EXHIBIT 10.3
BUSINESS SEPARATION AND SETTLEMENT AGREEMENT
This Business Separation and Settlement Agreement (this "Agreement") is
made and entered into as of October 30, 2001, by and among MAII Holdings, Inc.,
a Texas corporation (the "Company"), and Xxxxxxx X. Xxxxxxx, Xxx Xxxxxxx,
Sunwestern Investment Fund III Limited Partnership, and Sunwestern Cayman (1988)
Partners (each, a "Sunwestern Party" and collectively, the "Sunwestern
Parties").
WITNESSETH:
WHEREAS, the Company, on the one hand, and the Sunwestern Parties, on
the other hand, desire to terminate their business relationship on the terms set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Settlement Obligations. The parties agree as follows:
(a) On the date hereof, the Company shall purchase from the
Sunwestern Parties, and the Sunwestern Parties shall sell to the Company, the
number of shares of common stock, par value $0.002 per share, of the Company
(the "Common Stock") set forth opposite each Sunwestern Party's name on Schedule
I attached hereto (collectively, the "Shares"), for a purchase price of $2.00
per share (One Million Nine Hundred Ninety-Eight Thousand Three Hundred
Eighty-Six Dollars ($1,998,386) in the aggregate) (the "Purchase Price"). The
applicable portion of the Purchase Price shall be payable to each Sunwestern
Party by wire transfer to an account designated by each Sunwestern Party,
against delivery to the Company by each Sunwestern Party of certificates for the
Shares being sold to the Company hereunder, together with stock powers executed
in blank.
(b) On the date hereof, the Company shall issue to each
Sunwestern Party a warrant to purchase the number of shares of Common Stock set
forth opposite such Sunwestern Party's name on Schedule I (499,596 shares in the
aggregate), such warrants being substantially in the form of Exhibit A attached
hereto (collectively, the "Warrants"). The Company agrees that as long as the
Sunwestern Parties in the aggregate own at least 50% of the Warrants and/or
shares underlying the Warrants, that the Chief Executive Officer of the Company
will hold a quarterly progress meeting with Xxxxxxx X. Xxxxxxx, subject to a
confidentiality agreement in accordance with Regulation FD, no later than the
twenty-fifth day following the end of each calendar quarter and that such
meeting will include delivery of then-available financial information for the
most recent quarter and will include an update on the Company's then-current and
planned business strategy.
(c) Effective as of the Closing, Silcock hereby resigns as a
director of the Company.
(d) Except for the acquisition of shares of Common Stock
underlying the Warrants, each Sunwestern Party agrees not to acquire, directly
or indirectly, any securities of the Company following the Closing.
2. Closing. The closing of the transactions contemplated herein (the
"Closing") shall be deemed to have occurred on the date of this Agreement (the
"Closing Date").
3. Releases.
(a) Release by the Sunwestern Parties. Each Sunwestern Party,
on its own behalf and on behalf of its respective directors, partners,
shareholders, officers, agents, employees, successors, heirs, legal
representatives and the respective successors, heirs, legal representatives and
assigns of each of the foregoing (collectively, the "Sunwestern Party
Releasors") agrees to release and do hereby release, acquit and forever
discharge the Company and its directors, officers, employees, agents, attorneys,
successors and assigns and the respective successors, heirs, legal
representatives and assigns of each of the foregoing (collectively, the "Company
Releasees") from, and extinguishes, any and all claims, demands, debts, damages,
costs, losses, expenses, commissions, actions, causes of action, rights,
liabilities, obligations and choses in action of whatever nature or type which
any of the Sunwestern Party Releasors have, or may have, or which have been, or
could have been, or in the future otherwise might have been asserted in
connection with acts of the Company Releasees or any of them occurring on or
prior to the date hereof (the "Sunwestern Party Claims"), except that in no
event shall this paragraph operate to release any of the Company Releasees from
any claims or liability resulting from a breach of the representations,
warranties, covenants and agreements of the Company contained in this Agreement.
(b) Release by the Company. The Company, on its own behalf and
on behalf of its directors, shareholders, officers, agents, employees,
successors, heirs, legal representatives and the respective successors, heirs,
legal representatives and assigns of each of the foregoing (collectively, the
"Company Releasors") agrees to release and does hereby release, acquit and
forever discharge the Sunwestern Parties and their respective directors,
officers, partners, employees, agents, attorneys, successors and assigns and the
respective successors, heirs, legal representatives and assigns of each of the
foregoing (collectively, the "Sunwestern Party Releasees") from, and
extinguishes, any and all claims, demands, debts, damages, costs, losses,
expenses, commissions, actions, causes of action, rights, liabilities,
obligations and choses in action of whatever nature or type which any of the
Company Releasors have, or may have, or which have been, or could have been, or
in the future otherwise might have been asserted in connection with acts of the
Sunwestern Party Releasees or any of them occurring on or prior to the date
hereof (the "Company Claims"), except that in no event shall this paragraph
operate to release any of the Sunwestern Party Releasees from any claims or
liability resulting from a breach of the representations, warranties, covenants
and agreements of the Sunwestern Parties contained in this Agreement
4. Representations and Warranties.
(a) Representations and Warranties of the Company. The Company
hereby represents and warrants that the following are true and correct as of the
date hereof: (i) the Company is a corporation validly existing and in good
standing under the laws of the State of Texas; (ii) the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, and the execution, delivery and performance by it of this
Agreement has been duly authorized by all necessary corporate action, and this
Agreement constitutes the valid and binding obligation of the Company,
enforceable against it in accordance with the terms hereof; (iii) the Company
has not assigned, sold, conveyed or otherwise transferred all or any portion of
the
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Company Claims; (iv) the execution, delivery and performance by the Company of
this Agreement do not, and the consummation of the transactions contemplated by
and compliance with this Agreement will not: conflict with or result in any
violation of or default (with or without notice or lapse of time, or both) under
any provision of the Company's articles of incorporation or bylaws or any
contract, agreement, obligation or other document to which the Company is a
party or by which it or any of its properties or assets is otherwise bound or
affected, or conflict with or result in any violation of any domestic or foreign
judgment, verdict, jury award, injunction, order or decree ("Judgment") or
domestic or foreign statute, law (including common law), ordinance, rule or
regulation ("Law") applicable to the Company or its properties or assets; (v)
the Company (including through its directors and officers) is not aware of any
transaction or other proposal pertaining to a change of control of the Company
or any sale by the Company of any material portion of its assets or business.
(b) Representations and Warranties of the Sunwestern Parties.
Each Sunwestern Party, as to himself, hereby represents and warrants that the
following are true and correct as of the date hereof: (i) if the Sunwestern
Party is an entity, such Sunwestern Party is validly existing and in good
standing under the laws of the State of organization; (ii) such Sunwestern Party
has the power and authority to execute, deliver and perform its obligations
under this Agreement (including, without limitation, the sale of the Shares to
the Company), and this Agreement constitutes such Sunwestern Party's valid and
binding obligation, enforceable against such Sunwestern Party in accordance with
the terms hereof; (iii) such Sunwestern Party owns the Shares set forth opposite
its name on Schedule I (which shares constitute all shares of Common Stock owned
by such Sunwestern Party) free and clear of all liens, security interests and
other encumbrances and/or claims of any kind, and will transfer such shares to
the Company hereunder free and clear of any liens, security interests and other
encumbrances and/or claims or any kind (except pursuant to applicable securities
laws and except for such encumbrances and claims created by the Company or
otherwise applicable to the Company); (iv) such Sunwestern Party has not
assigned, sold, conveyed or otherwise transferred all or any portion of the
Sunwestern Party Claims; (v) if such Sunwestern Party is an individual, such
Sunwestern Party has consulted or has had sufficient opportunity to discuss with
any person, including an attorney of his choice, all provisions of this
Agreement, that such Sunwestern Party has carefully read and fully understands
all the provisions of this Agreement, that such Sunwestern Party is competent to
execute this Agreement, and that such Sunwestern Party is voluntarily entering
into this Agreement of his own free will and accord, without reliance upon any
statement or representation (other than as provided herein) of any person or
parties released, or their representatives, concerning the nature and extent of
the damages and/or legal liability therefore; and (vi) the execution, delivery
and performance by such Sunwestern Party of this Agreement do not, and the
consummation of the transactions contemplated by and compliance with this
Agreement will not: conflict with or result in any violation of or default (with
or without notice or lapse of time, or both) under any provision of such
Sunwestern Party's organizational documents or any contract, agreement,
obligation or other document to which such Sunwestern Party is a party or by
which it or any of its properties or assets is otherwise bound or affected, or
conflict with or result in any violation of any Judgment or Law applicable to
such Sunwestern Party or its properties or assets. In addition, the Sunwestern
Parties acknowledge and agree that the Company may have knowledge of certain
material information that the Sunwestern Parties do not have knowledge of, that
the Company previously asked the Sunwestern Parties to sign a confidentiality
agreement in order to disclose certain confidential information to the
Sunwestern Parties, which was refused by the Sunwestern Parties, that the
Sunwestern Parties have been provided complete access to the
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management of the Company, and that the Purchase Price may not bear any
relevance to the actual value of the Shares or the Company. Each Sunwestern
Party further represents and warrants that: (i) such Sunwestern Party has
requested that the Company purchase the Shares owned by such Sunwestern Party;
(ii) such Sunwestern Party is a sophisticated investor; and (iii) such
Sunwestern Party has done its own due diligence on the Company and is not
relying upon the Company to furnish it with any information (other than as
provided herein).
(c) Other Agreements. After the Closing: (i) each Sunwestern
Party agrees not to make any disparaging statements, written or verbal,
regarding the Company or any of the Company Releasees at any time; and (ii) the
Company agrees not to make any disparaging statements, written or verbal,
regarding any Sunwestern Party or any of the Sunwestern Party Releasees at any
time. In addition, after the Closing, each Sunwestern Party agrees not to
directly or indirectly assist or cooperate with any person or entity who intends
to or has filed a lawsuit against any Company Releasee or intends to attempt to
effect a change of control of the Company or influence the Company's management
or policies. However, the provisions of this Section shall not prohibit a party
from complying with a subpoena issued by a court of competent jurisdiction or a
governmental agency with valid subpoena power or otherwise from complying with
applicable law.
5. Amendment and Assignment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto. This Agreement shall extend to and be binding upon, and inure of the
benefit of the Sunwestern Party Releasees, the Company Releasees and each of the
parties hereto and their respective heirs, successors, assigns, legal
representatives and any corporation or other entity into or with which any party
hereto may merge or consolidate. Notwithstanding the above, neither this
Agreement nor any right created hereby shall be assignable to any party hereto
without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld.
6. Notice. Any notice or communication must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by facsimile. Any such notice
or communication shall be deemed received, if not earlier received, on the third
business day following the date on which it is mailed, or on the day on which it
is hand delivered or delivered by facsimile, as the case may be.
7. Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures as are required by law.
8. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
9. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, such
provisions shall be deemed severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provisions did not
comprise a part hereof unless the loss of such provision causes this Agreement
to fail of its essential purpose; and the remaining provisions hereof shall
remain in full force and effect and shall
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not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom except as aforesaid. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, the parties agree to meet to determine in
good faith, or will ask the court to determine, a provision as similar in its
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable and such provision so determined shall then be
added as part of this Agreement.
10. Governing Law. This Agreement and the rights and obligations of the
parties hereto, shall be governed, construed and enforced in accordance with the
laws of the State of Texas.
11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MAII HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
---------------------------
Xxxxxxxx X. Xxxxx,
Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxx Xxxxxxx
-----------------------
Xxx Xxxxxxx
SUNWESTERN INVESTMENT FUND III
LIMITED PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------
Its: General Partner
SUNWESTERN CAYMAN (1988) PARTNERS
By: /s/ Sunwestern Managers Inc.
------------------------------
Its: Attorney-in-fact
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Its: President
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SCHEDULE I
Name of Number of Shares of Common
Sunwestern Party Shares Being Sold Stock Underlying Warrant
---------------- ----------------- ------------------------
Sunwestern Investment Fund III Limited
Partnership 479,612 239,806
Sunwestern Cayman (1988) Partners
519,581 259,790
------- -------
999,193 499,596
SI-1
FORM OF WARRANT
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL (WHICH OPINION
IS REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES), SUCH REGISTRATION
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.
Date: October 30, 2001 Warrant to Purchase
Shares
MAII HOLDINGS, INC.
(Incorporated under the laws of the State of
Texas)
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
Warrant Price: $3.00 per share, subject to adjustment as provided below.
THIS IS TO CERTIFY that, for value received, ______________ and its
registered assigns (collectively, the "Holder"), is entitled to purchase,
subject to the terms and conditions hereinafter set forth, up to ___________
shares of the $0.002 par value common stock ("Common Stock") of MAII Holdings,
Inc., a
Texas corporation (the "Company"), and to receive certificate(s) for the
Common Stock so purchased.
1. EXERCISE PERIOD AND VESTING. The exercise period is the period
beginning on the date of this Warrant (the "Issuance Date") and ending at 5:00
p.m., Dallas,
Texas time, on October 30, 2004 (the "Exercise Period"). This
Warrant is vested in full as of the Issuance Date and is immediately exercisable
by Holder. This Warrant will terminate automatically and immediately upon the
expiration of the Exercise Period.
2. EXERCISE OF WARRANT. This Warrant may be exercised, in whole or in
part, at any time and from time to time during the Exercise Period. Such
exercise shall be accomplished by tender to the Company of the purchase price
set forth above as the warrant price (the "Warrant Price"), in cash, by wire
transfer or by certified check or bank cashier's check, payable to the order of
the Company, together with presentation and surrender to the Company of this
Warrant with an executed subscription in substantially the form attached hereto
as Exhibit A (the "Subscription"); provided, however, the Company may, in its
sole discretion, agree to a cashless exercise procedure with the Holder. Upon
receipt of the foregoing, the Company will deliver to the Holder, as promptly
as possible, a certificate or certificates representing the shares of Common
Stock so purchased, registered in the name of the Holder or its transferee (as
permitted under Section 3 below). With respect to any exercise of this Warrant,
the Holder will for all purposes be deemed to have become the holder of record
of the number of shares of Common Stock purchased hereunder on the date this
Warrant, a properly executed Subscription and payment of the Warrant Price is
received by the Company (the "Exercise Date"), irrespective of the date of
delivery of the certificate evidencing such shares, except that, if the date of
such receipt is a date on which the stock transfer books of the Company are
closed, such person will be deemed to have become the holder of such shares at
the close of business on the next succeeding date on which the stock transfer
books are open. Fractional shares of Common Stock will not be issued upon the
exercise of this Warrant. In lieu of any fractional shares that would have been
issued but for the immediately preceding sentence, the Holder will be entitled
to receive cash equal to the current market price of such fraction of a share of
Common Stock on the trading day immediately preceding the Exercise Date. In the
event this Warrant is exercised in part, the Company shall issue a new Warrant
to the Holder covering the aggregate number of shares of Common Stock as to
which this Warrant remains exercisable for.
3. TRANSFERABILITY AND EXCHANGE.
(a) This Warrant, and the Common Stock issuable upon the
exercise hereof, may not be sold, transferred, pledged or hypothecated unless
the Company shall have been provided with an opinion of counsel, or other
evidence reasonably satisfactory to it, that such transfer is not in violation
of the Securities Act, and any applicable state securities laws. Subject to the
satisfaction of the aforesaid condition, this Warrant and the underlying shares
of Common Stock shall be transferable from time to time by the Holder upon
written notice to the Company; provided, however, that this Warrant and the
underlying shares of Common Stock: (i) may be distributed to any partners or
shareholders of Holder as a dividend or liquidation plan; it being acknowledged
and agreed that any such transferee, by acceptance of such transfer, will be
deemed to have accepted, and to be bound by, the terms of this Warrant; and (ii)
except as provided in (i) above, may not be transferred in a private sale
without the Holder receiving the prior written consent of the Board of Directors
of the Company, which consent may be withheld in the sole discretion of the
Board of Directors of the Company. If this Warrant is transferred, in whole or
in part, in compliance with the terms and provisions of this Agreement, then the
Company shall, upon surrender of this Warrant to the Company, deliver to each
transferee a Warrant evidencing the rights of such transferee to purchase the
number of shares of Common Stock that such transferee is entitled to purchase
pursuant to such transfer. The Company may place a legend similar to the legend
at the top of this Warrant on any replacement Warrant and on each certificate
representing shares issuable upon exercise of this Warrant or any replacement
Warrants. Only a registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon delivery to the Company of the original Warrant and
an original Assignment, substantially in the form set forth in Exhibit B
attached hereto.
(b) This Warrant is exchangeable upon its surrender by the
Holder to the Company for new Warrants of like tenor and date representing in
the aggregate the right to purchase the number of shares purchasable hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as may be designated by the Holder at the time of such surrender.
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4. ADJUSTMENTS TO WARRANT PRICE AND NUMBER OF SHARES SUBJECT TO
WARRANT. The Warrant Price and the number of shares of Common Stock purchasable
upon the exercise of this Warrant are subject to adjustment from time to time
upon the occurrence of any of the events specified in this Section 4. For the
purpose of this Section 4, "Common Stock" means shares now or hereafter
authorized of any class of common stock of the Company and any other stock of
the Company, however designated, that has the right to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount (excluding, and subject to any prior rights of, any class or series
of preferred stock).
(a) In case the Company shall (i) pay a dividend or make a
distribution in shares of Common Stock or other securities, (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 by reclassification of its shares of Common Stock other securities
of the Company, then the Warrant Price in effect at the time of the record date
for such dividend or on the effective date of such subdivision, combination or
reclassification, and/or the number and kind of securities issuable on such
date, shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised shall be entitled to receive the aggregate number and kind
of shares of Common Stock (or such other securities other than Common Stock) of
the Company, at the same aggregate Warrant Price, that, if such Warrant had been
exercised immediately prior to such date, the Holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of cash, evidences of indebtedness or
assets, or subscription rights or warrants, the Warrant Price to be in effect
after such record date shall be determined by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the current market price per share of Common Stock on such record
date, less the amount of cash so to be distributed (or the fair market value (as
determined in good faith by, and reflected in a formal resolution of, the Board
of Directors of the Company) of the portion of the assets or evidences of
indebtedness so to be distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, and the denominator of which shall be
such current market price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Warrant Price shall again be adjusted to
be the Warrant Price which would then be in effect if such record date had not
been fixed.
(c) For the purpose of any computation under any subsection of
this Section 4, the "current market price" per share of Common Stock on any date
shall be the per share price of the Common Stock on the trading day immediately
prior to the event requiring an adjustment hereunder and shall be: (i) if the
principal trading market for such securities is a national or regional
securities exchange, the closing price on such exchange on such day; or (ii) if
sales prices for shares of Common Stock are reported by the Nasdaq National
Market System or Small Cap Market System (or a similar system then in use), the
last reported sales price so reported on such day; or (iii) if neither (i) nor
(ii) above are applicable, and if bid and ask prices for shares of Common Stock
are reported in the over-the-counter market by Nasdaq (or, if not so reported,
by the National Quotation
3
Bureau), the average of the high bid and low ask prices so reported on such day.
Notwithstanding the foregoing, if there is no reported closing price, last
reported sales price, or bid and ask prices, as the case may be, for the day in
question, then the current market price shall be determined as of the latest
date prior to such day for which such closing price, last reported sales price,
or bid and ask prices, as the case may be, are available, unless such securities
have not been traded on an exchange or in the over-the-counter market for 30 or
more days immediately prior to the day in question, in which case the current
market price shall be determined in good faith by, and reflected in a formal
resolution of, the Board of Directors of the Company.
(d) Notwithstanding any provision herein to the contrary, no
adjustment in the Warrant Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Warrant Price; provided,
however, that any adjustments which by reason of this subsection (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made to
the nearest cent or the nearest one-hundredth of a share, as the case may be.
(e) In the event that at any time, as a result of an
adjustment made pursuant to subsection (a) above, the Holder of any Warrant
thereafter exercised shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in this Section 4, and the other provisions of this Warrant shall
apply on like terms to any such other shares.
(f) If the Company merges or consolidates into or with another
corporation or entity, or if another corporation or entity merges into or with
the Company (excluding such a merger in which the Company is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of the outstanding shares of Common
Stock), or if all or substantially all of the assets or business of the Company
are sold or transferred to another corporation, entity, or person, then, as a
condition to such consolidation, merger, or sale (a "Transaction"), lawful and
adequate provision shall be made whereby the Holder shall have the right from
and after the Transaction to receive, upon exercise of this Warrant and upon the
terms and conditions specified herein and in lieu of the shares of the Common
Stock that would have been issuable if this Warrant had been exercised
immediately before the Transaction, such shares of stock, securities, or assets
as the Holder would have owned immediately after the Transaction if the Holder
had exercised this Warrant immediately before the effective date of the
Transaction; it being agreed that if the Transaction is a cash-out merger, then
Holder will be entitled to receive in cash the difference between the cash-out
merger price less the Warrant Price multiplied by the number of shares of Common
Stock then underlying this Warrant, and this Warrant shall be deemed to be
canceled.
(g) In case any event shall occur as to which the other
provisions of this Section 4 are not strictly applicable but the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof, then, in
each such case, the Company shall effect such adjustment, on a basis consistent
with the essential intent and principles established in this Section 4, as may
be necessary to preserve, without dilution, the purchase rights represented by
this Warrant.
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5. REGISTRATION RIGHTS. The Holder shall be entitled to the benefits of
the registration rights set forth in Exhibit C attached hereto.
6. RESERVATION OF SHARES. The Company agrees at all times to reserve
and hold available out of its authorized but unissued shares of Common Stock the
number of shares of Common Stock issuable upon the full exercise of this
Warrant. The Company further covenants and agrees that all shares of Common
Stock that may be delivered upon the exercise of this Warrant will, upon
delivery, be fully paid and nonassessable and free from all taxes, liens and
charges with respect to the purchase thereof hereunder.
7. NOTICES TO HOLDER. Upon any adjustment of the Warrant Price (or
number of shares of Common Stock purchasable upon the exercise of this Warrant)
pursuant to Section 4, the Company shall promptly thereafter cause to be given
to the Holder written notice of such adjustment. Such notice shall include the
Warrant Price (and/or the number of shares of Common Stock purchasable upon the
exercise of this Warrant) after such adjustment, and shall set forth in
reasonable detail the Company's method of calculation and the facts upon which
such calculations were based. Where appropriate, such notice shall be given in
advance and included as a part of any notice required to be given under the
other provisions of this Section 7.
In the event of (a) any fixing by the Company of a record date with respect to
the holders of any class of securities of the Company for the purpose of
determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right, (b) any capital reorganization of the Company, or
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets or business of the Company
to, or consolidation or merger of the Company with or into, any other entity or
person, or (c) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will give the Holder a written
notice specifying, as the case may be (i) the record date for the purpose of
such dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; or (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation, or winding up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such capital stock or securities receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock securities) for securities or other property deliverable upon such
event. Any such notice shall be given at least 10 days prior to the earliest
date therein specified.
8. NO RIGHTS AS A STOCKHOLDER. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company, nor to any
other rights whatsoever except the rights herein set forth.
9. ADDITIONAL COVENANTS OF THE COMPANY. At such time as the Common
Stock is listed for trading on any regional or national securities exchange or
Nasdaq (National Market or Small Cap System), the Company shall, upon issuance
of any shares for which this Warrant is exercisable, at its expense, promptly
obtain and maintain the listing of such shares. The Company shall comply with
the reporting requirements of Sections 13 and 15(d) of the Exchange Act for so
long as and to the extent that such requirements apply to the Company.
5
The Company shall not, by amendment of its Articles 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. Without
limiting the generality of the foregoing, the Company (a) will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
this Warrant, shares of Common Stock issuable from time to time upon exercise of
this Warrant, (b) will not increase the par value of any shares of capital stock
receivable upon exercise of this Warrant above the amount payable therefor upon
such exercise, and (c) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable stock.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company, the Holder and their respective successors
and permitted assigns.
11. NOTICES. The Company agrees to maintain a ledger of the ownership
of this Warrant (the "Ledger"). Any notice hereunder shall be given by
registered or certified mail if to the Company, at its principal executive
office and, if to the Holder, to its address shown in the Ledger of the Company;
provided, however, that the Holder may at any time on three (3) days written
notice to the Company designate or substitute another address where notice is to
be given. Notice shall be deemed given and received after a certified or
registered letter, properly addressed with postage prepaid, is deposited in the
U.S. mail.
12. SEVERABILITY. Every provision of this Warrant is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Warrant.
13. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of
Texas without giving effect to the
principles of choice of laws thereof.
14. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
15. ENTIRE AGREEMENT. This Warrant (including the Exhibits attached
hereto) constitutes the entire understanding between the Company and the Holder
with respect to the subject matter hereof, and supersedes all prior
negotiations, discussions, agreements and understandings relating to such
subject matter.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
MAII HOLDINGS, INC.
By:
-------------------------------
Title:
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6
Exhibit A
SUBSCRIPTION FORM
(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for _______ shares (the
"Stock") of the Common Stock of MAII Holdings, Inc. (the "Company") pursuant to
and in accordance with the terms and conditions of the attached Warrant (the
"Warrant"), and hereby makes payment of $_______ therefor by tendering cash,
wire transferring or delivering a certified check or bank cashier's check,
payable to the order of the Company. The undersigned requests that a certificate
for the Stock be issued in the name of the undersigned and be delivered to the
undersigned at the address stated below. If the Stock is not all of the shares
purchasable pursuant to the Warrant, the undersigned requests that a new Warrant
of like tenor for the balance of the remaining shares purchasable thereunder be
delivered to the undersigned at the address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
in violation of the Securities Act of 1933, as amended (the "Securities Act").
I understand that because the Stock has not been registered under the
Securities Act, I must hold such Stock indefinitely unless the Stock is
subsequently registered and qualified under the Securities Act or is exempt from
such registration and qualification. I shall make no transfer or disposition of
the Stock unless (a) such transfer or disposition can be made without
registration under the Securities Act by reason of a specific exemption from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Securities Act and has been declared effective with
respect to such disposition. I agree that each certificate representing the
Stock delivered to me shall bear substantially the same as set forth on the
front page of the Warrant.
I agree that each certificate representing the Stock delivered to me
shall bear substantially the same legend as set forth on the front page of the
Warrant.
I further agree that the Company may place stop orders on the
certificates evidencing the Stock with the transfer agent, if any, to the same
effect as the above legend. The legend and stop transfer notice referred to
above shall be removed only upon my furnishing to the Company of an opinion of
counsel (reasonably satisfactory to the Company) to the effect that such legend
may be removed.
Date: Signed:
---------------------------- --------------------------------
Address:
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Exhibit B
ASSIGNMENT
(To be Executed by the Holder to Effect Transfer of the Attached Warrant)
For Value Received __________________________ hereby sells, assigns and
transfers to _________________________ the Warrant attached hereto and the
rights represented thereby to purchase _________ shares of Common Stock in
accordance with the terms and conditions hereof, and does hereby irrevocably
constitute and appoint _________________________ as attorney to transfer such
Warrant on the books of the Company with full power of substitution.
Dated: Signed:
------------------------------ ----------------------------
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
------------------------------------- ----------------------------
-------------------------------------
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B-1
Exhibit C
REGISTRATION RIGHTS
1. DEFINITIONS
Affiliate: With reference to any designated Person, any Person that has
a relationship with such designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common control
with the other. For this purpose "control" means the power, direct or indirect,
of one Person to direct or cause direction of the management and policies of
another, whether by contract, through voting securities or otherwise.
Commission: The Securities and Exchange Commission or any other
governmental body at the time administering the Securities Act.
Common Stock: The Company's authorized common stock, par value $0.002
per share, as constituted on the date of this Warrant, any stock into which such
Common Stock may thereafter be changed and any stock of the Company of any other
class, which is not preferred as to dividends or assets over any other class of
stock of the Company and which is not subject to redemption, issued to the
holders of shares of such Common Stock upon any re-classification thereof.
Company Securities: Any equity securities proposed to be sold by the
Company in the registration statement referred to.
Person: A corporation, an association, a partnership, a limited
liability company, a joint venture, a trust, an organization, a business, an
entity, an individual, a government or political subdivision thereof or a
governmental body.
Registrable Securities: Shares of Common Stock underlying the Warrant
and any securities of the Company issued with respect to such shares of Common
Stock by way of stock dividend or stock split or in connection with a
combination, recapitalization, share exchange, consolidation or other
reorganization of the Company. As to any Registrable Securities, once issued
such securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (iv) they shall have ceased to be
outstanding.
Selling Expenses: All underwriting discounts, selling commissions and
stock transfer taxes applicable to the securities registered by the Holder and,
except as provided in Section 4 hereof, all fees and disbursements of counsel
for the Holder.
Capitalized terms used in this Exhibit C but not otherwise defined herein shall
have the meanings ascribed to such terms in the Warrant.
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2. REGISTRATION RIGHTS
2.1. Registration on Form S-3. The Warrant was issued simultaneously
with similar warrants for the purchase of shares of Common Stock (including,
without limitation, warrants which may be issued to ___________________________)
(the "Other Warrants"). On and after the time that the Company is qualified for
the use of Form S-3 (or any similar form or forms promulgated under the
Securities Act), persons owning at least a majority of the shares of Common
Stock underlying collectively this Warrant and the Other Warrants shall have the
right to request one registration on Form S-3 of the Registrable Securities
(which request or requests shall be in writing, shall specify the number of
shares of underlying Common Stock intended to be sold or disposed of by such
holders of Warrants and Other Warrants and shall state the intended method of
disposition of such shares); provided that, a registration requested pursuant to
this Section 2.1 shall not be deemed to have been effected if (A) a registration
statement with respect thereto has been declared effective for a period of less
than one hundred eighty (180) days, or (B) after such registration statement has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason and such interference lasts for more than ten
(10) days. Upon receiving such request, the Company will promptly give written
notice of such requested registration to all other holders of Other Warrants and
this Warrant, as applicable.
2.2. Incidental Registration. If the Company at any time proposes to
register any of its equity securities under the Securities Act on any form other
than Form S-4 or Form S-8 (or any similar or successor form then in effect),
whether or not for sale for its own account, and if the registration form
proposed to be used may be used for the registration of Registrable Securities,
the Company will in each such case give prompt written notice (and in any event
at least 10 business days' prior written notice prior to the filing of such
registration statement) to the Holder of the Company's intention to do so, such
notice to specify the securities to be registered, the proposed numbers and
amounts thereof and the date not less than 20 days thereafter by which the
Company must receive the Holder's written indication of whether the Holder
wishes to include its Registrable Securities in such registration statement and
advising the Holder of its rights under this Section 2.2. Upon the written
request of the Holder made on or before the date specified in such notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by the Holder), the Company will, to the extent permitted under
Section 7, use all commercially reasonable efforts to cause all such Registrable
Securities, which the Holder has so requested the registration thereof, to be
registered under the Securities Act (with the securities that the Company at the
time proposes to register), to the extent requisite to permit the sale or other
disposition (in accordance with the intended methods thereof as aforesaid) by
the Holder of the Registrable Securities to be so registered.
3. REGISTRATION PROCEDURES
If and whenever the Company is required by the provisions hereof to effect or
cause the registration of any Registrable Securities under the Securities Act as
provided herein, the Company will, as expeditiously as possible:
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(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use all commercially reasonable
efforts to cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of at least 180 days (or such shorter period as shall be necessary to
complete the distribution of the securities covered thereby) and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement;
(c) furnish to counsel for the Holders and each underwriter of the
securities being sold by the Holders such number of copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents, as such counsel may reasonably request, in substantially the form in
which they are proposed to be filed with the Commission, in order to facilitate
the public sale or other disposition of the Registrable Securities owned by the
participating Holders;
(d) use all commercially reasonable efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Holders shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable the Holders and any underwriter to consummate
the disposition in such jurisdictions of such Registrable Securities owned by
the participating Holders, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where, but for the requirements of this subsection (d), it
would not be obligated to be so qualified, or to subject itself to taxation in
any such jurisdiction;
(e) use all commercially reasonable efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the participating Holders to consummate the disposition of its
Registrable Securities;
(f) notify the participating Holders at any time when a prospectus
relating to its Registrable Securities is required to be delivered under the
Securities Act, of the Company's becoming aware that the prospectus included in
the related registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and promptly prepare and furnish to
the participating Holders and each underwriter a reasonable number of copies of
a prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not 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 not misleading in
the light of the circumstances then existing;
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(g) otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission;
(h) notify the Holder of any stop order threatened or issued by the
Commission and take all actions reasonably necessary to prevent the entry of
such stop order or to remove it if entered; and
(i) furnish to each Holder participating in the offering a signed
counterpart of:
(A) any opinion of counsel for the Company, dated the
effective date of such registration statement, in form and substance
customary for a registration statement of such type (and, if such
registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement),and
(B) any "comfort" letter, dated the effective date of such
registration statement, in form and substance customary for a
registration statement of such type (and, if such registration includes
an underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement.
The Holders shall be deemed to have agreed by acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of the happening of
any event of the kind described in subsection (f) above, the Holders will
forthwith discontinue their disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until the
Holders' receipt of the copies of the supplemented or amended prospectus
contemplated by said subsection and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies, then in the Holders' possession of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in subsection
(b) above shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
the Holders shall have received the copies of the supplemented or amended
prospectus contemplated by subsection (f) above.
Each participating Holder shall furnish to the Company in writing such
information and documents regarding it and the distribution of its securities as
may reasonably be required to be disclosed in the registration statement in
question by the rules and regulations under the Securities Act or under any
other applicable securities or blue sky laws of the jurisdictions referred to in
subsection (d) above.
If any such registration or comparable statement refers to any
participating Holder by name or otherwise as the holder of any securities of the
Company, but such reference to such participating Holder by name or otherwise is
not required by the Securities Act or any similar federal statute then in force,
then such participating Holder shall have the right to require the deletion of
the reference to such participating Holder.
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4. REGISTRATION EXPENSES
In connection with any registration of Registrable Securities pursuant
to Section 2.1 or 2.2, the Company will, whether or not any such registration
shall become effective, from time to time promptly upon receipt of bills or
invoices relating thereto, pay all expenses (other than Selling Expenses)
incident to its performance of or compliance herewith (the "Company Registration
Expenses"), including, without limitation, all registration, filing and NASD
fees, fees and expenses of compliance with securities or blue sky laws, word
processing, duplicating and printing expenses, messenger and delivery expenses,
fees and disbursements of counsel for the Company and all independent public
accountants and other Persons retained by the Company and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding underwriting commissions and discounts).
5. INDEMNIFICATION
(a) The Company will, and hereby does, indemnify, to the extent
permitted by law, Holder and each Person, if any, who controls such Holder
within the meaning of Section 15 of the Securities Act (collectively, "Holder
Indemnified Parties"), from and against all losses, claims, damages, liabilities
and expenses, joint or several, to which any such Holder Indemnified Party may
become subject under the Securities Act, the Exchange Act and all rules and
regulations under each such Act, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement as contemplated hereby or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to action
of or inaction by the Company in connection with any such registration; and in
each such case, the Company shall reimburse each such Holder Indemnified Party
for any reasonable legal or other expenses incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability,
expense, action or proceeding; provided, however, that the Company shall not be
liable to any such Holder Indemnified Party insofar as such losses, claims,
damages, liabilities, expenses, actions or proceedings are caused by any untrue
statement or alleged untrue statement made in reliance on or in conformity with
any information furnished in writing to the Company by or on behalf of the
Holder Indemnified Party expressly for use therein.
If the offering pursuant to any registration statement provided for
hereunder is made through underwriters, no action or failure to act on the part
of such underwriters (whether or not any such underwriter is an Affiliate of any
Holder Indemnified Party) shall affect the Company's obligations to indemnify
the Holder Indemnified Parties pursuant to the preceding paragraph. If the
offering pursuant to any registration statement provided for hereunder is made
through underwriters, the Company agrees to enter into an underwriting agreement
in customary form with such underwriters and to indemnify such underwriters,
their officers and directors, if any, and each Person, if any, who controls such
underwriters within the meaning of Section 15 of the Securities Act to the same
extent
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as hereinbefore provided with respect to the indemnification of the Holder
Indemnified Parties; provided, however, that the Company shall not be required
to indemnify any such underwriter, or any officer or director of such
underwriter or any Person who controls such underwriter within the meaning of
Section 15 of the Securities Act, to the extent that the loss, claim, damage,
liability, expense, action or proceeding for which indemnification is claimed
results from such underwriter's failure to send or give a copy of the amended or
supplemented final prospectus, at or prior to the written confirmation of the
sale of Registrable Securities, to a Person asserting the existence of an untrue
statement or alleged untrue statement or omission or alleged omission if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was given
notice of the availability of such amended or supplemented final prospectus.
In connection with any registration statement in which any Holder is
participating, such participating Holder will furnish to the Company in writing
such information as shall be reasonably requested by the Company for use in any
such registration statement or prospectus and will indemnify, to the extent
permitted by law, the Company, its officers and directors and each Person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages, liabilities, expenses, actions or
proceedings resulting from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the registration statement or prospectus or preliminary prospectus
or any amendment thereof or supplement thereto, or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is made in reliance on or in conformity with any
information so furnished in writing by such participating Holder expressly for
use therein.
Any Person entitled to indemnification under the provisions of this
Section 5 shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification, and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, permit
such indemnifying party to assume the defense of such claim, with counsel
reasonably satisfactory to the indemnified party; and if such defense is so
assumed, such indemnifying party shall not enter into any settlement without the
consent of the indemnified party if such settlement attributes liability to the
indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with respect
to any registration statement provided for hereunder shall so provide. In the
event an indemnifying party shall not be entitled, or elects not, to assume the
defense of a claim, such indemnifying party shall not be obligated to pay the
fees and expenses of more than one counsel or firm of counsel (plus one local
counsel or firm of counsel) for all parties indemnified by such indemnifying
party hereunder in respect of such claim, unless in the reasonable judgment of
any such indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties in respect to such
claim. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Holder Indemnified Party and shall
survive the transfer of such securities by such Holder Indemnified Party.
(b) If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
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benefits received by the indemnifying party on the one hand and the indemnified
party on the other, or (ii) if the allocation provided by subdivision (i) above
is not permitted by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no Holder shall be required to contribute any amount in excess of the
amount such Holder would have been required to pay to an indemnified party if
the indemnity under subdivision (a) of this Section 5 was available. 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. The obligation of any
underwriters to contribute pursuant to this Section 5 shall be several in
proportion to their respective underwriting commitments and not joint.
(c) An indemnifying party shall make payments of all amounts required
to be made pursuant to the foregoing provisions of this Section 5 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.
6. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS
In the case of a registration under Section 2.2, if the Company
determines to enter into an underwriting agreement in connection therewith, all
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement and no Person may participate in such registration
unless such Person agrees to sell such Person's securities on the basis provided
in such underwriting agreement and completes and/or executes all questionnaires,
indemnities, and other reasonable documents which must be executed under the
terms of such underwriting agreement; provided, however, that no such Person
shall be required to make any representations or warranties to or agreements
with the Company or the underwriters, other than representations, warranties or
agreements regarding such Person, its Registrable Securities and its intended
method of distribution and any other representation required by law or as
customarily given in registrations of such type.
7. ALLOCATION OF SECURITIES INCLUDED IN REGISTRATION STATEMENT
In the case of a registration pursuant to Section 2.2, if the Company's
managing underwriter shall advise the Company and the Holder in writing that the
inclusion in any registration pursuant hereto of some or all of (a) the
Registrable Securities sought to be registered by the Holder, and (b) the
Company Securities sought to be registered creates a substantial risk that the
proceeds or price per unit that will be derived from such registration will be
reduced or that the number of securities to be registered is too large a number
to be reasonably sold, (i) first, the number of Company Securities (or
securities of other Persons exercising "demand rights") sought to be registered
shall be included in such registration, and (ii) next, the number of Registrable
Securities and other securities of holders exercising "piggyback rights" shall
be included in such registration to the extent permitted by the Company's
managing underwriter (if the offering is underwritten) with the number of
Registrable Securities and such other securities being registered being on a pro
rata basis based on the number of securities Holder and each such other holder
with "piggyback rights" desire to have registered; provided, however, that, if
Holder would be required pursuant to the provisions of
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this Section 7 to reduce the number of Registrable Securities that it may
include in such registration, such Holder may withdraw all or any portion of its
Registrable Securities from such registration.
8. LIMITATIONS ON SALE OR DISTRIBUTION OF SECURITIES
If a registration hereunder shall be in connection with an underwritten
public offering, Holder shall be deemed to have agreed by acquisition of its
Registrable Securities not to effect any public sale or distribution, including
any sale pursuant to Rule 144 under the Securities Act, of any Registrable
Securities and to use its best efforts not to effect any such public sale or
distribution of any other equity security of the Company or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than as part of such underwritten public offering) within 10 days
before or 90 days after the effective date of such registration statement. In
such event, Holder agrees, if requested, to sign a customary market stand-off
letter with the Company's managing underwriter, and to comply with applicable
rules and regulations of the Commission.
9. TRANSFER OF REGISTRATION RIGHTS
If and to the extent that Holder sells or otherwise disposes of
Registrable Securities in any transaction that does not require registration
under the Securities Act (other than a transaction exempt under Rule 144), the
rights of Holder hereunder with respect to such Registrable Securities will be
assignable to the transferee of such Registrable Securities; provided, however,
that such transferee agrees in writing to be bound by all the terms and
conditions of this Exhibit C.
10. INVESTIGATION
In connection with the preparation and filing of each registration
statement under the Securities Act pursuant hereto, the Company will give each
Holder, and its counsel and accountants, such access to its books and records
and such opportunities to discuss the business of the Company with its officers
as shall be reasonably necessary to conduct a reasonable investigation within
the meaning of the Securities Act, subject however, to the execution of an
appropriate confidentiality agreement and, in any event, in compliance with
Regulation FD.
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