CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") executed as of this 20th day of
March, 2002, is made by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D. ("Consultant") and
Vital Living, Inc., a Nevada corporation ("Company").
R E C I T A L S
Company desires to utilize Consultant's experience, knowledge and
abilities in the various aspects of its business. Consultant desires to
render such consulting services subject to the terms and conditions of this
Agreement.
In consideration of the foregoing recitals and the mutual covenants and
agreements contained herein, Consultant and Company agree as follows:
1. CONSULTING SERVICES.
(a) The Company retains Consultant to provide the following consulting
services (the "Consulting Services") to the Company:
(i) Establish and serve as the Chairman of the Company's scientific advisory
board (the "Scientific Advisory Board") and in that capacity provide the
Company the following service:
(1) Attending and participating in all Scientific Advisory Board meetings
(Vital Living currently intends to convene one (1) in-person meeting and
three (3) teleconference meetings of the Scientific Advisory Board per year);
(2) Developing, manufacturing and testing of nutraceutical formulations
that are based on the best available scientific research, shown to be safe
and effective in appropriately designed and controlled clinical trials, and
proprietary to the Company ;
(3) Assisting the Company in the design and development of compliance and
lifestyle programs intended to enhance patient compliance with the Company's
nutraceuticals;
(4) Advising the Company on the needs of potential clients, partners, and
other users, including practicing physicians, academic researchers, other
health professional, and patients, and the design of products, services and
offerings to address those needs;
(5) Introducing Vital Living to other thought leaders and persons who can
assist the Company;
(6) Assisting Vital Living in establishing itself and its products and
services with other thought leaders, practicing physicians, academic
researchers, patients and other constituencies: and,
(ii) Making use of Vital Living's products and services.
(iii) Assist the Company in recruiting additional highly qualified
individuals to serve as members of the Scientific Advisory Board.
(iv) Supervise the formulation of the Company's nutritional supplements
("Nutraceuticals") including the selection of ingredients, dosages, delivery
methods, sources, manufacturing specifications and all other aspects of the
design, development and manufacturing of the Nutraceuticals.
(v) Meet with Cardiologists, other physicians, and others to present
information and explain the Company's products.
(vi) Design and implement the Company's program for conducting clinical
trials to evaluate the safety and efficacy of the Company's products and
write articles based on those trials for publication by leading peer reviewed
journals.
(vii) Appear at and participate in medical conferences, meetings,
conference calls, or other corporate promotional functions.
(viii) Assist the Company in developing and refining its programs and
efforts to encourage mainstream physicians to incorporate the Company's
products as integral components of their standard treatment protocols.
(ix) Perform such additional services as the Company and Consultant may agree
upon.
(b) In performing the duties required under this Agreement, Consultant, at
all times shall exercise his professional independent judgment, based on his
training, experience and expertise. Consultant shall at all times comply
with the ethical rules and opinions of the professional organizations of
which he is a member. If any conflict arises between Consultant's duties
hereunder and Consultant's ethical or other contractual obligations,
Consultant shall immediately bring the matter to the attention of the chief
executive officer, president or chairman of the board of directors of the
Company.
(c) Consultant shall devote such time as is reasonably required to perform
the Consulting Services.
(d) Consultant shall provide the Consulting Services at such locations as
may be necessary or desirable to perform such Consulting Services
effectively.
(e) Consultant and Company presently believe that effective performance will
require Consultant to visit the Company's offices at least every other month
during the Term.
2. TERM AND TERMINATION.
(a) This Agreement shall commence on the execution date hereof (the
"Effective Date") and shall automatically terminate (the period commencing
upon the Effective Date and ending upon termination of this Agreement, the
"Term") upon the termination of the two year period commencing on the
Effective Date, or earlier as follows:
(i) by the Company at any time, with or without Cause (as defined below),
provided that a termination of this Agreement for Cause shall be effective
only upon 30 days written notice from the Company to the Consultant.
(ii) upon the death or disability of the Consultant.
(iii) by mutual agreement of the Company and Consultant.
(iv) by Consultant for any reason, provided that a termination of this
Agreement by the Consultant shall be effective only upon 30 days written
notice from the Consultant to the Company.
(b) For purposes of this Agreement, Company shall have "Cause" to terminate
this Agreement upon Consultant's:
(i) Commission of a felony involving moral turpitude; or
(ii) death; provided that the Consultant's beneficiaries shall be entitled to
receive his compensation through the last day of the month in which his death
occurs; or
(iii) Commission of any act of fraud, theft, or embezzlement involving
assets of the Company; or
(iv) Becoming physically or mentally disabled so that he is unable to perform
his services for (I) a period of 60 consecutive days, or (II) for shorter
periods aggregating 60 days during any twelve-month period. The Consultant
shall become physically or mentally disabled so that he is unable
substantially to perform his services for (i) a period of 30 consecutive
days, or (ii) for shorter periods aggregating 30 days during any twelve-month
period. Notwithstanding such disability the Company shall continue to pay
the Consultant his compensation through the date of such termination.
(c) Upon the expiration or termination of this Agreement for any reason, (a)
each party will be released from all obligations to the other arising after
the date of expiration or termination, except that expiration or termination
of this Agreement will not relieve either party of its obligations under
Sections 3(b), 3(c), 6, 7, 8, or 9, nor will expiration or termination
relieve Consultant or Company from any liability arising from any breach of
this Agreement; and (b) Consultant will promptly notify Company of all
Confidential Information and Subject Inventions, in Consultant's possession
and promptly deliver to Company, or destroy at Company's request, all such
materials.
3. COMPENSATION AND EXPENSES.
(a) Commencing on the Effective Date and during the Term, Company shall
compensate Consultant at the rate of $4,200 per month payable pursuant to the
Company's payroll practices, as revised by the Company from time to time in
its sole discretion. Consultant agrees that without breaching this
Agreement, the Company may defer payment of Consultant's compensation if the
Company is unable to compensate Consultant, provided that such deferral shall
under no circumstances continue for a period of six months or more, and that
any deferral of payment of Consultant's compensation for a period of six
months or more shall constitute a breach of this agreement.. The
determination of the Company's ability to compensate Consultant shall be at
the sole discretion of the board of directors of the Company, provided,
however, that (i) the Company's right to defer payment of Consultant's
compensation shall terminate at such time as the Company shall have raised a
total of at least $2 million from any one or more related or unrelated debt
or equity financing transactions occurring after the date of this agreement;
(ii) the Company shall not defer payment of Consultant's compensation unless,
either prior to or concurrently with the deferment of Consultant's salary,
the Company ceases to pay any compensation to each of its then current Chief
Executive Officer, Chairman, and President; and the Company shall not pay any
compensation to its then current Chief Executive Officer, Chairman, or
President until it has made payment in full of all deferred Consultant
compensation; and (iii) if the Company defers payment of Consultant's
compensation for a period of six months, Consultant may, at his option,
terminate this Agreement by providing written notice of such termination to
the Company.
(b) Company shall promptly pay or reimburse Consultant for the reasonable
and necessary expenses incurred by Consultant in connection with the
performance of his duties hereunder, including travel expenses incurred by
Consultant at the request of Company and economy class travel to all
Scientific Advisory Board meetings, subject to Company's receipt of such
verification thereof as is reasonably required and subject to Company's
general expense reimbursement policies.
(c) If Consultant is terminated by the Company other than for cause, or if
Consultant terminates his engagement pursuant to Section 3(a)(iii) hereof,
then Consultant shall be entitled to continue to receive his then current
compensation for a period of six (6) months (such payments, the "Severance
Payments") pursuant to the payment schedule in effect for Consultant
immediately prior to such termination; provided, that without limiting any
other rights or remedies available to the Company, any violation of this
Agreement by Consultant during the 6 month period commencing upon
Consultant's termination shall terminate the Company's obligation to make
Severance Payments.
4. STOCK OPTIONS.
Concurrently with the execution of this Agreement, the Company and
Consultant shall enter into the Non-Qualified Stock Option Agreement attached
hereto as Exhibit A.
5. INDEPENDENT CONTRACTOR RELATIONSHIP.
(a) The relationship of Consultant to Company is that of an independent
contractor and advisor only. Nothing contained in this Agreement shall be
construed to create the relationship of employer and employee or principal
and agent between Consultant and Company. Accordingly, Consultant shall not
be entitled to any employee benefits, such as medical or other health
insurance, available to employees of Company. In addition, Consultant is not
a member, partner or joint venturer with Company, and nothing contained in
this Agreement shall be construed so as to make such parties partners or
joint venturers or to impose any liability as such on either of them.
Consultant shall have no authority to bind Company to any agreement,
obligation or commitment.
(b) It is understood and agreed that Consultant's duties and obligations to
Company are fully expressed by the terms hereof. As long as Consultant's
other business activities or services do not cause substantial interference
with Consultant's performance of his duties under this Agreement or otherwise
violate any other agreement between the Consultant and the Company,
Consultant shall be entitled to engage in any other business activities he
deems fit, as an owner, officer, director, partner, investor, employee,
consultant or otherwise.
(c) Consultant shall be responsible for payment of any and all applicable
federal, state and local income and other taxes, business license fees and
workers' compensation and disability benefits which he may incur as a
consequence of rendering the Consulting Services provided for herein. In the
event that the Company is required to pay, or it is contended that the
Company is required to pay any such employee taxes, penalties, interest,
fines or assessments, Consultant agrees to hold harmless and indemnify the
Company in full from and against any such taxes, penalties, fines or
assessments, and attorneys' fees and other expenses which result from, or are
incident to, any proceeding to establish or collect such taxes.
6. CONFIDENTIALITY.
(a) "Confidential Information" shall mean all confidential or proprietary
information of the Company whether developed by the Company, by Consultant
within the scope of Consultant's engagement by the Company, or by third
parties for the Company, including without limitation knowledge about
business, marketing plans, pricing practices, products, formulation,
ingredients, formulations, dosages, sources, methods of manufacturing and
delivery, inventions, prototypes, formula, processes, programming techniques,
experimental work, as well as information relating to the customers, clients
and suppliers of Company. Confidential Information will not include, however,
any information which is or becomes part of the public domain through no
fault of Consultant or that Company regularly gives to third parties without
restriction on use or disclosure.
(b) Consultant agrees to hold all such Confidential Information in strict
confidence, not to disclose it to others or use it in any way, except in
performing the Services, and not to allow any unauthorized person access to
it, either before or after expiration or termination of this Agreement.
Consultant further agrees to take all action reasonably necessary and
satisfactory to protect the confidentiality of the Confidential Information.
7. ASSIGNMENT OF INVENTIONS.
(a) "Inventions" shall mean all designs, discoveries, inventions, computer
programs, procedures, improvements (whether or not patentable or whether or
not copyrightable), modifications, enhancements, products, developments,
drawings, notes, documents, information and materials, including any such
items relating to the ingredients, formulations, dosages, sources, methods of
manufacturing and delivery of Nutraceuticals, whether or not patentable and
whether or not reduced to practice, together with each literary work of such
owner, whether or not copyrightable.
(b) "Subject Inventions" shall mean all Inventions made by Consultant during
the Term that result from any work performed by Consultant for the Company or
were developed using the Company's equipment, supplies, facilities, or trade
secret information.
(c) Consultant hereby assigns to the Company, without additional
consideration to the Consultant, the entire right, title, and interest in and
to the Subject Inventions and all confidential information, writings,
apparatus, and other matter related to the Subject Inventions and in and to
all proprietary rights therein or based thereon. Consultant understands and
agrees that all materials included in any Subject Invention which is eligible
for protection under the Copyright Laws shall be deemed specially
commissioned by the Company and treated as "Works for Hire" under the
Copyright Laws of the United States to the extent such materials fall within
a category eligible for such treatment. In the event that such materials are
not eligible to be treated as a Work for Hire, Consultant nonetheless shall,
and hereby does, assign all of Consultant's interest in such work to the
Company as the same is created by Consultant.
(d) During and after the Term, Consultant shall execute and deliver all
written assignments, oaths, declarations, applications, and other documents
as may be prepared by the Company to evidence and/or effect the assignments
required by this Agreement.
(e) During and after the Term, Consultant shall provide the Company with all
information, documentation, and assistance the Company may request to
perfect, enforce, or defend any Subject Inventions or Proprietary Information
under this Agreement. The Company, in its sole discretion, shall determine
the extent of the proprietary rights, if any, to be protected in or based on
the Subject Inventions and Proprietary Information. All such information,
documentation, and assistance shall be provided at no additional expense to
the Company, except out-of-pocket expenses which the Consultant incurred at
the Company's request.
(f) Nothing in this Agreement shall affect in any way the ownership of, or
rights to, any Inventions other than the Subject Inventions.
8. CONFLICTS OF INTEREST
(a) During the Term and for two (2) years thereafter, Consultant shall not:
(i) perform any services for any person or entity competing directly with
the Company; or
(ii) directly or indirectly (other than for Company), sell or attempt to sell
any Nutraceuticals to any person or entity which has been a customer of the
Company during the Term, purchase or attempt to purchase (other than for
Consultant's personal use) any Nutraceuticals from any person or entity which
has been a vendor or supplier of Company during the Term, or use Consultant's
personal knowledge or influence in relation to any person or entity which has
at any time during such period been a customer, vendor, or supplier of
Company in order to compete with Company.
(b) During the Term and for two (2) years thereafter, Consultant shall not:
(i) directly or indirectly, induce or attempt to induce any employee,
consultant, independent contractor, advisor, or other service provider of the
Company to terminate such person's or entity's relationship with the Company;
(ii) directly or indirectly induce or attempt to induce any vendor, customer,
or supplier, or any other person having a business relationship with Company,
to terminate or adversely modify such person's or entity's relationship with
the Company.
(c) Notwithstanding any provision of this Agreement to the contrary,
nothing in this Agreement shall restrict Consultant from (a) designing and
participating in the conduct of clinical trials related to cardiovascular and
other diseases, (b) conducting academic research of any nature, or (c)
performing any and all services required of Consultant in his role as the
head of Preventive Cardiology at Rush Presbyterian St. Lukes.
9. MISCELLANEOUS
(a) Binding Effect. This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and Company's successors or assigns and
the Consultant's heirs, executors and legal representatives, provided that
this Agreement is a personal services contract and may not be assigned by
Consultant without the prior written consent of Company.
(b) Publicity. Consultant shall not publicize or advertise in any manner
that Consultant is performing the Consulting Services hereunder, without the
prior written consent of Company. Consultant hereby grants to Company the
right to use Consultant's name, likeness, and relationship with Company in
and in connection with technical materials, various reports, brochures or
other documents produced by or on behalf of Company.
(c) Assignment. Consultant may not assign this Agreement or any of
Consultant's rights or delegate Consultant's duties under this Agreement
either in whole or in part, whether by operation of law or otherwise, without
the prior written consent of Company. Any attempted assignment or delegation
without such consent will be void and of no force and effect.
(d) Equitable Remedies. Because the Services are personal and unique and
because Consultant will have access to Confidential Information of Company,
Company will have the right to enforce this Agreement and any of its
provisions by injunction, specific performance or other equitable relief
without prejudice to any other rights and remedies that Company may have for
a breach of this Agreement.
(e) Attorneys' Fees. If any action is necessary to enforce the terms of
this Agreement, the substantially prevailing party will be entitled to
reasonable attorneys' fees, costs and expenses in addition to any other
relief to which such prevailing party may be entitled.
(f) Governing Law; Severability. This Agreement will be governed by and
construed in accordance with the laws of the State of Nevada excluding that
body of law pertaining to conflict of laws. If any provision of this
Agreement is for any reason found to be unenforceable, the remainder of this
Agreement will continue in full force and effect.
(g) Notices. All notices and demands between the parties hereto shall be in
writing and shall be served either by registered or certified mail, and such
notices or demands shall be deemed given and made forty-eight (48) hours
after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made,
and the issuance of the registered receipt therefor. All notices and demands
to Consultant or the Company may be given to them at the following addresses:
If to Consultant: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ M.D.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇▇▇
If to Company: Vital Living, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(i) Captions. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
thereof.
(j) Modification. Any waiver, modification or amendment of any provision of
this Agreement will be effective only if in writing and signed by the parties
hereto.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written.
VITAL LIVING, INC., a Nevada corporation
/S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, C.E.O.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D.
/S/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Exhibit A
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into
as of March 20, 2002 (the "Grant Date"), by and between VITAL LIVING, INC., a
Nevada corporation ("Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ M.D. ("Optionee").
R E C I T A L S
A. On July 31, 2001, the Board of Directors and Shareholders of the
Company adopted the Vital Living, Inc. 2001 Stock Option Plan (the
"Plan").
B. Pursuant to the Plan, on March 20, 2002, the Board of Directors of
the Company acting as the Plan Committee ("Committee") authorized granting to
Optionee options to purchase shares of the common stock, $0.001 par value, of
the Company ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
otherwise clearly requires, terms with initial capital letters used herein
shall have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Company hereby grants to Optionee, a Non-
Qualified Option ("Options") to purchase all or any part of 200,000 Shares,
upon and subject to the terms and conditions of the Plan, which is
incorporated in full herein by this reference, and upon the other terms and
conditions set forth herein. The Option is not intended to qualify as an
"incentive stock option" as that term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended from time to time.
3. OPTION PERIOD/VESTING.
3.1 Subject to the provisions of Section 8, the Options shall be
exercisable to purchase the Vested Shares at any time prior to expiration of
the five (5) year period commencing upon the Grant Date (the "Expiration
Date"), unless earlier terminated pursuant to Section 7.
3.2 Shares of Common Stock underlying this Option shall become "Vested
Shares" as follows: (a) upon execution of this Option, 11,112 shares of
Common Stock shall become Vested Shares, (b) so long as Holder is engaged by
the Corporation pursuant to the Consulting Agreement to which this Option is
an Exhibit (the "Consulting Agreement"), 11,112 shares of Common Stock shall
become Vested Shares on 15th day of each month commencing upon April 15, 2002
for 16 months, and (c) 11,096 shares shall become Vested Shares on August 15,
2003.
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Company of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied
by such other executed instruments or documents as may be required by the
Committee pursuant to this Agreement, and unless otherwise directed by the
Committee, Optionee shall at the time of such exercise tender the purchase
price of the Shares he has elected to purchase. An Optionee may purchase
less than the total number of Shares for which the Option is exercisable,
provided that a partial exercise of an Option may not be for less than One
Hundred (100) Shares. If Optionee shall not purchase all of the Shares which
he is entitled to purchase under the Options, his right to purchase the
remaining unpurchased Shares shall continue until expiration of the Options.
The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share
which Optionee is entitled to purchase under the Options shall be One Dollar
($1.00) per Share.
6. PAYMENT OF PURCHASE PRICE. The Optionee may pay for the Shares in any
one, or combination thereof, of the following methods. The Company, upon
receiving payment, shall make immediate delivery of such purchased shares,
fully paid and non-assessable, registered in the name of Optionee.
6.1 Cash or like consideration. At the time of Optionee's notice of
exercise of the Options, Optionee shall exercise the Option by notifying the
Company of the number of shares that he desires to purchase and by delivering
with such notice the cash or a certified bank check payable to the Company
for the purchase price of the shares being purchased.
6.2 Common Stock. Optionee may make payment in whole or in part with
shares of Common Stock. If payment is made in Common Stock, Optionee shall
deliver to the Company certificates representing the number of shares of
Common Stock in payment for new shares of Common Stock, duly endorsed for
transfer to the Company, together with any written representations relating
to title, liens and encumbrances, securities laws, rules and regulatory
compliance, or other matters, reasonably requested by the Board of Directors.
For purposes of determining the amount, if any, of the purchase price
satisfied by payment in Common Stock, such Common Stock shall be valued at
its Fair Market Value on the date of exercise, as determined by taking the
five (5) day average closing price of the Common Stock as quoted on the OTCBB
or other national exchange.
6.3 Full Recourse Promissory Note. With approval of the Company's board
of directors, Optionee may make payment in whole or in part with a promissory
note ("Note"), providing for full recourse against Optionee upon default.
The Note will be secured by the underlying shares of Common Stock issued
pursuant to the Option and such Note must be reduced from the proceeds of the
first sale of Common Stock by Optionee. The Note shall be payable over a
period not exceeding two years at an interest rate of ten (10%) percent.
6.4 "Easy Sale" Exercise. When, and if, the Company's Common Stock is
traded on the NASDAQ, AMEX, NYSE or like stock exchange with quantitative and
qualitative listing requirements, Optionee may, in lieu of the other payment
methods set forth in Section 6, when permitted by law and applicable
regulations (including Nasdaq and NASD rules), pay the through a "same day
sale" commitment from the Optionee (and if applicable a broker-dealer that is
a member of the National Association of Securities Dealers (an "NASD
Dealer")), whereby the Optionee irrevocably elects to exercise this Option
and to sell a portion of the shares so purchased to pay the purchase price
and the Optionee (or, if applicable, the NASD Dealer) commits upon sale (or,
in the case of the NASD Dealer, upon receipt) of such shares to forward the
purchase price directly to the Company.
7. REGISTRATION OF SHARES.
The terms of the Registration Agreement attached hereto as Exhibit A are
hereby incorporated herein.
8. EFFECT OF TERMINATION OF EMPLOYMENT.
8.1 If an Optionee's employment or other relationship with the Company
or a Subsidiary terminates, the effect of the termination on the Optionee's
rights to acquire Shares shall be as follows:
(a) Termination by the Company Other Than For Cause.
Notwithstanding Section 3.2 above, if Optionee is terminated by the Company
other than for Cause (as defined in the Consulting Agreement), or if Optionee
terminates his engagement pursuant to Section 3(a)(iii) of the Consulting
Agreement, than:
(1) the number of shares that are Vested Shares as of the date of
termination shall be that number of shares that would have become Vested
Shares if the Optionee's engagement was terminated one year after the actual
date of termination.
(2) Optionee's Options shall expire upon the Expiration Date. Prior to the
Expiration Date, Optionee may exercise his Options, but only with respect to
the Vested Shares, taking into account the acceleration provision of Section
8.2(a)(1) and except as so exercised.
(b) Other Termination. If Optionee's employment by, or
relationship with, the Company or a Subsidiary is terminated for Cause,
Optionee's Option shall expire thirty (30) days after such termination;
however, the Committee may waive the expiration of the Option by giving
written notice of such waiver to Optionee. In the event of such waiver,
Optionee may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if such Optionee had ceased to be employed by,
or ceased to have a relationship with, the Company or a Subsidiary upon the
date of such termination for a reason other than for cause.
9. NON-TRANSFERABILITY OF OPTIONS.
The Options shall not be transferable, either voluntarily or by
operation of law, otherwise than by will or the laws of descent and
distribution and shall be exercisable during the Optionee's lifetime only by
Optionee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
As used herein, the term "Adjustment Event" means an event pursuant to
which the outstanding Shares of the Company are increased, decreased or
changed into, or exchanged for a different number or kind of shares or
securities, without receipt of consideration by the Company, through
reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split, stock dividend, stock consolidation or otherwise. Upon
the occurrence of an Adjustment Event, (i) appropriate and proportionate
adjustments shall be made to the number and kind and exercise price for the
shares subject to the Options, and (ii) appropriate amendments to this
Agreement shall be executed by the Company and Optionee if the Committee
determines that such an amendment is necessary or desirable to reflect such
adjustments. If determined by the Committee to be appropriate, in the event
of an Adjustment Event which involves the substitution of securities of a
corporation other than the Company, the Committee shall make arrangements for
the assumptions by such other corporation of the Options. Notwithstanding
the foregoing, any such adjustment to the Options shall be made without
change in the total exercise price applicable to the unexercised portion of
the Options, but with an appropriate adjustment to the number of shares, kind
of shares and exercise price for each share subject to the Options. The
determination by the Committee as to what adjustments, amendments or
arrangements shall be made pursuant to this Section 10, and the extent
thereof, shall be final and conclusive. No fractional Shares shall be issued
on account of any such adjustment or arrangement.
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP.
Nothing contained in this Agreement shall obligate the Company to employ
or have another relationship with Optionee for any period or interfere in any
way with the right of the Company to reduce Optionee's compensation or to
terminate the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING OPTIONS.
The time the Options shall be deemed granted shall be the Grant Date.
13. PRIVILEGES OF STOCK OWNERSHIP.
Optionee shall not be entitled to the privileges of stock ownership as
to any Shares not actually issued and delivered to Optionee. No Shares shall
be purchased upon the exercise of any Options unless and until, in the
opinion of the Company's counsel, any then applicable requirements of any
laws, or governmental or regulatory agencies having jurisdiction, and of any
exchanges upon which the stock of the Company may be listed shall have been
fully complied with.
14. SECURITIES LAWS COMPLIANCE.
The Company will diligently endeavor to comply with all applicable
securities laws before any stock is issued pursuant to the Options. Without
limiting the generality of the foregoing, the Company may require from the
Optionee such investment representation or such agreement, if any, as counsel
for the Company may consider necessary in order to comply with the Securities
Act of 1933 as then in effect, and may require that the Optionee agree that
any sale of the Shares will be made only in such manner as is permitted by
the Committee. The Committee may in its discretion cause the Shares
underlying the Options to be registered under the Securities Act of 1933 as
amended by filing a Form S-8 Registration Statement covering the Options and
the Shares underlying the Options. Optionee shall take any action reasonably
requested by the Company in connection with registration or qualification of
the Shares under federal or state securities laws.
15. PLAN CONTROLS.
The Options shall be subject to and governed by the provisions of the
Plan. All determinations and interpretations of the Plan made by the
Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND.
The certificates evidencing such shares shall bear the following
restrictive legend, unless and until such shares have been registered in
accordance with the Securities and Exchange Act of 1933, as amended (the
"Act"):
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR THE SECURITIES
LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY ARE
REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS OR ANY APPLICABLE
JURISDICTIONS OR UNLESS PURSUANT TO ANY EXEMPTION THEREFROM.
17. COMPLIANCE WITH APPLICABLE LAWS.
THE CORPORATION'S OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON
EXERCISE OF THE OPTIONS IS EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE
CORPORATION OF ANY REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER
ANY STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENTAL
REGULATORY BODY, OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER
REPRESENTATIONS AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED TO
EXERCISE THE OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION
FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
COMMITTEE SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH
REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND
AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION
(i) IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE
PLACED UPON THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH
ANY REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE COMMITTEE
OR A REFERENCE THERETO.
18. MISCELLANEOUS.
18.1 Further Acts. Each party agrees to perform any further acts and
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.2 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and Company's successors or assigns
and the Consultant's heirs, executors and legal representatives, provided
that this Agreement is a personal services contract and may not be assigned
by Consultant without the prior written consent of Company.
18.3 Attorneys' Fees. If any action is necessary to enforce the terms
of this Agreement, the substantially prevailing party will be entitled to
reasonable attorneys' fees, costs and expenses in addition to any other
relief to which such prevailing party may be entitled.
18.4 Governing Law; Severability. This Agreement will be governed by
and construed in accordance with the laws of the State of Nevada excluding
that body of law pertaining to conflict of laws. If any provision of this
Agreement is for any reason found to be unenforceable, the remainder of this
Agreement will continue in full force and effect.
18.5 Notices. All notices and demands between the parties hereto shall
be in writing and shall be served either by registered or certified mail, and
such notices or demands shall be deemed given and made forty-eight (48) hours
after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made,
and the issuance of the registered receipt therefor. All notices and demands
to Consultant or the Company may be given to them at the following addresses:
If to Optionee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇▇▇
If to Company: Vital Living, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
18.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
18.7 Captions. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
thereof.
18.8 Modification. Any waiver, modification or amendment of any
provision of this Agreement will be effective only if in writing and signed
by the parties hereto.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date first set forth above.
"COMPANY"
VITAL LIVING, INC.,
a Nevada corporation
By:/S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, C.E.O.
"OPTIONEE"
/S/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ M.D.
EXHIBIT A TO OPTION
1. DEFINITIONS.
CAPITALIZED TERMS NOT DEFINED IN THIS EXHIBIT A SHALL HAVE THE MEANING
SET FORTH IN THE OPTION TO WHICH THIS EXHIBIT IS ATTACHED. FOR PURPOSES OF
THIS EXHIBIT A:
(a) Effective Date. The term "Effective Date" shall mean the Grant Date of
the Option.
(b) Holder. The term "Holder" shall mean the Optionee.
(c) Registration. The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended, (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement.
(d) Registrable Securities. The term "Registrable Securities" means: (1)
any Common Stock of the Company issued or to be issued upon exercise of the
Option and (2) any shares of Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any option, right or other
security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, any shares of Common Stock
described in clause (1) of this paragraph. Notwithstanding the foregoing,
"Registrable Securities" shall exclude any Registrable Securities sold by a
person in a transaction in which rights under this Exhibit A are not assigned
in accordance with this Agreement.
(e) Registrable Securities Then Outstanding. The number of shares of
"Registrable Securities then outstanding" shall mean the number of shares of
Common Stock of the Company that are Registrable Securities and (l) are then
issued and outstanding or (2) are then issuable pursuant to an exercise of
the Option or pursuant to conversion of securities issuable pursuant to an
exercise of the Option.
(f) SEC. The term "SEC" or "Commission" means the U.S. Securities and
Exchange Commission.
2. PIGGYBACK REGISTRATIONS.
(a) The Company shall notify all Holders of Registrable Securities in
writing at least ten (10) days prior to filing any registration statement
under the Securities Act for purposes of effecting a public offering of
securities of the Company that will include shares of Common Stock that is
then held by officers, directors or 10% or more beneficial owners of the
Company's Common Stock (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company,
including registration statements relating to any employee benefit plan filed
on Form S-8, but excluding any registration statements relating to any
corporate reorganization filed on Form S-4) and will afford each such Holder
an opportunity to include in such registration statement all or any part of
the Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall within ten (10) days after receipt of
the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company,
such Holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.
(b) Underwriting. If a registration statement under which the Company gives
notice under this Section 2 is for an underwritten offering, and
notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the Company shall
include in such offering at least that number of Holder's Registrable
Securities that is equal to the product of (a) the number of Holder's
Registrable Securities with respect to which Holder has requested
registration pursuant to the notice provisions described in Section 2.1; and
(b) a fraction (i) the numerator of which is equal to the number of shares
that the underwriter(s) determine(s) it can underwrite and (ii) the
denominator of which is the number of other shares of Common Stock of the
Company requested to be included by the Company and other investors having
written registration rights agreements with the Company respecting such
shares ("Other Registrable Securities"). If Holder disapproves of the terms
of any such underwriting, Holder may elect to withdraw therefrom by written
notice to the Company and the underwriter(s), delivered at least ten (10)
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.
(c) Expenses. All expenses incurred in connection with a registration
pursuant to this Section 2 (excluding underwriters' and brokers' discounts
and commissions relating to shares sold by the Holders), including, without
limitation all federal and "blue sky" registration, filing and qualification
fees, printers' and accounting fees, and fees and disbursements of counsel
for the Company and Holder, shall be borne by the Company.
(d) No Limit on Registrations. Except as otherwise provided herein, there
shall be no limit on the number of times the Holders may request registration
of Registrable Securities under this Section 2.
3. DEMAND REGISTRATIONS.
(a) At any time after the earlier of (a) February 15, 2003, or (b) such time
as the Company's Common Stock is traded on the NASDAQ, AMEX, NYSE or like
stock exchange with quantitative and qualitative listing requirements, the
Holder may request that the Company register any Registrable Securities. The
Holder shall be entitled to one (1) such demand registration per twelve (12)
month period (i.e. all registrations must be at least 12 months plus one day
apart). The Optionee shall have the right to demand that the Company satisfy
its obligations pursuant to this Section 3 by use of the SEC's Form S-8, or
any successor form thereto, subject to applicable law, or such other SEC
registration statement form as Holder may choose to request, including Form S-
3 or any successor form thereto, or if Form S-3 is not available, Form S-1 or
Form S-2, or any successor form thereto. Holder shall notify the Company in
writing that it intends to offer or cause to be offered for public sale all
or any portion of the Registrable Shares, and within ten (10) days of the
receipt after such notice.
(b) Upon written request of Holder the Company will use its best efforts to
cause all or any part of the Registrable Securities that may be requested by
Holder to be registered under the Securities Act as expeditiously as
possible.
(c) If Holder intends to distribute the Registrable Securities covered by
its request by means of an underwriting, it shall so advise the Company as
part of its request.
(d) Notwithstanding the foregoing, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 3: (i) if the Company shall furnish to Holder a certificate signed
by the President of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration statement to be
effected at such time, and that it is essential to the Company to defer the
filing, in which event the Company shall have the right to defer the filing
of the 3 registration statement for a period of not more than 120 days after
receipt of the request of the Holder under this Section 3; provided, however
that the Company shall not utilize this right more than once in any 12 month
period; or (ii) during the period starting with the date 60 days prior to the
Company's good faith estimate of filing of, and ending on a date 180 days
after the effective date of, a registration statement filed under the
Securities Act (other than a registration relating solely to the sale of
securities to participants in a Company stock plan).
4. OBLIGATIONS OF THE COMPANY. WHENEVER REQUIRED TO EFFECT THE REGISTRATION
OF ANY REGISTRABLE SECURITIES UNDER THIS AGREEMENT THE COMPANY SHALL, AS
EXPEDITIOUSLY AS POSSIBLE:
(a) Registration Statement. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective, provided,
however, that the Company shall not be required to keep any such registration
statement effective for more than one (1) year.
(b) Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
(c) Prospectuses. Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Blue Sky. Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) Underwriting. In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement in usual and
customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notification. Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
Opinion and Comfort Letter. Furnish, at the request of any Holder
requesting registration of Registrable Securities, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities, and (ii) a "comfort" letter dated as of such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities. If such securities are
not being sold through underwriters, then the Company shall furnish, at the
request and at the sole expense of any Holder requesting registration of
Registrable Securities, on the date that the registration statement with
respect to such securities becomes effective, an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to effect the Registration of their Registrable
Securities that the selling Holder shall furnish to the Company such
information regarding himself, the Registrable Securities held by him, and
the intended method of disposition of such securities as shall be required to
timely effect the Registration of their Registrable Securities.
6. INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Section 2:
(a) By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors
of each Holder, any underwriter (as determined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended, (the "1934 Act"), against any losses, claims, damages, or
Liabilities (joint or several) to which they may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto;
(ii) 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, or
(iii) any violation or alleged violation by the Company of the Securities
Act, the 1934 Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any federal
or state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 6.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by such Holder, partner, officer, director, underwriter or controlling person
of such Holder.
(b) By Selling Holders. To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or
any person who controls such Holder within the meaning of the Securities Act
or the 1934 Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling
person, underwriter or other such Holder, partner or director, officer or
controlling person of such other Holder may become subject under the
Securities Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only
to the extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, partner,
officer, director or controlling person of such other Holder in connection
with investigating or defending any such loss, claim, damage, liability or
action: provided, however, that the indemnity agreement contained in this
Section shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld; and
provided, further, that the total amounts payable in indemnity by a Holder
under this Section 6.2 in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential conflict of interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of liability to the indemnified
party under this Section 6 to the extent the indemnifying party is prejudiced
as a result thereof, but the omission so to deliver written notice to the
indemnified party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 6.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that,
insofar as they relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was timely furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
(e) Contribution. In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i)
any Holder exercising rights under this Agreement, or any controlling person
of any such Holder, makes a claim for indemnification pursuant to this
Section 6 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this Section 6
provides for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such selling Holder or any
such controlling person in circumstances for which indemnification is
provided under this Section 6; then, and in each such case, the Company and
such Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price of its
Registrable Securities offered by and sold under the registration statement
bears to the public offering price of all securities offered by and sold
under such registration statement, and the Company and other selling Holders
are responsible for the remaining portion; provided, however, that, in any
such case: (A) no such Holder will be required to contribute any amount in
excess of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
(f) Survival. The obligations of the Company and Holders under this
Section 6 shall survive until the fifth anniversary of the completion of any
offering of Registrable Securities in a registration statement, regardless of
the expiration of any statutes of limitation or extensions of such statutes.
7. TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have no
obligations pursuant to Section 2 with respect to any Registrable Securities
proposed to be sold by a Holder in a registration pursuant to Section 2 more
than five (5) years after the date of this Agreement.
8. Covenant. The Company hereby covenants to the Holder that at all times
subsequent to the date of the Warrant, it shall file in a timely manner
consistent with the requirements of the Securities Exchange Act of 1934, as
amended (the "34 Act") all reports and other materials required to be filed
pursuant to the 34 Act.