VITAL LIVING, INC.
SCIENTIFIC ADVISORY BOARD AGREEMENT
This Scientific Advisory Board Agreement ("Agreement") dated May 7,
2002, (the "Effective Date") is made by and between Vital Living, Inc.,
a Nevada corporation, whose address is ________________________________
("Company" or "Vital Living"), and (ii) Xxxxx Xxxxx, MD,
("Consultant"), an individual whose address is 0000 Xxxxxxxxx Xx.,
Xxxxxxxxx, XX 00000.
1. INTRODUCTION
Vital Living is establishing a Scientific Advisory Board ("SAB") to
provide Vital Living the following services and advice in connection with its
strategy and plans for the development and commercialization of its products
and services ("Services"), including, but not limited to:
Developing, manufacturing and testing of nutraceutical formulations
that are based on the best available scientific research, shown to
be safe and effective in appropriately designed and controlled
clinical trials, and proprietary to the Company ;
Assisting the Company in the design and development of compliance
and lifestyle programs intended to enhance patient compliance with
the Company's nutraceuticals;
Advising the Company on the needs of potential clients, partners,
and other users, including practicing physicians, academic
researchers, other health professional, and patients, and the
design of products, services and offerings to address those needs,
but not helping to directly market to these individuals;
Working with other thought leaders and health professionals to
facilitate projects of mutual benefit to the Company and said
individuals: and,
Participating in scientific exchange with thought leaders and other
health professionals and academic researchers regarding potential
clinical benefits of Vital Living products.
Consultant desires to be a member of the SAB and perform such Services, and
Company desires to have Consultant become a member of the SAB and perform
such Services.
2. SERVICES COMPENSATION AND EXPENSE REIMBURSEMENT
2.1 2.1 2.1 Services. Consultant agrees to
serve as a member of the SAB and to endeavor to attend and participate in all
SAB meetings. Vital Living currently intends to convene one (1) in-person
meeting and three (3) teleconference meetings of the SAB per year.
2.2 2.2 2.2 Compensation and Expense
Reimbursement. As sole compensation for the performance of the Services,
Company will compensate Consultant as set forth in Exhibit A. The Company
will reimburse Consultant for reasonable out-of-pocket expenses incurred in
the performance of the Services, including Business Class travel to SAB
Meetings; provided, however, that (a) all such out-of pocket expenses over an
aggregate of $500 during any calendar month shall have been previously
approved in writing by an officer of the Company; and (b) all such out-of-
pocket expenses are supported by reasonable documentation;
3. RELATIONSHIP OF PARTIES
3.1 Independent Contractor. Consultant is an independent contractor
and is not an agent or employee of, and has no authority to bind, Company.
Consultant will perform the Services under the general direction of Company,
but Consultant will determine the manner and means by which the Services are
accomplished. Consultant acknowledges that Vital Living shall not have any
obligation to follow the advice of Consultant or the SAB. Consultant will not
be entitled to receive benefits from or to participate in any plans designed
to provide benefits for Company's employees.
4. PROPERTY OF COMPANY
4.1 Definition. For the purposes of this Agreement, "Designs and
Materials" shall mean all designs, discoveries, inventions, products,
computer programs, procedures, improvements (whether or not patentable or
whether or not copyrightable), developments, drawings, notes, documents,
information and materials made, conceived, reduced to practice, written,
designed, discovered or developed by Consultant alone or with others whether
during normal business hours or otherwise which result from, relate to or are
derived from any work performed by Consultant for the Company.
4.2 Assignment of Ownership. Consultant hereby irrevocably transfers
and assigns any and all of its right, title, and interest in and to Designs
and Materials, including but not limited to all copyrights, patent rights,
trade secrets and trademarks, to Company. Designs and Materials will be the
sole property of Company, and Company will have the sole right to determine
the treatment of any Designs and Materials, including the right to keep them
as trade secrets, to file and execute patent applications on them, to use and
disclose them without prior patent application, to file registrations for
copyright or trademark on them in its own name, or to follow any other
procedure that Company deems appropriate. Consultant agrees: (a) to disclose
promptly in writing to Company all Designs and Materials; (b) to cooperate
with and assist Company to apply for, and to execute any applications and/or
assignments reasonably necessary to obtain, any patent, copyright, trademark
or other statutory protection for Designs and Materials in Company's name as
Company deems appropriate; and (c) to otherwise treat all Designs and
Materials as "Confidential Information," as defined below. These obligations
to disclose, assist, execute and keep confidential will survive any
expiration or termination of this Agreement. Consultant agrees that if the
Company is unable, after reasonable effort, to secure my signature on any
such papers, any executive officer of the Company shall be entitled to
execute any such papers as my agent and attorney-in-fact, and Consultant
hereby irrevocably designates and appoints each executive officer of the
Company as Consultant's agent and attorney-in-fact to execute any such papers
on Consultant's behalf, and to take any and all actions as the Company may
deem necessary or desirable in order to protect its rights and interests in
any Designs and Materials, under the conditions described in this sentence.
Consultant hereby waives and quit claims to the Company any and all claims,
of any nature whatsoever, which Consultant now or may hereafter have for
infringement of any proprietary rights assigned hereunder.
5. CONFIDENTIAL INFORMATION
Consultant acknowledges that Consultant will acquire information and
materials from Company and knowledge about Company including, without
limitation, knowledge about business, marketing plans, pricing practices,
products, formulation, ingredients, dosages, services, inventions,
prototypes, cell lines, formula, processes, programming techniques,
experimental work, customers, clients and suppliers of Company and that all
such knowledge, information and materials acquired, the existence, terms and
conditions of this Agreement, and the Designs and Materials, are and will be
the trade secrets and confidential and proprietary information of Company
(collectively "Confidential Information"). Confidential Information will not
include, however, any information which is or becomes part of the public
domain through no fault of Consultant or that Company regularly gives to
third parties without restriction on use or disclosure. Consultant agrees to
hold all such Confidential Information in strict confidence, not to disclose
it to others or use it in any way, commercially or otherwise, except in
performing the Services, and not to allow any unauthorized person access to
it, either before or after expiration or termination of this Agreement.
Consultant further agrees to take all action reasonably necessary and
satisfactory to protect the confidentiality of the Confidential Information.
6. TERM AND TERMINATION
This Agreement will commence on the Effective Date and terminate three
years thereafter. Either party may terminate this Agreement at any time, for
any reason or for no reason, upon thirty (30) days written notice.
7. EFFECT OF EXPIRATION OR TERMINATION Upon the expiration or termination
of this Agreement for any reason, (a) each party will be released from all
obligations to the other arising after the date of expiration or termination,
except that expiration or termination of this Agreement will not relieve
either party of its obligations under Sections 3, 4, 5, 6, 8 and 9, nor will
expiration or termination relieve Consultant or Company from any liability
arising from any breach of this Agreement; and (b) Consultant will promptly
notify Company of all Confidential Information, including but not limited to
the Designs and Materials, in Consultant's possession and promptly deliver to
Company, or destroy at Company's request, all such Confidential Information.
8. WARRANTIES
Consultant represents and warrants to the Company that (a) Consultant's
service on the SAB does not conflict with, result in the breach of any
provisions of, or constitute a default under any agreement or other
obligation to which Consultant is a party, and (b) Consultant's principal
place of employment has received full disclosure as to the Consultant's
service on the SAB and that such employer consents to the Consultant's
participation.
9. GENERAL
9.1 Publicity. Consultant shall not publicize or advertise in any
manner that Consultant is performing the Services hereunder, without the
prior written consent of Company. Consultant hereby grants to Company the
right to use Consultant's name, likeness, and relationship with Company in
and in connection with technical materials, various reports, brochures or
other documents produced by or on behalf of Company.
9.2 Assignment. Consultant may not assign this Agreement or any of
Consultant's rights or delegate Consultant's duties under this Agreement
either in whole or in part, whether by operation of law or otherwise. Any
attempted assignment will be void and of no force and effect.
9.3 Equitable Remedies. Because the Services are personal and unique
and because Consultant will have access to Confidential Information of
Company, Company will have the right to enforce this Agreement and any of its
provisions by injunction, specific performance or other equitable relief
without prejudice to any other rights and remedies that Company may have for
a breach of this Agreement.
9.4 Attorneys' Fees. If any action is necessary to enforce the terms
of this Agreement, the substantially prevailing party will be entitled to
reasonable attorneys' fees, costs and expenses in addition to any other
relief to which such prevailing party may be entitled.
9.5 Governing Law; Severability. This Agreement will be governed by
and construed in accordance with the laws of the State of California
excluding that body of law pertaining to conflict of laws. If any provision
of this Agreement is for any reason found to be unenforceable, the remainder
of this Agreement will continue in full force and effect.
9.6 Notices. Any notices under this Agreement will be sent by
certified or registered mail, return receipt requested, or a nationally
recognized overnight courier to the address set forth above or such other
address as the party specifies in writing. Such notice will be effective
upon its mailing.
9.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9.8 Complete Understanding; Modification. This Agreement constitutes
the complete and exclusive understanding and agreement of the parties and
supersedes all prior understandings and agreements, whether written or oral,
with respect to the subject matter hereof. Any waiver, modification or
amendment of any provision of this Agreement will be effective only if in
writing and signed by the parties hereto.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
Effective Date.
VITAL LIVING, INC. CONSULTANT
By: By:
Title: Title:
EXHIBIT A
COMPENSATION
FEES: Consultant will receive $1250 per S.A.B meeting that he or she attends.
Currently the company estimates that there will be 4 meetings annually.
__________________________________________________________________________
Exhibit A
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into
as of May 7, 2002 (the "Grant Date"), by and between VITAL LIVING, INC., a
Nevada corporation ("Company"), and Xxxxx Xxxxx M.D. ("Optionee").
R E C I T A L S
A. On May 3, 2002, the Board of Directors and Shareholders of the
Company adopted the Vital Living, Inc. 2002 Stock Option Plan (the
"Plan").
B. Pursuant to the Plan, on May 3, 2002, the Board of Directors of the
Company acting as the Plan Committee ("Committee") authorized granting to
Optionee options to purchase shares of the common stock, $0.001 par value, of
the Company ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
otherwise clearly requires, terms with initial capital letters used herein
shall have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Company hereby grants to Optionee, a Non-
Qualified Option ("Options") to purchase all or any part of 15,000 Shares,
upon and subject to the terms and conditions of the Plan, which is
incorporated in full herein by this reference, and upon the other terms and
conditions set forth herein. The Option is not intended to qualify as an
"incentive stock option" as that term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended from time to time.
3. OPTION PERIOD/VESTING.
3.1 Subject to the provisions of Section 8, the Options shall be
exercisable to purchase the Vested Shares at any time prior to expiration of
the five (5) year period commencing upon the Grant Date (the "Expiration
Date"), unless earlier terminated pursuant to Section 7.
3.2 Shares of Common Stock underlying this Option shall become "Vested
Shares" as follows: (a) so long as Holder is engaged by the Corporation
pursuant to the Scientific Advisory Board Agreement to which this Option is
an Exhibit (the "Scientific Advisory Board Agreement"), 1,250 shares of
Common Stock shall become Vested Shares on August 1, 2002, and an additional
1,250 shares of common stock will become vested shares on the 1st day of
every third month for the term of this agreement..
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Company of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied
by such other executed instruments or documents as may be required by the
Committee pursuant to this Agreement, and unless otherwise directed by the
Committee, Optionee shall at the time of such exercise tender the purchase
price of the Shares he has elected to purchase. An Optionee may purchase
less than the total number of Shares for which the Option is exercisable,
provided that a partial exercise of an Option may not be for less than One
Hundred (100) Shares. If Optionee shall not purchase all of the Shares which
he is entitled to purchase under the Options, his right to purchase the
remaining unpurchased Shares shall continue until expiration of the Options.
The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share
which Optionee is entitled to purchase under the Options shall be Two Dollars
and Eighty Cents ($2.80) per Share.
6. PAYMENT OF PURCHASE PRICE. The Optionee may pay for the Shares in any
one, or combination thereof, of the following methods. The Company, upon
receiving payment, shall make immediate delivery of such purchased shares,
fully paid and non-assessable, registered in the name of Optionee.
6.1 Cash or like consideration. At the time of Optionee's notice of
exercise of the Options, Optionee shall exercise the Option by notifying the
Company of the number of shares that he desires to purchase and by delivering
with such notice the cash or a certified bank check payable to the Company
for the purchase price of the shares being purchased.
7. REGISTRATION OF SHARES.
The terms of the Registration Agreement attached hereto as Exhibit A are
hereby incorporated herein.
8. EFFECT OF TERMINATION OF EMPLOYMENT.
8.1 If an Optionee's employment or other relationship with the Company
or a Subsidiary terminates, the effect of the termination on the Optionee's
rights to acquire Shares shall be as follows:
(a) Termination by the Company Other Than For Cause.
Notwithstanding Section 3.2 above, if Optionee is terminated by the Company
other than for Cause (as defined in the Scientific Advisory Board Agreement),
or if Optionee terminates his engagement pursuant to Section 3(a)(iii) of the
Scientific Advisory Board Agreement, than:
the number of shares that are Vested Shares as of the date of
termination shall be that number of shares that would have become Vested
Shares if the Optionee's engagement was terminated one year after the actual
date of termination.
Optionee's Options shall expire upon the Expiration Date. Prior to the
Expiration Date, Optionee may exercise his Options, but only with respect to
the Vested Shares, taking into account the acceleration provision of Section
8.1(a)(1) and except as so exercised.
(b) Other Termination. If Optionee's employment by, or
relationship with, the Company or a Subsidiary is terminated for Cause,
Optionee's Option shall expire thirty (30) days after such termination;
however, the Committee may waive the expiration of the Option by giving
written notice of such waiver to Optionee. In the event of such waiver,
Optionee may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if such Optionee had ceased to be employed by,
or ceased to have a relationship with, the Company or a Subsidiary upon the
date of such termination for a reason other than for cause.
9. NON-TRANSFERABILITY OF OPTIONS.
The Options shall not be transferable, either voluntarily or by
operation of law, otherwise than by will or the laws of descent and
distribution and shall be exercisable during the Optionee's lifetime only by
Optionee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
As used herein, the term "Adjustment Event" means an event pursuant to
which the outstanding Shares of the Company are increased, decreased or
changed into, or exchanged for a different number or kind of shares or
securities, without receipt of consideration by the Company, through
reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split, stock dividend, stock consolidation or otherwise. Upon
the occurrence of an Adjustment Event, (i) appropriate and proportionate
adjustments shall be made to the number and kind and exercise price for the
shares subject to the Options, and (ii) appropriate amendments to this
Agreement shall be executed by the Company and Optionee if the Committee
determines that such an amendment is necessary or desirable to reflect such
adjustments. If determined by the Committee to be appropriate, in the event
of an Adjustment Event which involves the substitution of securities of a
corporation other than the Company, the Committee shall make arrangements for
the assumptions by such other corporation of the Options. Notwithstanding
the foregoing, any such adjustment to the Options shall be made without
change in the total exercise price applicable to the unexercised portion of
the Options, but with an appropriate adjustment to the number of shares, kind
of shares and exercise price for each share subject to the Options. The
determination by the Committee as to what adjustments, amendments or
arrangements shall be made pursuant to this Section 10, and the extent
thereof, shall be final and conclusive. No fractional Shares shall be issued
on account of any such adjustment or arrangement.
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP.
Nothing contained in this Agreement shall obligate the Company to employ
or have another relationship with Optionee for any period or interfere in any
way with the right of the Company to reduce Optionee's compensation or to
terminate the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING OPTIONS.
The time the Options shall be deemed granted shall be the Grant Date.
13. PRIVILEGES OF STOCK OWNERSHIP.
Optionee shall not be entitled to the privileges of stock ownership as
to any Shares not actually issued and delivered to Optionee. No Shares shall
be purchased upon the exercise of any Options unless and until, in the
opinion of the Company's counsel, any then applicable requirements of any
laws, or governmental or regulatory agencies having jurisdiction, and of any
exchanges upon which the stock of the Company may be listed shall have been
fully complied with.
14. SECURITIES LAWS COMPLIANCE.
The Company will diligently endeavor to comply with all applicable
securities laws before any stock is issued pursuant to the Options. Without
limiting the generality of the foregoing, the Company may require from the
Optionee such investment representation or such agreement, if any, as counsel
for the Company may consider necessary in order to comply with the Securities
Act of 1933 as then in effect, and may require that the Optionee agree that
any sale of the Shares will be made only in such manner as is permitted by
the Committee. The Committee may in its discretion cause the Shares
underlying the Options to be registered under the Securities Act of 1933 as
amended by filing a Form S-8 Registration Statement covering the Options and
the Shares underlying the Options. Optionee shall take any action reasonably
requested by the Company in connection with registration or qualification of
the Shares under federal or state securities laws.
15. PLAN CONTROLS.
The Options shall be subject to and governed by the provisions of the
Plan. All determinations and interpretations of the Plan made by the
Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND.
The certificates evidencing such shares shall bear the following
restrictive legend, unless and until such shares have been registered in
accordance with the Securities and Exchange Act of 1933, as amended (the
"Act"):
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR THE SECURITIES
LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY ARE
REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS OR ANY APPLICABLE
JURISDICTIONS OR UNLESS PURSUANT TO ANY EXEMPTION THEREFROM.
17. COMPLIANCE WITH APPLICABLE LAWS.
THE CORPORATION'S OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON
EXERCISE OF THE OPTIONS IS EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE
CORPORATION OF ANY REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER
ANY STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENTAL
REGULATORY BODY, OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER
REPRESENTATIONS AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED TO
EXERCISE THE OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION
FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
COMMITTEE SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH
REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND
AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION
(i) IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE
PLACED UPON THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH
ANY REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE COMMITTEE
OR A REFERENCE THERETO.
18. MISCELLANEOUS.
18.1 Further Acts. Each party agrees to perform any further acts and
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.2 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and Company's successors or assigns
and the Consultant's heirs, executors and legal representatives, provided
that this Agreement is a personal services contract and may not be assigned
by Consultant without the prior written consent of Company.
18.3 Attorneys' Fees. If any action is necessary to enforce the terms
of this Agreement, the substantially prevailing party will be entitled to
reasonable attorneys' fees, costs and expenses in addition to any other
relief to which such prevailing party may be entitled.
18.4 Governing Law; Severability. This Agreement will be governed by
and construed in accordance with the laws of the State of Nevada excluding
that body of law pertaining to conflict of laws. If any provision of this
Agreement is for any reason found to be unenforceable, the remainder of this
Agreement will continue in full force and effect.
18.5 Notices. All notices and demands between the parties hereto shall
be in writing and shall be served either by registered or certified mail, and
such notices or demands shall be deemed given and made forty-eight (48) hours
after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made,
and the issuance of the registered receipt therefor. All notices and demands
to Consultant or the Company may be given to them at the following addresses:
If to Optionee: Xxxxx Xxxxx.
0000 Xxxxxxxxx Xx.
Xxxxxxxxx, Xxxx 00000
If to Company: Vital Living, Inc.
0000 X. Xxxxx Xx.
Xxxxx, XX 00000
18.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
18.7 Captions. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
thereof.
18.8 Modification. Any waiver, modification or amendment of any
provision of this Agreement will be effective only if in writing and signed
by the parties hereto.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
"COMPANY"
VITAL LIVING, INC.,
a Nevada corporation
By:
Xxxxxxx X. Xxxxx, C.E.O.
"OPTIONEE"
Xxxxx Xxxxx M.D.
EXHIBIT A TO OPTION
1. DEFINITIONS.
CAPITALIZED TERMS NOT DEFINED IN THIS EXHIBIT A SHALL HAVE THE MEANING
SET FORTH IN THE OPTION TO WHICH THIS EXHIBIT IS ATTACHED. FOR PURPOSES OF
THIS EXHIBIT A:
(A) Effective Date. The term "Effective Date" shall mean the Grant Date of
the Option.
Holder. The term "Holder" shall mean the Optionee.
Registration. The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended, (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement.
Registrable Securities. The term "Registrable Securities" means: (1)
any Common Stock of the Company issued or to be issued upon exercise of the
Option and (2) any shares of Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any option, right or other
security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, any shares of Common Stock
described in clause (1) of this paragraph. Notwithstanding the foregoing,
"Registrable Securities" shall exclude any Registrable Securities sold by a
person in a transaction in which rights under this Exhibit A are not assigned
in accordance with this Agreement.
Registrable Securities Then Outstanding. The number of shares of
"Registrable Securities then outstanding" shall mean the number of shares of
Common Stock of the Company that are Registrable Securities and (l) are then
issued and outstanding or (2) are then issuable pursuant to an exercise of
the Option or pursuant to conversion of securities issuable pursuant to an
exercise of the Option.
SEC. The term "SEC" or "Commission" means the U.S. Securities and
Exchange Commission.
DEMAND REGISTRATIONS.
As long as Holder is engaged by the Corporation, at any time after May
3, 2002 or (b) such time as the Company's Common Stock is traded on the
NASDAQ, AMEX, NYSE or like stock exchange with quantitative and qualitative
listing requirements, the Holder may request that the Company register any
Registrable Securities. The Holder shall be entitled to one (1) such demand
registration per twelve (12) month period (i.e. all registrations must be at
least 12 months plus one day apart). The Optionee shall have the right to
demand that the Company satisfy its obligations pursuant to this Section 3
by use of the SEC's Form S-8, or any successor form thereto, subject to
applicable law, or such other SEC registration statement form as Holder may
choose to request, including Form S-3 or any successor form thereto, or if
Form S-3 is not available, Form S-1 or Form S-2, or any successor form
thereto. Holder shall notify the Company in writing that it intends to offer
or cause to be offered for public sale all or any portion of the Registrable
Shares, and within ten (10) days of the receipt after such notice.
Upon written request of Holder the Company will use its best efforts to
cause all or any part of the Registrable Securities that may be requested by
Holder to be registered under the Securities Act as expeditiously as
possible.
If Holder intends to distribute the Registrable Securities covered by
its request by means of an underwriting, it shall so advise the Company as
part of its request.
Notwithstanding the foregoing, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 3: (i) if the Company shall furnish to Holder a certificate signed
by the President of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration statement to be
effected at such time, and that it is essential to the Company to defer the
filing, in which event the Company shall have the right to defer the filing
of the 3 registration statement for a period of not more than 120 days after
receipt of the request of the Holder under this Section 3; provided, however
that the Company shall not utilize this right more than once in any 12 month
period; or (ii) during the period starting with the date 60 days prior to the
Company's good faith estimate of filing of, and ending on a date 180 days
after the effective date of, a registration statement filed under the
Securities Act (other than a registration relating solely to the sale of
securities to participants in a Company stock plan).
OBLIGATIONS OF THE COMPANY. WHENEVER REQUIRED TO EFFECT THE REGISTRATION OF
ANY REGISTRABLE SECURITIES UNDER THIS AGREEMENT THE COMPANY SHALL, AS
EXPEDITIOUSLY AS POSSIBLE:
Registration Statement. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective, provided,
however, that the Company shall not be required to keep any such registration
statement effective for more than one (1) year.
Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
Prospectuses. Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
Blue Sky. Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
Underwriting. In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement in usual and
customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
Notification. Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
Opinion and Comfort Letter. Furnish, at the request of any Holder
requesting registration of Registrable Securities, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities, and (ii) a "comfort" letter dated as of such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities. If such securities are
not being sold through underwriters, then the Company shall furnish, at the
request and at the sole expense of any Holder requesting registration of
Registrable Securities, on the date that the registration statement with
respect to such securities becomes effective, an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to effect the Registration of their Registrable
Securities that the selling Holder shall furnish to the Company such
information regarding himself, the Registrable Securities held by him, and
the intended method of disposition of such securities as shall be required
to timely effect the Registration of their Registrable Securities.
INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 2:
By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors
of each Holder, any underwriter (as determined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended, (the "1934 Act"), against any losses, claims, damages, or
Liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto;
the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or
any violation or alleged violation by the Company of the Securities Act,
the 1934 Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the 1934 Act or any federal or state
securities law in connection with the offering covered by such registration
statement;
and the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 6.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by such Holder, partner, officer, director, underwriter or controlling person
of such Holder.
By Selling Holders. To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or
any person who controls such Holder within the meaning of the Securities Act
or the 1934 Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling
person, underwriter or other such Holder, partner or director, officer or
controlling person of such other Holder may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only
to the extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, partner,
officer, director or controlling person of such other Holder in connection
with investigating or defending any such loss, claim, damage, liability or
action: provided, however, that the indemnity agreement contained in this
Section shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld; and
provided, further, that the total amounts payable in indemnity by a Holder
under this Section 6.2 in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.
Notice. Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential conflict of interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of liability to the indemnified
party under this Section 6 to the extent the indemnifying party is prejudiced
as a result thereof, but the omission so to deliver written notice to the
indemnified party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 6.
Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that,
insofar as they relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was timely furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
Contribution. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i)
any Holder exercising rights under this Agreement, or any controlling person
of any such Holder, makes a claim for indemnification pursuant to this
Section 6 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this Section 6
provides for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such selling Holder or any
such controlling person in circumstances for which indemnification is
provided under this Section 6; then, and in each such case, the Company and
such Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price of its
Registrable Securities offered by and sold under the registration statement
bears to the public offering price of all securities offered by and sold
under such registration statement, and the Company and other selling Holders
are responsible for the remaining portion; provided, however, that, in any
such case: (A) no such Holder will be required to contribute any amount in
excess of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
Survival. The obligations of the Company and Holders under this
Section 6 shall survive until the fifth anniversary of the completion of any
offering of Registrable Securities in a registration statement, regardless of
the expiration of any statutes of limitation or extensions of such statutes.
TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have no
obligations pursuant to Section 2 with respect to any Registrable
Securities proposed to be sold by a Holder in a registration pursuant to
Section 2 more than five (5) years after the date of this Agreement.
Covenant. The Company hereby covenants to the Holder that at all
times subsequent to the date of the Option, it shall file in a timely
manner consistent with the requirements of the Securities Exchange Act of
1934, as amended (the "34 Act") all reports and other materials required
to be filed pursuant to the 34 Act.
