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EXHIBIT 10.100
DEVELOPMENT AND SUPPLY AGREEMENT
This Development and Supply Agreement ("this Agreement") is made effective on
the 18th day of September, 1997 ("Effective Date") by and between Wilshire
Technologies, Inc. ("WTI"), a California corporation with a place of business at
0000 Xxxxxxx Xxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxxxxx 00000 and PTG Medical LLC
("PTG"), a California limited liability company with a place of business at 0000
0xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
RECITALS
WHEREAS, WTI is a manufacturer and supplier of polyurethane, breathable gloves;
WHEREAS, PTG is a manufacturer of a proprietary hydrophilic glove polymer
material developed in a strategic business alliance with WTI;
WHEREAS, WTI desires to purchase such proprietary polymer material from PTG; and
WHEREAS, PTG wishes to supply WTI's requirements of the polymer material.
NOW THEREFORE, the parties hereto agree as follows:
1.0 DEFINITIONS.
1.1 Escrow Arrangement shall mean the deposit of the PTG proprietary
information and other materials related to the Product Technology pursuant to
the provisions of the three party technology escrow agreement among Data
Security International, Inc. ("DSI"), WTI and PTG attached to this Agreement as
Exhibit D.
1.2 Mexico Plant shall mean WTI's Tijuana, Mexico production facility
located at Xxxxxxx Xxxxxxxxxx Xx, 00.0 Xxxxxx 0-00, Xxxxxx Industrial Xxxxx, Los
Pinos Tijuana, B.C. Mexico.
1.3 Minimum Quantity shall mean the minimum quantity of the Products
(solid and liquid) which WTI is obligated to purchase from PTG, on a quarterly
basis, as set forth on Exhibit B attached hereto.
1.4 Product(s) shall mean the hydrophilic glove polymer material
developed by PTG in a strategic business alliance with WTI known as
"MPU-12031"and/or any solvent based, polyurethane glove material made with all
and only the reactants which are included in MPU-12031 in any ratio.
1.5 Product Technology shall mean the Product formula, technical data,
manufacturing procedures and other know-how and data which is reasonably
required by WTI to establish an alternative manufacturing source for the
Product.
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1.6 Specification shall mean the Product specification attached to this
Agreement as Exhibit A.
2.0 TERM.
2.1 The term of this Agreement shall be for a period of five (5) years
(the "Initial Term") commencing on the Effective Date above.
2.2 Following the expiration of the Initial Term, this Agreement shall
automatically renew on a year-to-year basis for successive one (1) year renewal
periods.
2.3 PTG or WTI may preclude the automatic renewal of this Agreement by
providing written notice to other party of its intention not to renew or
otherwise extend this Agreement (which notice must be received by the other
party no later than twelve months prior to the expiration of the Initial Term or
any annual period thereafter).
3.0 SUPPLY AND PURCHASE.
3.1 During the term of this Agreement, WTI agrees that it will purchase
the Products exclusively from PTG.
3.2 Provided that WTI performs its material obligations under this
Agreement and except as set forth in Section 3.3 below, PTG agrees that it will
not supply the Products to any other manufacturer for the production of gloves
during the term of this Agreement. For the purposes of this Section 3.2, Product
shall also be deemed to include a surface-modifying end group ("SME") extension
of the Product as a replacement for some or all of the monofunctional chain
termination agents of the original Product.
3.3 WTI shall purchase, and PTG will use its best efforts to supply, the
Annual Minimum Quantity and any additional quantities forecasted by WTI pursuant
to Section 4.0 below.
3.3.1 Concurrently with the execution of this Agreement, WTI
shall deliver to PTG its purchase order for the quantity of Products to be
supplied in the first six (6) months under this Agreement. Such purchase order
will be subject to the provisions of Section 4.0 below.
3.3.2 No later than three (3) calendar months prior to the
commencement of the second annual period ("second supply year") following the
Effective Date, and each succeeding supply year during the term of this
Agreement, WTI and PTG shall agree upon the Annual Minimum Quantity for the
applicable supply year. In the event that the parties fail to reach agreement on
the Annual Minimum Quantity for a particular succeeding supply year, the Annual
Minimum Quantity for such year shall be the Annual Minimum Quantity established
in the prior supply year.
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3.3.3 In the event that WTI shall fail to meet the Annual Minimum
Quantity for a particular supply year, and any supply year thereafter, PTG shall
be entitled, at its option, to continue to supply WTI the Products on a
nonexclusive basis or to terminate this Agreement. Notwithstanding the
foregoing, WTI shall be entitled to ninety (90) days prior written notice of
PTG's intention to take such action, and such notice shall permit WTI to cure
its failure to meet its Annual Minimum Quantity purchase requirement by
purchasing the Products then remaining. The sole and exclusive remedy of PTG for
WTI's failure to meet the Annual Minimum Quantity purchase requirement in the
second supply year or thereafter (i.e., purchase of Products not delivered to
WTI) shall be conversion of the Agreement to a non-exclusive Product supply
arrangement (in which case WTI will continue to be subject to the provisions of
Section 3.1), or termination of the Agreement in the manner provided above. In
no event shall WTI be obligated in such event to purchase any remaining Annual
Minimum Quantity purchase requirements.
4.0 PURCHASE ORDERS/FORECASTS
During the first week of each month, WTI shall also forward to PTG a
twelve (12) month rolling forecast of Product requirements (in increments which
are integer multiples of a current batch) designating the quantities of the
Products which WTI intends to purchase in such period. Product requirements
scheduled for delivery in months 1, 2 and 3 of the rolling forecast will be
considered firm orders and may not be rescheduled or canceled by WTI. However,
Products scheduled for delivery in months 4, 5, and 6 of the rolling forecast
may be adjusted up or down in quantity by up to 10% (in increments which are
integer multiples of a current batch) by WTI, provided that WTI shall fulfill
its obligation to purchase Minimum Quantities. The quantities forecast in the
remaining months (i.e., months 7-12) shall be considered estimated requirements
only.
5.0 DELIVERY/RISK OF LOSS
5.1 Delivery of all Products ordered by WTI shall be made F.O.B. point
of shipment. WTI shall be responsible for the payment of all freight and
insurance charges.
5.2 Title and risk of loss to the Products shall pass to WTI when PTG
gives possession to the carrier at the F.O.B. point of shipment.
6.0 PRICES AND PAYMENT
6.1 The unit prices for the Products shall decline as the volume
purchased increases, and are listed on Exhibit C attached hereto. Such prices
shall be fixed and firm during the term of this Agreement, provided that such
prices may shall be adjusted upward or downward on a bi-annual basis in
proportion to any cost increases (or decreases) caused by (i) raw materials
price increases (or decreases), (ii) direct labor increases (or decreases), or
(iii) indirect labor [as later defined by the
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parties consistent with the application of generally accepted accounting
principles]. In no event shall WTI be obligated to pay price increases related
to cost increases which were within the reasonable control of PTG.
6.2 In the event that PTG and WTI fail to agree on the prices to be paid
for the Products following any bi-annual review conducted pursuant to Section
6.1 above, the dispute shall be resolved by an arbitrator pursuant to the
provisions of Section 17 below.
6.3 PTG shall have the option from time to time to propose price
increases to WTI related to cost increases related to items outside the scope of
Section 6.1 above. WTI shall negotiate in good faith such price increase
proposals with PTG but shall be under no obligation to accept any such price
increase proposal.
6.4 The terms of payment for the Products shall be net 30 days from the
date of invoice.
7.0 TECHNICAL ASSISTANCE AND SETUP.
7.1 PTG shall provide on-site assistance for a period of ten (10)
man-days at the Mexico Plant at no additional cost to WTI to facilitate
prepolymer scale-up.
7.2 Exclusive of the services provided under Section 7.1 above, PTG
shall allot 10 man days for technical assistance to be provided to WTI at WTI's
request over the period commencing on the Effective Date and ending eighteen
(18) months from the Effective Date.
7.3 WTI shall pay PTG a one-time setup fee in the amount $25,000 upon
execution of this Agreement.
8.0 TESTING PROCEDURES.
WTI and PTG shall jointly develop the quality control testing procedures
for the Products. Such procedures shall be reduced to writing promptly after
they are developed. All Products which pass, or Products samples of which pass,
such testing procedures shall be conclusively deemed to meet and comply with the
Specification at the time of delivery. PTG shall promptly replace at its cost
any Product which fails such testing procedures following the delivery of the
Product, and such replacement shall be the sole remedy for failure to meet the
Specification at the time of delivery. WTI shall be conclusively deemed to have
accepted any Product if it does not give written notice of rejection within ten
(10) days after the test procedure has been conducted with respect to that
Product or a sample thereof. Procedures must provide that test is to be
conducted promptly on delivery.
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9.0 WARRANTIES.
9.1 PTG warrants that the Products as shipped will be free from defects
in material and workmanship and conform to the Specification for a period of six
(6) months from the date of shipment (the "Warranty Period"). PTG shall promptly
replace at its cost any defective or nonconforming Product during the Warranty
Period, and such replacement shall be the sole and exclusive remedy for breach
of the Product warranty. PTG HEREBY DISCLAIMS ALL OTHER WARRANTIES, WHETHER
EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR PURPOSE.
9.2 PTG warrants that it will manufacture the Products and otherwise
operate in accordance with Good Manufacturing Practices ("GMP") as such
practices relate to raw material supply.
10.0 INTELLECTUAL PROPERTY.
10.1 In the event that the Product or any part thereof should infringe
any copyright, trademark, trade secret or U.S. patent of any third party, PTG
shall have the responsibility at its option and expense to: (i) procure for WTI
the right or license to continuing using the Product as delivered; or (ii)
modify the Product so as to render it non-infringing (and still conform to the
Specification), or as a last resort, (iii) accept the return of the Product and
grant WTI an equitable adjustment to the purchase price paid by WTI.
10.2 Notwithstanding Section 10.1 above, PTG shall have no liability for
any infringement solely based on the combination or use of the Product in other
products (i.e., gloves).
11.0 PATENT COOPERATION.
11.1 WTI acknowledges that the Product Technology existing as of the
date of this Agreement is the property of PTG.
11.2 Any improvements to the Product Technology or inventions acquired
or developed during the term of the Agreement which are necessary or useful for
the manufacture of gloves from the Products, or which the parties otherwise
mutually identify as directly related to the Products (together referred to as
"Subsequent Inventions"), shall be subject to the following provisions:
11.2.1 Neither PTG and WTI will file any patent application
covering any Subsequent Invention without the consent of the other party, which
consent shall not be unreasonably withheld;
11.2.2 PTG and WTI will execute such assignments and other
instruments as may be necessary, and otherwise cooperate, to cause any patent on
any Subsequent Invention to be owned jointly by WTI and PTG ("Joint Patents");
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11.2.3 WTI will grant to PTG under such Joint Patents an
exclusive, royalty-free, worldwide, assignable license (including the right to
sublicense) to make, have made, use and distribute any and all products derived
from such Joint Patents (except products covered by one or more claims relating
to manufacturing processes for gloves which patent exploitation rights shall be
retained as exclusive to WTI); and
11.2.4 PTG will grant to WTI under such Joint Patents an
exclusive, royalty-free, worldwide, assignable license (including the right to
sublicense) to make, have made, use and distribute any and all products derived
from such Joints Patents (except products covered by one or more claims relating
to compositions of matter which patent exploitation rights shall be retained as
exclusive to PTG).
11.3 WTI and PTG will grant to each other such other or further licenses
under the Joint Patents as may be necessary for the use, enjoyment and
exploitation of the rights granted under this Agreement.
12.0 CONFIDENTIALITY.
12.1 To the extent that WTI and PTG must disclose confidential
information not generally known in the industry to each other as a consequence
of the performance of this Agreement, the parties shall clearly identify such
information upon disclosure. If such disclosure is made in writing, each page
thereof containing such information shall be marked with the legend
"Confidential Information" or similar designation. If such disclosure is made
orally or visually, each party shall identify the data or material disclosed as
"Confidential Information" or similar designation at the time of disclosure, and
such oral or visual disclosure shall be reduced to writing promptly by the
disclosing party no later than thirty (30) days after disclosure. Each party
shall use such Confidential Information only for the purposes of fulfilling its
obligations under this Agreement and shall take reasonable precautions to limit
the disclosure of Confidential Information. Such information shall be disclosed
only to those employees, agents, representatives and suppliers having a need to
know Confidential Information in connection with their performance of this
Agreement.
12.2 Notwithstanding the foregoing, Information shall not be deemed to
be Confidential Information if:
(a) the Information was known to a party prior to its receipt of
the Information from the other party;
(b) the Information became known or available to a party from an
independent third party source under no obligation of secrecy with respect
thereto;
(c) the Information became part of the public domain in any way
without breach of the Agreement; and
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(d) the Information was disclosed by a party in accordance with
the written approval of the other party.
13.0 ESCROW OF PRODUCT TECHNOLOGY.
13.1 Within thirty (30) days following the Effective Date, PTG will
deliver to DSI ("Escrow Agent") the Product formula, and the remainder of the
Product Technology will be delivered within six (6) months following the
Effective Date (together referred to as "Escrow Materials") pursuant to the
terms of the escrow agreement ("Escrow Agreement") attached hereto as Exhibit D.
Such Escrow Materials will include all of the items listed on Schedule A to the
Escrow Agreement. Escrow Agent will not deliver the Escrow Materials to WTI
unless and until a condition of release ("Release Conditions") occurs and the
conditions of the Escrow Agreement have been satisfied. The Release Conditions
are defined in Section 13.3 below. All costs and expenses related to the
establishment of the Escrow Agreement will be the responsibility of WTI.
13.2 During the term of the Escrow Agreement, WTI shall have the right
to verify the Escrow Materials at Escrow Agent's site for accuracy, completeness
and sufficiency, and to confirm that it complies to the requirements of the
Escrow Agreement. PTG will promptly correct any deficiencies noted by WTI. Such
verification shall be performed by a mutually acceptable third party who has
executed a confidentiality agreement acceptable to PTG and WTI.
13.3 Subject to the provisions of the Escrow Agreement relating to
disputing the same, any of the following events shall be Release Conditions for
purposes of this Section:
(a) PTG breaches a material provision of this Agreement and fails
to cure such breach within the time period specified in Section 15 below; or
(b) PTG fails to continue to do business in the ordinary course,
files or has filed against it a petition under the Federal Bankruptcy Code,
becomes insolvent or has a receiver appointed for all or a substantial part of
its business.
14.0 MANUFACTURING LICENSE
14.1 In the event that PTG declines to renew or otherwise extend the
Agreement pursuant to Section 2 above, WTI shall be entitled to exercise a
non-exclusive, irrevocable world-wide license under the Product Technology and
any patents obtained pursuant to Section 11.0 to (i) make or have made the
Products, and (ii) make, have made, sell and distribute gloves made from the
Products. The foregoing shall include a license to exploit all patent,
copyright, trade secret and other intellectual property rights of PTG necessary
to facilitate the grant and implementation of such manufacturing license. The
term of the manufacturing license will be for a period of thirty (30) months
from the effective date of termination of this Agreement.
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14.2 Upon WTI's exercise of such license, PTG shall disclose and
transfer all Product Technology to WTI, including but not limited to all
materials and documentation which compose the Escrow Materials referenced in
Section 12 above, not later than 15 days following PTG's receipt of WTI's
written notice of intention to exercise the manufacturing license. At the time
of such notification, WTI shall also pay a fee to PTG in the amount of $10,000
to compensate PTG for all costs incurred to transfer such data and to provide 15
days of technical assistance. The confidentiality provisions of this Agreement
shall apply to the Product Technology, and WTI shall comply with such
provisions, which shall not be terminated by any termination or this Agreement,
making only such disclosure as is necessary to properly exercise the license
rights hereunder, and then only after the party to whom the disclosure has been
made executes in favor of PTG as confidentiality agreement similar to that
contained in this Agreement.
14.3 In the event that WTI manufactures the Product internally, the
foregoing manufacturing license shall be granted on royalty-free basis. If WTI
elects to manufacture the Product using a third party supplier or vendor, WTI
shall pay PTG a royalty of 12.5% of the value of any purchase orders given by
WTI to such third party supplier or vendor.
15.0 TERMINATION
Notwithstanding the provisions of Section 2, this Agreement may be
terminated immediately by written notice upon the occurrence of any of the
following events:
(i) by PTG or WTI in the event proceedings are instituted by or against
the other party in bankruptcy or under in solvency laws, and such proceeding is
not dismissed within sixty (60) days; or
(ii) by PTG or WTI in the event of a breach of any material term of the
Agreement by the other party and failure to cure such breach within forty-five
(45) days after such party's receipt of written notice detailing such breach.
Material terms of the Agreement shall include, but not be limited to the
purchase of Minimum Quantities, the supply of the Products as described in
Section 3.0, and the Warranties described in Section 9.0.
The obligations set forth in Sections 10.0, 12.0, 16.0, 17.0, and 18.0
shall expressly survive any termination of this Agreement.
16.0 ARBITRATION
Any and all controversies or disputes between the parties arising under
any Section of this Agreement shall be submitted to an arbitrator for final and
binding resolution in accordance with the commercial arbitration rules of the
American Arbitration Association. The site of the arbitration shall be at San
Diego, California and the law of the State of California shall be applied by the
arbitrators.
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17.0 LIMITATION OF LIABILITY
IN NO EVENT WHATSOEVER SHALL PTG OR WTI OR ANY OF THEIR AFFILIATES OR
ANY OF THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS OR SHAREHOLDERS, BE LIABLE
FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, WHETHER FOR BREACH OF THIS
AGREEMENT OR BREACH OF WARRANTY OR BREACH OF ANY OTHER LEGAL DUTY, ARISING UNDER
THIS AGREEMENT OR RELATED IN ANY WAY TO THE TRANSACTIONS CONTEMPLATED BY IT.
18.0 GENERAL LIABILITY INSURANCE COVERAGE.
WTI shall add PTG as an "additional insured" under the coverage of its
general liability policy which shall have the coverages and policy limits as set
forth in the certificate of insurance attached hereto as Exhibit E. Further, WTI
shall maintain such coverage during the term of this Agreement. PTG understands
and acknowledges that such general liability coverage is written on an
"occurrence" basis. In the event of a termination of this Agreement, WTI shall
continue to maintain such general liability coverage (including additional
insured coverage for the benefit of PTG) for a period of one (1) year from the
effective date of termination.
19.0 GENERAL
19.1 Force Majeure. Neither PTG nor WTI shall be liable for failure to
perform or for delay in performance due to fire, flood, strike, act or God, act
of any governmental authority, embargo or other reasonably unforeseeable cause.
In the event of delay in performance due to any such cause, the date of delivery
or time for completion will be extended by a period of time reasonably necessary
to overcome the effect of such delay. This provision shall not, however, operate
to excuse any delay in the performance of any obligation to pay money.
19.2 Notices. All notices permitted or required under this Agreement
shall be sent via facsimile, certified mail or courier to the signature parties
at the addresses set forth above.
19.3 Independent Contractor Status. Nothing contained in this Agreement
shall be construed as creating a partnership or joint venture between the
parties. The relationship of PTG to WTI shall at all times be that of an
independent contractor. Neither party to this Agreement shall have any implied
or express rights or authority to assume or create any obligations on behalf of
or in the name of the other party.
19.4 Assignment. This Agreement and the mutual obligations and duties of
the parties hereunder may not be assigned or transferred by either party without
the prior written consent of the other party to this Agreement, except that
either party may assign this Agreement in connection with a merger or the sale
of substantially all the assets of such party, provided that the assignee is at
least as capable, financially and otherwise, of performing this Agreement as the
assigning party at that time.
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19.5 Entire Agreement. This Agreement (including the referenced
Exhibits) contains the complete understanding of the parties with respect to the
development, manufacture and sale of the Products. This Agreement supersedes all
previous agreements and understandings between the parties with respect to the
subject of the Agreement including but not limited to the September 10, 1996
letter between Xxxxx Xxxxxxxx and Xxxxx Xxxxx, and may be amended or
supplemented only by another writing signed by the parties.
19.6 Warrant. No later than five (5) days following the joint execution
of this Agreement by WTI and PTG, WTI shall deliver the Warrant Agreement to PTG
in the form attached hereto as Exhibit F.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
WILSHIRE TECHNOLOGIES, INC. PTG MEDICAL LLC
By: /s/ Xxxx Xxx Xxxxxx By: /s/ Xxxxx X. Xxxxx
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Title: President & CEO Title: Executive Vice President
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Date: August 15, 1997 Date: September 18, 1997
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EXHIBIT 10.100
DEVELOPMENT AND SUPPLY AGREEMENT
BETWEEN WTI AND PTG DATED SEPTEMBER 18, 1997
EXHIBIT A
"PROVISIONAL"
Product Specification
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DEVELOPMENT AND SUPPLY AGREEMENT
BETWEEN WTI AND PTG DATED SEPTEMBER 18, 1997
EXHIBIT B
Minimum Purchase Requirements
Production Polymer Minimum
Period Description Units Purchased
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From the Effective Date 19% Solids 2,500 Gallons/Quarter
of this Agreement and or or
for 12 months thereafter 100% Solids 4,000 Pounds/Quarter
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DEVELOPMENT AND SUPPLY AGREEMENT
BETWEEN WTI AND PTG DATED SEPTEMBER 18, 1997
EXHIBIT C
Product Prices
Minimum
Description Order Quantity Unit Price
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Pilot Line
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19% Solids 2,500 Gallons/Quarter $36.00 Per Gallon
100% Solids 4,000 Pounds/Quarter (To Be Determined)
Production Line
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100% Solids 18,000 Pounds/Quarter $11.35 Per Pound
100% Solids 36,000 Pounds/Quarter $10.00 Per Pound
100% Solids 54,000 Pounds/Quarter $ 9.00 Per Pound
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EXHIBIT 10.100
EXHIBIT D
PREFERRED ESCROW AGREEMENT
Account Number 0000000-00001-2309040
This Agreement is effective September 18, 1997 among Data Securities
International, Inc. ("DSI"), PTG Medical LLC ("Depositor") and Wilshire
Technologies, Inc. ("Preferred Beneficiary"), who collectively may be referred
to in this Agreement as "the parties."
A. Depositor and Preferred Beneficiary have entered or will enter into a
Development and Supply Agreement, regarding certain proprietary technology of
Depositor (referred to in this Agreement as "the Supply Agreement").
B. Depositor desires to avoid disclosure of its proprietary technology except
under certain limited circumstances.
C. The availability of the proprietary technology of Depositor is critical to
Preferred Beneficiary in the conduct of its business and, therefore, Preferred
Beneficiary needs access to the proprietary technology under certain limited
circumstances.
D. Depositor and Preferred Beneficiary desire to establish an escrow with DSI to
provide for the retention, administration and controlled access of the
proprietary technology materials of Depositor.
E. The parties desire this Agreement to be supplementary to the Supply Agreement
pursuant to 00 Xxxxxx Xxxxxx [Bankruptcy] Code, Section 365(n).
ARTICLE 1 -- DEPOSITS
1.1 Obligation to Make Deposit. Upon the signing of this Agreement by the
parties, Depositor shall deliver to DSI the proprietary information and other
materials ("deposit materials") required to be deposited by the Supply Agreement
or, if the Supply Agreement does not identify the materials to be deposited with
DSI, then such materials will be identified on an Exhibit A. If Exhibit A is
applicable, it is to be prepared and signed by Depositor and Preferred
Beneficiary. DSI shall have no obligation with respect to the preparation,
signing or delivery of Exhibit A.
1.2 Identification of Deposit Materials. Prior to the delivery of the deposit
materials to DSI, Depositor shall conspicuously label for identification each
document. Additionally, Depositor shall complete Exhibit B to this Agreement by
listing each such deposit materials by the item label description, the material
and the quantity. The Exhibit B must be signed by Depositor and delivered to DSI
with the deposit materials. Unless and until Depositor makes the initial deposit
with DSI, DSI shall have no obligation with respect to this Agreement, except
the obligation to notify the parties regarding the status of the deposit account
as required in Section 2.2 below.
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1.3 Deposit Inspection. When DSI receives the deposit materials and the Exhibit
B, DSI will conduct a deposit inspection by visually matching the labeling of
the tangible media containing the deposit materials to the item descriptions and
quantity listed on the Exhibit B. In addition to the deposit inspection,
Preferred Beneficiary may elect to cause a verification of the deposit materials
in accordance with Section 1.6 below.
1.4 Acceptance of Deposit. At completion of the deposit inspection, if DSI
determines that the labeling of the deposit materials matches the item
descriptions and quantity on Exhibit B, DSI will date and sign the Exhibit B and
mail a copy thereof to Depositor and Preferred Beneficiary. If DSI determines
that the labeling does not match the item descriptions or quantity on the
Exhibit B, DSI will (a) note the discrepancies in writing on the Exhibit B; (b)
date and sign the Exhibit B with the exceptions noted; and (c) provide a copy of
the Exhibit B to Depositor and Preferred Beneficiary. DSI's acceptance of the
deposit occurs upon the signing of the Exhibit B by DSI. Delivery of the signed
Exhibit B to Preferred Beneficiary is Preferred Beneficiary's notice that the
deposit materials have been received and accepted by DSI.
1.5 Depositor's Representations. Depositor represents as follows:
a. Depositor lawfully possesses all of the deposit materials
deposited with DSI;
b. With respect to all of the deposit materials, Depositor has the
right and authority to grant to DSI and Preferred Beneficiary
the rights as provided in this Agreement;
c. The deposit materials are not subject to any lien or other
encumbrance;
d. The deposit materials consist of the proprietary information and
other materials identified either in the Supply Agreement or
Exhibit A, as the case may be; and
e. The deposit materials are readable and useable in their current
form or, if the deposit materials are encrypted, the decryption
tools and decryption keys have also been deposited.
1.6 Verification. During the term of the Escrow Agreement, and as expressly
provided in Section 13 of the Supply Agreement, Preferred Beneficiary shall have
the right to verify the Escrow Materials at Escrow Agent's site for accuracy,
completeness and sufficiency, and to confirm that it complies to the
requirements of the Escrow Agreement. Depositor will promply correct any
deficiencies noted by Preferred Beneficiary. Such verification shall be
performed by a mutually acceptable third party who has executed a
confidentiality agreement acceptable to Depositor and Preferred Beneficiary.
1.7 Deposit Updates. Unless otherwise provided by the Supply Agreement,
Depositor shall update the deposit materials within 60 days of each release of a
new version of the product which is subject to the Supply Agreement. Such
updates will be added to the existing deposit. All deposit updates shall be
listed on a new Exhibit B and the new Exhibit B shall be signed by Depositor.
Each Exhibit B will be held and maintained separately within the escrow account.
An independent record will be created which will document the activity for each
Exhibit B. The processing of all deposit updates shall be in accordance with
Sections 1.2 through 1.6 above. All
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references in this Agreement to the deposit materials shall include the initial
deposit materials and any updates.
1.8 Removal of Deposit Materials. The deposit materials may be removed and/or
exchanged only on written instructions signed by Depositor and Preferred
Beneficiary, or as otherwise provided in this Agreement.
ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality. DSI shall maintain the deposit materials in a secure,
environmentally safe, locked facility which is accessible only to authorized
representatives of DSI. DSI shall have the obligation to reasonably protect the
confidentiality of the deposit materials. Except as provided in this Agreement,
DSI shall not disclose, transfer, make available, or use the deposit materials.
DSI shall not disclose the content of this Agreement to any third party. If DSI
receives a subpoena or other order of a court or other judicial tribunal
pertaining to the disclosure or release of the deposit materials, DSI will
immediately notify the parties to this Agreement. It shall be the responsibility
of Depositor and/or Preferred Beneficiary to challenge any such order; provided,
however, that DSI does not waive its rights to present its position with respect
to any such order. DSI will not be required to disobey any court or other
judicial tribunal order. (See Section 7.5 below for notices of requested
orders.)
2.2 Status Reports. DSI will issue to Depositor and Preferred Beneficiary a
report profiling the account history at least semi-annually. DSI may provide
copies of the account history pertaining to this Agreement upon the request of
any party to this Agreement.
2.3 Audit Rights. During the term of this Agreement, Depositor and Preferred
Beneficiary shall each have the right to inspect the written records of DSI
pertaining to this Agreement. Any inspection shall be held during normal
business hours and following reasonable prior notice.
ARTICLE 3 -- GRANT OF RIGHTS TO DSI
3.1 Title to Media. Depositor hereby transfers to DSI the title to the deposit
materials upon which the proprietary information and materials are written.
However, this transfer does not include the ownership of the proprietary
information and materials contained on the media such as any copyright, trade
secret, patent or other intellectual property rights.
3.2 Right to Make Copies. DSI shall have the right to make copies of the deposit
materials as reasonably necessary to perform this Agreement. DSI shall copy all
copyright, nondisclosure, and other proprietary notices and titles contained on
the deposit materials onto any copies made by DSI. With all deposit materials
submitted to DSI, Depositor shall provide any and all instructions as may be
necessary to duplicate the deposit materials including but not limited to the
hardware and/or software needed.
3.3 Right to Transfer Upon Release. Depositor hereby grants to DSI the right to
transfer the deposit materials to Preferred Beneficiary upon any release of the
deposit materials for use by Preferred Beneficiary in accordance with Section
4.5. Except upon such a release or as otherwise provided in this Agreement, DSI
shall not transfer the deposit materials.
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ARTICLE 4 -- RELEASE OF DEPOSIT
4.1 Release Conditions. As used in this Agreement, "Release Conditions" shall
mean the following:
a. Depositor breaches a material provision of the Supply
Agreement and fails to cure such breach within the time period
specified in Section 15 of the Supply Agreement.
b. Depositor fails to continue to do business in the ordinary
course, files or has filed against it a petition under the
Federal Bankruptcy Code, becomes insolvent or has a receiver
appointed for all or a substantial part of its business (and
provided that such proceeding is not dismissed within sixty
days).
4.2 Filing For Release. If Preferred Beneficiary believes in good faith that a
Release Condition has occurred, Preferred Beneficiary may provide to DSI written
notice of the occurrence of the Release Condition and a request for the release
of the deposit materials. Upon receipt of such notice, DSI shall provide a copy
of the notice to Depositor, by certified mail, return receipt requested, or by
commercial express mail.
4.3 Contrary Instructions. From the date DSI mails the notice requesting release
of the deposit materials, Depositor shall have ten business days to deliver to
DSI Contrary Instructions. "Contrary Instructions" shall mean the written
representation by Depositor that a Release Condition has not occurred or has
been cured. Upon receipt of Contrary Instructions, DSI shall send a copy to
Preferred Beneficiary by certified mail, return receipt requested, or by
commercial express mail. Additionally, DSI shall notify both Depositor and
Preferred Beneficiary that there is a dispute to be resolved pursuant to the
Dispute Resolution section (Section 7.3) of this Agreement. Subject to Section
5.2, DSI will continue to store the deposit materials without release pending
(a) joint instructions from Depositor and Preferred Beneficiary; (b) resolution
pursuant to the Dispute Resolution provisions; or (c) order of a court.
4.4 Release of Deposit. If DSI does not receive Contrary Instructions from the
Depositor, DSI is authorized to release the deposit materials to the Preferred
Beneficiary or, if more than one beneficiary is registered to the deposit, to
release a copy of the deposit materials to the Preferred Beneficiary. However,
DSI is entitled to receive any fees due DSI before making the release. This
Agreement will terminate upon the release of the deposit materials held by DSI.
4.5 Right to Use Following Release. Unless otherwise provided in the Supply
Agreement, upon release of the deposit materials in accordance with this Article
4, Preferred Beneficiary shall have the right to use the deposit materials for
the sole purpose of continuing the benefits afforded to Preferred Beneficiary by
the Supply Agreement. Preferred Beneficiary shall be obligated to maintain the
confidentiality of the released deposit materials.
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ARTICLE 5 -- TERM AND TERMINATION
5.1 Term of Agreement. The initial term of this Agreement is for a period of one
year. Thereafter, this Agreement shall automatically renew from year-to-year
unless (a) Depositor and Preferred Beneficiary jointly instruct DSI in writing
that the Agreement is terminated; or (b) the Agreement is terminated by DSI for
nonpayment in accordance with Section 5.2. If the deposit materials are subject
to another escrow agreement with DSI, DSI reserves the right, after the initial
one year term, to adjust the anniversary date of this Agreement to match the
then prevailing anniversary date of such other escrow arrangements.
5.2 Termination for Nonpayment. In the event of the nonpayment of fees owed to
DSI, DSI shall provide written notice of delinquency to all parties to this
Agreement. Any party to this Agreement shall have the right to make the payment
to DSI to cure the default. If the past due payment is not received in full by
DSI within one month of the date of such notice, then DSI shall have the right
to terminate this Agreement at any time thereafter by sending written notice of
termination to all parties. DSI shall have no obligation to take any action
under this Agreement so long as any payment due to DSI remains unpaid.
5.3 Disposition of Deposit Materials Upon Termination. Upon termination of this
Agreement by joint instruction of Depositor and Preferred Beneficiary, DSI shall
destroy, return, or otherwise deliver the deposit materials in accordance with
Depositor's instructions. Upon termination for nonpayment, DSI may, at its sole
discretion, destroy the deposit materials or return them to Depositor. DSI shall
have no obligation to return or destroy the deposit materials if the deposit
materials are subject to another escrow agreement with DSI.
5.4 Survival of Terms Following Termination. Upon termination of this Agreement,
the following provisions of this Agreement shall survive:
a. Depositor's Representations (Section 1.5);
b. The obligations of confidentiality with respect to the deposit
materials;
c. The rights granted in the sections entitled Right to Transfer
Upon Release (Section 3.3) and Right to Use Following Release
(Section 4.5), if a release of the deposit materials has
occurred prior to termination;
d. The obligation to pay DSI any fees and expenses due;
e. The provisions of Article 7; and
f. Any provisions in this Agreement which specifically state they
survive the termination or expiration of this Agreement.
ARTICLE 6 -- DSI'S FEES
6.1 Fee Schedule. DSI is entitled to be paid its standard fees and expenses
applicable to the services provided. DSI shall notify the party responsible for
payment of DSI's fees at least 90
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days prior to any increase in fees. For any service not listed on DSI's standard
fee schedule, DSI will provide a quote prior to rendering the service, if
requested.
6.2 Payment Terms. DSI shall not be required to perform any service unless the
payment for such service and any outstanding balances owed to DSI are paid in
full. All other fees are due upon receipt of invoice. If invoiced fees are not
paid, DSI may terminate this Agreement in accordance with Section 5.2. Late fees
on past due amounts shall accrue at the rate of one and one-half percent per
month (18% per annum) from the date of the invoice.
ARTICLE 7 -- LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions. DSI may act in reliance upon any instruction,
instrument, or signature reasonably believed by DSI to be genuine. DSI may
assume that any employee of a party to this Agreement who gives any written
notice, request, or instruction has the authority to do so. DSI shall not be
responsible for failure to act as a result of causes beyond the reasonable
control of DSI.
7.2 Indemnification. DSI shall be responsible to perform its obligations under
this Agreement and to act in a reasonable and prudent manner with regard to this
escrow arrangement. Provided DSI has acted in the manner stated in the preceding
sentence, Depositor and Preferred Beneficiary each agree to indemnify, defend
and hold harmless DSI from any and all claims, actions, damages, arbitration
fees and expenses, costs, attorney's fees and other liabilities incurred by DSI
relating in any way to this escrow arrangement.
7.3 Dispute Resolution. Any dispute relating to or arising from this Agreement
shall be resolved by arbitration under the Commercial Rules of the American
Arbitration Association. Unless otherwise agreed by Depositor and Preferred
Beneficiary, arbitration will take place in San Diego, California, U.S.A. Any
court having jurisdiction over the matter may enter judgment on the award of the
arbitrator(s). Service of a petition to confirm the arbitration award may be
made by First Class mail or by commercial express mail, to the attorney for the
party or, if unrepresented, to the party at the last known business address.
7.4 Controlling Law. This Agreement is to be governed and construed in
accordance with the laws of the State of California, without regard to its
conflict of law provisions.
7.5 Notice of Requested Order. If any party intends to obtain an order from the
arbitrator or any court of competent jurisdiction which may direct DSI to take,
or refrain from taking any action, that party shall:
a. Give DSI at least two business days' prior notice of the
hearing;
b. Include in any such order that, as a precondition to DSI's
obligation, DSI be paid in full for any past due fees and be
paid for the reasonable value of the services to be rendered
pursuant to such order; and
c. Ensure that DSI not be required to deliver the original (as
opposed to a copy) of the deposit materials if DSI may need to
retain the original in its possession to fulfill any of its
other duties.
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ARTICLE 8 -- GENERAL PROVISIONS
8.1 Entire Agreement. This Agreement, which includes the Exhibits described
herein, embodies the entire understanding among the parties with respect to its
subject matter and supersedes all previous communications, representations or
understandings, either oral or written. No amendment or modification of this
Agreement shall be valid or binding unless signed by all the parties hereto,
except that Exhibit A need not be signed by DSI, Exhibit B need not be signed by
Preferred Beneficiary and Exhibit C need not be signed.
8.2 Notices. All notices, invoices, payments, deposits and other documents and
communications shall be given to the parties at the addresses specified in the
attached Exhibit C. It shall be the responsibility of the parties to notify each
other as provided in this Section in the event of a change of address. The
parties shall have the right to rely on the last known address of the other
parties. Unless otherwise provided in this Agreement, all documents and
communications may be delivered by First Class mail.
8.3 Severability. In the event any provision of this Agreement is found to be
invalid, voidable or unenforceable, the parties agree that unless it materially
affects the entire intent and purpose of this Agreement, such invalidity,
voidability or unenforceability shall affect neither the validity of this
Agreement nor the remaining provisions herein, and the provision in question
shall be deemed to be replaced with a valid and enforceable provision most
closely reflecting the intent and purpose of the original provision.
8.4 Successors. This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties. However, DSI shall have no
obligation in performing this Agreement to recognize any successor or assign of
Depositor or Preferred Beneficiary unless DSI receives clear, authoritative and
conclusive written evidence of the change of parties.
PTG Medical LLC Wilshire Technologies, Inc.
Depositor Preferred Beneficiary
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------- ---------------------
Name: Xxxxx Xxxxx Name: Xxxxx Xxxxxxxx
Title: EVP Title: VP & Chief Financial Officer
Date:September 18, 1997 Date: August 15, 1997
Data Securities International, Inc.
By: /s/Xxxxxxxx X. Xxxxxxx
-------------------------------
Name:Xxxxxxxx X. Xxxxxxx
Title: Contract Administrator
Date: October 1, 1997
Page 7
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EXHIBIT A
MATERIALS TO BE DEPOSITED
Account Number 162003-00001-2309040
Depositor represents to Preferred Beneficiary that deposit materials delivered
to DSI shall consist of the following:
1. Product Specification including:
a.) Reactants
b.) Stoichiometry
c.) Process Conditons
d.) Reaction Mechanism Conditions
2. Equipment List and Contacts
3. Pricing and Availability of Equipment and Materials
4. QA/QC Specifications including test methods for:
a.) Deleted
b.) Deleted
c.) Fouier Transform Infrared Spectroscopy
d.) Molecular Distribution
5. Production Specification
6. Stability Studies of the Polymer
7. List of reputable polymer manufacturers with capability to make product
Depositor Preferred Beneficiary
PTG Medical LLC Wilshire Technologies, Inc.
By: /s/ Xxxxx Xxxxx By: /s/Xxxxx X. Xxxxxxxx
---------------------------- ----------------------------
Name: Xxxxx Xxxxx Name: Xxxxx Xxxxxxxx
Title:EVP Title: VP & Chief Financial
Date:September 18, 1997 Officer
Date:August 15, 1997
Page 8
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EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIALS
Depositor Company Name Wilshire Technologies, Inc.______________________________
Account Number _________________________________________________________________
PRODUCT DESCRIPTION:
Product Name MPU-12031
I certify for Depositor that the above described DSI has inspected and accepted
the above deposit materials have been transmitted to DSI: materials (any
exceptions are noted above):
Signature______________________ Signature__________________________________
Print Name_____________________ Print Name_________________________________
Date___________________________ Date Accepted______________________________
Exhibit B#_________________________________
Send materials to: DSI, 0000 Xxxxxxxxxx Xx. #000, Xxx Xxxxx, XX 00000
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EXHIBIT C
Account Number 0000000-00001-2309040
Notices, deposit material returns and
communications to Depositor Invoices to Depositor should be
should be addressed to: addressed to:
CompanyName: PTG Medical LLC
------------------------------- -------------------------------
Address: 0000 0xx Xxxxxx
---------------------------------- -------------------------------
Xxxxxxxx, XX 00000
---------------------------------- -------------------------------
Designated Contact: Xxxxx Xxxxx Contact:
------------------------ -----------------------
Telephone: (000) 000-0000
---------------------------------- -------------------------------
Facsimile: (000)000-0000
---------------------------------- -------------------------------
Notices and communications to Invoices to Preferred
Preferred Beneficiary should be addressed to: Beneficiary should be addressed
to:
Company Name: Wilshire Technologies Inc. Wilshire Technologies, Inc.
------------------------------- -------------------------------
Address: 5441 Xxxxxxx Xxxxxxx 0000 Xxxxxxx Xxxxxxx
------------------------------------ -------------------------------
Suite A Suite A
------------------------------------ -------------------------------
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
------------------------------------ -------------------------------
Designated Contact: Xxxxx Xxxxxxxx Contact: Xxxxx Xxxxxxxx
------------------------------------ -------------------------------
Telephone:(000) 000-0000
------------------------------------ -------------------------------
Facsimile: (000) 000-0000
------------------------------------ -------------------------------
Requests from Depositor or Preferred Beneficiary to change the designated
contact should be given in writing by the designated contact or an authorized
employee of Depositor or Preferred Beneficiary.
Contracts, deposit materials and notices to Invoice inquiries and fee
DSI should be addressed to: remittances to DSI should be
addressed to:
DSI DSI
Contract Administration Accounts Receivable
Xxxxx 000 Xxxxx 0000
0000 Xxxxxxxxxx Xxxxx 000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000 (000) 000-0000
Facsimile: (000) 000-0000 (000) 000-0000
Date: September 18, 1997
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EXHIBIT 10.100
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR
SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER.
Warrant No. PTG-1 September 18, 1997
EXHIBIT F
WARRANT TO PURCHASE SHARES OF COMMON
STOCK OF WILSHIRE TECHNOLOGIES, INC.
This certifies that PTG MEDICAL LLC, a California limited liability
company (the "Holder"), for value received is entitled, subject to the
adjustment and to the other terms set forth below, to purchase from WILSHIRE
TECHNOLOGIES, INC., a California corporation (the "Company"), One Hundred
Thousand (100,000) fully paid and nonassessable shares of the Company's Common
Stock, no par value per share (the "Stock"), at a per share price calculated in
the manner set forth in Section 1, below (the "Stock Purchase Price"), at any
time on or after September 18, 1997 (the "Commencement Date") but not later than
5:00 p.m. (Pacific Time) on the Expiration Date (as defined below), upon
surrender to the Company at its principal office at 0000 Xxxxxxx Xxxxxxx, Xxxxx
X, Xxxxxxxx, Xxxxxxxxxx 00000 (or at such other location as the Company may
advise Holder in writing) of this Warrant properly endorsed with the Form of
Subscription Agreement attached hereto duly filled in and signed and upon
payment in cash or cashier's check of the aggregate Stock Purchase Price for the
number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof. The Stock Purchase Price and, in some
cases, the number of shares purchasable hereunder are subject to adjustment as
provided in Section 3 of this Warrant. This Warrant and all rights hereunder, to
the extent not exercised in the manner set forth herein shall terminate and
become null and void on the Expiration Date. "Expiration Date" means the fifth
anniversary of the Commencement Date; provided, however, that if the Development
and Supply Agreement dated September 18, 1997, between the Holder and the
Company (the "Supply Agreement") shall be terminated by Holder in accordance
with the provisions of set forth in Section 15 of the Supply Agreement prior to
the occurrence of such fifth anniversary, the Expiration Date shall be
accelerated to a date that is thirty (30) days following such termination date.
This Warrant is issued in conjunction with the Supply Agreement.
This Warrant is subject to the following terms and conditions:
1. Exercise; Stock Purchase Price; Issuance of Certificates; Payment for
Shares. This Warrant is exercisable at the option of Holder at any time or from
time to time but not earlier than the Commencement Date or later than 5:00 p.m.
(Pacific Time) on the Expiration Date for all or a portion of the shares of
Stock which may be purchased hereunder. The Company agrees that the shares of
Stock purchased under this Warrant shall be and are deemed to be issued to
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for such
shares. The per share Stock Purchase Price shall be 25 cents greater than the
mean average of the bid and asked prices for the five trading days immedi-
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25
ately preceding the effective date of the Supply Agreement. Subject to the
provisions of Section 2, certificates for the shares of Stock so purchased,
together with any other securities or property to which Holder is entitled upon
such exercise, shall be delivered to Holder by the Company's transfer agent at
the Company's expense within a reasonable time after the rights represented by
this Warrant have been exercised. Each stock certificate so delivered shall be
in such denominations of Stock as may be requested by Holder and shall be
registered in the name of Holder or such other name as shall be designated by
Holder, subject to the limitations contained in Section 2. If, upon exercise of
this Warrant, fewer than all of the shares of Stock evidenced by this Warrant
are purchased prior to the Expiration Date of this Warrant, one or more new
warrants substantially in the form of, and on the terms in, this Warrant will be
issued for the remaining number of shares of Stock not purchased upon exercise
of this Warrant.
2. Shares to Be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any shareholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company covenants that it will reserve and keep available a
sufficient number of shares of its authorized but unissued Stock for such
exercise. The Company will take all such reasonable action as may be necessary
to assure that such shares of Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
domestic securities exchange or automated quotation system upon which the Stock
may be listed.
3. Adjustment of Stock Purchase Price and Number of Shares. The Stock
Purchase Price and, in some cases, the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 3.
3.1 Subdivision or Combination of Stock and Stock Dividend. In
case the Company shall at any time subdivide its outstanding shares of Stock
into a greater number of shares or declare a dividend upon its Stock payable
solely in shares of Stock, the Stock Purchase Price in effect immediately prior
to such subdivision or declaration shall be proportionately reduced, and the
number of shares issuable upon exercise of the Warrant shall be proportionately
increased. Conversely, in case the outstanding shares of Stock of the Company
shall be combined into a smaller number of shares, the Stock Purchase Price in
effect immediately prior to such combination shall be proportionately increased,
and the number of shares issuable upon exercise of the Warrant shall be
proportionately reduced.
3.2 Notice of Adjustment. Promptly after adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to the registered
holder of this Warrant at the address of such holder as shown on the books of
the Company. The notice shall be signed by the Company's chief financial officer
and shall state the effective date of the adjustment and the Stock Purchase
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price
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26
upon the exercise of this Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.
3.3 Other Notices. If at any time:
(a) the Company shall declare any cash dividend upon its
Stock;
(b) the Company shall declare any dividend upon its Stock
payable in stock (other than a dividend payable solely in shares of Stock) or
make any special dividend or other distribution to the holders of its Stock;
(c) there shall be any consolidation or merger of the
Company with another corporation, or a sale of all or substantially all of the
Company's assets to another corporation; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder, as shown on the books of the Company, (i)
at least 30 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least 30 days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of Stock shall be
entitled thereto. Any notice given in accordance with clause (iii) above shall
also specify the date on which the holders of Stock shall be entitled to
exchange their Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, as the case may be. If the Holder of the Warrant does
not exercise this Warrant prior to the occurrence of an event described above,
except as provided in Sections 3.1 and 3.4, the Holder shall not be entitled to
receive the benefits accruing to existing holders of the Stock in such event.
Notwithstanding anything herein to the contrary, if and to the extent the Holder
chooses to exercise this Warrant within the ten-day period following receipt of
the notice specified in clause (ii) above, the Holder may elect to pay the
aggregate Stock Purchase Price by delivering to the Company cash or a cashier's
check in the amount of the aggregate par value of the shares of Stock to be
purchased and the Holder's full recourse Promissory Note in the amount of the
balance of the aggregate Stock Purchase Price, which Note shall be payable to
the order of the Company in a single sum on the 30th day following the date of
receipt of such notice and shall bear interest at the lowest applicable federal
short term rate (using monthly compounding) as established pursuant to Section
1274(d) of the Internal Revenue Code of 1986, as amended, or any successor
provision; provided, however,
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27
that if the Holder elects to deliver such a Promissory Note to the Company, the
Holder will pledge to the Company all Stock issued in connection with the
exercise of this Warrant, and the Company shall retain possession of the
certificates evidencing such Stock, until such time as the Note is paid in full.
3.4 Changes in Stock. In case at any time following the
Commencement Date, the Company shall be a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all of
the Company's assets or recapitalization of the Stock) in which the previously
outstanding Stock shall be changed into or exchanged for different securities of
the Company or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing (each such transaction being herein called
the "Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that each Holder,
upon the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive; and this Warrant shall thereafter represent the right to
receive, in lieu of the stock issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such Holder would actually have been entitled as a shareholder upon the
consummation of the Transaction if such Holder had exercised such Warrant
immediately prior thereto. The provisions of this Section 3.4 shall similarly
apply to successive Transactions.
4. Issue Tax. The issuance of certificates for shares of Stock upon the
exercise of the Warrant shall be made without charge to the holder of the
Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the holder
hereof the right to vote or to consent or to receive notice as a shareholder in
respect of meetings of shareholders for the election of directors of the Company
or any other matters or any rights whatsoever as a shareholder of the Company.
Except for the adjustment to the Stock Purchase Price pursuant to Section 3.1 in
the event of a dividend on the Stock payable in shares of Stock, no dividends or
interest shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised. No provisions hereof, in
the absence of affirmative action by the holder to purchase shares of Stock, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Stock Purchase Price or
as a shareholder of the Company whether such liability is asserted by the
Company or by its creditors.
6. Restrictions on Transferability of Securities; Compliance With
Securities Act.
6.1 Restrictions on Transferability. This Warrant and the Stock
issuable upon exercise hereof (collectively, the "Securities") shall be
transferable only in accordance with the provisions of the Securities Act of
1933, as amended, and the state securities and Blue Sky laws.
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6.2 Restrictive Legend. Each certificate representing the
Securities or any other securities issued in respect of the Securities upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of the Purchase
Agreement) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER."
7. Registration Rights. Holder shall have the registration rights set
forth in Exhibit A attached hereto and incorporated herein by this reference.
8. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
9. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered
or shall be sent by certified or registered mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefor in the first paragraph of this Warrant.
10. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.
11. Lost Warrants or Stock Certificates. The Company represents and
warrants to Holder that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Warrant or stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity and, if requested, bond reasonably satisfactory to the
Company, or in the case of any such mutilation, upon surrender and cancellation
of such Warrant or stock certificate, the Company at its expense will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
12. Fractional Shares. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share pay the holder entitled to such
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fraction a sum in cash equal to the fair market value of any such fractional
interest as it shall appear on the public market, or if there is no public
market for such shares, then as shall be reasonably determined by the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer, thereunto duly authorized as of this 18th day of September,
1997.
WILSHIRE TECHNOLOGIES, INC.
By: /s/ Xxxx Xxx Xxxxxx
-------------------------------------------
President & Chief Executive Officer
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FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered upon execution of Warrant)
WILSHIRE TECHNOLOGIES, INC.
0000 Xxxxxxx Xxxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______ shares of common stock, no par value per share (the
"Stock"), of WILSHIRE TECHNOLOGIES, INC. (the "Company") and herewith makes
payment of ____________________ Dollars ($ ) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to, whose
address is ___________________________________________________________________.
If the exercise of this Warrant is not covered by a registration
statement effective under the Securities Act of 1933, as amended (the
"Securities Act"), the undersigned represents that
(i) the undersigned is acquiring such Stock for investment for
its own account, not as nominee or agent, and not with a view to the
distribution thereof and the undersigned has not signed or otherwise arranged
for the selling, granting any participation in, or otherwise distributing the
same;
(ii) the undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the undersigned's investment in the Stock;
(iii) the undersigned has received all of the information the
undersigned has requested from the Company and considers necessary or
appropriate for deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks
of its prospective investment;
(v) the undersigned is able, without materially impairing its
financial condition, to hold the shares of Stock for an indefinite period of
time and to suffer complete loss on its investment;
(vi) the undersigned understands and agrees that (A) it may be
unable to readily liquidate its investment in the shares of Stock and that the
shares must be held indefinitely unless a subsequent disposition thereof is
registered or qualified under the Securities Act and applicable
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state securities or Blue Sky laws or is exempt from such registration or
qualification, and that the Company is not required to register the same or to
take any action or make such an exemption available except to the extent
provided in the within Warrant; and (B) the exemption from registration under
the Securities Act afforded by Rule 144 promulgated by the Securities and
Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
(vii) the undersigned either (A) is familiar with the definition
of and the undersigned is an "accredited investor" within the meaning of such
term under Rule 501 of Regulation D promulgated under the Securities Act, or (B)
is providing representations and warranties reasonably satisfactory to the
Company and its counsel, to the effect that the sale and issuance of Stock upon
exercise of such Warrant may be made without registration under the Securities
Act or any applicable state securities and Blue Sky laws; and
(viii) the address set forth below is the true and correct
address for the undersigned.
DATED:_________________
______________________________________
______________________________________
______________________________________
(Address)
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Exhibit A to Warrant to Purchase Shares
of Common Stock of Wilshire Technologies, Inc.
1. Certain Definitions. As used herein, the following terms shall have
the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Stock issued or issuable pursuant to this
Warrant.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
commission thereunder, all as the same shall be in effect at the time.
"Registrable Securities" means (i) the Conversion Stock; and (ii) any
Stock of the Company issued or issuable in respect of the Conversion Stock or
other securities issued or issuable pursuant to the conversion of the Stock upon
any stock split, stock dividend, recapitalization, or similar event, or any
Common Stock otherwise issued or issuable with respect to the Stock; provided,
however, that shares of Common Stock or other securities shall only be treated
as Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are available for sale in the opinion of
counsel to the Company in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are or may be removed
upon the consummation of such sale.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except Selling Expenses
as defined below, incurred by the Company in complying with Sections 2 and 3
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expenses of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company) and the reasonable fees and disbursements of counsel for Holder.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the securities registered by Holder.
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2. Company Registration.
(a) Notice of Registration. If, at any time or from time to time,
the Company shall determine to register any of its securities, either for its
own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws, or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request,
made within 20 days after receipt of such written notice from the Company, by
Holder.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as a part of the written notice given
pursuant to Section 2(a)(i). In such event, the right of Holder to registration
pursuant to this Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. If Holder proposes to
distribute its Registrable Securities through such underwriting, Holder,
together with the Company, shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company. Notwithstanding any other provision of this Section 2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter, in its sole
discretion, may limit the Registrable Securities to be included in such
registration, and the Company shall promptly so advise Holder thereof. If Holder
disapproves of the terms of any such underwriting, Holder may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration, and shall not be transferred in a public distribution prior
to 90 days after the effective date of the registration statement relating
thereto, or such other shorter period of time as the underwriter may require.
The Company may include shares of Stock held by shareholders other than Holder
in a registration statement pursuant to this Section 2.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant hereto, shall be borne by the Company,
and all Selling Expenses incurred in connection with any registration pursuant
hereto shall be borne by Holder.
4. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant hereto, the Company
will keep Holder advised in writing
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as to the initiation of each registration, qualification and compliance and as
to the completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least ninety (90)
days, and prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for at least
ninety (90) days, provided that no such registration shall constitute a shelf
registration under Rule 415 promulgated by the Commission under the Securities
Act;
(b) Enter into a written underwriting agreement in customary form
and substance reasonably satisfactory to the Company, the Holder and the
managing underwriter or underwriters of the public offering of such securities,
if the offering is to be underwritten in whole or in part;
(c) Furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such underwriter may reasonably request in order to facilitate the public
offering of such securities;
(d) Notify the Holder, promptly after it shall receive notice
thereof, of the time when such registration statement has been effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(e) Notify Holder promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(f) Prepare and file with the Commission promptly upon the
request of Holder, any amendments or supplements to such registration statement
or prospectus which, in the reasonable opinion of counsel for Holder, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Securities by Holder;
(g) Prepare and promptly file with the Commission, and promptly
notify Holder of the filing of, such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances in which they were made;
(h) In case Holder or any underwriter for Holder is required to
deliver a prospectus at a time when the prospectus then in effect may no longer
be used under the Securities Act, prepare promptly upon request such amendment
or amendments to such registration statement
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and such prospectuses as may be necessary to permit compliance with the
requirements of the Securities Act;
(i) Advise Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(j) At the request of Holder, furnish on the effective date of
the registration statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement, (i)
an opinion, dated each such date, of the counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any, and to
the Holder, covering such matters with respect to the registration statement,
the prospectus and each amendment or supplement thereto, proceedings under state
and federal securities laws, other matters relating to the Company, the
securities being registered and the offer and sale of such securities as are
customarily the subject of opinions of issuer's counsel provided to underwriters
in underwritten public offerings, and (ii) to the extent the Company's
accounting firm is willing to do so, a letter dated each such date, from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the Holder, stating that they are independent
certified public accountants within the meaning of the Securities Act and that
in the opinion of such accountants the financial statements and other financial
data of the Company included in the registration statement or the prospectus or
any amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act, and additionally
covering such other financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter
with respect to the registration statement and prospectus, as the underwriters
or Holder may reasonably request.
5. Information by Holder. The Holder shall furnish the Company such
information regarding Holder, the Registrable Securities held by Holder and the
distribution proposed by Holder as the Company may request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to herein.
6. Indemnification.
(a) The Company will indemnify Holder, each of its officers,
directors and partners, and each person controlling Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant hereto, and each
underwriter, if any, and each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state
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therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation promulgated under the Securities Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse Holder, each of its officers and directors, and each
person controlling Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement of omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by Holder,
such controlling person or underwriter and stated to be specifically for use
therein.
(b) Holder will, if Registrable Securities held by Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of a or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, 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, and will reimburse the Company, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of Holder under this subsection (b)
shall be limited to an amount equal to the initial public offering price of the
shares sold by Holder, unless such liability arises out of or is based on
willful conduct by Holder.
(c) Each party entitled to indemnification under this Section 6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action and
provided further, that the Indemnifying Party shall not assume the defense
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for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgement or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
7. No Transfer of Registration Rights. The rights to cause the Company
to register securities granted hereunder may not be assigned to any transferee
or assignee of the Registrable Securities.
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