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EXHIBIT 10.18
SETTLEMENT AGREEMENT AND GENERAL RELEASE
In consideration of (i) the sum of One Hundred Thousand Dollars
($100,000.00), full and complete receipt of which is hereby acknowledged, (ii)
the issuance of Twenty Five Thousand (25,000) fully paid and non assessable
shares of the common stock of Recovery Network, Inc. (without cost to Releasor),
full and complete receipt of which is hereby acknowledged, and (iii) the
execution and delivery by Recovery Network, Inc. of a Warrant Agreement in the
form attached hereto as Exhibit "A", the receipt of which is hereby
acknowledged, XXXXXX XXXXX ("Releasor") hereby releases and discharges
RECOVERYNET INTERACTIVE, LLC ("RNI") and RNI's members, directors, officers,
employees, attorneys, designees, successors and assigns (collectively,
"Releasees") from any and all claims, demands and causes of action of whatever
kind or nature, whether known or unknown, or suspected or unsuspected by
Releasor which Releasor ever had, now has, or hereafter may have, against
Releasees arising out of or connected with that certain Shadow Equity Agreement
dated November __, 1997 between Releasor and RNI ("Shadow Equity Agreement").
Releasor acknowledges that the shares which are referred to in clause (ii)
above, and the shares which are described in the Warrant Agreement referred to
in clause (iii) above, are not now registered, cannot be traded until they are
registered, and that Company shall use its best efforts to register all such
shares (at Company's cost) within ninety (90) days following the date of this
Release. Upon registration, such shares will be publicly-tradeable on the
exchange where the shares of Recovery Network, Inc. are normally traded.
It is the intention of Releasor in executing this Release, that this
Release shall be effective as a bar to each and every claim, demand or cause of
action described above to be so barred. In furtherance of this intention,
Releasor hereby expressly waives any and all rights and benefits conferred upon
her by the provisions of Section 1542 of the California Civil Code, which are as
follows:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known to him must have materially
affected his settlement with the debtor."
Releasor hereby acknowledges the foregoing waiver of the provisions of Section
1542 of the California Civil Code was separately bargained for.
This Release may be executed in two or more counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument. This Release shall be binding upon and inure to the benefit of
Releasor, Releasees, and their respective heirs, representatives, successors and
assigns. This Release shall be governed by the law of the State of California
without regard to California's conflicts of law principles.
This Release shall be effective immediately upon the receipt by Releasor of
the payment set forth at the beginning of this Release.
IN WITNESS WHEREOF, Releasor has executed this General Release this 26
day of October, 1998.
/s/ XXXXXX XXXXX
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NAME: Xxxxxx Xxxxx
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLE, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAW.
THE RECOVERY NETWORK, INC.
COMMON STOCK PURCHASE WARRANT
TRNW-1001
1. Issuance. For good and valuable consideration, the receipt of which
is hereby acknowledged by THE RECOVERY NETWORK, INC., a Colorado corporation
(the "Company"), XXXXXX XXXXX ("Xxxxx") is hereby granted the right to purchase
at any time commencing two (2) days following the date hereof and until 5:00
P.M., New York City time, on May 15, 2003 (the "Expiration Date"), One Hundred
Thousand (100,000) fully-paid and nonassessable shares of the Company's
publicly tradable Common Stock, par value $.01 per share (the "Common Stock").
The exercise price for such shares shall be $2.125 ("Exercise Price"). The
shares of the Company's Common Stock which are the subject of this Warrant are
hereinafter referred to as "the Shares". The Company shall register the Shares
(at the Company's cost) and shall use its best efforts to register the Shares
within ninety (90) days following the issuance of this Warrant. Upon such
registration, the Shares shall be publicly-tradeable by the holder of this
Warrant on the exchange where the Common Stock of the Company is normally
traded.
2. Exercise of Warrant. This Warrant is exercisable, in a maximum of
three exercises only, as to any or all of the Shares at the Exercise Price per
Share payable hereunder, payable only in cash or by certified or official bank
check or such other form of payment as may be acceptable to the Company, in its
sole discretion. Upon surrender of this Warrant Certificate with the annexed
Notice of Exercise Form duly executed, together with payment of the Exercise
Price for the Shares of Common Stock purchased, Xxxxx shall be entitled to
receive a certificate or certificates for the shares of Common Stock so
purchased.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant. The Company shall use its
best efforts and all
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due diligence to increase the number of shares of Common Stock so reserved to
cure any deficiencies, and, if necessary, to obtain approval of its stockholders
therefor, including authorization of such additional number of shares of Common
Stock as may be required in excess of the number so reserved.
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of Xxxxx. Xxxxx shall not, by virtue hereof, be entitled
to any rights of a stockholder in the Company, either at law or equity, and the
rights of Xxxxx are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
6. Adjustments of Exercise Price and Number of Shares.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price
is required pursuant to this Section 6, Xxxxx shall be entitled to purchase such
number of shares of Common Stock as will cause (i) the total number of shares of
Common Stock Xxxxx is entitled to purchase pursuant to this Warrant (after such
adjustment) multiplied by the adjusted Exercise Price to equal (ii) the total
number of shares of Common Stock Xxxxx was entitled to purchase before such
adjustment multiplied by the Exercise Price before the adjustment.
6.2 Capital Adjustments. In case of any stock split or
combination, stock dividend, reclassification of the Common Stock,
recapitalization, or like capital adjustment affecting the Common Stock of the
Company, the Exercise Price shall be proportionately adjusted in a fair,
equitable and reasonable manner so as to give effect, as nearly as reasonably
practicable to the purposes hereof.
6.3 Merger, Sale of Assets, Etc. If at any time while this
Warrant, or any portion hereof, is outstanding and unexpired there shall be (i)
a reorganization (other than a stock split or combination, stock dividend,
reclassification, or like capital adjustment of shares otherwise provided for
herein), (ii) a merger or consolidation of the Company with or into another
corporation or other entity including a merger or consolidation in which the
Company is the surviving entirety but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then as a part of such
reorganization, merger, consolidation, sale or transfer lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of
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this Warrant, during the period specified herein and payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised immediately before
such reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 6. The foregoing provisions of
this Section 6 shall similarly apply to successive reorganization,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation or other entity that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable for shares in
connection with any such transactions is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in good
faith by the Company's Board of Directors. In all events, appropriate adjustment
(as determined in good faith by the Company's Board of Directors) shall be made
in the application of the provisions of this Warrant with respect to the rights
and interests of Xxxxx after the transaction, to the end that the provisions of
this Warrant shall be applicable after that event, as near as reasonably
practicable, in relation to any shares or other property deliverable after that
event upon exercise of this Warrant.
6.4 Merger with End of Company's Existence. In case of any consolidation
or merger to which the Company is a party other than a merger or consolidation
in which the Company is the continuing corporation, or in case of any sale or
conveyance to another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory exchange of
securities with another entity (including any exchange effectuated in connection
with a merger of any other corporation with the Company other than a merger in
which the Company is the continuing corporation) Xxxxx shall have the right
thereafter to exercise such Warrant for the kind and amount of securities, cash
or other property which he would have owned or have been entitled to receive
immediately after such consolidation, merger, statutory exchange, sale or
conveyance had this Warrant been exercised immediately prior to the effective
date of such consolidation, merger, statutory exchange, sale or conveyance and
in any such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 6 with respect to the
rights and interests thereafter of Xxxxx to the end that the provisions set
forth in this Section 6 shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares of stock or other
securities or property thereafter deliverable on the exercise of this Warrant.
The above provisions of this Subsection 6.4 shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances of property
as an entirety or substantially as an entirety. Notice or any such
consolidation, merger, statutory exchange, sale or conveyance, and of said
provisions so proposed to be made, shall be mailed to Xxxxx not less than 20
days prior to such event. A sale of all or substantially all of the assets of
the Company for a consideration consisting primarily of securities shall be
deemed a consolidation or merger for the foregoing purposes.
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6.5 DeMinimus Adjustment. No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock, provided, however, that any adjustments
which by reason of this Subsection 6.5 are not required to be made shall be
carried forward and taken into account in any subsequent adjustments and
provided further, however, that adjustments shall be required and made in
accordance with the provisions of this Section 6 (other than this Subsection
6.5) not later than such time as may be required in order to preserve the
tax-free nature of a distribution to Xxxxx of Common Stock. All calculations
under this Section 6 shall be made to the nearest cent or the nearest 1/100th
of a share, as the case may be. Anything in this Section 6 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
per share Exercise Price, in addition to those required by this Section 6, as
it in its distribution of rights to purchase stock or securities convertible or
exchangeable for stock hereafter made by the Company to its shareholders shall
not be taxable.
6.6 Notice. Whenever the Exercise Price is adjusted as provided in this
Section 6 and upon any modification of the rights of Xxxxx in accordance with
this Section 6, the Company shall, at its own expense, within ten (10) days of
such adjustment or modification, deliver to the holder of this Warrant a
certificate of the Principal Financial Officer of the Company setting forth the
unaudited Exercise Price and the number of Warrant Shares after such adjustment
or the effect of such modification, a brief statement of the facts requiring
such adjustment or modification and the manner of computing the same. If the
Board of Directors of the Company shall declare any dividend or other
distribution in cash with respect to the Common Stock, other than out of earned
surplus, the Company shall mail notice thereof of Xxxxx not less than 10 days
prior to the record date fixed for determining shareholders entitled to
participate in such dividend or other distribution.
6.7 Payment Deferment. In the event of the exercise of all or part of
this Warrant after the record date for any event described in Subsection 6.2 or
6.3 but prior to the effective date therefor, the Company may defer until the
effective or payment date issuing (and, in case of any stock combination or
reclassification that would result in Xxxxx being entitled to fewer shares of
Common Stock, the Company need not issue) to Xxxxx any shares or property in
addition to (or in excess of) that which Xxxxx would be entitled to own prior
to such payment or effective date had Xxxxx exercised this Warrant (or portion
thereof exercised) immediately prior to such record date.
6.8 Form of Consideration. If the consideration received or to be
received by the Company with respect to any Common Stock, rights, options,
warrants or securities convertible into Common Stock (including any future
consideration which may be received): (i) is cash, the amount thereof shall be
the amount of cash to be received and/or (ii) is a consideration other than
cash, the amount of such other consideration shall be deemed to be the fair
market value of such
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consideration as determined by the Board of Directors of the Company, in the
case of (i) and/or (ii) without deduction therefrom of any expenses incurred or
any underwriting commissions, discounts or concessions paid or allowed by the
Company.
7. Transfer to Comply with the Securities Act. This Warrant has not
been registered under the Securities Act and has been issued to Xxxxx for
investment purposes and not with a view to the distribution of either the
Warrant or the Shares. Neither this Warrant nor any of the Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Securities Act relating to such security or an opinion of
counsel reasonably satisfactory to the Company that registration is not required
under the Securities Act. Each certificate for the Warrant, the Shares and any
other security issued or issuable upon exercise of this Warrant shall contain a
legend on the fact thereof, in form and substance satisfactory to counsel for
the Company, setting forth the restrictions on transfer contained in this
Section.
8. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon (i) the transmitter's confirmation
of the receipt of a facsimile transmission or (ii) confirmed delivery by a
standard overnight carrier or when delivered by hand, addressed at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Company, to:
The Recovery Network, Inc.
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx, Esq.
Greenberg, Glusker, Fields, Claman & Machtinger, LLP
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
(b) if to Xxxxx, to:
with a copy to:
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7. Supplements and Amendments: Whole Agreement. This Warrant may
be amended or supplemented only by an instrument in writing signed by the
Company and Xxxxx. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understanding of the parties hereto
with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
8. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Colorado without regard
to principles of conflicts or choice of laws (or any other law that would make
any substantive laws of any state other than the State of Colorado applicable
hereto).
9. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, THE RECOVERY NETWORK, INC. has caused this
Warrant to be signed by its President and its corporate seal to be hereunto
affixed and attested by its Secretary as of the __ day of October, 1998.
THE RECOVERY NETWORK, INC.
By:
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Name:
Title:
Attest:
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EXHIBIT "A"
FORM OF NOTICE OF EXERCISE
(To be executed only upon exercise of Warrant)
The undersigned registered owner of the attached Warrant ("Warrant")
irrevocably exercises this Warrant for the purchase of _________ shares of
Common Stock of Recovery Network, Inc. purchasable with this Warrant, and
herewith makes payment therefor, at the price and on the terms and conditions
specified in this Warrant.
DATED: ______________________
Signature of Registered Owner:__________________________________
Print Name:__________________________________
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