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Exhibit 10.5
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement, dated October 12, 1999 (this
"Agreement"), is entered into by and between XxxxxXxxxx.xxx, Inc., a Nevada
corporation (the "Company"), and Infusion Capital Partners, L.L.C., a Delaware
limited liability company (the "Consultant").
In consideration of the mutual covenants of the parties set forth in
this Agreement, the parties, intending to be legally bound, agree as follows:
1. Purpose. The Company hereby engages the Consultant, as an
independent contractor of the Company, to provide the services required pursuant
to Section 3 throughout the Term (as defined in Section 2), on the terms and
subject to the conditions set forth herein.
2. Term. The period during which the Consultant shall provide services
to the Company hereunder (the "Term") shall commence on the date hereof and
continue for a period of one year; provided, however, (a) either party may
terminate this Agreement prior to the end of the Term by delivering written
notice of termination to the other party at least twenty (20) days prior to the
effective date of termination, (b) the Consultant may terminate the Term in
accordance with Section 10 and (c) the Company may terminate the Term in
accordance with Section 11.
3. Duties of the Consultant. Throughout the Term, the Consultant's
duties shall be to provide financial advisory services to the Company by
assisting the Company in (a) identifying possible merger or acquisition
opportunities and (b) structuring and implementing the terms of any such merger
or acquisition opportunity that the Company desires to pursue. It is understood
and acknowledged by the parties that the value of the Consultant's advice is not
readily quantifiable and not necessarily in proportion to the amount of time
devoted to performing services, that the Consultant shall not be obligated to
spend any specific amount of time to the rendition of any services hereunder and
that the Company's obligation to deliver that Consultant's compensation
hereunder shall not be contingent on its providing any services other than as
expressly stated above. Nothing in this Agreement shall require the Company to
request that the Consultant perform any particular service at any particular
time or require the Consultant to undertake any duties beyond the scope of the
services required by this Section 3. The Company specifically acknowledges that
the Consultant shall not be providing legal, tax or accounting services.
4. Compensation. In consideration for the services rendered by the
Consultant pursuant to Section 3, the Company shall issue the Consultant a
warrant, in form and substance satisfactory to the Consultant, to purchase
950,000 shares of the Company's common stock at the exercise price of $1.00 per
share (the "Warrant"). Warrant shall be exercisable with respect to (i) 595,000
shares of the Company without regard to the market price of the common stock,
(ii) 177,500 shares of the Company at such time that the market price of the
common stock equals or exceeds 400% of the exercise price for a period of 20
consecutive days prior to exercise and (iii) 177,500 shares of the Company at
such time as the market price of the common stock equals or exceeds 1000% of the
exercise price for a period of 20 consecutive days prior to exercise. For
purposes hereof, "market price" means the average of the closing bid price of
the Company's common stock (or the common stock of any company for which the
Company's common stock may be converted or exchanged). Warrant shall be
exercisable on a cashless basis and may be assigned by the Consultant, in whole
or in part, to any of its members, managers, employees, other persons or
entities who have provided services to or for the Consultant in connection with
its performance hereunder and any family members thereof. The Consultant shall
furnish the Company with prior written notice of any proposed assignment of
Warrant. Warrant shall be issued upon the execution of this Agreement and shall
expire 3 years from the expiration or termination of this Agreement. In the
event that the Company shall not have consummated a merger or acquisition
transaction prior to June 30, 2000 with an opportunity identified by the
Consultant (the parties acknowledge that for purposes of this Agreement that the
Consultant has identified Premier Concepts, Inc. ("Premier") as a possible
merger opportunity for the Company), on such date, the Company shall purchase
from the Consultant, and the Consultant shall sell to the Company, the Warrant
referred to herein for the purchase price of $1.00. The Company shall effect the
registration of the shares of common stock underlying the Warrant pursuant to
the terms and conditions set forth on Exhibit A, hereby incorporated into and
made a part of this Agreement.
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Representations, Warranties and Covenants
5.1 The Company makes the following representations,
warranties and covenants to the Consultant:
(a) The Company has the corporate power and authority to
execute and deliver this Agreement and to perform all of the Company's
obligations as set forth in this Agreement, and the Company has obtained any and
all necessary approvals relating to such execution, delivery or performance.
(b) This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation, enforceable
against the Company in accordance with its terms. The execution, delivery and
performance of this Agreement by the Company does not violate, breach or
contravene the provisions of (i) any charter document, agreement or other
document, by which the Company or any of its assets is bound, (ii) any judgment,
decree, order, ruling of any judicial or arbitral body or any regulatory or
other governmental commission, agency or body having jurisdiction over the
Company or any of its assets or (iii) any applicable law.
(c) All information provided or made available to the
Consultant by or on behalf of the Company will, to the best of the Company's
knowledge at the time the information is provided, not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in light of the circumstances
under which such statements are made. If during or after the Term the Company
becomes aware of any fact or circumstance which gives the Company a reasonable
basis for believing that information previously provided or made available to
the Consultant contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein not
misleading in light of the circumstances under which such statements were made,
the Company shall make prompt written disclosure to the Consultant of such fact
or circumstance.
5.2 The Consultant makes the following representations and
warranties to the Company:
(a) The Consultant has the corporate power and authority
to execute and deliver this Agreement and to perform all of the Consultant's
obligations as set forth in this Agreement, and the Consultant has obtained any
and all necessary approvals relating to such execution, delivery or performance.
(b) This Agreement has been duly executed and delivered
by the Consultant and constitutes a valid and binding obligation, enforceable
against the Consultant in accordance with its terms. The execution, delivery and
performance of this Agreement by the Consultant does not violate, breach or
contravene the provisions of (i) any charter document, agreement or other
document, by which the Consultant or any of its assets is bound, (ii) any
judgment, decree, order, ruling of any judicial or arbitral body or any
regulatory or other governmental commission, agency or body having jurisdiction
over the Consultant or any of its assets or (iii) any applicable law.
6. Confidentiality. The Consultant acknowledges that it has and
throughout the Term will continue to have a relationship of trust and confidence
with the Company. Based on such relationship, the Consultant has and throughout
the Term will continue to be given access to Confidential Information (as
hereinafter defined). The Consultant may disclose Confidential Information to
its managers, officers, employees and counsel to the extent they need to know
such information for the purpose of providing the services required by this
Agreement and provided that as a condition to disclosure they agree to be bound
by the terms and provisions of this Section 6. The Company and its managers,
officers, employees and counsel shall maintain in strict confidence, protect and
safeguard the Confidential Information, and, except as expressly provided in the
preceding sentence, shall not, directly or indirectly, disclose, reveal or make
available to any third party any Confidential Information or use or exploit any
Confidential Information for any purpose whatsoever. In the event that the
Consultant or any of its managers, officers, employees or counsel is requested
or required by law (including by request for information or documents through
proper discovery requests, subpoena or other similar legal process) to disclose
any Confidential Information, such party shall provide the Company with prompt
written notice of any such request or requirement to afford the Company with a
reasonable opportunity to seek a protective order or other appropriate remedy
and shall cooperate
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with the efforts of the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded to its
Confidential Information, unless the Company elects to waive compliance with the
provisions of this Agreement, in the Company's sole discretion. In the absence
of a protective order, other reliable assurance of confidential treatment or
waiver by the Company, if the Consultant or any of its managers, officers,
employees or counsel is nonetheless, in the opinion of counsel, legally
compelled to disclose Confidential Information, the Consultant or its managers,
officers, employees and counsel may, without liability hereunder, disclose only
that portion of the Confidential Information that such counsel advises is
legally required to be disclosed and only to such court, arbitrator, tribunal,
judicial or governmental body or agency or other person that such counsel
advises disclosure is legally required to be made. Any out-of-pocket expenses
that the Consultant would incur in complying with this Section 6 shall be paid
by the Company as a condition to such compliance. "Confidential Information"
means any information, data or facts concerning the business, operations,
finances, assets, affairs or prospects of the Company, including all information
relating to the financial condition, sales or marketing plans or strategies,
pricing policies, condition of assets, methods of doing business, computer
systems, software products (including all programming and source code
information), techniques, know-how and other technical information, financial
projections, budgets, business plans, labor or employment matters,
vendor/supplier lists, subcontractor lists, customer lists, solicitation lists,
contractual arrangements and prospective transactions or relationships with
third parties and all other information which the Company regards as
confidential or proprietary and may wish to keep confidential; provided,
however, Confidential Information will not include information (a) after it
becomes generally available to the public, other than as a result of a breach
hereof or wrongful conduct of the Consultant or any of its managers, officers,
employees or counsel, (b) available to the Consultant on a non-confidential
basis prior to disclosure to the Consultant or any of its managers, officers,
employees or counsel, as demonstrated by the written records of the Consultant,
or (c) after it becomes available to the Consultant on a non-confidential basis
from a source other than the Company or any of its representatives, which source
was not itself bound by a confidentiality agreement or other duty of
confidentiality and did not receive such information, directly or indirectly,
from a person or entity so bound.
7. Other Engagements. Nothing in this Agreement shall restrict or limit
the Consultant's acceptance of other engagements or performance of services for
any third parties, including competitors of the Company, subject at all times to
the Consultant's obligations under Section 6. If the Consultant believes that
any task it is required to perform for a third party is in conflict with the
best interests of the Company, the Consultant shall disclose such conflict to
the Company and, if requested by the Company, shall terminate the Consultant's
engagement with either the Company or the third party, as the Consultant may
choose. The Company acknowledges that the Consultant provides consulting and
other services for Premier and waives all conflicts with the Company's interests
arising out of the Consultant's engagement by Premier and services performed for
Premier.
8. Independent Consultant Status. The relationship of the Consultant to
the Company is and shall remain solely that of an independent contractor. The
Consultant shall not be considered for any purpose, and shall not represent
itself as being, a member, manager, officer, employee, partner, joint venturer,
agent or representative of the Company. The Consultant's authority to act for
the Company shall be limited strictly to such authority as may be granted to the
Consultant in writing from time to time by the Board of Directors of the
Company, and the Consultant shall have no authority, and shall not represent
itself as having authority, to enter into contracts for or otherwise bind the
Company or to take any other action beyond what is expressly permitted pursuant
to this Agreement.
9. Public Announcements. Following the closing of any merger or
acquisition identified by the Consultant involving the Company, the Consultant
shall have the right to place advertisements or make other public announcements
in financial and other newspapers, journals and periodicals, at the Consultant's
own expense, describing the Consultant's services to the Company hereunder,
provided that Consultant has provided a copy of any such advertisement or
announcement to the Company prior to publication thereof and the Company has
consented to such advertisement or announcement.
10. Termination by the Consultant. The Consultant may terminate the
Term at any time, by giving written notice setting forth the effective date of
termination (which may be immediate), after any of the following: (i) the
Company's failure to issue and deliver completely and timely the Warrant due to
the Consultant pursuant to Section 4; (ii) a material misrepresentation by the
Company in or pursuant to this Agreement; (iii) a material
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breach of a warranty or covenant made by the Company in or pursuant to this
Agreement, (iv) conduct on the part of the Company intended to, or reasonably
expected to, cause material damage to the business, assets, operations,
condition, affairs or prospects of the Consultant, or (v) the indictment of the
Company or any of its directors or officers for a crime involving moral
turpitude, whether relating to this Agreement, a merger or acquisition or
otherwise.
11. Termination by the Company. The Company may terminate the Term at
any time, by giving written notice setting forth the effective date of
termination (which may be immediate), after: (i) a material misrepresentation by
the Consultant in or pursuant to this Agreement; (ii) a material breach of a
warranty or covenant made by the Consultant in or pursuant to this Agreement;
(iii) conduct on the part of the Consultant intended to, or reasonably expected
to, cause material damage to the business, assets, operations, condition,
affairs or prospects of the Company, (iv) the indictment of the Consultant or
any of its managers or officers for a crime involving moral turpitude, whether
relating to the Consultant's engagement hereunder or otherwise; or (v) the
Consultant's repeated failure to render advice requested by the Company within
the scope of the Consultant's duties as set forth in Section 3, which failure
persists after written notice to the Consultant.
12. Effect of Termination. Termination of the Term of this Agreement by
the Consultant pursuant to Section 10 or the Company pursuant to Section 11, as
the case may be, shall be the exclusive remedy of the applicable party, and the
non-terminating party shall have no liability to the other party hereunder
except for a breach of Section 6 hereof, for which the Company shall have all of
its other rights and remedies at law, in equity or otherwise. Notwithstanding
any termination of this Agreement, in the event the Company consummates a merger
or acquisition with an opportunity identified by the Consultant (including,
without limitation, Premier Concepts, Inc.) prior to June 30, 2000, termination
of this Agreement shall not affect the Consultant's ownership or other rights
(including, without limitation, cashless exercise, assignability and
registration, as provided herein) in the Warrant issued to it hereunder.
Sections 6, 13 - 25 and this Section 12 shall survive the termination of the
Term for any reason whatsoever and remain in full force and effect indefinitely.
13. Forum Selection for Disputes. Each of the parties to this Agreement
hereby submits to the exclusive, personal jurisdiction of either the Federal
District Court for the Southern District of New York or the Courts of the State
of New York located in New York County for all claims, disputes or controversies
involving the parties hereto and relating to this Agreement. Each party hereby
knowingly, intelligently and voluntarily waives its right to contest the
jurisdiction or venue of either such court, whether on the grounds of
inconvenience or otherwise, and each party hereto knowingly, intelligently and
voluntarily waives its right to initiate a suit or action against the other
party in any other court or forum.
14. Waiver of Jury Trial. IRREVOCABLY AND UNCONDITIONALLY, EACH OF THE
PARTIES HERETO HEREBY KNOWINGLY, INTELLIGENTLY, VOLUNTARILY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVES ITS RIGHTS TO DEMAND TRIAL BY JURY IN ANY LITIGATION,
SUIT OR OTHER ACTION BROUGHT UNDER OR IN CONNECTION WITH THIS AGREEMENT OR UNDER
ANY OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED PURSUANT TO, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY PROVISION OF ANY OF THE FOREGOING OR ANY
OTHER MATTERS INVOLVING BOTH OF THE PARTIES HERETO.
15. Notices and Other Communications. Any notice, consent, demand or
other communication required or permitted under this Agreement shall be made in
writing and shall be deemed to have been duly given if (a) sent by personal
delivery or facsimile, telecopier or similar transmission on a business day
between the hours of 9:00 a.m. and 6:00 p.m. (and shall be deemed given upon
confirmation of receipt, which shall be an automatic machine generated
confirmation in the case of facsimile transmission), (b) mailed by first class
registered or certified mail, return receipt requested, postage prepaid (and
shall be deemed delivered six (6) business days after the date received for
delivery by the United States Postal Service, whether or not accepted by the
addressee) or (c) sent by nationally recognized next-day delivery courier that
guaranties delivery within twenty-four (24) hours, charges prepaid (and shall be
deemed delivered one business day after delivery to said courier), addressed to
the parties hereto at their respective addresses set forth in the preamble to
this Agreement, marked in each case to the attention of the President of the
recipient; however, each party may change the person to be notified on its
behalf or the address of such person from time to time by giving notice of such
change at least ten (10) days in advance.
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16. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto pertaining to the subject matter hereof
and supersedes all prior agreements and understandings of the parties, oral or
written, express or implied, with respect to such subject matter, all of which
are merged herein.
17. Amendments and Waivers. Any provision of this Agreement may be
amended or modified, in whole or in part, and the compliance with any provision
of this Agreement may be waived only with the written consent of (a) both
parties hereto, in the case of an amendment or modification and (b) the party
waiving compliance with a provision, in the case of a waiver.
18. No Waiver. No waiver by any party hereto of any condition, or the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed or construed as a
further or continuing waiver of any such condition or breach or waiver of any
other condition.
19. Severability. If any provision (or any part of any provision) of
this Agreement shall for any reason be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not invalidate, impair or affect the remainder of this
Agreement, which shall continue in full force and effect. If such invalid,
illegal or unenforceable provision would be valid, legal and enforceable if
modified in scope, duration or otherwise, such provision shall be deemed
modified to the minimum extent necessary to render the same valid, legal and
enforceable.
20. Governing Law. This Agreement, its interpretation, performance and
enforcement, and the rights and remedies of the parties hereto, shall be
governed and construed by and in accordance with the laws of the State of New
York, without regard to principles of conflict of laws.
21. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective representatives,
successors and permitted assigns. Either party may assign its rights and
obligations under this Agreement (a) as part of a merger, consolidation or other
transaction effecting an assignment by operation of law or (b) as part of a sale
or transfer of substantially all of its assets, including its business and
goodwill, in which case the successor entity shall confirm in writing at the
time of such sale or transfer that such successor remains bound by this
Agreement. Except as provided in the preceding sentence, neither party may
assign any of its rights or obligations under this Agreement without the prior
written consent of the other party, in such other party's sole discretion.
Further, in connection with any merger or acquisition involving the Company, the
Warrant issued to the Consultant hereunder shall be exchanged for a warrant to
purchase, shares of common stock of the corporation in the merger or acquisition
with respect to which the shares of common stock of the Company shall be
converted or exchanged, with the same terms and provisions as the Warrant.
22. No Third Party Rights. This Agreement is not intended to, and it
shall not, provide any rights whatsoever to any third party, and no third party
shall have any right to assert a claim under or enforce this Agreement against
any party hereto. The services rendered by the Consultant to the Company are
intended for the sole benefit of the Company. Accordingly, unless otherwise
expressly agreed in writing by the Consultant, no one other than the Company is
authorized to rely upon any statement, opinion or advice of the Consultant, and
no statement, opinion or advice of the Consultant shall be reproduced,
disseminated, quoted or referred to at any time in any manner or otherwise used
for any purpose, other than as contemplated by this Agreement.
23. Construction. The masculine form, wherever used herein, shall be
construed to include the feminine and the neuter, and vice versa, where
appropriate. The singular form, wherever used herein, shall be construed to
include the plural, and vice versa, where appropriate. The term "include" (and
correlative terms, such as "includes" and "including") shall not be construed as
a term of limitation in any context but shall be construed as if followed by the
words "without limitation." All references in this Agreement to a "Section"
shall be to the applicable section of this Agreement, unless otherwise specially
provided. The captions of Sections are for the convenience of the parties only;
they form no part of this Agreement and shall not affect its interpretation.
24. Determining Days. In computing the number of days for purposes
hereof, all days shall be counted, including Saturdays, Sundays and legal
holidays in the Commonwealth of Pennsylvania or the State of New
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York (unless only business days are specified); provided, however, that if the
final day of any time period falls on a Saturday, Sunday or legal holiday, the
final day shall be deemed to be the following day which is not a Saturday,
Sunday or holiday. A "business day" shall mean any day which is not a Saturday,
Sunday or legal holiday in the Commonwealth of Pennsylvania or the State of New
York.
25. Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall be deemed to be an original and all counterparts
together shall constitute one and the same instrument. The transmission of a
signature by telecopier will be treated as delivery of an executed original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
XXXXXXXXXX.XXX, INC.
By: _________________________________
Xxxxx Xxxxxxx, President
INFUSION CAPITAL PARTNERS, L.L.C.
By: _________________________________
Xxxxx X. X. Xxxxxx, President
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EXHIBIT A
1. Registration Rights. The Company shall cause all Registrable
Securities (defined below) of the Holders (defined below) to be registered, at
its expense, for sale or resale under the Securities Act (defined below)
pursuant to an appropriate registration statement, as a condition to the closing
of any merger or acquisition involving the Company that results in the Company's
stockholders holding shares of publicly-traded stock and either (a) in
connection with the shares to be registered in connection with any such the
merger or acquisition (i.e. piggyback registration) or (b) pursuant to a
separate registration of the Registrable Securities. The Company shall use its
best diligent efforts to cause such registration statement to become effective
as soon as possible after filing and, in the event of the Merger, concurrently
with the closing. After registration, the Company shall use its best efforts to
maintain a continuously effective registration statement covering such
Registrable Securities until all such Registrable Securities have been sold (or
with respect to Warrant shares, the expiration of the Warrant without exercise).
2. Restrictions. Holders shall not be subject to any agreement
restricting Holders from effecting any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities.
3. Registration Procedures. Unless otherwise required in connection
with the Merger:
3.1 Before filing a registration statement or any amendments
or supplements thereto, the Company shall furnish to the counsel selected by the
Holders copies of all such documents proposed to be filed, and any documents
incorporated therein by reference, and shall cooperate fully with the Holders
and their counsel in drafting or revising any such documents.
3.2 The Company shall furnish to each seller of Registrable
Securities such number of copies of the registration statement, each amendment
and supplement thereto, the prospectus constituting a part of such registration
statement (including each preliminary prospectus), all exhibits to such
registration statement and such other documents as such seller may reasonably
request in writing in order to facilitate the disposition of the Registrable
Securities owned by such seller in compliance with applicable law.
3.3 The Company shall use its best efforts to register or
qualify the Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests, and to cause the Registrable
Securities to be registered with or approved by necessary governmental agencies
or authorities, and shall do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller.
3.4 The Company shall notify each seller of Registrable
Securities, 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 contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and shall prepare all necessary supplements or
amendments to such prospectus to comply with all legal requirements pertaining
thereto.
3.5 The Company shall cause all Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed and shall provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement.
3.6 After the effectiveness of the registration statement, the
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and the provisions of the Securities Act.
3.7 The Company shall otherwise take all other actions
necessary from time to time as, in the reasonable opinion of the Holders and
their counsel, may reasonably be necessary or desirable to allow Holders to
effectuate the public sale or resale of their Registrable Securities.
4. Registration Expenses. All expenses incident to the Company's
performance of or compliance with
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this Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, counsel for the Company and all
independent certified public accountants, underwriters and other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), shall be borne by the Company. The Consultant shall be responsible
for the fees and disbursements of its own counsel and its pro rata amount of any
fees paid to any underwriter of the Registrable Securities.
5. Indemnification
5.1 The Company shall indemnify, to the extent permitted by
law, each Holder of Registrable Securities, its members, managers, officers and
employees and each Person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by or arising out of (i) any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any document
incorporated into any of the foregoing by reference prepared by the Company;
(ii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading; (iii)
written information which contains any material misstatement or omission
furnished by the Company to register the Registrable Securities in any
jurisdiction; (iv) the failure of the Company to file any amendment or
supplement to any registration statement or prospectus as required by the
Securities Act, the Securities Exchange Act or any other applicable law; and (v)
any and all Registration Expenses. The Company shall reimburse each such Holder
and other person entitled to indemnification hereunder for any reasonable legal
fees or other expenses incurred in investigating or defending any such loss,
claim, liability, action or proceeding; provided that the Company shall not be
liable to any such indemnified person hereunder if and to the extent that any
such loss, claim, damage, liability or expense is caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use
therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after The
Company has furnished such Holder with a sufficient number of copies of the
same.
5.2 In connection with any registration statement in which a
Holder is participating, each such Holder will furnish to the Company in writing
such information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from or
arising out of any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such Holder for the specific purpose of including the same in the registration
statement; provided that the obligation to indemnify will be individual to each
Holder and will be limited to the net amount of proceeds received by such Holder
from the sale of Registrable Securities pursuant to such registration statement.
5.3 The indemnification provided for under this Section 5 is
cumulative with and in addition to, not exclusive or in lieu of, all other
rights and remedies which may be available hereunder, under any other agreement
between the Company and a Holder, at law or in equity, and such right of
indemnification and other rights and remedies will remain in full force and
effect regardless of any investigation made by or on behalf of, or knowledge of
or attributable to, the indemnified party or any officer, director or
controlling Person of such indemnified party, and will survive the transfer of
securities and will be equally applicable to any other federal or state law or
regulation requiring registration or qualification of the Registrable Securities
other than the Securities Act and the Securities Exchange Act.
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6. Definitions.
6.1 "Person" means an individual, proprietorship, partnership,
joint venture, corporation, limited liability company, association, trust,
unincorporated organization or other entity or enterprise in any form or a
government or any department, agency or political subdivision thereof.
6.2 "Holder(s)" means the Consultant and any other Person who
at any time holds Registrable Securities (including, without limitation, by
assignment from the Consultant).
6.3 "Registrable Securities" means all shares of the Company's
common stock issued or issuable upon the exercise of the Warrant issued or to be
issued by the Company to the Consultant pursuant to this Agreement. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or available to be sold to the public
through a broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force).
6.4 "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force, or any successor legislation
thereto.
6.5 "SEC" means the United States Securities and Exchange
Commission and any governmental body or agency succeeding to the functions
thereof.
6.6 "Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in force, or any
successor legislation thereto.
7. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Holders in this Agreement.
8. Adjustments Affecting Registrable Securities. The Company will not
cause or permit any stock split, combination of shares or other transaction
resulting in an adjustment or similar effect on Registrable Securities which
could reasonably be expected to adversely affect the ability of the Holders to
include Registrable Securities in a registration undertaken pursuant to this
Agreement or which could reasonably be expected to adversely affect the
marketability of such Registrable Securities in any such registration.
9. Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law or in equity. The parties hereto agree
and acknowledge that money damages will not be an adequate remedy for any breach
of the provisions of this Agreement by the Company and that, in addition to the
recovery of damages or the pursuit of any other right or remedy available at
law, under the Purchase Agreement or otherwise, any Holder may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) and obtain specific performance and
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
10. Successors and Assigns. All covenants and agreements set forth in
this Exhibit A by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors, assigns, heirs and legal
representatives of the parties hereto, whether so expressed or not. Without
limiting the foregoing, the obligations of the Company hereunder shall be
binding upon the corporation that survives the Merger and the rights of the
Consultant shall be applicable with respect to shares of common stock of such
corporation. In addition, whether or not any express assignment has been made,
the provisions of this Agreement which are for the benefit of Holders or
purchasers of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent Holder.
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