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EXHIBIT 10.98
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this
"Amendment") is dated as of July __, 2001 and entered into by and among IVonyx
Group Services, Inc., a Delaware corporation ("IVonyx"), IVonyx, Inc., a
California corporation and a wholly-owned subsidiary of IVonyx ("IVonyx Sub"),
drkoop LifeCare, Inc. (formerly known as Infusion Acquisition Sub, Inc.), a
Delaware corporation ("Acquisition Sub"), and xxxxxx.xxx, Inc., a Delaware
corporation ("Parent" and, together with Acquisition Sub, the "Koop Parties").
IVonyx and IVonyx Sub are collectively referred to herein as the "IVonyx
Parties" or individually as an "IVonyx Party."
R E C I T A L S
WHEREAS, on April 13, 2001, IVonyx, IVonyx Sub, Acquisition Sub
and Parent entered into the Asset Purchase Agreement (the "Purchase Agreement");
and
WHEREAS, pursuant to Section 12.6 of the Purchase Agreement,
IVonyx, IVonyx Sub, Acquisition Sub and Parent now desire to amend the Purchase
Agreement as hereinafter provided.
A M E N D M E N T
NOW, THEREFORE, the Parties agree as follows:
1. All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned thereto in the Purchase Agreement.
2. Section 1.1 is hereby amended by (A) deleting the definitions for the
terms "Average Price", "Proxy Statement" and "Registration Statement" in their
entirety, (B) adding the following definitions in alphabetical order:
""Bonus Amount" shall Five Million Dollars ($5,000,000).
"Reduced Target Amount" shall mean Two Million Dollars ($2,000,000)."
3. Section 1.2 is hereby amended by (A) inserting the words "Additional
Shares" (immediately below the listing of the term "Acquisition Sub Financial
Statements") as a term defined in Section 2.3, (B) inserting the words "Bonus
Earnout Payment" (immediately below the listing of the term "Audited Financial
Statements") as a term defined in Section 2.5(a), (C) inserting the words
"Contingent Shares Right" (immediately below the listing of the term "Contested
Claim") as a term defined in Section 2.3, (D) inserting the words "Investment
Representation Letter and Lock-Up Agreement" (immediately below the listing of
the term "Independent Accountant") as a term defined in Section 2.3 , (E)
inserting the words "Preferred
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Stockholders" (immediately below the listing of the term Permitted Transferee)
as a term defined in Section 4.26(e); (F) inserting the words "Reduced Target
Earnout Payment" (immediately below the listing of the term "Purchase Price
Allocation Schedule") as a term defined in Section 2.5(a), (G) inserting the
words "Target Earnout Payment" (immediately below the listing of the term
"Shares") as a term defined in Section 2.5(a), (H) inserting the word "Transfer"
(immediately below the listing of the term "Termination Date") as a term defined
in Section 11.10, and (I) inserting the words "Unpaid Cash Payment" (immediately
below the listing of the term "Uncontested Claim") as a term defined in Section
2.5(a).
4. Section 2.3 is hereby deleted and replaced with the following Section
2.3:
"2.3 Consideration. On the Closing Date (as defined below), upon
the terms and subject to the conditions set forth herein, in
consideration for the transfer of the Assets of the IVonyx Parties
pursuant to Section 2.1 of this Agreement, Parent shall pay an aggregate
purchase price (the "Purchase Price") comprised of: (a) Two Million
Dollars ($2,000,000.00) in cash which shall be payable at the Closing by
certified or bank cashier's check or by wire transfer of immediately
available funds to a trust account established by IVonyx's counsel or
such other account designated by IVonyx, (b) the issuance by Parent to
IVonyx of five million (5,000,000) shares of Common Stock (the "Initial
Shares"), of which stock certificates evidencing ninety percent (90%) of
the Shares (the "Non-Escrowed Shares") shall be delivered to IVonyx at
the Closing and the remainder shall be placed in escrow in accordance
with Section 2.4 below, and (c) the contingent right (the "Contingent
Shares Right") to receive additional shares of Common Stock (the
"Additional Shares" and collectively with the Initial Shares, the
"Shares") pursuant to Section 2.5 below. It is the intention of IVonyx
to immediately distribute the Initial Shares and allocate the Contingent
Shares Right to its Preferred Stockholders (as defined in Section
4.26(e)) and, promptly following the Closing, IVonyx shall distribute
the Initial Shares and allocate the Contingent Shares Right to its
Preferred Stockholders (it being understood that the Contingent Shares
Right shall be allocated among the Preferred Stockholders
proportionately to the relative number of Initial Shares distributed to
each Preferred Stockholder); provided that such distribution shall be
subject to each Preferred Stockholder that is to receive any Initial
Shares in connection with such distribution (and any transferee thereof)
completing, executing and delivering to Parent an Investment
Representation Letter and Lock-Up Agreement in the form of Exhibit E
attached hereto (the "Investment Representation Letter and Lock-Up
Agreement") or otherwise agreeing in writing, in a manner reasonably
acceptable to Parent, to be bound by the transfer restrictions contained
in Article XI hereof. At the written request of IVonyx, the Non-Escrowed
Shares shall be issued directly to the Preferred Stockholders to which
IVonyx distributes such Non-Escrowed Shares pursuant to the preceding
sentence; provided, however that each such Preferred Stockholder
completes, executes and delivers to Parent an Investment Representation
Letter and Lock-Up Agreement or otherwise agrees in writing, in a manner
reasonably acceptable to Parent, to be bound by the transfer
restrictions contained in Article XI hereof."
5. Section 2.4 is hereby amended by (A) deleting each reference to the
word "Shares" in the first sentence thereof and replacing them with the words
"Initial Shares" and
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(B) deleting the word "stockholders" in the last sentence thereof and replacing
it with the words "Preferred Stockholders".
6. Section 2.5(a) is hereby deleted and replaced with the following
Section 2.5(a):
"2.5 Earnout.
(a) In connection with this Section 2.5, Acquisition Sub
shall deliver to the Representative no later than sixty (60) days
following the end of the twelfth (12th) full calendar month following
the Closing Date (such twelve (12) full month period beginning with the
first day of the first month following the Closing Date and ending on
the end of the twelfth (12th) full calendar month of such date, the
"Earnout Period"), financial statements of Acquisition Sub setting forth
the amount of aggregate Net Income of Acquisition Sub (the "Acquisition
Sub Financial Statements"), along with a reasonably detailed description
of the calculations of the amount of the aggregate Net Income. In the
event Net Income of Acquisition Sub: (i) equals or exceeds the Bonus
Amount, Acquisition Sub shall (A) pay to IVonyx $2,000,000, of which
$1,000,000 shall be paid in four equal quarterly installments with the
first installment due on the first day of the month following the end of
the third Earnout Period, and (B) issue to IVonyx 7,500,000 shares of
Common Stock (the "Bonus Earnout Payment"); (ii) equals or exceeds the
Target Amount and is less than the Bonus Amount, Acquisition Sub shall
(A) pay to IVonyx $2,000,000, of which $1,000,000 shall be paid in four
equal quarterly installments with the first installment due on the first
day of the month following the three month period after the end of the
Earnout Period, and (B) issue to IVonyx 2,500,000 shares of Common Stock
(the "Target Earnout Payment"); or (iii) does not equal or exceed the
Target Amount but equals or exceeds the Reduced Target Amount,
Acquisition Sub shall (A) pay to IVonyx $666,667 plus an incremental 33%
of the amount by which Net Income exceeds the Reduced Target Amount, to
be paid in four equal quarterly installments with the first installment
due on the first day of the month following the three month period after
the end of the Earnout Period (the "Reduced Target Earnout Payment,"
with each of the Bonus Earnout Payment and the Target Earnout Payment
referred to herein as an "Earnout Payment"), in each case in accordance
with the terms of this Section 2.5. Unless the Representative gives
written notice to Acquisition Sub on or before the twentieth (20th)
calendar day after the Representative's receipt of the Acquisition Sub
Financial Statements, specifying in reasonable detail all disputed items
and the basis therefor, the Representative shall be deemed to have
accepted the Acquisition Sub Financial Statements and Acquisition Sub
shall have (i) no obligation to pay any Earnout Payment to IVonyx if Net
Income is less than the Reduced Target Amount or (ii) an obligation to
pay the applicable Earnout Payment if Net Income is above the Reduced
Target Amount. If the Representative so notifies Acquisition Sub of his
objection to the Acquisition Sub Financial Statements, the
Representative and Acquisition Sub shall, within twenty (20) days
following such notice, attempt to resolve their differences in good
faith, and any resolution by them as to any disputed amounts shall be
final, binding and conclusive. If, at the end of such twenty (20) day
period, the Representative and Acquisition Sub are unable to resolve
such disagreements, the independent accountants of Acquisition Sub and
the Representative shall jointly select a third independent auditor of
recognized national standing to resolve any remaining
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disagreements, which third independent auditor shall not have provided
accounting services to Acquisition Sub, Parent or any IVonyx Party
during the five (5) year period immediately preceding the Closing Date,
and which auditor so selected will be set forth in writing and will be
conclusive and binding upon the Parties (the "Independent Accountant").
Acquisition Sub and the Representative shall use their reasonable
efforts to cause the Independent Accountant to make its determination
within thirty (30) calendar days of accepting its selection. The
determination by the Independent Accountant shall be final, binding and
conclusive on the Parties. The fees and expenses of the Independent
Accountant shall be borne by the Representative if the Net Income
determined by the Independent Accountant is less than the amount that
would qualify IVonyx to receive the next highest Earnout Payment (e.g.,
if the Acquisition Sub Financial Statements delivered by Acquisition Sub
indicate that Net Income is less than the Target Amount, the fees and
expenses of the Independent Accountant would be borne by IVonyx unless
the Independent Accountant determined that actual Net Income exceeded
the Target Amount); otherwise, the fees and expenses of the Independent
Accountant shall be borne by Acquisition Sub. Subject to Section 10.13
below, within ten (10) calendar days after (i) receipt by the
Representative of Acquisition Sub Financial Statements which reflect
aggregate Net Income equal to or in excess of the Reduced Target Amount,
or (ii) in the event of a disagreement, the date of determination by the
Independent Accountant that aggregate Net Income equals or exceeds the
Reduced Target Amount, Acquisition Sub shall pay the Bonus Earnout
Payment, the Target Earnout Payment or the Reduced Earnout Payment, as
applicable, to IVonyx; provided, however, that if the Independent
Accountant determines that IVonyx is entitled, under this Section 2.5,
to an Earnout Payment from Acquisition Sub different from the Earnout
Payment that Acquisition Sub would be obligated to pay based on the
Acquisition Sub Financial Statements delivered by Acquisition Sub,
Acquisition Sub shall pay the cash component of the applicable Earnout
Payment that was not yet paid (any such cash portion, the "Unpaid Cash
Payment"), if any, with interest from the period commencing on the date
such Unpaid Cash Payment would have been required to be paid had the
Acquisition Sub Financial Statements reflected the determination of the
Independent Accountant when initially delivered by Acquisition Sub to
the date the Unpaid Cash Payment is actually paid, at the compound rate
of ten percent (10%) per annum."
7. Section 2.5(b) is hereby deleted and replaced with the following
Section 2.5(b):
"(b) The cash component, if any, of any Earnout Payment
(and any interest thereon) shall be made by cashiers or certified bank
check or by wire transfer of immediately available funds to an account
specified by IVonyx. Any Earnout Payment shall, to the extent required
by law, be deemed to include interest at the applicable federal rate
under the Code (it being understood that such deemed interest will not
affect the amount due and payable under this Section 2.5). At the
written request of IVonyx, the Additional Shares, if any, shall be
issued directly to the stockholders to which IVonyx distributed
Non-Escrowed Shares pursuant to Section 2.3 in proportion to the
relative portion of the Contingent Shares Right allocated to each
Preferred Stockholder."
8. Section 2.5(e) is hereby amended by deleting the last paragraph
thereof and replacing it with the following:
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"In the event that one or more Events of Default described in
subsection (i) above shall occur, then the applicable Earnout Payment
shall be immediately due and payable if Acquisition Sub fails to cure
such Event of Default within five (5) business days of receipt of
written notice thereof. In the event that one or more Events of Default
described in subsections (ii) or (iii) above shall occur, then the
Target Earnout Payment shall be immediately due and payable without
demand, notice or declaration of any kind whatsoever, notwithstanding
whether or not the Net Income equals or would have equaled the Target
Amount. In the event of the occurrence of any Event of Default, IVonyx
may exercise any remedies set forth in this Section 2.5 or otherwise in
this Agreement or any other rights and remedies available to IVonyx
under applicable law."
9. Section 3.1 is hereby amended to add to the end the following: "The
parties shall exert best efforts to satisfy all conditions as soon as possible
on or after August 1, 2001, time being of the essence in the Closing of the
transactions that are the subject of the Agreement, as amended hereby."
10. Section 3.2 is hereby amended by (A) deleting the words "Xxxxxx
Xxxxxx Xxxxxx LLP" from clause (k) and replacing them with the words "Xxxxx &
Lardner" and (B) adding the following clause (q):
"(q) Investment Representation Letters and Lock-Up
Agreements previously completed and executed by each Preferred
Stockholder of IVonyx that will receive Initial Shares from IVonyx
following consummation of the transactions contemplated hereby."
11. Section 4.24 is hereby amended by (A) deleting each reference to the
words "Registration Statement" therein and replacing them with the words
"Information Statement" and (B) deleting the words "filed with the SEC and at
the time it becomes effective under the Securities Act" therein and replacing
them with the words "delivered to the stockholders of IVonyx".
12. Article IV is hereby amended by adding the following Section 4.26:
"4.26 Investor Representations.
(a) IVonyx understands that (i) the Shares have not been
registered under the Securities Act, nor qualified under the securities
laws of any other jurisdiction, (ii) the Shares cannot be resold unless
they subsequently are registered under the Securities Act and qualified
under applicable state securities laws or foreign securities laws,
unless exemptions from such registration and qualification requirements
are available, and (iii) IVonyx has no right to require such
registration or qualification (except pursuant to Article XI hereof).
(b) IVonyx is an "accredited investor" (as such term is
defined in Section 501 of Regulation D of the Securities Act) and has
substantial knowledge and experience in financial and business matters,
has specific experience making investment decisions of a similar nature,
and is capable, without the use of a financial advisor, of utilizing and
analyzing the information made available in connection with the
acquisition of the Shares
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under this Agreement and of evaluating the merits and risks of an
investment in the Shares.
(c) IVonyx is able to bear the economic risk of its
investment in the Shares for an indefinite period of time because (i)
there is no assurance that the business of Acquisition Sub will be
economically successful and (ii) the Shares have not been registered
under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or a valid exemption
from such registration is available and are subject to restrictions on
transfer as provided in the Article XI hereof.
(d) IVonyx has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Shares, has had full access to such other information concerning
Parent as it has requested and has not received and is not relying upon
any written offering literature or prospectus. Without limiting the
generality of the foregoing, IVonyx is not relying upon any oral
representations which are in any manner inconsistent with the written
information contained in such documents.
(e) IVonyx represents that (i) only the Preferred
Stockholders are entitled to receive any Shares pursuant to IVonyx's
Certificate of Incorporation in connection with IVonyx's distribution of
such Shares; (ii) there are 180 holders of record of its preferred
stock; (iii) Schedule 4.26(e) hereto is a true, complete and correct
list of the preferred stockholders of IVonyx (the "Preferred
Stockholders"); (iv) except as identified on Schedule 4.26(e), each
Preferred Stockholder is an accredited investor; and (v) except as
identified on Schedule 4.26(e), each Preferred Stockholder has executed
an Investment Representation Letter and Lock-Up Agreement and (vi)
IVonyx has made available a purchaser representative (as defined in
Regulation D promulgated under the Securities Act) to advise each
Preferred Stockholder with respect to whether to consent to the sale of
the Assets and the other transactions contemplated hereby.
(f) Each IVonyx Party acknowledges that the Koop Parties
are entering into this Agreement in reliance upon IVonyx's
representations and warranties herein, for purposes of establishing a
valid exemption from the registration requirements of the Securities
Act."
13. Section 5.6 is hereby amended by (A) deleting each reference to the
words "Registration Statement" therein and replacing them with the words
"Information Statement" and (B) deleting the words "filed with the SEC and at
the time it becomes effective under the Securities Act" and replacing them with
the words "delivered to the stockholders of IVonyx".
14. Section 6.10 is hereby amended by deleting the words "Registration
Statement" from the second sentence thereof and replacing them with the words
"Information Statement".
15. Section 6.11 is hereby deleted in its entirety and replaced with the
following Section 6.11:
"6.11 Information Statement. As promptly as reasonably
practicable after the receipt of the Required IVonyx Financial
Statements, the IVonyx Parties and Parent will prepare the Information
Statement. The IVonyx Parties and Parent shall cooperate with
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each other in the preparation of the Information Statement and shall
promptly supply any information which may be required to be included in
the Information Statement. As promptly as practicable following
completion of the Information Statement, IVonyx shall cause the
Information Statement to be mailed to its stockholders for the purpose
of obtaining the requisite written consent of the Preferred Stockholders
for the sale of the Assets and the other transactions contemplated
hereby."
16. Section 8.6 is hereby deleted in its entirety and replaced with the
following Section 8.6:
"8.6 [Reserved]."
17. Section 9.9 is hereby deleted in its entirety and replaced with the
following Section 9.9:
"9.9 [Reserved]."
18. Section 10.8(a) is hereby amended by deleting each reference to the
word "Shares" and replacing it with the words "Escrow Shares".
19. Article XI is hereby deleted in its entirety and replaced with the
following Article XI:
"ARTICLE XI.
REGISTRATION RIGHTS; TRANSFER RESTRICTIONS
11.1 Certain Definitions. For purposes of this Article XI:
(a) 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, and the
declaration or ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term "Registrable
Securities" means (i) the Initial Shares that are issued to IVonyx (and
distributed to IVonyx's Preferred Stockholders) and the Additional
Shares, if applicable, that are issued to IVonyx's Preferred
Stockholders, pursuant to Article II hereof and (ii) any shares of
Common Stock that may be issued as a dividend or other distribution
(including shares of Common Stock issued in a subdivision and split of
Parent's outstanding Common Stock) with respect to, or in exchange for,
or in replacement of, shares of Common Stock described in clause (i) or
in this clause (ii) of this Section 11.1(b); excluding in all cases,
however, from the definition of "Registrable Securities" any such shares
that are: (w) registered under the Securities Act other than pursuant to
a registration statement filed pursuant to this Agreement; (x) sold by a
person in a transaction in which rights under this Article XI with
respect to such shares are not assigned in accordance with the terms of
this Article XI; (y) sold pursuant to a registration statement filed
pursuant to this Agreement; or
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(z) sold pursuant to Rule 144 promulgated under the Securities Act or
otherwise sold to the public. Only shares of Common Stock shall be
Registrable Securities. Except as provided in clause (ii) of the first
sentence of this Section 11.1(b), the term "Registrable Securities" does
not include any shares of Common Stock that were not issued pursuant to
Article II.
(c) Holder. The term "Holder" means IVonyx or any
assignee of record of any Registrable Securities to whom rights under
this Article XI have been duly assigned in accordance with Section 11.9.
11.2 Piggyback Registration Rights. Parent shall notify all
Holders of Registrable Securities in writing at least twenty (20) days
prior to filing any registration statement under the Securities Act for
purposes of effecting a public offering of Common Stock, excluding
registration statements (i) relating to any employee benefit plan, (ii)
on Form S-4 or any successor form relating to a transaction covered by
Rule 145 promulgated under the Securities Act, (iii) relating to any
underwritten public offering or any other public offering of securities
by Parent for capital raising purposes and (iv) filed prior to the first
anniversary of the Closing Date, and will afford each such Holder an
opportunity to include in such registration statement all or any part of
the Registrable Securities then held by such Holder. Each Holder
desiring to include in any such registration statement all or any part
of the Registrable Securities held by such Holder shall, within ten (10)
days after receipt of the above-described notice from Parent, so notify
Parent in writing, and in such notice shall inform Parent of the number
of Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by
Parent, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by Parent with
respect to offerings of its securities, all upon the terms and
conditions set forth herein.
11.3 Limitations. Notwithstanding the provisions of Section 11.2
above, Parent shall not be obligated to effect any registration,
qualification or compliance of Registrable Securities pursuant to
Section 11.2 of this Agreement, and the Holders shall not be entitled to
sell Registrable Securities pursuant to any registration statement filed
under Section 11.2 of this Agreement, as applicable:
(a) if Parent shall furnish to the Holders a certificate
signed by an officer of Parent stating that, in the good faith judgment
of such officer, it would be detrimental to Parent and its stockholders
for such registration statement to be in effect or such sales to be made
at such time, due, for example, to the existence of a material
development or potential material development involving Parent which
Parent would be obligated to disclose in the prospectus contained in the
registration statement, which disclosure would, in the good faith
judgment of such officer, be premature or otherwise inadvisable at such
time or could have a material adverse affect upon Parent and its
stockholders, in which event Parent will have the right to defer the
filing of any such registration statement or such sales for a period of
not more than sixty (60) days after delivery of such
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certificate to the Holders; provided, however, that Parent may not
exercise this deferral right more than once in a six month period;
(b) if Parent is acquired and Common Stock ceases to be
publicly traded;
(c) in any particular jurisdiction in which Parent would
be required to qualify to do business or to file a general consent to
service of process in effecting such registration, qualification or
compliance, unless Parent is already subject to service of process in
such jurisdiction;
(d) if the SEC refuses to declare such registration
effective due to the participation of any particular Holder in such
registration (unless such Holder withdraws all such Holder's Registrable
Securities from such registration statement); or if the manner in which
any Registrable Securities are disposed of pursuant to the registration
statement is not included within the plan of distribution set forth in
the prospectus for the registration statement; or
(e) if the registration statement triggering such
piggyback registration rights is withdrawn for any reason whatsoever.
11.4 Shares Otherwise Eligible for Resale. Notwithstanding
anything herein to the contrary, Parent shall not be obligated to effect
or continue to keep effective any such registration, registration
statement, qualification or compliance with respect to the Registrable
Securities held by any particular Holder:
(a) if all the Registrable Securities then held by such
Holder may be resold by such Holder within a three month period without
registration under the Securities Act pursuant to the provisions of Rule
144 promulgated under the Securities Act (or successor provisions), or
otherwise; or
(b) if all Registrable Securities have been registered
and sold pursuant to a registration effected pursuant to this Agreement
and/or have been transferred in transactions in which registration
rights hereunder have not been assigned in accordance with this
Agreement.
11.5 Expenses. Parent shall pay all expenses reasonably incurred
in connection with any registration effected by Parent pursuant to this
Agreement (excluding brokers' discounts and commissions), including all
filing, registration and qualification, printers', legal (including, the
reasonable fees and expenses of one counsel for the Holders as a group)
and accounting fees. Parent shall reimburse the Holders of Registrable
Securities being registered pursuant to such registration for the
reasonable fees and disbursements of not more than one counsel chosen by
a majority of such Registrable Securities being registered pursuant to
such registration.
11.6 Obligations of Parent. Subject to Sections 11.2, 11.3 and
11.4 above, when required to effect the registration of any Registrable
Securities under the terms of this Agreement, Parent will, as
expeditiously as reasonably possible:
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(a) furnish to the Holders such number of copies of the
prospectus included in registration statement and amendments or
supplements thereto, 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;
(b) notify each Holder of Registrable Securities
promptly and, if requested by such Holder, confirm such notification in
writing promptly (i) when a registration statement has become effective
and when any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to a
registration statement has become effective, (iii) of the issuance by
the SEC or any state securities authority of any stop order suspending
the effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by Parent of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of any
determination by Parent that a post-effective amendment to a
registration statement would be appropriate;
(c) use all reasonable efforts to (i) register and
qualify the securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions in the United
States as will be reasonably requested by the Holders; and (ii) cause
such Registrable Securities to be registered with or approved by such
other governmental agencies or authorities, including the National
Association of Securities Dealers as may be necessary by virtue of the
business and operations of Parent; provided, however, that Parent will
not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this paragraph (c), or (B) consent to general service of process in any
such jurisdiction except as may be required by the Securities Act; and
(d) promptly notify each Holder of Registrable
Securities covered by such registration statement, 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
and, subject to the provisions of this Agreement, at the request of any
Holder, prepare and furnish to each Holder of Registrable Securities
then outstanding a reasonable number of copies of a supplement to or an
amendment of the prospectus as may be necessary to correct the untrue
statement or omission.
11.7 Furnish Information. It shall be a condition precedent to
the obligations of Parent to take any action pursuant to this Article XI
that the selling Holders will furnish to Parent such information
regarding themselves, the Registrable Securities held by them, and the
intended method of disposition and plan of distribution of such
Registrable Securities as shall be requested by Parent and to timely
effect the registration of their Registrable Securities.
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11.8 Indemnification.
(a) By Parent. To the extent permitted by law, Parent
will indemnify, defend and hold harmless each Holder against any losses,
claims, damages, or liabilities (joint or several), including all
reasonable legal and other expenses reasonably incurred by a Holder to
which such Holder may become subject under the Securities Act or other
U.S. 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"):
(i) any untrue statement or alleged untrue
statement of a material fact contained in a registration statement filed
by Parent pursuant to this Agreement pursuant to which Registrable
Securities are sold, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state
in such registration statement, preliminary prospectus or final
prospectus or any amendments or supplements thereto, a material fact
required to be stated therein, or necessary to make the statements
therein not misleading; or
(iii) any violation or alleged violation by
Parent of the Securities Act, the Exchange Act, any U.S. federal or
state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any U.S. federal or state securities
law in connection with the offering of Registrable Securities covered by
such registration statement;
provided however, that the indemnity agreement
contained in this Section 11.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the written consent of Parent (which
consent shall not be unreasonably withheld), nor shall Parent 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.
(b) By Selling Holders. To the extent permitted by law,
(i) each selling Holder will indemnify and hold harmless Parent, each of
its directors, each of its officers who have signed the registration
statement, each Person, if any, who controls Parent within the meaning
of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement, against any losses,
claims, damages or liabilities (joint or several) to which Parent or any
such director, officer, controlling person, underwriter or other such
Holder may become subject under the Securities Act, the Exchange 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
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connection with such registration; (ii) and each such Holder will
indemnify and reimburse Parent or any such director, officer,
controlling person, underwriter or other Holder for any reasonable
attorneys' fees and other expenses reasonably incurred by Parent or any
such director, officer, controlling person or other Holder in connection
with investigating or defending any such loss, claim, damage, liability
or action, as incurred. Each selling Holder's liability pursuant to this
Section 11.8(b) shall be limited to an amount equal to the net proceeds
received by such selling Holder pursuant to sales under the registration
statement, except in the case of fraud by such Holder.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 11.8 of notice of the commencement of any
action (including any governmental action) against such indemnified
party, such indemnified party will, if a claim for indemnification or
contribution in respect thereof is to be made against any indemnifying
party under this Section 11.8, deliver to the indemnifying party a
written notice of the commencement thereof and, if the indemnifying
party is Parent, Parent shall have the right and obligation to control
the defense of such action, and if Parent fails to defend such action it
shall indemnify and reimburse the selling Holders for any reasonable
attorneys' fees and other expenses reasonably incurred by them in
connection with investigating or defending such action; provided,
however, that: (i) Parent shall also have the right, at its option, to
assume and control the defense of any action with respect to which
Parent or any person entitled to be indemnified by the selling Holders
under Section 11.8(b) is entitled to indemnification from the selling
Holders; (ii) the indemnified party or parties shall have the right to
participate at its own expense in the defense of such action and (but
only to the extent agreed in writing with Parent and any other
indemnifying party similarly noticed) to assume the defense thereof with
counsel mutually satisfactory to the parties; and (iii) an indemnified
party shall have the right to retain its own counsel, with the fees and
expenses of such counsel 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 an actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure of an
indemnified party to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 11.8, but the omission so to
deliver written notice to the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any indemnified
party otherwise than under this Section 11.8.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of Parent and the 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 or
supplemented prospectus on file with the SEC and effective at the time
the sale of Registrable Securities under such registration statement
occurs (the "Amended Prospectus"), such indemnity agreement shall not
inure to the benefit of any person if a copy of the Amended Prospectus
was furnished to the indemnified party and was not furnished to the
person asserting the loss, liability, claim or damage in the action
giving
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rise to indemnity claims under this Section 11.8, at or prior to the
time such action is required by the Securities Act.
11.9 Assignment of Registration Rights. Notwithstanding anything
herein to the contrary, the rights of a Holder under Article XI may be
assigned only with Parent's express prior written consent, which may be
withheld in Parent's sole discretion; provided, however, that the rights
of a Holder under Article XI may be assigned without Parent's express
prior written consent to (i) any stockholder of IVonyx to which IVonyx
distributes Registrable Securities in accordance with Article II hereof
or (ii) any Permitted Transferee of such stockholder in accordance with
Section 11.10 or (iii) after the termination of the restrictions on
transfer set forth in Section 11.10, any transferee of Holder that
acquires at least $25,000 worth of Common Stock valued as of the date of
transfer; provided, however, that in all cases it shall be a condition
to such assignment that the assignee execute an agreement stating that
the assignee is receiving and holding such shares of Common Stock
subject to the provisions of this Section 11.9, and there shall be no
further assignment of the rights of a Holder under this Article XI
except in accordance with this Section 11.9. Any attempt to assign any
rights of a Holder under Article XI without Parent's express prior
written consent in a situation in which such consent is required by this
Section shall be null and void and without effect. Subject to the
foregoing restrictions, all rights, covenants and agreements in Article
XI by or on behalf of the parties hereto will bind and inure to the
benefit of the respective permitted successors and assigns of the
parties hereto.
11.10 Restrictions on Transfer.
(a) For a period of one (1) year from the Closing Date,
IVonyx shall not (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any Initial Shares (as defined in
Section 2.3) or any securities convertible into or exercisable or
exchangeable for Initial Shares (including, without limitation,
securities convertible into or exercisable or exchangeable for Initial
Shares that may be deemed to be beneficially owned by IVonyx, any such
stockholder or any Permitted Transferee in accordance with the rules and
regulations of the SEC), or (ii) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Initial Shares (any such
transaction, a "Transfer"); provided, however, that IVonyx may Transfer
Initial Shares in accordance with Article II to any Preferred
Stockholder of IVonyx that has completed, executed and delivered to
Parent an Investment Representation Letter and Lock-Up Agreement.
Following the expiration of the one (1) year period, to the extent
IVonyx holds any Initial Shares, such Initial Shares may only be
Transferred by IVonyx pursuant to an effective registration statement
under the Securities Act or in a transaction exempt from the
registration requirements of the Securities Act in accordance with this
Section 11.10. Unless there is an effective registration statement under
the Securities Act covering the Transfer of the Initial Shares,
following the expiration of such one (1) year period, IVonyx may not
Transfer any Initial Shares without first notifying Purchaser of its
intention to effect such Transfer, which notice must be accompanied by a
written opinion of legal counsel reasonably satisfactory to Parent to
the effect that the proposed
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Transfer of the Initial Shares may be effected without registration
under the Securities Act (it being understood that any holders subject
to Rule 145 Letter Agreements shall be subject to the terms of the Rule
145 Letter Agreements).
(b) Notwithstanding the preceding paragraph, (i) if a
potential transferor of any Shares is an individual, such Person may
transfer any or all of such Shares in private transactions (A) to or for
the benefit of members of such Person's immediate family, (B) to any
trust, limited liability company or partnership for the direct or
indirect benefit of (or directly or indirectly owned by) such Person or
such Person's immediate family or (C) by gift, will or intestacy; or
(ii) if a potential transferor of any Shares is an entity or a trust,
such Person may transfer any or all of such Shares in private
transactions (A) to entities controlling, controlled by or under common
control with such Person, or (B) as a distribution to partners, members
or stockholders of such Person (each, a "Permitted Transfer" and each
transferee, a "Permitted Transferee"); provided, however, that in all
cases it shall be a condition to the Permitted Transfer that the
Permitted Transferee execute an agreement stating that the Permitted
Transferee is receiving and holding such Shares subject to the
provisions of this Article XI, and there shall be no further transfer of
such Shares except in accordance with this Article XI; provided further,
that if any such transfer is not made pursuant to an effective
registration statement, in all cases it shall be a condition to the
Permitted Transfer that Parent shall have received prior notice of such
transfer accompanied by a written opinion of legal counsel reasonably
satisfactory to Parent to the effect that the proposed transfer may be
effected without registration under the Securities Act; provided further
that if the Permitted Transferee may be deemed an "affiliate" of Parent
(as that term is used in Rule 145 promulgated under the Securities Act),
such Permitted Transferee shall also execute a Rule 145 Letter
Agreement.
(c) Notwithstanding the foregoing, in no event shall
IVonyx transfer the Contingent Shares Right to any Person other than to
the Preferred Stockholders to which IVonyx distributed Non-Escrowed
Shares pursuant to Section 2.3 contemporaneous with the distribution of
such Non-Escrowed Shares and in proportion to the relative number of
Non-Escrowed Shares distributed to such Preferred Stockholders, and in
no event shall any Preferred Stockholders to which a portion of the
Contingent Shares Right is so transferred have the right to Transfer the
Contingent Shares Right to any Person, including Permitted Transferees,
and any purported Transfer of the Contingent Shares Right prohibited by
this Section 11.10(c) shall be null and void.
(d) IVonyx agrees, and each Preferred Stockholder and
Permitted Transferee shall agree as a condition to the transfer of
Shares to such Person, that Parent may, and that such Person will, (a)
with respect to any Shares that are subject to the restrictions set
forth in Article XI for which such Person is the record holder, cause
the transfer agent for Parent to note stop transfer instructions with
respect to such shares on the transfer books and records of Parent and
(b) with respect to any Shares that are subject to the restrictions set
forth in Article XI for which such Person is the beneficial holder but
not the record holder, cause the record holder of such Shares to cause
the transfer agent for Parent to note stop transfer instructions with
respect to such Shares on the transfer books and records of Parent.
IVonyx acknowledges, and each stockholder of
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IVonyx and Permitted Transferee of IVonyx shall acknowledge as a
condition to the transfer of Shares to such Person, that each
certificate representing the Shares shall bear a legend evidencing the
provisions of this Article XI. Without limiting the restrictions herein,
any sale, transfer or other disposition of the Shares by IVonyx, a
stockholder of IVonyx or any Permitted Transferee shall remain at all
times subject to applicable securities laws, including without
limitation the resale restrictions imposed by Rules 144 and 145
promulgated under the Securities Act."
20. The Exhibits to the Purchase Agreement are hereby amended by
inserting the exhibit attached hereto as Exhibit E thereof.
21. Unless otherwise indicated, all references in this Amendment to
designated "sections" are to the designated Sections of the Purchase Agreement.
22. Except as modified by the foregoing, the terms and conditions of the
Purchase Agreement shall remain in full force and effect.
23. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
24. This Amendment shall be construed, interpreted and the rights of the
Parties determined in accordance with the laws of the State of California
(without giving effect to its conflicts of law principles).
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
IVONYX:
IVONYX GROUP SERVICES, INC.
By:
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Name: G. Xxxxx Xxxxxx, Jr.
------------------------------------
Title: Chief Executive Officer
-----------------------------------
IVONYX SUB:
IVONYX, INC.
By:
--------------------------------------
Name: G. Xxxxx Xxxxxx, Jr.
------------------------------------
Title: Chief Executive Officer
-----------------------------------
ACQUISITION SUB:
DRKOOP LIFECARE, INC.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------
Title: Vice President and Secretary
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PARENT:
XXXXXX.XXX, INC.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------
Title: President
-----------------------------------
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