contained herein shall not in any way be affected or
impaired thereby, and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement..

 

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

 

14.           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements relating to such subject
matter are expressly cancelled.

 

15.           Finders Fees.  Neither the Company nor the Investor nor any
affiliate thereof has incurred any obligation which will result in the
obligation of the other party to pay any finder’s fee or commission 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.

 

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

 

17.           Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
Investors, including without limitation and without the need for an express
assignment, affiliates of the Investors. 
With respect to transfers that are not made pursuant to the Registration
Statement, the rights and obligations of an Investor under this Agreement shall
be automatically assigned by such Investor to any transferee of all or any
portion of such Investor’s Registrable Shares who is a Permitted Transferee (as
defined below); provided, however, that within two business days prior to the transfer,
(i) the Company is provided notice of the transfer including the name and
address of the transferee and the number of Registrable Shares transferred; and
(ii) that such transferee agrees in writing to be bound by the terms of
this Agreement.  (For purposes of this
Agreement, a “Permitted Transferee” shall mean any Person who (a) is
an “accredited investor,” as that term is defined in Rule 501(a) of
Regulation D under the Securities Act and (b) is a transferee of at least
20,000 Registrable Shares as permitted under the securities laws of the United
States).  Upon any transfer permitted by
this Section 17, the Company shall be obligated to such transferee to
perform all of its covenants under this Agreement as if such transferee were an
Investor.

 

18.           Expenses.  Each of the Company and the Investors shall
bear its own expenses in connection with the preparation and negotiation of the
Agreement. provided that, notwithstanding the
foregoing, the Company agrees to pay the reasonable fees and expenses of one
counsel to certain of the Investors, in connection with the negotiation,
documentation and consummation of this Agreement and the transactions
contemplated hereby, not to exceed $5,000 without the prior written consent of
the Company.

 

21

 

Exhibit A

 

CERTIFICATE OF
SUBSEQUENT SALE

 

Mellon Investor Services
LLC

235 Montgomery Street, 23rd Floor

San Francisco, CA  94104

Attention:  Cecil Bobey

 

RE:                              Sale
of Shares of Common Stock of Conceptus, Inc. (the “Company”)
pursuant to the Company’s Prospectus dated ____________ (the “Prospectus”)

 

Ladies and Gentlemen:

 

The undersigned hereby
certifies, in connection with the sale of shares of Common Stock of the Company
included in the table of Selling Stockholders in the Prospectus, that the
undersigned has sold the shares pursuant to the Prospectus and in a manner
described under the caption “Plan of Distribution” in the Prospectus and that
such sale complies with all applicable securities laws, including, without limitation,
the Prospectus delivery requirements of the Securities Act of 1933, as amended.

 

	
  Selling Stockholder
  (the beneficial owner):

  	
   

  
	
   

  
	
  Record Holder (e.g., if
  held in name of nominee):

  	
   

  
	
   

  
	
  Restricted Stock
  Certificate No.(s):

  	
   

  
	
   

  
	
  Number of Shares Sold:

  	
   

  
	
   

  
	
  Date of Sale:

  	
   

  
						

 

In the event that you
receive a stock certificate(s) representing more shares of Common Stock than
have been sold by the undersigned, then you should return to the undersigned a
newly issued certificate for such excess shares in the name of the Record
Holder and BEARING A RESTRICTIVE LEGEND.  Further, you should place a stop transfer on
your records with regard to such certificate.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
  cc:

  	
  President and Chief
  Executive Office

  	
   

  
	
   

  	
  Conceptus, Inc.

  	
   

  
	
   

  	
  1021 Howard Avenue

  	
   

  
	
   

  	
  San Carlos, CA  94070

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