Exhibit 10.66
SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASES
THIS SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASES ("Agreement") is
dated for reference as of the 25th day of March, 2002, by and between Med
Diversified, Inc., a Nevada corporation, formerly known as x-XxxXxxx.xxx, on the
one hand (hereinafter "MED"), and Xxxxxxxx Capital Corp., a California
corporation, on the other hand (hereinafter "XXXXXXXX), as well as any of their
affiliates, predecessors, successors or assigns as set forth herein. This
Agreement shall become effective on the Effective Date, as defined below.
RECITALS
A. MED and XXXXXXXX have a series of disputes arising out of their
pre-existing business relationships. MED filed a lawsuit in Los Angeles Superior
Court (Case No. SC 069391) which MED has since dismissed without prejudice, and
MED filed an arbitration governed by the American Arbitration Association (Case
No. 50 T 168005151) (the lawsuit and the arbitration collectively referred to
herein as the "Lawsuits"). The purpose of this Agreement is to settle and
compromise - in the manner set forth herein - all the Lawsuits and potential
actions that have been brought or could have been brought as between MED and
XXXXXXXX prior to the date of this Agreement.
B. The term "Settlement Documents" used herein shall mean collectively this
Agreement, the Warrant Surrender Letter and Registration Rights Agreement, as
defined below, and all of the exhibits hereto and thereto. Terms defined in any
of the Settlement Documents shall have the same meaning in each other Settlement
Document.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
obligations set forth herein, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows;
AGREEMENT
1. XXXXXXXX WARRANT. A true and correct copy of the registration rights
agreement concurrently issued and delivered by MED to XXXXXXXX is appended
hereto and marked Exhibit "A" ("Registration Rights Agreement"). The
Registration Rights Agreement applies to the Shares and the Warrant Shares (as
defined below). The Registration Rights Agreement is hereby declared fully
enforceable by XXXXXXXX against MED, and XXXXXXXX shall be entitled to
unconditional piggyback registration rights in connection with the Shares and
the underlying shares of MED common stock represented by the Replacement Warrant
("Warrant Shares"). MED covenants and agrees that it shall include the Shares
and the Warrant Shares in the immediately next registration statement filed by
MED with the Securities and Exchange Commission ("Registration Statement") which
MED anticipates will be filed with the SEC in April 2002. MED shall use its best
efforts to cause such Registration Statement to become effective. MED further
covenants and agrees that it shall comply with all provisions set forth in the
Registration Rights Agreement. If such Registration Statement shall be withdrawn
or abandoned, then MED shall include the Shares and the Warrant Shares in its
next subsequent registration statement filed by MED with the SEC, and MED shall
comply with all provisions set forth in the Registration Rights Agreement.
XXXXXXXX may exercise its unconditional piggyback registration rights from time
to time until all the Shares and the Warrant Shares shall have been registered
pursuant to a registration statement declared effective by the SEC or until
XXXXXXXX shall have actually transferred the last of the Shares and the Warrant
Shares pursuant to Rule 144 in lieu of any such registration. For purposes of
this Agreement, the terms "Shares" and "Replacement Warrant" shall have the same
meaning as set forth in Exhibit "B" appended hereto ("Warrant Surrender
Letter").
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2. MUTUAL GENERAL RELEASES AND DISMISSALS WITH PREJUDICE.
a. Excepting the obligations set forth in these Settlement Documents.
XXXXXXXX, for itself and for its past and present shareholders, employees,
officers, directors, predecessors, successors, assigns, partners, affiliates,
subsidiaries, advisors, agents and attorneys, and those who at any time purport
for any reason to be acting in association with it or on its behalf
(collectively "XXXXXXXX Group"), do hereby forever and finally release, relieve,
acquit, remise, absolve and discharge MED and its past and present shareholders,
employees, officers, directors, predecessors, successors, assigns, partners,
affiliates, subsidiaries, advisors, agents and attorneys and those who at any
time purport for any reason to be acting in association with it or on its behalf
( collectively "MED Group") from any and all losses, claims, debts, liabilities,
demands, obligations, promises, acts, omissions, agreements, costs, expenses,
damages, injuries, suits, actions and causes of action, of whatever kind or
nature, whether known or unknown, suspected or unsuspected, contingent or fixed,
that the XXXXXXXX Group may have against the MED Group based upon, related to,
or arising from, any matter, cause, fact, act or omission, including, without
limitation, arising from the XXXXXXXX engagement letter dated February 20, 2001,
the facts alleged in or underlying the Lawsuits, including, without limitation,
the filing thereof, and matters existing by reason of any contract (expressed or
implied in fact or implied in law), occurring, or arising from or existing in
connection therewith at the time of and including the Effective Date. Each
person released by operation of this Agreement is an intended third party
beneficiary of this Agreement.
b. Excepting the obligations set forth in these Settlement Documents,
the MED Group does hereby forever and finally release, relieve, acquit, remise,
absolve and discharge the XXXXXXXX Group from any and all losses, claims, debts,
liabilities, demands, obligations, promises, acts, omissions, agreements, costs,
expenses, damages, injuries, suits, actions and causes of action, or whatever
kind or nature, whether known or unknown, suspected or unsuspected, contingent
or fixed, that the MED Group may have against the XXXXXXXX Group based upon,
related to, or arising from, any matter, cause, fact, act or omission,
including, without limitation, arising from the XXXXXXXX engagement letter dated
February 20, 2001, the facts alleged in or underlying the Lawsuits, including,
without limitation, the filing thereof, and matters existing by reason of any
contract (expressed or implied in fact or implied in law), occurring or arising
from, or existing in connection therewith, at the time of and including the
Effective Date. Each person released by operation of this Agreement is an
intended third party beneficiary of this Agreement.
c. Nothing herein shall operate, nor is it intended to operate, in any
manner to release, limit, offset or otherwise reduce the legal rights (i) the
MED Group has against Xxxxxx International, Ltd., Rhino Advisors or any entity
appertaining, relating or affiliated with such entities ("Xxxxxxx Group") or
(ii) the Xxxxxxxx Group has against Quantum Digital Solutions. MED acknowledges
that, in connection with its actions and claims made against the Xxxxxxx Group
that XXXXXXXX and members of the XXXXXXXX Group may be called to testify, at a
deposition or otherwise, or respond to discovery requests regarding matters
relating to this Agreement and any exhibits hereto, the Original Warrant, the
Registration Rights Agreement, the agreements entered into between MED and
Xxxxxx International, Ltd. and/or any other member of the Xxxxxx Group, and
that, in responding truthfully, such testimony or other communications may be
adverse to the interests of MED. MED acknowledges and agrees that,
notwithstanding that any such communication made by XXXXXXXX or the XXXXXXXX
Group may be adverse to the interests of MED, no such communication shall limit,
affect, impair or otherwise modify any of the rights or obligations of MED or
XXXXXXXX, or the XXXXXXXX Group or the MED Group, relating to or arising from
this Agreement, the Settlement Documents or any exhibit or other agreement or
instrument delivered in connection herewith and therewith.
3. FINALITY AND SCOPE OF RELEASES. The parties hereto acknowledge and
agree that it is their intention, through this Agreement and the releases set
forth above, to fully,
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finally and forever settle and release each other from all those matters
released herein, and all claims related thereto, which do now exist, may exist
or heretofore have existed, or may hereafter exist. It is the intent of the
parties to this Agreement to release each other from claims or causes of action
arising from facts that were willfully, wrongfully, or tortiuously concealed
from the aggrieved party. MED hereby specifically withdraws its claims against
XXXXXXXX and members of the XXXXXXXX Group by which MED alleged that XXXXXXXX
and certain members of the XXXXXXXX Group committed any fraud,
misrepresentation, breach of duty, or other intentional or willful act.
4. RELEASES OF UNKNOWN OR UNSUSPECTED CLAIMS. THE PARTIES HAVE BEEN
INFORMED BY THEIR RESPECTIVE ATTORNEYS AND ADVISORS ABOUT CALIFORNIA CIVIL CODE
SECTION 1542, AND THE PARTIES ACKNOWLEDGE THAT THEY ARE FAMILIAR WITH AND HEREBY
EXPRESSLY WAIVE THE PROVISIONS OF THIS SECTION, AND ANY SIMILAR STATUTE, CODE,
LAW OR REGULATION OF ANY STATE IN THE UNITED STATES TO THE FULLEST EXTENT THAT
THEY MAY WAIVE SUCH RIGHTS AND BENEFITS. SECTION 1542 OF THE CALIFORNIA CIVIL
CODE PROVIDES:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
5. FINAL ACCORD AND SATISFACTION. This Agreement and the releases contained
herein, as well as the Settlement Documents, the exhibits hereto and thereto and
any other agreements delivered by the parties hereto, are intended to be final
and binding between the parties hereto and are further to be effective as a full
and final accord and satisfaction between the parties hereto. Each party to this
Agreement and the Settlement Documents expressly relies on the finality of this
Agreement and the Settlement Documents as a substantial, material factor
inducing that party's execution of this Agreement and the Settlement Documents.
6. THE EFFECT OF DISCOVERY OF DIFFERENT OR ADDITIONAL FACTS. The parties
hereto acknowledge that they are aware that they may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which they now know or believe to be true pertaining to the matters
released herein. Nevertheless, it is the intention of the parties hereto,
through this Agreement and the releases herein, to fully, finally, and forever
settle and release all such matters, and all claims and parties related thereto,
which do now exist, may exist in the future or heretofore have existed. In
furtherance of such intention, the releases herein given shall be and remain in
effect as a full and complete release of such matters and parties,
notwithstanding the discovery or existence of any such additional or different
claims or facts or parties related thereto by the parties hereto. In entering
into these releases, the parties hereto are not relying upon any statement,
representation, inducement or promise of any other parties, except as expressly
stated in this Agreement. It is the intent of the parties to this Agreement to
release each other from claims or causes of action arising from facts that were
willfully, wrongfully, or tortiuously concealed from the aggrieved parties.
7. ASSUMPTION OF RISKS. In entering into this Agreement and the releases
contained herein, the parties hereto recognize that no facts or representations
are ever absolutely certain; accordingly, each party hereto assumes the risk of
any misrepresentation, concealment or mistake, and if any party hereto should
subsequently discover that any fact the said party relied upon in entering into
this Agreement was untrue, or that any fact was concealed from that party, or
that any understanding of the facts or the law was incorrect, said party shall
not be entitled to set aside this Agreement by reason thereof, regardless of any
claim of fraud, misrepresentation, promise made without the intention of
performing it, fraud in the inducement, concealment of
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fact, mistake of fact or law, or any other circumstances whatsoever. This
Agreement and the releases contained herein are intended to be final and binding
upon the parties hereto, and each of them, and is further intended to be
effective as a full and final accord and satisfaction among the parties hereto,
regardless of any claim of fraud, misrepresentation, promise made without the
intention of performing it, fraud in the inducement, concealment of fact,
mistake of fact or law, or any other circumstances whatsoever. Each party relies
upon the finality of this Agreement and the releases herein as a material factor
inducing the party's execution of this Agreement.
8. GENERALITY AND SPECIFICITY OF RELEASES; COVENANT NOT TO XXX OR MAKE
CLAIMS/NON-DISPARAGEMENT. The parties hereto intend these releases to be
consumed in the broadest possible terms so that the effect of this Agreement is
that the persons released hereby may not be sued by the persons releasing them
hereby, whether directly or indirectly, and no claims may be made related to
such releases whether by way of offset or otherwise or in any manner and for any
reason, under any theory of fact, under any theory of law, under any alleged set
of facts, under any alleged reading of the law and under or pursuant to any
claim of any kind, including (without limitation) claims for negligence, breach
of contract, fraud, theft, breach of fiduciary duty, lender liability or for any
of the disputes described in any of the recitals set forth above. Each party
hereby agrees not to disparage the other party or the XXXXXXXX Group or the MED
Group, respectively, in any communication after the date of this Agreement
relating to events occurring prior to the date of this Agreement; provided that
nothing herein shall be construed to limit or impair the rights and duties of
any party to comply with legal process or any order in any court or governmental
agency, nor to comply with the disclosure requirements of any applicable state
or federal securities laws.
9. INVALIDITY. Any portion or provision of this Agreement or any exhibit
hereto which is invalid, illegal or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the remaining
portions or provisions thereof in such jurisdiction or, to the extent permitted
by law, without rendering that or any other portion or provision thereof
invalid, illegal or unenforceable in any other jurisdiction.
10. EQUITABLE REMEDIES. In addition to legal remedies to the extent allowed
pursuant to this Agreement or the settlement documents or by law, in recognition
of the fact that remedies at law may not be sufficient, the parties hereto (and
their successors) shall be entitled to equitable remedies including, without
limitation, specific performance and injunction, in the event of a breach of
this Agreement or any of the Settlement Documents or any exhibits hereto or
thereto, including, without limitation, the breach of MED's obligations set
forth in Section 1 and Section 3 hereof.
11. ARTICLES AND SECTION HEADINGS. The Article and Section headings
included in this Agreement are for the convenience of the parties only and shall
not effect the construction or interpretation of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in several counterparts
each one of which shall be an original and all of which shall constitute one and
the same document.
13. FAX SIGNATURES. Facsimile copies of signatures on this agreement and
the Settlement Documents shall be deemed valid and original.
14. FEES AND EXPENSES. Each party shall pay all fees and expenses,
however described incurred by it in connection with this transaction or with any
dispute, services, or other interaction occurring prior to the Effective Date.
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15. NOTICES. Any notices which any party is required or may desire to give
to any other party or parties under this Agreement shall be in writing, and
shall be given by addressing the same to such other party or parties at the
address set forth below, and by depositing the same so addressed, postage
prepaid, certified mail, return receipt requested, in the United States mail, by
delivering the same personally to such other party or parties or by facsimile. A
party may change its address for the service of notice by written notice given
to the other parties in the manner herein provided.
If to MED:
Med Diversified, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxxxx, Xx. Chairman, President
and CEO
Facsimile: (000) 000-0000
with a copy to:
(which shall not constitute notice)
Manatt, Xxxxxx & Xxxxxxxx
Xxxxxx X. Xxxxxxxx
00000 X. Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to XXXXXXXX:
Xxxxxxxx Capital Corp.
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, President and CEO
Facsimile: (000) 000-0000
16. GOVERNING LAW AND VENUE. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
without giving effect to its choice of law provisions. MED and XXXXXXXX
irrevocably agree to submit themselves to the in personam jurisdiction of the
state and federal courts situated within Los Angeles County, State of California
with regard to any controversy arising out of or relating to this Agreement, and
irrevocably waive any objection to improper venue and inconvenient forum. The
prevailing party in any such action or proceeding shall be awarded its costs,
including reasonable attorneys' fees, from the non-prevailing party. Any party
shall have the right to seek injunctive relief from any court of competent
jurisdiction in any case where such relief is available. The prevailing party in
such injunctive action shall be awarded its costs, including reasonable
attorneys' fees, from the non-prevailing party.
17. ENTIRE AGREEMENT AMENDMENTS AND WAIVER. This Agreement, the Settlement
Documents, all exhibits hereto or thereto and any other agreements and
instruments delivered by the parties in connection herewith or therewith
constitute the entire agreement between the parties pertaining to the subject
matter contained herein, and supersede all prior and contemporaneous agreements,
representations and understandings -- whether oral, written or both -- of the
parties with respect to the subject matter hereof. In the case of this
particular Agreement and the Settlement Documents, there have been no prior or
contemporaneous agreement and the Settlement Documents, there have been no prior
or contemporaneous agreements, representations and understandings between or
among the parties hereto or thereto, and the only agreement that formed the
topic of negotiations and discussions is
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contained herein or therein. The parties agree that this Agreement, the
Settlement Documents and any exhibits hereto and thereto may not be modified,
and that no attempted modification by the parties shall be binding upon either
party hereto, unless contained in a written instrument executed by all the
parties to this Agreement. Accordingly, this Agreement, the Settlement Documents
and any exhibits hereto and thereto may not be modified by a writing that is
unsigned by one or all of the parties hereto, and this Agreement and the
Settlement Documents may not be modified by any oral amendment, oral agreement
or other oral modification.
18. LEGAL ADVICE. The parties hereby acknowledge that they have received or
have had an opportunity to receive independent legal advice from attorneys of
their choice with respect to the advisability of executing this Agreement, the
Settlement Documents and any exhibits hereto and thereto and the other documents
relating to this transaction. Prior to the execution of this Agreement, the
Settlement Documents and exhibits hereto or thereto and in accordance with these
opportunities, each party made all desired changes to this Agreement, the
Settlement Documents and the exhibits hereto and thereto. Each party and its
attorneys have made such investigation of the facts pertaining to this
Agreement, the Settlement Documents and the exhibits hereto and thereto, and any
of the matters appertaining thereto as they deemed necessary. Each party
certifies that they have read this Agreement, the Settlement Documents and the
exhibits hereto and thereto, and fully understand them and that they have
executed them voluntarily, free of any duress, force, or undue influence of any
party or any person.
19. WARRANTIES. Each party hereto represents and warrants that it is the
owner of all claims and causes of action released by that party herein, that it
has the full power and authority to enter into this Agreement and that it has
received all necessary approvals required thereto, including, without
limitation, approval of this Agreement and the Settlement Documents by its board
of directors.
20. CONDITIONS PRECEDENT. The releases and other agreements of the parties
given and made herein are expressly subject to and shall be effective only upon
the execution of this Agreement by MED and XXXXXXXX and upon satisfaction of all
of the following conditions precedent (the date on which all of such conditions
precedent shall be satisfied, or waived in writing by XXXXXXXX, is referred to
herein as the "Effective Date"):
MED shall have caused to be delivered to XXXXXXXX all of the following: (i)
the Registration Rights Agreement appended hereto marked Exhibit "A"; (ii) the
Warrant Surrender Letter fully executed by MED in the form of Exhibit "B"; (iii)
all of the documents and instruments referred to in the Warrant Surrender
Letter; and (iv) the agreement granting shares of MED common stock fully
executed by MED in the form of Exhibit "C." MED acknowledges that the delivery
of each of the foregoing documents and instruments is a material inducement to
XXXXXXXX entering into this Agreement.
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IN WITNESS HEREOF, the parties hereto have themselves, or through their
duly authorized representatives, executed this Agreement, the Settlement
Documents and all exhibits hereto and thereto as of the date first set forth
above.
"MED" "XXXXXXXX"
MED DIVERSIFIED, INC. XXXXXXXX CAPITAL CORP.
a Nevada corporation a California corporation
By: /s/ Xxxxx X. Xxxxxxxxxxxx, Xx. By:
--------------------------- ------------------------------
Xxxxx X. Xxxxxxxxxxxx, Xx. Xxxxxx X. Xxxxxxxx
Its: Chairman, President and CEO Its: President and CEO
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IN WITNESS HEREOF, the parties hereto have themselves, or through their
duly authorized representatives, executed this Agreement, the Settlement
Documents and all exhibits hereto and thereto as of the date first set forth
above.
"MED" "XXXXXXXX"
MED DIVERSIFIED, INC. XXXXXXXX CAPITAL CORP.
a Nevada corporation a California corporation
By: By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------ ---------------------------
Xxxxx X. Xxxxxxxxxxxx, Xx. Xxxxxx X. Xxxxxxxx
Its: Chairman, President and CEO Its: President and CEO
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Med Diversified, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
March 25, 2002
Xxxxxxxx Capital Corp.
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, President
Gentlemen:
This letter confirms our agreement that, in consideration and exchange for
that certain Warrant granted by us to Xxxxxxxx Capital Corp., a California
corporation ("XXXXXXXX") dated February 20, 2001, to purchase Three Million One
Hundred Thirty-One Thousand Four Hundred Fifty-Nine (3,131,459) shares of Med
Diversified, Inc. ("MED") common stock ("Original Warrant"), we shall cause to
be issued to XXXXXXXX or its designees, one or more certificates representing in
the aggregate One Million (1,000,000) shares ("Shares") of common stock of Med
Diversified, Inc. ("MED") and one or more Warrants to purchase in the aggregate
One Million Five Hundred Thousand (1,500,000) shares of MED common stock
(collectively "Replacement Warrants") upon the terms and conditions set forth in
the Replacement Warrant appended hereto, in exchange for the surrender and
cancellation of the Original Warrant. A copy of the fully executed
certificate(s) representing the Shares is appended hereto marked Exhibit "A" and
a copy of the fully executed Replacement Warrants is appended hereto marked
Exhibit "B." The Shares and the Replacement Warrants are hereby declared fully
earned and enforceable by XXXXXXXX against MED.
No later than March 31, 2002, MED shall cause an opinion of its counsel to
be delivered to it and to MED's stock transfer agent stating that the Shares,
and the Warrant Shares upon exercise of the Replacement Warrants, are freely
tradable by XXXXXXXX, or its designees, subject only to compliance with Rule 144
regarding securities held for more than one year, unless such securities shall
have been otherwise registered under the federal securities laws. Except as
required by state or federal securities laws, such opinion letter shall not
contain any statements contradictory to the foregoing or which create other
restrictions upon the sale of the Shares or the Warrant Shares.
Med Diversified, Inc.
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxxxxxx, Xx.
--------------------------------------
Xxxxx X. Xxxxxxxxxxxx, Xx.
Chairman, President and CEO
Read and Accepted
Xxxxxxxx Capital Corp.
a California corporation
By:
---------------------------
Xxxxxx X. Xxxxxxxx
Its: President
MED DIVERSIFIED, INC.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
March 25, 2002
Xxxxxxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Gentlemen:
This letter confirms our agreement that, for good and valuable
consideration had and received, we shall cause to be issued to each of you
158,126 shares of common stock of MED Diversified, Inc. ("MED") in accordance
with MED's stock plans. Such 316,252 shares of MED common stock are referred to
herein collectively as the "Corporate Finance Shares." If the Corporate Finance
Shares have not previously been registered, MED shall file a registration
statement with the Securities and Exchange Commission on Form S-8 covering the
Corporate Finance Shares on or before April 12, 2002, and shall use its best
efforts to cause such Registration Statement to become effective as soon as
practicable and thereafter to be available for two (2) years from the date of
this Agreement. Subject to registration of the Corporate Finance Shares, or
pursuant to any exemption provided by Rule 144, the Corporate Finance Shares
shall be freely transferable without limitation. The parties acknowledge that
time is of the essence.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California, without giving effect to its choice of
law provisions MED, Xxxxxxxx Capital Corp. and you irrevocably agree to submit
to the in personam jurisdiction of the state and federal courts situated within
Los Angeles County, State of California with regard to any controversy arising
out of or relating to this Agreement, and irrevocably waive any objection to
improper venue and inconvenient forum. The prevailing party in any such action
or proceeding shall be awarded its costs, including reasonable attorneys' fees,
from the non-prevailing party. Any party shall have the right to seek injunctive
relief from any court of competent jurisdiction in any case where such relief is
available. The prevailing party in such injunctive action shall be awarded its
costs, including reasonable attorneys' fees, from the non-prevailing party.
This Agreement constitutes the entire agreement between the parties
pertaining to the Corporate Finance Shares and the registration thereof and
supersedes all prior and contemporaneous agreements, representations and
understandings, whether oral; written or both, with respect to the subject
matter hereof. This agreement may not be modified except in a written instrument
executed by all of the parties hereto.
Xxxxxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxxxx
March 11, 2002
Page 2 of 2
MED shall notify Xxxxxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxxxxxx promptly upon
the filing of the Registration Statement and promptly following the date that
such Registration Statement shall become effective.
Please confirm our agreement regarding the foregoing by signing the
acknowledgment below.
MED DIVERSIFIED, INC.,
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxxxxxx, Xx.
--------------------------------
Xxxxx X. Xxxxxxxxxxxx, Xx.
Chairman, President and CEO
READ AND APPROVED
as of the date first set forth above:
------------------------------------
Xxxxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxxx
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of
March 25, 2002, between Xxxxxxxx Capital Corp. ("Xxxxxxxx") and Med Diversified,
Inc. (formerly known as x-Xxxxxxx.xxx) ("Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the parties are entering into a warrant surrender agreement,
dated as of the date hereof ("Warrant Surrender Agreement"), by and between
Xxxxxxxx and the Company. (Terms not defined herein shall have the meanings
ascribed to them in the Warrant Surrender Agreement and the Replacement
Warrant); and
WHEREAS, the execution and delivery of this Agreement granting
to Xxxxxxxx the registration rights set forth herein with respect to the Shares
and the Warrant Shares is a material part of the Warrant Surrender Agreement.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGRISTRABLE SECURITIES. As used herein the term
"Registrable Security" means all Shares and the Warrant Shares that have not
been (i) sold under the Registration Statement, (ii) sold under circumstances
under which all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act ("Rule 144") are met, (iii)
otherwise transferred to persons who may trade such Shares and Warrant Shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such Shares and Warrant
Shares not bearing a restrictive legend or (iv) sold without any time, volume or
manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect under the Securities Act. In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be deemed to be made in the definition
of "Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement. As used herein,
the term "Shares" means collectively the Shares and the Warrant Shares, unless
the context requires otherwise.
Section 2. RESTRICTIONS ON TRANSFER. Xxxxxxxx acknowledges and
understands that in the absence of an effective Registration Statement
authorizing the resale of the Shares as provided herein, the Shares are
"restricted securities" as defined in Rule 144. Xxxxxxxx understands that no
disposition or transfer of the Shares may be made by Xxxxxxxx in the absence of
(i) an opinion of counsel to Xxxxxxxx, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act, or (ii) such registration.
With a view to making available to Xxxxxxxx the benefits of
Rule 144, the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of
Rule 144; and
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(b) file with the Commission in a timely manner all
reports and other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did
file such reports, it will, upon the request of Xxxxxxxx, make available
other information as required by, and so long as necessary to permit sales
of, its Registrable Securities pursuant to Rule 144.
Section 3. REGISTRATION RIGHTS WITH RESPECT TO THE SHARES.
(a) The Company agrees that if the Shares are not
included within a registration statement on Form S-8 that has been declared
effective by the Securities and Exchange Commission ("Commission") within
sixty (60) days from the date hereof, it will include the Shares in the
registration statement on Form S-1, which the Company anticipates filing
with the Commission within forty-five (45) days after the date hereof (the
"Registration Statement"), at the sole expense of the Company (except as
provided in Section 3(d) hereof, so as to permit a public offering and
resale of the Shares under the Securities Act by Xxxxxxxx.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable. The
Company will notify Xxxxxxxx of the effectiveness of the Registration
Statement within one Trading Day of such event.
(c) The Company will maintain the Registration
Statement or post-effective amendment filed under this Section 3 hereof
effective under the Securities Act until the earliest of (i) the date that
all the Shares have been disposed of pursuant to the Registration
Statement, (ii) the date that all of the Shares have been sold pursuant to
the Registration Statement, (iii) the date on which all Shares have been
transferred to persons who may trade such shares without restriction under
the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such Shares not bearing a restrictive
legend, (iv) the date on which all Shares may be sold without any time,
volume or manner limitations pursuant to Rule 144(k) or any similar
provision then in effect under the Securities Act in the opinion of counsel
to the Company, which counsel shall be reasonably acceptable to Xxxxxxxx,
or (v) 12 months after the Effective Date, provided that the Company gives
the investor 10 Trading Days' notice that the Registration Statement shall
no longer be effective (the "Effectiveness Period").
(d) All fees, disbursements and out-of-pocket expenses
and costs incurred by the Company in connection with the preparation and
filing of the Registration statement under subparagraph 3(a) and in
complying with applicable securities and Blue Sky laws (including, without
limitation, all attorneys' fees of the Company) shall be borne by the
Company. Xxxxxxxx shall bear the cost of underwriting and/or brokerage
discounts, fees and commissions, if any, applicable to the Shares being
registered and the fees and expenses of its counsel.
(e) Xxxxxxxx and its counsel shall have a reasonable
period, not to exceed five (5) Trading Days, to review those portions of
the proposed Registration
2
Statement or any amendment thereto, dealing with the Shares, the Warrant
Shares, the transactions related thereto, and Xxxxxxxx, prior to filing
with the Commission and the Company shall provide Xxxxxxxx with copies of
any comment letters received from the Commission with respect thereto
within two (2) Trading Days of receipt thereof.
(f) The Company shall qualify any of the Shares for
sale in such states as Xxxxxxxx reasonably designates (not exceeding 10 in
number) and shall furnish indemnification in the manner provided in Section
6 hereof. However, the Company shall not be required to qualify any shares
in any state which will require an escrow or other restriction relating to
the Company and/or the sellers, or which will require the Company to
qualify to do business in such state or require the Company to file therein
any general consent to service of process.
(g) The Company at its expense will supply Xxxxxxxx
with copies of the Registration Statement and the prospectus included
therein (the "Prospectus") and other related documents in such quantities
as may be reasonably requested by Xxxxxxxx.
(h) The Company shall not be required by this Section 3
to include the Shares in any Registration Statement which is to be filed
if, in the opinion of counsel for the Company the proposed offering or
other transfer as to which such registration is requested is exempt from
applicable federal and state securities laws and would result in all
purchasers or transferees obtaining securities which are not "restricted
securities," as defined in Rule 144 under the Securities Act.
Section 4. COOPERATION WITH COMPANY. Xxxxxxxx shall cooperate
with the Company in all respects in connection with this Agreement, including
timely supplying all information reasonably requested by the Company (which
shall include all information regarding Xxxxxxxx and the proposed manner of sale
of the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing its obligations under any underwriting agreement
(if the offering is an underwritten offering) in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. Xxxxxxxx
shall consent to be named as an underwriter in the Registration Statement.
Xxxxxxxx acknowledges that in accordance with current Commission policy,
Xxxxxxxx will be named as the underwriter of the Shares in the Registration
Statement.
Section 5. REGISTRATION PROCEDURES. If and whenever the
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible, subject to Xxxxxxxx'x assistance and cooperation as reasonably
required:
(a) (i) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the Prospectus
as may be necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect to the sale
or other disposition of all securities covered by
3
such registration statement whenever Xxxxxxxx shall desire to sell or
otherwise dispose of the same (including prospectus supplements with
respect to the sales of securities from time to time in connection with a
registration statement pursuant to Rule 415 promulgated under the
Securities Act) and (ii) take all lawful action such that each of (A) the
Registration Statement and any amendment thereto and (B) the Prospectus,
and any amendment or supplement thereto, does not at any time during the
Effectiveness Period include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(b) furnish to Xxxxxxxx such numbers of copies of the
Prospectus, including a preliminary prospectus or any amendment or
supplement to any Prospectus, as applicable, in conformity with the
requirements of the Securities Act, and such other documents as Xxxxxxxx
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(c) list such Registrable Securities on the Principal
Market, and any other exchange on which the Common Stock of the Company is
then listed, if the listing of such Registrable Securities is then
permitted under the rules of such exchange or the Nasdaq Stock Market;
(d) as promptly as practicable after becoming aware of
such event, notify Xxxxxxxx (or, in the event of an underwritten offering,
the managing underwriters) of the issuance by the Commission or any state
authority of any stop order or other suspension of the effectiveness of the
Registration Statement and take all lawful action to effect the withdrawal,
rescission or removal of such stop order or other suspension;
(e) cooperate with Xxxxxxxx to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to
be offered pursuant to the Registration Statement and enable such
certificated for the Registrable Securities to be in such denominations or
amounts, as the case may be, as Xxxxxxxx reasonably may request and
registered in such names as Xxxxxxxx may request;
(f) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by Xxxxxxxx of its
registrable Securities in accordance with the intended methods therefor
provided in the Prospectus which are customary for issuers to perform under
the circumstances;
(g) Maintain a transfer agent for its Common Stock.
Section 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
Xxxxxxxx and each person, if any, who controls Xxxxxxxx within the meaning
of the Securities Act ("Distributing Person") against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of
this Agreement include, but not be limited to, all
4
reasonable costs of defense and investigation and all reasonable attorneys'
fees), to which the Distributing Person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, or any related preliminary
prospectus, the Prospectus or amendment or supplement thereto, or arise out
of or are based upon 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; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
registration Statement, preliminary prospectus, the Prospectus or amendment
or supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by the Distributing Person
specifically for use in the preparation thereof. This Section 6(a) shall
not inure to the benefit of any Distributing Person with respect to any
person asserting such loss, claim, damage or liability who purchased the
Registrable Securities which are the subject thereof if the Distributing
Person failed to send or give (in violation of the Securities Act or the
rules and regulations promulgated thereunder) a copy of the Prospectus to
such person at or prior to the written confirmation to such person of the
sale of such Registrable Securities, where the Distributing Person was
obligated to do so under the Securities Act or the rules and regulations
promulgated thereunder.
(b) Each Distributing Person agrees that it will
indemnify and hold harmless the Company, and each officer, director of the
Company or person, if any, who controls the Company within the meaning of
the Securities Act, against any losses, claims, damages or liabilities
(which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, or any related preliminary prospectus, the
Prospectus or amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, preliminary prospectus, the Prospectus
or amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by such Distributing
Person specifically for use in the preparation thereof. Notwithstanding
anything to the contrary herein, the Distributing Person shall not be
liable under this Section 6(b) for any amount in excess of the net proceeds
to such Distributing person as a result of the sale of Registrable
Securities pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action, such
indemnified party will, if a claim in
5
respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified
party except to the extent of actual prejudice demonstrated by the
indemnifying party. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, assume the defense thereof, subject
to the provisions herein stated and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation, unless the indemnifying party
shall not pursue the action to its final conclusion. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the indemnified party; provided that if the
indemnified party is the Distributing Person, the fees and expenses of such
counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by
the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the Distributing Person and
the indemnifying party, and the Distributing Person and the indemnifying
party shall have been issued an opinion by such counsel that there may be
one or more legal defenses available to the indemnifying party different
from or in conflict with any legal defenses which may be available to the
Distributing Person (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of the
Distributing Person, it being understood, however, that the indemnifying
party shall in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable only for
the reasonable fees and expenses of one separate firm of attorneys for the
Distributing Person, which firm shall be designated in writing by the
Distributing Person and be approved by the indemnifying party). No
settlement of any action against an indemnified party shall be made without
the prior written consent of the indemnified party, which consent shall not
be unreasonably withheld.
All fees and expenses of the indemnified party
(including reasonable costs of defense and investigation in a manner nor
inconsistent with this Section and all reasonable attorneys' fees and
expenses) shall be paid to the indemnified party, as incurred, within ten
(10) Trading Days of written notice thereof to the indemnifying party;
provided, that the indemnifying party may require such indemnified party to
undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such indemnified party is not entitled
to indemnification hereunder.
Section 7. CONTRIBUTION. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a
6
claim for indemnification pursuant to Section 6 hereof but 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 the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Person shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys' fees), in either such
case (after contribution from others) on the basis of relative fault as well as
any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the applicable Distributing Person on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Distributing Person
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Notwithstanding any other provision of this Section 7, in no
event shall any (i) Distributing Person be required to undertake liability to
any person under this Section 7 for any amounts in excess of the dollar amount
of the net proceeds to be received by Distributing Person from the sale of
Xxxxxxxx'x Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Registration Statement under
which such Registrable Securities are to be registered under the Securities Act
and (ii) underwriter be required to undertake liability to any person hereunder
for any amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to the Registration
Statement.
Section 8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be delivered as set forth
in the Replacement Warrant.
Section 9. ASSIGNMENT. Neither this Agreement nor any rights
of Xxxxxxxx or the Company hereunder may be assigned by either party to any
other person. Notwithstanding the foregoing, (a) the provisions of this
Agreement shall inure to the benefit of, and be enforceable by, any transferee
of any of the Shares or Warrant Shares from Xxxxxxxx other than through
open-market sales, and (b) upon the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed in the case of an
assignment to an affiliate,
7
officer or director of Xxxxxxxx or Xxxxxxxx Group, Inc., Xxxxxxxx'x interest in
this Agreement may be assigned at any time, in whole or in part, to any other
person or entity (including any affiliate, officer or director of Xxxxxxxx or
Xxxxxxxx Group, Inc.) who agrees to be bound hereby.
Section 10. COUNTERPARTS/FACSIMILE. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
Section 11. REMEDIES AND SEVERABILITY. The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law. If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction.
Section 12. CONFLICTING AGREEMENTS. The Company shall not
enter into any agreement with respect to its securities that prevents the
Company from complying with all of its obligations hereunder.
Section 13. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14. GOVERNING LAW AND VENUE. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
California, without giving effect to its choice of law provisions. The Company
and Xxxxxxxx irrevocably agree to submit themselves to the in personam
jurisdiction of the state and federal courts situated within Los Angeles County,
State of California with regard to any controversy arising out of or relating to
this Agreement, and irrevocably waive any objection to improper venue and
inconvenient forum. The prevailing party in any such action or proceeding shall
be awarded its costs, including reasonable attorneys' fees, from the
non-prevailing party. Any party shall have the right to seek injunctive relief
from any court of competent jurisdiction in any case where such relief is
available. The prevailing party in such injunctive action shall be awarded its
costs, including reasonable attorneys' fees, from the non-prevailing party.
[SIGNATURE PAGE FOLLOWS]
8
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on this 25th day of March,
2002.
MED DIVERSIFIED, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxxxxx, Chairman,
President & CEO
XXXXXXXX CAPITAL CORP.
By:
--------------------------------
Authorized Signatory
9
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND
ANY APPLICABLE STATE LAWS.
STOCK PURCHASE WARRANT
To Purchase 1,500,000 Shares of Common Stock of
MED DIVERSIFIED, INC.
This certifies that, for value received, Xxxxxxxx Capital Corp. ("Holder"),
is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the Initial Exercise
Date (as defined below) and prior to the close of business on the Termination
Date (as defined below) but nor thereafter, to subscribe for and purchase from
Med Diversified, Inc. (formerly known as x-Xxxxxxx.xxx), a corporation
incorporated in the State of Nevada ("Company"), up to 1,500,000 shares (the
"Warrant Shares") of Common Stock, $0.001 par value per share, of the Company
("Common Stock"). The purchase price of one share of Common Stock ("Exercise
Price") under this Warrant shall be One Dollar Fifty Cents ($1.50). The Exercise
Price and the number of Warrant Shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant replaces that
certain warrant issued to Xxxxxxxx Capital Corp. and dated February 20, 2001.
This Warrant is effective as of March 25, 2002.
1. TITLE TO WARRANT. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.
2. AUTHORIZATION OF SHARES. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
3. EXERCISE OF WARRANT.
(a) Except as provided in Section 4 herein, exercise of the purchase
rights represented by this Warrant may be made at any time or times (i) on or
after the effective date hereof (i.e., March 25, 2002), and, (ii) on or before
the close of business on March 24, 2006, ("Termination Date") at the office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company) and upon payment of the Exercise Price of
the shares thereby purchased by wire transfer or cashier's check drawn on a
United States bank (or by means of a cashless exercise) the Holder shall be
entitled to receive a certificate for the number of Warrant Shares so purchased.
Certificates for shares purchased hereunder shall be delivered to the Holder
within three (3) Trading Days after the date on which this Warrant shall have
been exercised as aforesaid. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares
1
for all purpose, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by the Holder,
if any, pursuant to Section 5 prior to the issuance of such shares, have been
paid.
(b) If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
(c) This Warrant shall also be exercisable by means of a
"cashless exercise" in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B)(X)] by (A), where;
(A) = the average of the high and low trading prices per
share of Common Stock on the Trading Day preceding the date of
such election on the Nasdaq Stock Market, or if the Common
Stock is not traded on the Nasdaq Stock Market, then the
Principal market in terms of volume;
(B) = the Exercise Price of this Warrant: and
(X) = the number of Warrant Shares issuable upon
exercise of this Warrant in accordance with the terms of this
Warrant.
(d) Notwithstanding anything herein to the contrary, in no
event shall the Holder be permitted to exercise this Warrant for Warrant Shares
to the extent that (i) the number of shares of Common Stock owned by such Holder
(other than Warrant Shares issuable upon exercise of this Warrant) plus (ii) the
number of Warrant Shares issuable upon exercise of this Warrant, would be equal
to or exceed 9.9% of the number of shares of Common Stock then issued and
outstanding including shares issuable upon exercise of this Warrant held by such
Holder after application of this Section 3(d). As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(d) applies,
the determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder) and or which a portion of this Warrant is
exercisable shall be in the sole discretion of such Holder, and the submission
of a Notice of Exercise shall be deemed to be such Holder's determination of
whether this Warrant is exercisable (in relation to other securities owned by
such Holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm to accuracy of such determination. Nothing
contained herein shall be deemed to restrict the right of a Holder to exercise
this Warrant into Warrant Shares at such time as such exercise will not violate
the provisions of this Section 3(d). The provision of this Section 3(d) may be
waived by the Holder upon, at the election of the Holder, not less than 61 days
prior notice to the Company, and the provisions of this Section 3(d) shall
continue to apply until such 61st day (or such later date as may be specified in
such notice of waiver). No exercise of this Warrant in violation of this Section
3(d) but otherwise in accordance with this Warrant shall affect the status of
the Warrant Shares as validly issued, fully-paid and nonassessable.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or Scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in
2
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder or in such name or names as may directed by the Holder, provided,
however, that in the event certificates for Warrant Shares are to be issued in a
name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder; and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto.
6. CLOSING OF BOOKS. Unless required by law, the Company will not close
its stockholder books or records in any manner which prevents the timely
exercise of this Warrant.
7. TRANSFER, DIVISION AND COMBINATION.
(a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. In the event that
the Holder wishes to transfer a portion of this Warrant, the Holder shall
transfer at least 50,000 shares underlying this Warrant to any such transferee.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
(c) The company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.
8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price (or by means of a cashless exercise), the
Warrant Shares so purchased shall be and be deemed to be issued to such Holder
as the record owner of such shares as of the close of business on the later of
the date of such surrender or payment.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or
3
Stock certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
(a) Stock Splits, etc. The number and kind of securities purchasable
upon the exercise of this Warrant and payment of the Exercise Price shall be
subject to adjustment from time to time upon the happening of any of the
following. In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of the Common Stock, then the number of Warrant
Shares purchasable upon exercise of this Warrant immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which it would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment of the kind and number of Warrant Shares or
other securities of the Company which are purchasable hereunder, the Holder
shall thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
12. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION
OF ASSETS. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12. For purposes of
this Section 12, "common stock of
4
the successor or acquiring corporation" shall include stock of such corporation
of any class which is not preferred as to dividends or assets over any other
class of stock of such corporation and which is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 12 shall similarly
apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets. Notwithstanding anything to the contrary in this
Section 12, a successor or acquiring corporation, at the closing of the
succession or acquisition of the Company, may elect to purchase the entire
unexercised portion of this Warrant at the value for such warrant as determined
in accordance with the Black-Scholes option pricing formula; provided, however,
the successor or acquiring corporation notify the Holder at least ten (10)
Trading Days prior to such closing. The Holder shall have the right to exercise
all or any portion of this Warrant up to and including the Trading Day
immediately prior to the date set in such notice for the purchase of this
Warrant.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.
14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
Holder notice of such adjustment or adjustments setting forth the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made. Such notice, in the absence of manifest error,
shall be conclusive evidence of the correctness of such adjustment.
15. NOTICE OF CORPORATE ACTION. If at any time:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and
5
the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchanged their Warrant Shares for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17(d).
16. AUTHORIZED SHARES. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.
The Company shall not be any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without Limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the Exercise Price
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.
17. MISCELLANEOUS.
(a) GOVERNING LAW AND VENUE. This Warrant shall be governed by and
construed in accordance with the internal laws of the State of California,
without giving effect to its choice of law provisions. The Company and the
Holder irrevocably agree to submit themselves to the in personam jurisdiction of
the state and federal courts situated within Los Angeles County, State of
California with regard to any controversy arising out of or relating to this
Warrant, and irrevocably waive any objection to improper venue and inconvenient
forum. The prevailing party in any such action or proceeding shall be awarded
its costs, including reasonable attorneys' fees, from the non-prevailing party.
Any party shall have the right to seek injunctive relief from any court of
competent jurisdiction in any case where such relief is available. The
prevailing party in such injunctive action shall be awarded its costs, including
reasonable attorneys' fees, from the non-prevailing party.
(b) RESTRICTIONS. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
6
(c) NONVAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company
shall pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(d) NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (A) upon hand delivery or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on business day during normal business
hours where such notice is to be received), or (B) on the second business day
following the date of mailing by express Internationally recognized courier
service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur. The addresses for such communications
shall be:
If to the Company: 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxxxxx, Xx., Chairman,
President and CEO
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Manatt, Xxxxxx & Xxxxxxxx, LLP
(which shall not constitute 00000 Xxxxxxx Xxxxxxxxx
xxxxxx) Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Holder: Xxxxxxxx Capital Corp.
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Any party hereto may from time to time change its address for notices by
giving written notice of such changed address to the other party hereto in
accordance herewith.
(e) LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
(f) REMEDIES. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
7
(g) SUCCESSORS AND ASSIGNS. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares. Subject to
compliance with applicable securities laws, the Holder may distribute this
Warrant (or the Warrant Shares if applicable) in whole or in part, to Xxxxxxxx
Group, Inc., Xxxxxxxx Partners, LLC, or their respective shareholders, members
or employees, in increments of no less than 50,000 Warrants (or warrant Shares
if applicable), provided that for administrative purposes, there will be a
maximum of ten (10) assignees or transferees, in the aggregate.
(h) AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder.
(i) SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(j) HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
18. DEFINITIONS.
(a) "Exchange Act" shall mean the securities Exchange Act of
1934, as amended.
(b) "Principal Market" shall mean initially the American Stock
Exchange and shall include the Nasdaq National Market, the Nasdaq Small-Cap
Market and the New York Stock Exchange if the Company becomes listed and trades
on such market or exchange after the date hereof.
(c) "Registration Statement" shall mean registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), to be filed with
the Securities and Exchange Commission for the registration of shares of Common
Stock pursuant to the Registration Rights Agreement by and between the Company
and the Holder (the "Registration Rights Agreement").
(d) "Trading Day" shall mean any day on which the Principal
Market is open for business.
(e) "Transaction Documents" shall mean the Registration Rights
Agreement by and between the Company and the Holder, dated concurrently
herewith, as in effect as of the date hereof.
8
IN WITNESS WHEREOF, the Company and the Holder have caused this Warrant to
be executed by their officers thereunto duly authorized.
Dated for Reference MED DIVERSIFIED, INC.
as March 25,2002
By: /s/ Xxxxx X. Xxxxxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxxxxx, Xx.
Chairman, President and CEO
XXXXXXXX CAPITAL CORP.
By:
-----------------------------------
Xxxxxx X. Xxxxxxxx
President and CEO
9
NOTICE OF EXERCISE OF WARRANT
To: Med Diversified, Inc.
(1) The undersigned hereby elects to purchase_________Warrant Shares (the
"Common Stock"), of Med Diversified, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
----------------------------
The Warrant Shares shall be delivered to the following:
----------------------------
----------------------------
----------------------------
[HOLDER]
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
Date:
--------------------------------
10
NOTICE OF EXERCISE OF WARRANT
PURSUANT TO CASHLESS EXERCISE PROVISIONS
TO: Med Diversified, Inc.
Aggregate Price of Warrant Before Exercise: $_______________________
Aggregate Price Being Exercised: $_______________________
Exercise Price: $______________________________________________ per share
Number of Shares of Common Stock to be Issued Under this Notice:________
Remaining Aggregate Price (if any) After Issuance: $_____________________
Gentlemen:
The undersigned, registered Holder of the Warrant delivered herewith,
hereby irrevocably exercises such Warrant for, and purchases thereunder, shares
of the Common Stock of Med Diversified, Inc., a Nevada corporation, as provided
below. Capitalized terms used herein, unless otherwise defined herein, shall
have the meanings given in the Warrant. The portion of the Exercise Price (as
defined in the Warrant) to be applied toward the purchase of Common Stock
pursuant to this Notice of Exercise is $_____________ , thereby leaving a
remaining aggregate Exercise Price (if any) equal to $_____________. Such
exercise shall be pursuant to the cashless exercise provisions of Section 3 of
the Warrant; therefore, Holder makes no payment with this Notice of Exercise.
The number of shares to be issued pursuant to this exercise shall be determined
by reference to the formula in Section 3 of the Warrant which, by reference to
Section 3, requires the use of the high and low trading price of the Company's
Common Stock on the Trading Day preceding the date of such election. The high
and low trading price of the Company's Common Stock has been determined by
Holder to be $____________ and $_________________ , respectively, which figure
is acceptable to Holder for calculations the number of shares of Common Stock
issuable pursuant to this Notice of Exercise. Holder requests that the
certificates for the purchased shares of Common Stock be issued in the name of
and delivered to the person(s) designated below. To the extent the foregoing
exercise is for less than the full Aggregate Price of the Warrant, a replacement
Warrant representing the remainder of the Aggregate Price (and otherwise of like
form, tenor and effect) shall be delivered to Holder along with the share
certificate evidencing the Common Stock issued in response to this Notice of
Exercise.
Please issue a certificate or certificates representing said Warrant Shares
in the name of the undersigned or in such other name as is specified below;
---------------------------------
The Warrant Shares shall be delivered to the following:
---------------------------------
---------------------------------
---------------------------------
[HOLDER]
By:
----------------------------------
Name:
--------------------------
Title:
----------------------
Date:
---------------------
NOTE: The execution to the foregoing Notice of Exercise must exactly correspond
to the name of the Holder on the Warrant.
11
ASSIGNMENT FORM
(To assign the foregoing warrant, execute this form and
supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
whose address is
---------------------------------------------------------
----------------------------------------------------------------------------
Dated:
-----------------------------
Holder's Signature:
-----------------------------------
Holder's Address:
--------------------------------------
Signature Guaranteed:
-------------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
12
Xxxxxxxx Capital Corp.
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
April 9, 2002
Med Diversified. Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxxx, Xx.
Chairman, President and CEO
Gentlemen:
This letter confirms our agreement with respect to the following facts:
Pursuant to the settlement Agreement and Mutual General Releases
("Settlement Agreement") dated March 25, 2002, and the Warrant Surrender Letter
referenced therein, MED is obligated to deliver to Xxxxxxxx Capital Corp. an
aggregate 1,000,000 shares of MED common stock ("Shares") on the Effective Date.
MED has informed Xxxxxxxx that it will issue a certificate representing the
Share: registered to Xxxxxxxx upon approval from the American Stock Exchange
("AMEX") for listing the Shares, as well as listing 1,500,000 shares of MED
common stock underlying the Replacement Warrant ("Warrant Shares"), delivered to
Xxxxxxxx on the Effective Date, Capitalized terms used herein have the same
meaning ascribed to them in the Settlement Agreement.
The parties desire to set forth the protocol for issuance of the Shares
post-Effective Date, It being understood that MED term remains obligated to
deliver the Shares and cause its legal counsel to deliver the related Rule 144
opinion letter, and nothing herein constitutes a waiver thereof by Xxxxxxxx.
In reliance upon the foregoing facts and for other good and valuable
consideration, we agree as follows:
1. MED shall cause an application to list the Shares and the Warrant Shares
to be filed with AMEX no later than Friday, April 12, 2002.
2. MED shall use its commercial best efforts to obtain approval from AMEX
for listing the Shares and the Warrant Shares. MED will arrange for its legal
counsel to notify Xxxxxxxx, at Xxxxxxxx'x request, as [ILLEGIBLE] status of the
AMEX application, including any requests by AMEX for additional information, or
any objections by AMEX.
3. Within four (4) business days after receipt of approval from AMEX for
listing the Shares and the Warrant Shares, MED shall cause the certificate
representing the Shares to be delivered to Xxxxxxxx.
4. With respect to the proposed sale by Xxxxxxxx or its designees of all or
a portion of the Shares and/or Warrant Shares, at any time and from time to
time, within one (1) business day after receipt by MED's legal counsel Manatt,
Xxxxxx & Xxxxxxxx, or such
Med Diversified, Inc.
April 9, 2002
Page 2 of 2
Other counsel as may be designated by MED upon notice to Xxxxxxxx) of the
following documents: (x) a copy of a signed Rule 144 Notice of Sale regarding
such Shares and/or Warrant Shares, (y) the related Seller's Representation
Letter and (z) the Broker's Representation Letter (with such documents in the
form previously provided to Xxxxxxxx), MED shall cause its legal counsel
(Manatt, Xxxxxx & Xxxxxxxx, as applicable) to deliver a signed Rule 144 opinion
letter to MED and to MED's stock transfer agent, in the form of the Rule 144
opinion appended hereto.
5. Except for satisfaction of the foregoing items, the parties confirm that
all other conditions precedent set forth in the Settlement Agreement have been
satisfied, all documents have been released from escrow or will be released
concurrently herewith including, without limitation, the Settlement Agreement,
the Registration Rights Agreement, the Replacement Warrant, the Warrant
Surrender Letter, the Share Grant Letter, the S-8 stock certificates, and the
opinion letter of Manatt, Xxxxxx & Philips to Xxxxxxxx, and that the Effective
Date for purposes of the Settlement Agreement is April 9, 2002.
6. Sections 10,15,16,17 and 18 of the Settlement Agreement are hereby
incorporated by reference and made a part hereof as if rewritten verbatim.
This letter agreement may be executed in counterparts each of which shall
constitute an original, but together shall constitute one and the same
instrument. In lieu of an original, a facsimile transmission or copy of the
original shall be as effective and enforceable as the original.
Please confirm your agreement with the foregoing by signing the
acknowledgement below.
Xxxxxxxx Capital Corp.
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
Read and Approved
as of the date set forth above
Med Diversified, Inc.,
a Nevada corporation
By:
----------------------------
(Print or Type Name)
