Exhibit 99.3
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made as
of the 14th day of December, 2001, by and between Inverness Medical Innovations,
Inc. (the "Company"), a corporation organized under the laws of the state of
Delaware, with its principal offices at 00 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxxxxx 00000, and the investors whose names and addresses are set forth
on the signature pages hereof (the "Investors").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Investors agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of (i) its
Subordinated Promissory Notes, each in the form of EXHIBIT A attached hereto, in
an aggregate original principal amount of up to $20,000,000 (the "Notes") and
(ii) Warrants, each in the form of EXHIBIT B attached hereto, representing
original rights to purchase up to 55,189 shares (subject to adjustment as
provided in such Warrants) of the Company's Common Stock (as defined in Section
4.2) in the aggregate (the "Warrants"; together with the Notes, the
"Securities").
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SECURITIES. At the Closing (as
defined in Section 3), the Company will sell to each Investor a Note in an
original principal amount, and a Warrant representing the original right to
purchase a number of shares of Common Stock, each as set forth on the signature
page to this Agreement executed by such Investor and accepted by the Company,
and each such Investor will purchase such Securities from the Company, upon the
terms and conditions hereinafter set forth, at the aggregate purchase price set
forth on such Investor's signature page. The obligations of each Investor under
this Agreement, and all representations, warranties and covenants made by such
Investor herein, shall be several and not joint.
SECTION 3. CLOSING; DELIVERY OF SECURITIES.
3.1 CLOSING; ESCROW. The closing of the purchase and sale of the
Securities (the "Closing") shall occur simultaneously with the closing of the
Acquisition (as defined in Section 4.12) (the "Closing Date"). Prior to the
Closing Date, each Investor shall deliver to Xxxxx, Xxxx & Xxxxx LLP, counsel to
the Company (the "Escrow Agent"), a signature page to this Agreement, executed
by such Investor, and the full purchase price for the Securities such Investor
is purchasing. The Company shall cause the Escrow Agent to hold each Investor's
purchase price in escrow pending the closing of the Acquisition, whereupon such
purchase price shall be delivered to the Company. Each Investor acknowledges and
agrees that the Company will instruct the Escrow Agent to convert, and that the
Escrow Agent will convert, the funds held in escrow into British Pounds Sterling
prior to the Closing Date. In the event that the closing of the Acquisition
shall not have occurred on or before December 31, 2001 (the "Escrow Termination
Date"), the Company shall arrange for the conversion of any escrow funds held in
British Pounds Sterling into U.S. Dollars and cause the Escrow Agent to return
to each Investor the amount held by the Escrow Agent which is attributable to
such Investor's payment of such purchase price. If
such Investor's purchase price is so required to be returned to such Investor,
such Investor shall be entitled to payment of interest thereon by the Company
calculated at 12% per annum, compounded daily and calculated on the basis of a
year of 365 days, for each day from and including the date on which such
Investor so delivers the purchase price into escrow (either by wire transfer of
immediately available funds into, or by delivery of a check for funds that have
cleared and are fully available in, the relevant escrow account) to but
excluding the date on which such purchase price is so returned to such Investor.
Each Investor acknowledges and agrees that the Company shall be responsible for
returning the full amount of such Investor's purchase price (together with such
interest thereon) and shall be solely responsible for any diminution in value
resulting from the currency conversion of the escrow funds and for the payment
of any such interest. Each Investor further acknowledges and agrees that the
Escrow Agent shall have no liability for any such conversion effected in
accordance with the instructions of the Company or otherwise in connection with
the escrow arrangements. The Company may from time to time, in its sole
discretion, extend the Escrow Termination Date to a date not later than January
31, 2002.
3.2 DELIVERY OF THE SECURITIES AT THE CLOSING. At the Closing, the
Company will issue to each Investor a Note and a Warrant, each registered in the
name of such Investor, or in such nominee name(s) as designated by such Investor
in writing, representing the Securities being purchased by such Investor. The
name(s) in which the Securities are to be registered are set forth in the
Securities Questionnaire attached hereto as APPENDIX I. The Company's obligation
to complete the purchase and sale of the Securities being purchased hereunder
and deliver such Securities to the Investors at the Closing 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 same-day funds in the full amount of the purchase
price for the Securities being purchased at the Closing; and (b) the accuracy in
all material respects of the representations and warranties made by the
Investors and the fulfillment of those undertakings of the Investors to be
fulfilled prior to or at the Closing. The obligation of the Investors to accept
delivery of and pay for such Securities at the Closing shall be subject to the
accuracy in all material respects of the representations and warranties made by
the Company herein as of the Closing Date and the fulfillment of those
undertakings of the Company to be fulfilled prior to or at the Closing.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
hereby represents and warrants to, and covenants with, the Investors as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; and the Company is in good standing in each other jurisdiction in
which qualification is required, except where the failure to be so qualified
will not have a Material Adverse Effect, as defined in Section 4.4.
4.2 AUTHORIZED CAPITAL STOCK. The authorized capital stock of the
Company consists of 50,000,000 shares of common stock, $.001 par value per share
("Common Stock"), and 5,000,000 shares of preferred stock, $.001 par value per
share ("Preferred Stock"), not more than 2,666,667 of which will have been
designated as Series A Convertible Preferred Stock ("Series A Preferred Stock")
on the Closing Date. The rights and privileges of the Series A Preferred Stock
on the Closing Date are described in the Certificate of Designation, Preferences
and Rights attached hereto as EXHIBIT C (the "Certificate of Designation"). The
number of shares of
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Preferred Stock, Common Stock and all subscriptions, warrants, options,
convertible securities, and other rights (contingent or other) to purchase or
otherwise acquire equity securities of the Company issued and outstanding on the
Closing Date (or, in the case of the Common Stock, as of December 10, 2001) are
as set forth on SCHEDULE 4.2 hereto. The issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all applicable
federal and state securities laws, and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SECURITIES. The Securities being
purchased hereunder have been duly authorized and, when issued, delivered and
paid for in the manner set forth in this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable. No preemptive rights or other
rights of any stockholder of the Company or other person to subscribe for or
purchase exist with respect to the issuance and sale of the Securities by the
Company pursuant to this Agreement. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Securities to be sold by the Company as contemplated
herein. The Company's issuance of the Securities shall be in compliance with all
applicable federal and state securities laws.
4.4 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company has full legal right, corporate power and authority to enter into this
Agreement and perform the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company. The execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions herein contemplated will not violate any
provision of the organizational documents of the Company. The execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions herein contemplated will not result in the
creation of any lien, charge, security interest or encumbrance upon any assets
of the Company pursuant to the terms or provisions of, or conflict with, result
in the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any material agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company is a party or by which the Company or any of its properties
may be bound or affected and in each case which individually or in the aggregate
would have a material adverse effect on the condition (financial or otherwise),
properties, business, prospects, or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), or any statute or
any authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body applicable
to the Company or any of its respective properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with all federal and state securities laws
applicable to the offering and sale of the Securities. Upon its execution and
delivery, and assuming the valid execution thereof by the Investors, this
Agreement will constitute a valid and binding obligation of the Company,
enforceable against the Company 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
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enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.5 GOOD STANDING OF SUBSIDIARIES. Each of the Company's subsidiaries
has been duly organized and is validly existing in good standing under the laws
of the jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as conducted
and as proposed to be conducted, and is duly qualified and is in good standing
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified will not have a Material
Adverse Effect. All of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is duly paid and
nonassessable and is owned by the Company only free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; and none of the
outstanding shares of capital stock of each such subsidiary was issued in
violation of any preemptive or similar rights of any third party.
4.6 NO DEFAULTS. The Company is not in violation of or default under
any provision of its Certificate of Incorporation or By-Laws, each as amended.
The Company, and to the best of the Company's knowledge, each other party
thereto, is not in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the Company is a party
or by which the Company or any of its properties are bound; and there does not
exist any state of facts which, with notice or lapse of time or both, would
constitute an event of default as defined in such documents on the part of the
Company, and to the best of the Company's knowledge, on the part of each other
party thereto, except for such breaches and defaults which individually or in
the aggregate would not have a Material Adverse Effect.
4.7 NO ACTIONS. Except as disclosed in the Information Documents (as
defined in Section 4.14), there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of its subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its subsidiaries is or may be
subject (except for threatened litigation which individually or in the aggregate
would not have a Material Adverse Effect); and no labor disturbance by the
employees of the Company or any of its subsidiaries exists, or, to the best of
the Company's knowledge, is imminent. Neither the Company nor any of its
subsidiaries is a party to or subject to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental body.
4.8 PROPERTIES. The Company and each of its subsidiaries has, as of the
applicable dates referred to therein, good and marketable title to all the
properties and assets reflected as owned by it in the financial statements
included in the Information Documents, subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except (i) those, if any, reflected in such
financial statements, or (ii) those which are not material in amount and do not
adversely affect the use made and currently proposed to be made of such property
by the Company or such subsidiary. The Company and its subsidiaries hold their
leased properties under valid and binding leases. The Company and its
subsidiaries own or lease all such properties as are necessary to their
operations as now conducted.
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4.9 NO MATERIAL CHANGE. Since November 21, 2001 and except for the
transactions described on SCHEDULE 4.9, (i) the Company and its subsidiaries
have not incurred any material liabilities or obligations, indirect or
contingent, or entered into any material agreement or other transaction which is
not in the ordinary course of business or which could reasonably be expected to
result in a material reduction in the future earnings of the Company or its
subsidiaries; (ii) the Company and its subsidiaries have not sustained any
material loss or interference with their businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock, and the Company and each of its
subsidiaries is not in default in the payment of principal or interest on any
outstanding debt obligations, if any; (iv) there has not been any material
change in the capital stock of the Company or any of its subsidiaries other than
the sale of the Securities hereunder; and (v) there has not been a material
adverse change in the condition (financial or otherwise), properties, business
or results of operations of the Company or any of its subsidiaries.
4.10 INTELLECTUAL PROPERTY.
(a) The Company and its subsidiaries own or have the right to
use all Intellectual Property Rights (as defined below) used by the Company and
its subsidiaries for the conduct of their respective businesses, which
Intellectual Property Rights are the only Intellectual Property Rights necessary
or required for the conduct of their respective businesses.
(b) Neither the Company nor any of its subsidiaries is in
default of its obligations to pay royalties or other amounts to other persons by
reason of the ownership or use of any Intellectual Property Rights used by the
Company and its subsidiaries for the conduct of their respective businesses.
(c) To the best of the Company's knowledge, no Intellectual
Property Right owned by the Company or any of its subsidiaries violates or will
violate any license or infringes or will infringe any Intellectual Property
Rights of another. To the best of the Company's knowledge, no Intellectual
Property Right, product or service marketed, sold or licensed (as licensor or as
licensee) by the Company or any of its subsidiaries, violates or will violate
any license or infringes or will infringe any Intellectual Property Rights of
another, nor has the Company or any of its subsidiaries received any notice that
any of the Intellectual Property Rights used by the Company or any of its
subsidiaries for the conduct of their respective businesses, conflicts or will
conflict with the rights of others.
(d) Except as disclosed in the Information Documents, there
are no claims pending or, to the best of the Company's knowledge, threatened
with respect to any Intellectual Property Rights necessary or required for the
conduct of the business of the Company or any of its subsidiaries as currently
conducted, nor, to the best of the Company's knowledge, does there exist any
basis therefor.
As used herein, the term "Intellectual Property Rights" means all patents,
trademarks, service marks, trade names, copyrights, inventions, trade secrets,
know-how, proprietary processes and formulae, applications for patents,
trademarks, service marks and copyrights, and other intellectual property
rights.
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4.11 COMPLIANCE. The Company has not been advised, or has no reason to
believe, that the Company or any of its subsidiaries is not conducting business
in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, except where failure to be so
in compliance would not have a Material Adverse Effect.
4.12 USE OF PROCEEDS. The Company intends to use the proceeds obtained
from the sale of the Securities hereunder in order to finance a portion of the
acquisition transaction described in SCHEDULE 4.12 (the "Acquisition").
4.13 REPORTING COMPANY; LISTED SECURITIES. The Company has filed all
reports required to be filed by Sections 13(a) or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") since it became a public company on
November 21, 2001. The Company's Common Stock is listed on the American Stock
Exchange ("AMEX"). As of the Closing Date, the Company meets all the
requirements for continued listing on AMEX, and to the best of the Company's
knowledge, there is no stop order suspending the trading of the Common Stock on
AMEX or any information which would result in the Common Stock being delisted
from AMEX.
4.14 ADDITIONAL INFORMATION. The Company has made available to the
Investors a true and complete copy of its Registration Statement on Form S-4,
Registration No. 333-67392, as declared effective by the Securities and Exchange
Commission (the "Commission"), and all exhibits thereto, as well as the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2001, as amended, as filed with Commission (collectively, the "Information
Documents"). As of their respective dates, the Information Documents and any
forms, reports and other documents filed by the Company with the Commission
during the period commencing on the date of this Agreement and ending on the
last date on which the Company is required to maintain the effectiveness of any
Registration Statement (as defined in Section 7 hereof) covering any Registrable
Shares held by any Investors, complied or will comply in all material respects
with the requirements of the Securities Act of 1933, as amended (the "Securities
Act") or the Exchange Act, as the case may be, and the rules and regulations of
the Commission thereunder applicable to the Information Documents or such other
forms, reports or other documents, and none of the Information Documents
contained, and none of such other forms, reports or other documents will contain
at the time they are filed, any untrue statement of a material fact or omitted,
or will omit at the time they are filed, to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Information Documents comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the Commission with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by the rules and regulations of the Commission) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments, which were not individually or in the aggregate material) in all
material respects the financial position of the Company as at the dates thereof
and the results of its operations and cash flows for the periods then ended.
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4.15 LEGAL OPINION. At the Closing, the Company will cause Xxxxx, Xxxx
& Xxxxx, LLP, counsel to the Company, to deliver to the Investors a legal
opinion as to the matters set forth in EXHIBIT D hereto.
4.16 CERTIFICATE. At the Closing, the Company will deliver to Investors
a certificate executed by the Chief Executive Officer or President of the
Company, dated the Closing Date, in form and substance reasonably satisfactory
to the Investors, to the effect that the representations and warranties of the
Company set forth in this Section 4 are true and correct in all material
respects as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions herein on its part to be performed
or satisfied on or prior to the Closing Date.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTORS.
5.1 Each Investor represents and warrants to, and covenants with, the
Company that: (i) such Investor is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
securities representing an investment decision such as that involved in the
purchase of the Securities and has requested, received, reviewed and understood
all information it deems relevant in making an informed decision to purchase the
Securities, including, without limitation, the information contained in the
Information Documents and the Certificate of Designation; (ii) such Investor
acknowledges that the offering of the Securities pursuant to this Agreement is
being made without registration under the Securities Act and applicable state
securities laws and has not been reviewed by the Commission or any state
regulatory authority; (iii) such Investor is acquiring the Securities set forth
on its signature page hereto for its own account for investment only and with no
present intention of distributing any of such Securities or any arrangement or
understanding with any other persons regarding the distribution of such
Securities; (iv) such 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 Securities except in
compliance with the Securities Act, the rules and regulations thereunder and any
applicable state securities or blue sky laws; (v) such Investor has completed or
caused to be completed the Securities Questionnaire, attached hereto as APPENDIX
I, and the answers thereto are true and correct as of the date hereof; (vi) such
Investor has, in connection with its decision to purchase the number of
Securities set forth on its signature page, not relied upon any representations
or other information (whether oral or written) other than as set forth in the
Information Documents and the representations and warranties of the Company
contained herein; (vii) such Investor has had an opportunity to discuss this
investment with representatives of the Company and ask questions of them and
such questions have been answered to the full satisfaction of such Investor; and
(viii) such Investor is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act.
5.2 Each Investor hereby covenants with the Company not to make any
sale of the Registrable Shares (as hereinafter defined) without satisfying the
prospectus delivery requirements under the Securities Act, if any.
5.3 Each Investor further represents and warrants to, and covenants
with, the Company that (i) such Investor has full right, power, authority and
capacity to enter into this
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Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, (ii) if such Investor is an entity, such Investor is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (iii) the execution, delivery and performance of
this Agreement by such Investor and the consummation by such Investor of the
transactions contemplated by this Agreement will not (A) if such Investor is an
entity, violate any provision of the organizational documents of such Investor
or (B) conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any material agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which such Investor is a party or, any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to such Investor, (iv) no consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
body is required on the part of such Investor for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, (v) upon the execution and delivery of this Agreement, this Agreement
shall constitute a valid and binding obligation of such Investor enforceable 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 (vi) there is not in effect any order enjoining or restraining such Investor
from entering into or engaging in any of the transactions contemplated by this
Agreement.
5.4 Each Investor recognizes that an investment in the Securities, the
Series A Preferred Stock issuable upon conversion of the Notes and the Common
Stock issuable pursuant to the Securities or upon conversion of the Series A
Preferred Stock issuable upon conversion of the Notes is speculative and
involves a high degree of risk, including a risk of total loss of such
Investor's investment.
5.5 All of the information provided to the Company or its agents or
representatives concerning each Investor's suitability to invest in the Company
and the representations and warranties of such Investor contained herein, are
complete, true and correct as of the date hereof. Such Investor understands that
the Company is relying on the statements contained herein to establish an
exemption from registration under federal and state securities laws.
5.6 The addresses set forth in the Investor's signature page hereto is
the Investor's true and correct domicile.
5.7 Each Investor covenants to provide the Company an updated, accurate
and complete plan of distribution at all times during which the Company is
required to keep in effect any Registration Statement covering any Registrable
Shares held by such Investors.
5.8 Each Investor understands and agrees that each Note, each Warrant
and each certificate or other document evidencing any of the Securities or any
shares of Common Stock or Series A Preferred Stock issued pursuant to or upon
conversion or exercise of the Securities, or upon conversion of any Series A
Preferred Stock issuable upon conversion of the Notes, shall be
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endorsed with the legend in substantially the form set forth below as well as
any other legends required by applicable law, and such Investor covenants that
such Investor shall not transfer any Note, any Warrant or any shares of Series A
Preferred Stock or Common Stock represented by any such certificate or other
document without complying with the restrictions on transfer described in the
legends endorsed on such certificate:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR REGISTERED OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE TRANSFERRED UNLESS (A) COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS
OR (B) EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION
REQUIREMENTS ARE AVAILABLE. AS A CONDITION TO PERMITTING ANY
TRANSFER OF THESE SECURITIES, THE COMPANY MAY REQUIRE THAT IT
BE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY TO THE EFFECT THAT NO REGISTRATION OR QUALIFICATION IS
LEGALLY REQUIRED FOR SUCH TRANSFER.
5.9 Each Investor understands and agrees that the rights and
obligations of the Company and the such Investor under such Investor's Note are
subject to the provisions of the Subordination Agreement (as defined below), as
more fully described in Section 4(i) of the form of Note attached hereto as
EXHIBIT A, and that each Note shall be endorsed with a legend substantially to
such effect. As used herein, the term "Subordination Agreement" shall mean the
subordination agreement dated on or about the Closing Date entered into by and
among the Borrower, The Royal Bank of Scotland plc, as security trustee, and the
Bridge Note Holders (as defined therein), as amended, varied, supplemented,
restated or novated from time to time.
SECTION 6. SURVIVAL OF REPRESENTATIVES, 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 Investors herein and in any certificates or documents delivered pursuant
hereto or in connection therewith shall survive following the delivery to the
Investors of the Securities being purchased and the payment therefor.
SECTION 7. REGISTRATION OF COMMON STOCK.
7.1 INCIDENTAL REGISTRATION; REGISTRATION PROCEDURES AND EXPENSES, ETC.
(a) (i) Whenever the Company proposes to file a Registration
Statement (as defined below) at any time and from time to time, it shall, prior
to such filing, give written notice to all Investors of its intention to do so
and, upon the written request of an Investor or Investors, given within ten (10)
business days after the Company provides such notice (which request shall state
the intended method of disposition of the Registrable Shares (as defined below)
requested to be registered), the Company shall use its reasonable best efforts
to cause all Registrable Shares which the Company has been requested by such
Investor or Investors to be
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registered to be so registered under the Securities Act to the extent necessary
to permit their sale or other disposition in accordance with the intended
methods of distribution specified in the request of such Investor or Investors;
PROVIDED, HOWEVER, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 7.1 without obligation to any
Investor. As used in this Agreement, the term "Registration Statement" shall
mean a registration statement filed by the Company with the Commission for a
public offering and sale of Common Stock by the Company (other than a
registration statement on Form S-8 or Form S-4, or their successors, or any
other form for a similar limited purpose, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another company). As used in this Agreement, the term "Registrable Shares" shall
mean (i) any Common Stock issued or issuable upon exercise of the Warrants, (ii)
any Common Stock issued or issuable upon conversion of any Series A Preferred
Stock which is issued or issuable upon conversion of the Notes (iii) Common
Stock issued or issuable pursuant to the provisions of the Notes; or (iv) any
shares of Common Stock issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events).
(ii) In connection with any registration under this
Section 7.1(a) involving an underwriting, the Company shall not be required to
include any Registrable Shares in such registration unless the holders thereof
accept the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it. If in the opinion of the managing underwriter it is
desirable because of marketing factors to limit the number of Registrable Shares
to be included in the offering, then the Company shall be required to include in
the registration only that number of Registrable Shares, if any, which the
managing underwriter believes should be included therein.
(b) If and whenever the Company is required by the provisions
of this Section 7.1 to use its reasonable best efforts to effect the
registration of any Registrable Shares under the Securities Act, the Company
shall:
(i) so long as such Registration Statement is
effective covering any Registrable Shares owned by the Investors, furnish to the
Investors with respect to the Registrable Shares registered under such
Registration Statement such number of copies of prospectuses and such other
documents as the Investors may reasonably request in order to facilitate the
public sale or other disposition of all or any of the Registrable Shares by the
Investors;
(ii) file documents required of the Company for blue
sky clearance in states specified in writing by the Investors; 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 so
qualified or has not so consented; and
(iii) bear all expenses in connection with the
procedures in paragraphs (i) and (ii) of this Section 7.1(b) and the
registration of the Registrable Shares pursuant to such Registration Statement,
and reasonable legal fees and expenses, if any, of one (1) counsel to all of the
Investors whose shares are registered, and except for any underwriting
discounts, brokerage fees and commissions incurred by the Investors, if any.
10
7.2 ADDITIONAL OBLIGATIONS OF THE PARTIES.
(a) With a view to making available to the Investors the
benefits of Rule 144 promulgated by the Commission under the Securities Act (or
its successor rule) ("Rule 144") and any other rule or regulation of the
Commission that may at any time permit the Investors to sell the Registrable
Shares to the public without registration, the Company covenants and agrees to:
(i) make and keep public information available, as those terms are understood
and defined in Rule 144, until the earlier of (A) such date as all of the
Investors' Registrable Shares may be resold within a given three-month period
pursuant to Rule 144 or any other rule of similar effect or (B) such date as all
of the Investors' Registrable Shares shall have been resold and (ii) file with
the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and under the Exchange Act.
(b) If the Company has delivered preliminary or final
prospectuses to the Investors who own Registrable Shares included in any
Registration Statement (each a "Selling Investor") and after having done so the
prospectus is amended to comply with the requirements of the Securities Act, the
Company shall promptly notify the Selling Investors and, if requested, the
Selling Investors shall immediately cease making offers of Registrable Shares
and return all prospectuses to the Company. The Company shall promptly provide
the Selling Investors with revised prospectuses and, following receipt of the
revised prospectuses, the Selling Investors shall be free to resume making
offers of the Registrable Shares.
(c) In the event that, in the judgment of the Company, it is
advisable to suspend use of a prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all investors to such
effect, and, upon receipt of such notice, each such Selling Investor shall
immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Investor has received copies of a
supplemented or amended prospectus or until such Selling Investor is advised in
writing by the Company that the then current prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Notwithstanding anything
to the contrary herein, the Company shall not exercise its rights under this
Section 7.1(d) to suspend sales of Registrable Shares for a period in excess of
90 days in any 365-day period.
(d) Each Investor including Registrable Shares in any
Registration Statement shall furnish to the Company such information regarding
such Investor as the Company may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3:
(i) the term "Investors" shall include the Investors
and any affiliate of the Investors; and
11
(ii) the term "Registration Statement" shall include
any final prospectus, exhibit, supplement or amendment
included in or relating to any Registration Statement referred
to in Section 7.1.
(a) In the event of any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company agrees to
indemnify and hold harmless each of the Selling Investors with respect thereto
and each person, if any, who controls any such Selling Investor within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which any such Selling Investor or controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement covering any Registrable Shares, including the prospectus, financial
statements and schedules, and all other documents filed as a part thereof, as
amended at the time of effectiveness of such Registration Statement, including
any information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, under the
Securities Act, or the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) under the Securities Act, or filed as part of such
Registration Statement at the time of effectiveness if no Rule 424(b) filing is
required (a "Prospectus"), or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state a material fact
required to be stated in such Registration Statement, Prospectus or any
amendment or supplement thereto or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, and will
reimburse the Selling Investors and each such controlling person for any legal
and other expenses reasonably incurred, as such expenses are reasonably
incurred, by the Selling Investors or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; PROVIDED, HOWEVER, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Statement, Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of a Selling Investor expressly for use therein, or (ii)
the failure of a Selling Investor to comply with Section 5.2 hereof respecting
sale of the Registrable Shares, or (iii) the inaccuracy of any representations
made by any Selling Investor herein or (iv) any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
a Selling Investor prior to the pertinent sale or sales by such Selling
Investor.
(b) In the event of any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Investor with
respect thereto will indemnify and hold harmless the Company, each of its
directors, each of its officers who sign any Registration Statement covering any
Registrable Shares and each person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses to which the Company, each of its directors, each of its officers
who signed such Registration Statement or controlling person may become subject,
under the
12
Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Selling Investor) insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon (i) any failure by such Selling Investor to comply with Section
5.2 hereof respecting the sale of the Registrable Shares or (ii) the inaccuracy
of any representation made by such Selling Investor herein or (iii) any untrue
or alleged untrue statement of any material fact contained in any Registration
Statement, Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement, Prospectus or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Investor
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed Registration Statement and each such
controlling person for any legal and other expense reasonably incurred, as such
expenses are reasonably incurred, by the Company, each of its directors, each of
its officers who signed such Registration Statement or such controlling person
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing thereof, but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise to the extent it is not actually prejudiced
as a result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions or defenses of the
indemnifying party and the indemnified party in conducting the defense of any
such action, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise participate in
the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless: (i) the indemnified party shall have employed such counsel in connection
with the assumption of legal defenses in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to the indemnifying party, representing the indemnified
parties who are parties to such action and all other purchasers of Registrable
Shares who may be parties to such action; PROVIDED, HOWEVER,
13
that if any indemnified party shall have reasonably concluded that there may be
a conflict between the positions or defenses of such indemnified party and the
positions or defenses of other indemnified parties or other purchasers in
conducting the defense of any such action, the indemnified party shall have the
right to select a separate counsel to assume such legal defenses) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. The indemnity agreements contained in Section 7.3(a) and (b)
shall not apply to amounts paid in settlement of any action if such settlement
is effected without the prior written consent of the indemnifying party (which
consent shall not be unreasonably withheld or delayed), or to amounts paid in
settlement of any action if the indemnifying party is not fully released under
such settlement from any claim or liability under such action.
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Investors from the sale of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but the relative
fault of the Company and the Selling Investors in connection with the statements
or omissions or inaccuracies in the representations and warranties in this
Agreement which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits received by the Company on the one hand and the Selling
Investors on the other shall be deemed to be in the same proportion as the
amount paid by the Selling Investors to the Company pursuant to this Agreement
for the Registrable Shares that were sold pursuant to any Registration Statement
bears to the difference (the "Difference") between the amount the Selling
Investors paid for such Registrable Shares and the amount received by the
Selling Investors from the sale of such Registrable Shares. The relative fault
of the Selling Investors shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the Selling Investors and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (c) of this
Section 7.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (c) of this Section 7.3 with respect to the
notice of the threat or commencement of any threat or action shall apply if a
claim for contribution is to be made under this paragraph (d); PROVIDED,
HOWEVER, that no additional notice shall be required with respect to any threat
or action for which notice has been given under paragraph (c) for purposes of
indemnification. The Company and the Investors agree that it would not be just
and equitable if contribution pursuant to this Section 7.3 were determined
14
solely by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, the Selling Investors shall
not be required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that the Selling Investors have
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.
SECTION 8. NOTICES. Any notice required or permitted to be given to a party
under this Agreement shall be made in writing at the address or facsimile number
of the party specified below (or such other address or facsimile number as the
party may specify in a written notice to the other party) and shall be deemed to
have been given, if delivered personally or sent via electronic facsimile
transmission with confirmation received, on the date of delivery or, if sent via
nationally recognized overnight express courier with established tracking
capability marked for delivery on the next business day, on the earlier of the
date of delivery, as demonstrated by the tracking records of the courier, or two
(2) business days after deposit of the notice with the courier:
if to the Company, to:
Inverness Medical Innovations, Inc.
00 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxxxx, President
with a copy to:
Xxxxx, Xxxx & Xxxxx, LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Xx., Esq.
if to the Investors, at their addresses as set forth on their respective
signature pages to this Agreement.
SECTION 9. CHANGES. This Agreement may not be modified or amended, and no
provision hereof may be waived, except pursuant to an instrument in writing,
signed by the Company and each Investor.
SECTION 10. 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.
SECTION 11. 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 provisions contained herein shall
not in any way be affected or impaired thereby.
15
SECTION 12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts, without giving
effect to its principles of conflicts of law. Any dispute arising out of or
relating to this Agreement or the Securities shall be filed and prosecuted in
any court of competent subject matter jurisdiction located in Massachusetts. The
Company and each of the Investors hereby consent to the personal jurisdiction of
such courts over them, stipulate to the convenience, fairness and efficiency of
proceeding in such courts, and covenant not to assert any objection to
proceeding in such courts based on any alleged lack of jurisdiction or any
alleged inconvenience, unfairness or inefficiency of such courts.
SECTION 13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but both 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 party.
SECTION 14. ENTIRE AGREEMENT. This Agreement (including the attachments hereto)
contains the entire agreement of the parties with respect to the subject matter
hereof and supersedes and is in full substitution for any and all prior oral or
written agreements and understandings between them related to such subject
matter, and neither party hereto shall be liable or bound to the other party
hereto in any manner with respect to such subject matter by any representations,
indemnities, covenants or agreements except as specifically set forth herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives shown below as of the date
first written above.
XXXXXXXXX FAMILY VENTURES, LLC
By /s/ Xxx Xxxxxxxxx
-------------------------
Xxx Xxxxxxxxx, Manager
Address: 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECURITIES TO BE PURCHASED
Warrant to Purchase the Aggregate Purchase Price in
Note in the Original Principal Number of shares of Common U.S. Dollars for Securities
Amount Set Forth Below Stock Set Forth Below to be Purchased
------------------------------ -------------------------- ---------------------------
$10,000,000.00 27,594 $10,000,000.00
Accepted and Agreed to by:
INVERNESS MEDICAL INNOVATIONS, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer
Note and Warrant Purchase Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives shown below as of the date
first written above.
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, as Trustee under The
Xxxxxxx X. Xxxxxxx 1996 Revocable Trust
U/A/D 03/26/96
Address: 00 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECURITIES TO BE PURCHASED
Warrant to Purchase the Aggregate Purchase Price in
Note in the Original Principal Number of shares of Common U.S. Dollars for Securities
Amount Set Forth Below Stock Set Forth Below to be Purchased
------------------------------ -------------------------- ---------------------------
$5,000,000.00 13,797 $5,000,000.00
Accepted and Agreed to by:
INVERNESS MEDICAL INNOVATIONS, INC.
By: /s/ Xxx Xxxxxxxxx
-----------------------
Name: Xxx Xxxxxxxxx
Title: President
Note and Warrant Purchase Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives shown below as of the date
first written above.
/s/ Xxxxxx Xxxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxxx
Address: 00 Xxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECURITIES TO BE PURCHASED
Warrant to Purchase the Aggregate Purchase Price in
Note in the Original Principal Number of shares of Common U.S. Dollars for Securities
Amount Set Forth Below Stock Set Forth Below to be Purchased
------------------------------ -------------------------- ---------------------------
$2,000,000.00 5,519 $2,000,000.00
Accepted and Agreed to by:
INVERNESS MEDICAL INNOVATIONS, INC.
By: /s/ Xxx Xxxxxxxxx
-----------------------
Name: Xxx Xxxxxxxxx
Title: President
Note and Warrant Purchase Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives shown below as of the date
first written above.
/S/ XXXX XXXXXXXXX
Xxxx Xxxxxxxxx, as Trustee under US Boston
Corporation PSRP U/A/D 10/1/84 A/C X. Xxxxxxxxx
Address: 00 Xxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECURITIES TO BE PURCHASED
Warrant to Purchase the Aggregate Purchase Price in
Note in the Original Principal Number of shares of Common U.S. Dollars for Securities
Amount Set Forth Below Stock Set Forth Below to be Purchased
------------------------------ -------------------------- ---------------------------
$3,000,000.00 8,279 $3,000,000.00
Accepted and Agreed to by:
INVERNESS MEDICAL INNOVATIONS, INC.
By: /s/ Xxx Xxxxxxxxx
-----------------------
Name: Xxx Xxxxxxxxx
Title: President
Note and Warrant Purchase Agreement
EXHIBIT A
[Intentionally Omitted]
EXHIBIT B
[Intentionally Omitted]
EXHIBIT C
[Intentionally Omitted]
EXHIBIT D
The opinion of the Company's legal counsel shall address the following matters,
as of the Closing Date:
(i) The Company is validly existing as a corporation in good standing under
the laws of the State of Delaware; the Company has all requisite
corporate power and authority to own, lease, license and operate its
assets and properties and conduct its business as now being conducted
and as described in the Information Documents.
(ii) The Notes and Warrants, when sold pursuant to the Agreement, and the
shares of Series A Preferred Stock and Common Stock issuable pursuant
to or upon conversion or exercise thereof, or upon conversion of any
Series A Preferred Stock issuable conversion of the Notes, when issued
in accordance with the terms and conditions of the Company's
Certificate of Incorporation, will be duly and validly issued, fully
paid and nonassessable and, to such counsel's knowledge, none of them
will have been issued in violation of any preemptive or other similar
right.
(iii) All necessary corporate action has been duly and validly taken by the
Company to authorize the execution, delivery and performance of this
Agreement and the sale of the Notes and Warrants, and the issuance of
the shares of Series A Preferred Stock and Common Stock issuable
pursuant to or upon conversion or exercise thereof, or upon conversion
of any Series A Preferred Stock issuable upon conversion of the Notes,
by the Company. The Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms.
(iv) Based upon the representations, warranties and covenants of the
Investors set forth in Section 5 of the Agreement, the offer and sale
of the Notes and Warrants is exempt from registration under the
Securities Act.
(v) This Agreement and the transactions contemplated hereby do not conflict
with, constitute a default under or result in any violation of the
Company's Certificate of Incorporation or By-laws, each as amended as
of the date hereof, or applicable laws, statutes, rules, regulations
and orders or decisions of judicial and administrative bodies by which
the Company is bound.
