Contract
Exhibit
10.14
NEITHER
THIS SECURITY NOR THE SECURITY INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE OFFERED
OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
SECURED
CONVERTIBLE PROMISSORY NOTE
|
$_________
|
________,
20__
|
FOR
VALUE
RECEIVED, DRTATTOFF, LLC, a California limited liability company located at
0000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx XX 00000 (the “Borrower”)
hereby
promises to pay to the order of _________________ (the “Holder”),
the
principal sum of _________________ Dollars ($_________), upon the following
terms:
1. Security.
This
Note is secured as set forth in the Pledge and Security Agreement of even date
herewith.
2. Interest
Rate.
Interest shall accrue on the unpaid principal balance of this Note from the
date
of issuance until paid or converted in full at the rate of ten percent (10%)
per
year, calculated on a 365/366 day year, as applicable, provided, however, that
upon an Event of Default, interest shall accrue as provided in Section 8 hereof.
3.
Payment
Terms.
The
Borrower agrees to pay the unpaid principal balance of this Note and all accrued
and unpaid interest on the date that is the earlier of (i) six months from
the
date of issuance, or (ii) five (5) business days from the date of closing by
Borrower of equity financing in the aggregate of not less than $5.0 million
(the
“Maturity
Date”),
unless previously converted in accordance with Section 5 hereof. Borrower may
prepay all or any part of interest or principal at any time without
penalty.
4. Manner
and Place of Payment; Holidays.
All
payments on this Note shall be made in coin or currency which, at the time
or
times of payment, constitute legal tender for public or private debts in the
United States of America. All payments on this Note shall be made to Holder
at
the address stated above, or at such other address as Holder shall designate
in
writing. If the prescribed date of payment of any of the principal or interest
hereon is a Saturday, Sunday or legal holiday, such payment shall be due on
the
next succeeding business day.
5. Conversion
Rights.
(i) Conversion.
The
Holder, at its option, so long as any portion of this Note remains outstanding,
may elect to convert any outstanding and unpaid principal portion of this Note,
and any accrued and unpaid interest (the date of giving of such notice of
conversion being a “Conversion
Date”)
into
units of membership interests of the Company (“Units”)
as
such interests exist on the date of issuance of this Note, or any shares of
capital stock or securities of Borrower into which such Units shall hereafter
be
changed or reclassified, at the conversion price as defined in Section 5(ii)
hereof (the “Conversion
Price”),
determined as provided herein. Upon delivery to the Borrower of a completed
Notice of Conversion, a form of which is annexed hereto, Borrower shall issue
and deliver to the Holder within three (3) business days after the Conversion
Date (such third day being the “Delivery
Date”)
a
certificate evidencing the Units issuable for the portion of the Note converted
in accordance with the foregoing. The Units issuable upon conversion of this
Note shall be determined by dividing that portion of the principal of the Note
and interest, if any, to be converted, by the Conversion Price. On the
Conversion Date any and all obligations of the Borrower with respect to the
portion of the Note so converted shall be deemed satisfied, and the Borrower
will have no further obligation under the Note with respect to such converted
portion in any way other than to issue the Units and Warrants (as set forth
in
Section 6 below).
(ii) Conversion
Price.
Subject
to adjustment as provided in Section 5(iii) hereof, the Conversion Price per
Unit shall be $1.00. Fractional Units will not be issued and will instead be
rounded up to the nearest whole Unit.
(iii) Adjustment.
The
Conversion Price and number and kind of shares or other securities to be issued
upon conversion determined pursuant to Section 5(i), shall be subject to
adjustment from time to time upon the happening of certain events while this
conversion right remains outstanding, as follows:
X. Xxxxxx,
Sale of Assets, etc.
If the
Borrower at any time shall consolidate with or merge into or sell or convey
all
or substantially all its assets to any other corporation, this Note, as to
the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase such number and kind of shares
or
other securities and property as would have been issuable or distributable
on
account of such consolidation, merger, sale or conveyance, upon or with respect
to the securities subject to the conversion or purchase right immediately prior
to such consolidation, merger, sale or conveyance. The foregoing provision
shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser.
B. Reclassification,
etc.
If the
Borrower at any time shall, by reclassification or otherwise, change the Units
into the same or a different number of securities of any class or classes that
may be issued or outstanding, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence
the
right to purchase an adjusted number of such securities and kind of securities
as would have been issuable as the result of such change with respect to the
Units issuable immediately prior to such reclassification or other
change.
2
C. Splits,
Combinations and Dividends.
If the
Units are subdivided or combined into a greater or smaller number of Units,
or
if a dividend is paid on the Units in the form of additional Units, the
Conversion Price shall be proportionately reduced in case of subdivision of
Units or Unit dividend or proportionately increased in the case of combination
of Units, in each such case by the ratio which the total number of Units
outstanding immediately after such event bears to the total number of Units
outstanding immediately prior to such event.
(iv) Method
of Conversion.
This
Note may be converted by the Holder in whole or in part as described in Section
5(i) hereof. Upon partial conversion of this Note, a new Note containing the
same date and provisions of this Note shall, at the request of the Holder,
be
issued by the Borrower to the Holder for the principal balance of this Note
and
interest which shall not have been converted or paid.
(v) Registration
Rights.
The
Holder is entitled to the registration rights set forth in Annex
A
attached
hereto and made a part hereof.
6. Warrant
Coverage.
(i) Upon
Conversion.
In the
event this Note is converted, in whole or in part, in the manner set forth
in
Section 5 herein, then Holder shall also receive at the time of conversion
a
Unit purchase warrant (“Warrant”)
to
purchase ½ Unit, or the equivalent thereof, at an exercise price of $1.00 per
Unit, subject to adjustment in accordance with the Warrant agreement, for each
Unit issued upon conversion of the Note.
(ii)
At
Maturity.
In the
event all or a portion of this Note remains outstanding on the Maturity Date,
then Holder shall receive on such date a Warrant to purchase one (1) Unit,
or
the equivalent thereof, at an exercise price of $1.00 per Unit, for each Unit
which would have been issued had the principal balance and accrued and unpaid
interest outstanding on the Maturity Date been converted in accordance with
Section 5 herein.
(iii)
Expiration
Date.
All
Warrants will expire five years from the date of this Note.
7. Events
of Default and Acceleration.
Time is
of the essence of this Note. The occurrence of any of the following events
shall
constitute an “Event
of Default”
hereunder: (i) Xxxxxxxx's failure to pay timely any amount due hereunder, and
such failure continues for ten (10) business days; (ii) bankruptcy,
reorganization, insolvency or liquidation proceedings or other proceedings
for
relief under any bankruptcy law or any law for the relief of debtors shall
be
instituted by or against Borrower and, if instituted against Borrower, Borrower
shall by any action or answer approve of, consent to or acquiesce in any such
proceedings or admit the material allegations of, or default in answering a
petition filed in any such proceeding or such proceedings shall not be dismissed
within ninety (90) calendar days thereafter; (iii) any material breach by
Borrower, that remains uncured for greater than 5 days after receipt of written
notice of same, of any of the terms of this Note (other than payment
obligations) or the Warrants issued by Borrower in connection with this Note;
(iv) dissolution of the Borrower; or (v) cessation or liquidation of the
Borrower's business or suspension of the Borrower's business for more than
forty-five consecutive days. If any such Event of Default occurs, Holder may,
then or at any time thereafter, and at its option, accelerate maturity and
cause
the entire unpaid principal balance of this Note, together with interest accrued
hereon, to become immediately due and payable. If Holder waives Holder's right
to accelerate maturity as a result of an Event of Default hereunder, either
one
or more times or repeatedly, nevertheless Holder shall not be deemed to have
waived the right to require strict compliance with the terms of this Note
thereafter.
3
8. Interest
After Event of Default, Acceleration or Maturity.
Upon an
occurrence of an Event of Default hereunder, the entire unpaid balance of said
principal sum and interest then accrued shall bear interest, while such Event
of
Default continues both before and after judgment, at ten percent (10%) per
year
on the unpaid balance until paid, calculated on a 365/366 day year, as
applicable.
9. Application
of Payments.
All
sums paid hereon shall be applied first to the payment of accrued interest
due
on the unpaid principal balance and the remainder to the reduction of unpaid
principal.
10. Attorney's
Fees and Expenses.
In the
event that Holder or other holder of this Note brings suit hereon, or employs
an
attorney or incurs expenses to compel payment of this Note or any portion of
the
indebtedness evidenced hereby, or to cure any Event of Default under this Note,
whether through suit, probate, insolvency, reorganization, bankruptcy or any
other legal or informal proceeding, the Borrower and all endorsers, guarantors
and sureties agree additionally to pay all reasonable attorney's fees, court
costs and other reasonable expenses thereby incurred by Xxxxxx or other holder
of this Note.
11. Waiver.
Except
as may be required by law, Xxxxxxxx and all guarantors of this Note, both before
and after maturity, hereby expressly (i) waive all protest, notice of protest,
demand for payment, presentment for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of dishonor, bringing
of
suit, and diligence in taking any action to collect any amounts called for
hereunder and in the handling of properties, rights or collateral at any time
existing in connection herewith; (ii) consent to and waive notice of any one
or
more renewal, extension or modification of this Note, whether made to or in
favor of the Borrower or any other person or persons, regardless whether such
renewal, extension or modification modifies the terms, interest rate or time
for
payment of the Note and regardless of the length of term of the renewal,
extension or modification; (iii) consent to and waive notice of any
substitution, exchange or release of any security hereafter given for this
Note;
(iv) consent to and waive notice of the release of any party primarily or
secondarily liable hereon; (v) consent to and waive notice of any other
indulgences, none of which shall otherwise affect the liability of any of said
parties for the indebtedness evidenced by this Note; and (vi) agree that it
will
not be necessary for Holder, in order to enforce payment of this Note, first
to
institute suit against or to exhaust Holder's remedies against Borrower or
any
other party liable hereunder, or to proceed against any other security for
this
Note.
12. Parties
in Interest.
This
Note may be assigned by Holder at any time upon notice to and with written
consent of Xxxxxxxx. This Note may not be assigned by Borrower without the
prior
written consent of Xxxxxx. This Note will be binding in all respects upon
Borrower and inure to the benefit of Xxxxxx and its permitted successors and
assigns.
4
13. Definitions.
The
terms "Borrower" and "Holder" and other nouns and pronouns include the singular
and/or the plural, as appropriate. The terms "Borrower" and "Holder" also
include their respective heirs, personal representatives, permitted successors
and assigns. The term "Holder" includes subsequent permitted holders of this
Note.
14. Choice
of Law; Venue.
All
questions concerning the construction, validity, enforcement and interpretation
of this Note shall be governed by and construed and enforced in accordance
with
the laws of the State of California, without regard to the principles of
conflicts of law thereof. Each party agrees that all proceedings concerning
the
interpretations, enforcement and defense of the transactions contemplated by
this Note (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts of California. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts of California for the adjudication of any dispute hereunder
or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such proceeding is improper. The parties hereto hereby
irrevocably waive, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to
this Note or the transactions contemplated hereby. Neither party shall be
entitled to injunctive relief to prevent or cure breaches of the provisions
of
this Note. If any party shall commence a proceeding to enforce any provisions
of
this Note, then the prevailing party in such proceeding shall be reimbursed
by
the other party for its reasonable attorneys fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
proceeding.
15. Notice.
All
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given one (1) business day after
delivery to an overnight carrier with instructions to deliver to the applicable
address set forth above, or, if sent by facsimile, upon receipt of a
confirmation of delivery.
16. Severability.
If any
part of this Note is adjudged illegal, invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provision of this Note that
can
be given effect without such provision.
17. Amendments.
This
Note may not be varied, amended or modified except in writing signed by the
Borrower and the Holder.
18. Member
Status.
The
Holder shall not have rights as a member of the Borrower with respect to
unconverted portions of this Note. However, the Holder will have all the rights
of a member of the Borrower with respect to the Units to be received by Holder
after delivery by the Holder of a Conversion Notice to the
Borrower.
THIS
NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
5
THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN
WITNESS WHEREOF, Xxxxxxxx has executed this Note effective as of the date first
set forth above.
6
Exhibit
10.14
NOTICE
OF CONVERSION
(To
be
executed and delivered by the Holder in order to convert the Note)
The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by DRTATTOFF, LLC (the “Borrower”)
on
______________, 20___ into Units of the Borrower according to the conditions
set
forth in such Note, as of the date written below.
Date
of
Conversion:________________________________________________________________________________
Conversion
Price:__________________________________________________________________________________
Units
To
Be
Issued:________________________________________________________________________________
Signature:________________________________________________________________________________________
Print
Name:_______________________________________________________________________________________
Address:________________________________________________________________________________________
_______________________________________________________________________________________________
Exhibit
10.14
ANNEX
A
REGISTRATION
RIGHTS
1. DEFINITIONS.
Capitalized terms used and not otherwise defined herein that are defined in
the
Note shall have the meanings given such terms in the Note. As used herein,
the
following terms shall have the following meanings:
“Commission”
means
the Securities and Exchange Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and any successor
statute.
“Holder”
or
“Holders”
means
the Note Holder or Holders to the extent any of them hold Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5.2.
“Indemnifying
Party”
shall
have the meaning set forth in Section 5.2.
“Piggy-Back
Registration”
is
defined in Section 2.1.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means
the membership interests issuable upon conversion of the Note, or other
securities of the Company or any other issuer or issuable in respect of such
Units (because of stock splits, stock dividends, reclassifications,
recapitalizations, mergers, combinations or similar events, if applicable);
provided, however, that the Units which are Registrable Securities shall cease
to be Registrable Securities upon any sale or transfer of such securities
pursuant to a Registration Statement, Section 4(1) of the Securities Act, Rule
144 under the Securities Act or otherwise.
“Registration
Statement”
means
a
registration statement filed by the Company with the Commission on any
registration form prescribed by the Commission permitting a secondary offering
or distribution, other than on Form S-4, Form S-8 or similar forms.
A-1
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended, and any successor statute.
“Trading
Market”
means
any of the Pink Sheets LLC electronic quotation service, NASD OTC Bulletin
Board, NASDAQ Global Select Market, NASDAQ Global Market, NASDAQ Capital Market,
American Stock Exchange or the New York Stock Exchange.
“Note”
means
the Convertible Promissory Note issued by the Company.
2. PIGGY-BACK
REGISTRATION.
2.1 At
any
time and from time to time while any portion of the Note remains outstanding,
whenever the Company proposes to file a Registration Statement, the Company
will
prior to such filing give written notice to Holder of its intention to do so
and, upon the written request of Holder given within ten (10) days after the
Company provides such notice, the Company shall use its good faith efforts
to
cause all Registrable Securities which the Company has been requested by Holder
to register to be registered under the Securities Act to the extent necessary
to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of Holder; provided that the Company
shall have the right to postpone or withdraw any registration effected pursuant
to this Section 2 without obligation or liability to Holder. In the Holder’s
request, the Holder will be required to describe briefly its proposed
disposition of the Registrable Securities. However, in connection with any
registration under Section 2, the Holder’s Registrable Securities shall be
junior and subordinate to any registration rights granted by the Company which
are already outstanding, and any senior registration rights granted by the
Company in the future.
2.2 In
connection with any registration under Section 2 involving an underwritten
offering of the Company’s securities, the Company shall not be required to
include any Registrable Securities in such underwriting unless Xxxxxx accepts
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in
the
sole discretion of the underwriters, jeopardize the success of the offering
by
the Company. If in the sole discretion of the managing underwriter or
underwriters the registration of all, or part of, the Registrable Securities
which Holder has requested to be included would adversely affect such public
offering, then the Company shall be required to include in the underwriting
only
that number of Registrable Securities, if any, which the managing underwriter
or
underwriters believe may be sold without causing such adverse effect. If the
number of Registrable Securities to be included in the underwriting in
accordance with the foregoing is less than the total number of Registrable
Securities which Holder has requested to be included, then Holder and each
participant other than the Company in such underwriting shall participate in
the
underwriting pro rata based upon their total ownership of Registrable
Securities. Any such limitation shall be imposed in such manner so as to avoid
any diminution in the number of securities the Company may register for sale
by
giving first priority for the securities to be registered for issuance and
sale
by the Company and the underwriter, and by giving second priority for the
securities to be registered for sale by any holder of Registrable Securities
pursuant to the terms of this Agreement.
A-2
2.3 In
connection with any registration under this Section 2 involving a selling
stockholder registration statement or any other registration statement not
involving an underwritten offering of the Company’s securities, the Company
reserves the right to include only that number of Registrable Securities, if
any, as it shall determine in its sole discretion, may be sold without
jeopardizing the success of the offering or having an adverse effect on the
offering. If the number of Registrable Securities to be included in the offering
in accordance with the foregoing is less than the total number of Registrable
Securities which Holder has requested to be included, then Holder and each
participant other than the Company in such offering shall participate in the
offering pro rata based upon their total ownership of Registrable Securities.
Any such limitation shall be imposed in such manner so as to avoid any
diminution in the number of securities the Company may register for sale by
giving first priority for the securities to be registered for issuance and
sale
by the Company, and by giving second priority for the securities to be
registered for sale by any holder of Registrable Securities pursuant to the
terms of this Agreement.
2.4
Any
holder of Registrable Securities may elect to withdraw such holder’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also elect to
withdraw a registration statement at any time prior to the effectiveness of
the
Registration Statement. Notwithstanding any such withdrawal, the Company shall
pay all expenses incurred by the holders of Registrable Securities in connection
with such Piggy-Back Registration as provided in Section 4 hereof.
3. REGISTRATION
PROCEDURES.
When
the Company proposes to effect the registration of any of the Registrable
Securities under the Securities Act, the Company shall:
3.1 furnish
to the Holder such number of copies of the Registration Statement and the
Prospectus included therein (including each preliminary Prospectus) as the
Holder reasonably may request to facilitate the public sale or disposition
of
the Registrable Securities covered by the Registration Statement;
3.2 use
its
commercially reasonable efforts to register or qualify the Holder’s Registrable
Securities covered by the Registration Statement under the securities or “blue
sky” laws of such jurisdictions within the United States as the Holder may
reasonably request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent
to
general service of process in any such jurisdiction; and
3.3 list
the
Registrable Securities covered by the Registration Statement with any Trading
Market on which the equity securities of the Company is then listed.
A-3
4. REGISTRATION
EXPENSES.
All
expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the NASD, transfer taxes, fees of transfer agents and registrars are called
“Registration Expenses.” All selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any counsel
to
the Holders, are called “Selling Expenses” and shall be the responsibility of
the Holder. The Company shall only be responsible for all Registration
Expenses.
5. INDEMNIFICATION.
5.1 In
the
event of a registration of the Registrable Securities, the Holder (subject
to
the provisions of Section 5.2) will indemnify and hold harmless the Company
or
its successor, and its officers, directors and each other person, if any, who
controls the Company within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such persons may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of any material fact which was furnished in writing
by the Holder to the Company expressly for use in (and such information is
contained in) the Registration Statement under which such Registrable Securities
were registered under the Securities Act pursuant to the Note, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or supplement
thereof, 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, and will reimburse the Company and each
such person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that such Holder will be liable in
any
such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon said Holder’s untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished in writing to the Company by or on behalf of said
Xxxxxx specifically for use in any such document, or (ii) in connection
with a Holder’s sale of Registrable Securities, including without limitation
alleged violations of Regulation M. Notwithstanding the provisions of this
paragraph, no Holder shall be required to indemnify any person or entity in
excess of the amount of the aggregate net proceeds received by said Holder
in
respect of Registrable Securities in connection with any such registration
under
the Securities Act.
A-4
5.2 Promptly
after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action, such
Indemnified Party shall, if a claim for indemnification in respect thereof
is to
be made against a party hereto obligated to indemnify such Indemnified Party
(an
“Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability which it may have to such Indemnified Party other than under this
Section 5.2 and shall only relieve it from any liability which it may have
to
such Indemnified Party under this Section 5.2 if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action
shall
be brought against any Indemnified Party and it shall notify the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be entitled
to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such Indemnified Party,
and, after notice from the Indemnifying Party to such Indemnified Party of
its
election so to assume and undertake the defense thereof, the Indemnifying Party
shall not be liable to such Indemnified Party under this Section 5.2 for any
legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; if the Indemnified Party retains its own counsel,
then
the Indemnified Party shall pay all fees, costs and expenses of such counsel,
provided, however, that, if the defendants in any such action include both
the
Indemnified Party and the Indemnifying Party and if counsel shall have
reasonably concluded that there may be reasonable defenses available to the
Indemnified Party which are different from or additional to those available
to
the Indemnifying Party or if the interests of the Indemnified Party reasonably
may be deemed to conflict with the interests of the Indemnifying Party in either
case which would prohibit such counsel from representing both parties under
applicable conflicts of interest rules of professional ethics, the Indemnified
Party shall have the right to select one separate counsel and to assume such
legal defenses and otherwise to participate in the defense of such action,
with
the reasonable expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Indemnifying Party as
incurred. Neither party shall settle any proceeding for which indemnification
is
sought without the written consent of the other party, which shall not be
unreasonably withheld.
5.3
Notwithstanding
any provision herein to the contrary, each Holder shall be treated individually
and separately from all other Holders under this Section 5, and will not become
the subject of any obligation under this Section 5 as a result of any action,
failure to act, statement, omission, or otherwise of any other Holder
hereunder.
A-5
