EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of July 31, 2003 (the
"Effective Date"), is entered into by and among GPX Acquisition, LLC, a Texas
limited liability company ("GAI"), The Entity, Inc., a Colorado corporation and
the parent corporation of GAI ("Holdings"), Xxxxx X. Xxxx, the majority
shareholder of Holdings ("Holdings Shareholder"), GPX Partners, L.L.C., a Texas
limited liability company (the "Company"), and all of the members of the
Company, which members are listed on the signature page hereto under the heading
"Members" (each, a "Member", and collectively, the "Members").
RECITALS
WHEREAS, the board of directors of Holdings and the managers of GAI and
the Company have adopted this Agreement and Plan of Merger, providing for the
merger of GAI with and into the Company (the "Merger") under the Texas Limited
Liability Company Act (the "TLLCA") in accordance with the provisions of this
Agreement and have recommended the Merger to their respective shareholders and
members for approval;
WHEREAS, the parties intend for the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the Code (as defined
below).
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement but not otherwise defined shall
have the meanings ascribed thereto in Exhibit A attached hereto.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, GAI will be merged with and into the Company
in accordance with this Agreement, and the separate existence of GAI shall
cease, and the Company shall continue as the surviving entity. The Company as it
exists from and after the Effective Time, is sometimes referred to hereinafter
as the "Surviving Company."
2.2 Effect of the Merger. Upon the effectiveness of the Merger,
the Surviving Company shall possess all the rights, privileges, immunities and
franchises, as well of a public as of a private nature, and be subject to all
the restrictions, disabilities and duties, of each of the Constituent Companies;
and all property, real, personal and mixed, and all debts due to any of the
Constituent Companies on whatever account, including subscriptions to shares,
and all other things in action and all and every other interest, of or belonging
to each of the Constituent Companies, shall be vested in the Surviving Company
without further act or deed and without any transfer or assignment having
occurred; and all property, rights, privileges, immunities and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Company as they were of the Constituent Companies, and the title
to any real estate vested by deed or otherwise in either of the Constituent
Companies shall not revert or be in any way impaired by reason of the Merger;
but all
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rights of creditors and all liens upon any property of either of the Constituent
Companies shall be preserved unimpaired, and all debts, liabilities and duties
of the Constituent Companies shall thenceforth attach to the Surviving Company,
and may be enforced against it to the same extent as if said debts, liabilities
and duties had been incurred or contracted by it; and all other effects of the
Merger specified in the TLLCA shall result therefrom.
2.3 Consummation of the Merger. As soon as practicable after the
satisfaction or waiver of the conditions to this Agreement, the parties hereto
will cause the Merger to be consummated by filing with the appropriate agency of
the State of Texas properly executed Articles of Merger, substantially in the
form attached as Exhibit B, incorporating, to the extent required by the laws of
the State of Texas, this Agreement.
2.4 Articles of Organization; Managers and Officers. The Articles
of Organization of the Surviving Company from and after the Effective Time shall
be the Articles of Organization of the Company until thereafter amended in
accordance with the provisions therein and as provided by the TLLCA. The
managers of the Surviving Company shall be: Xxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxx
Xxxx, until their successors are duly elected and qualified, and the officers of
the Surviving Company shall be the officers of the Company holding such
positions immediately prior to the Effective Time until their respective
successors are duly appointed and qualified.
2.5 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, GAI or any holder
of any interest as a member of the Company or GAI:
(a) All Membership Interests shall automatically be
converted into the right to receive a proportionate share of an aggregate of
1,465,200 shares of duly authorized, validly issued, fully paid and
non-assessable shares of Holdings Common Stock, without interest (the "Merger
Price"), which proportionate share is set forth in Exhibit C attached hereto.
(b) The outstanding Membership Interests shall be
converted into one hundred percent (100%) of the issued and outstanding
membership interests of the Surviving Company.
2.6 Merger Payment Procedure. As soon as practicable after the
Effective Time, the Surviving Company will distribute to holders of record of
the Membership Interests so converted, a certificate representing the
proportionate share of Holdings Common Stock due as a result of the Merger, as
provided in Exhibit C. In no event shall any holder of Membership Interest be
entitled to receive interest on account of any shares of Holdings Common Stock
due as a result of the Merger.
2.7 Closing of the Company Books. At the Effective Time, the books
of the Company shall be closed and no transfer of shares of Membership Interests
shall thereafter be made.
2.8 Reorganization under Section 368(a) of the Code. The parties
intend that the Merger will qualify as a tax-free reorganization under Section
368(a) of the Code and this Agreement are to be interpreted to that effect. Each
party agrees to render to the other parties reasonable assistance to preserve
that tax treatment, however, no representation is made by any party hereto as to
whether the transactions contemplated hereby will so qualify.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
MEMBERS
The Company and the Members represent and warrant to GAI, Holdings and
the Holdings Shareholder that the statements contained in this Article III are
true and correct as of the date hereof and will be true and correct as of the
Closing Date as if made on such date, except as set forth in the Schedules
delivered by the Company to Holdings concurrently herewith and which are
attached hereto. Notwithstanding any provision in this Agreement to the
contrary, any representation or warranty made by a Member is made only with
respect to the Company and himself or herself and not with respect any other
Member.
3.1 Organization. The Company is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Texas. The Company (a) is qualified or licensed in all jurisdictions where such
qualification or license is required to own and operate its properties and
conduct its business in the manner and at the places presently conducted; (b)
holds all franchises, grants, licenses, certificates, permits, consents and
orders, all of which are valid and in full force and effect, from all applicable
United States and foreign regulatory authorities necessary to own and operate
its properties and to conduct its business in the manner and at the places
presently conducted; and (c) has full power and authority (corporate and other)
to own, lease and operate its respective properties and assets and to carry on
its business as presently conducted and as proposed to be conducted, except, in
each case, where the failure to be so qualified or licensed or to hold such
franchises, grants, licenses, certificates, permits, consents and orders or to
have such power and authority would not, when taken together with all other such
failures, reasonably be expected to have a Material Adverse Effect with respect
to the Company, as the case may be. The Company does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
3.2 Capital Structure.
(a) As of the Effective Date, the Membership Interests of
the Company are as set forth in Exhibit C. There are no bonds, debentures, notes
or other indebtedness having voting rights (or convertible or exchangeable into
securities having such rights) ("Company Voting Debt") of the Company issued and
outstanding. There are no existing (i) options, warrants, calls, preemptive
rights, subscriptions or other rights, convertible or exchangeable securities,
agreements, arrangements or commitments of any character, relating to the issued
or unissued equity or membership interests of the Company, obligating the
Company to issue, transfer or sell or cause to be issued, transferred or sold
any equity or membership interest or Company Voting Debt of, or other equity or
membership interest in, the Company, as the case may be, (ii) securities
convertible into or exchangeable for such equity or membership interests, or
(iii) obligations of the Company to grant, extend or enter into any such option,
warrant, call, preemptive right, subscription or other right, convertible
security, agreement, arrangement or commitment.
(b) There are no voting trusts, proxies or other
agreements or understandings to which the Company is a party with respect to the
voting of the equity interest of the Company. Except as necessary to consummate
the transactions contemplated herein, the Company is not a party
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to any agreement or obligation, contingent or otherwise, to redeem, repurchase
or otherwise acquire or retire any equity or membership interests of the
Company, whether as a result of the transactions contemplated by this Agreement
or otherwise.
(c) The Company has not (i) made or agreed to make any
split of its equity or dividend, or issued or permitted to be issued any equity
interests, or securities exercisable for or convertible into equity, of the
Company, (ii), repurchased, redeemed or otherwise acquired any equity of the
Company, or (iii) declared, set aside, made or paid any dividends or other
distributions on the outstanding equity of the Company.
3.3 Authorization and Validity. The Company and each of the
Members have the appropriate power and authority and legal right to execute and
deliver this Agreement and to perform their respective obligations hereunder.
The execution and delivery by the Company and each of the Members of this
Agreement and the performance of their respective obligations hereunder have
been duly authorized by proper corporate or other proceedings, and this
Agreement constitutes the legal, valid and binding obligation of the Company and
each of the Members enforceable against each in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
3.4 No Conflict; Consent. Neither the execution and delivery by
the Company and the Members of this Agreement, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate (a) any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Company or any of the Members, or (b) the
Company's articles of organization or regulations or similar documents, or (c)
the provisions of any indenture, instrument or agreement to which the Company is
a party or is subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in, or require, the creation
or imposition of any Lien in, of or on the Property of the Company pursuant to
the terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by the Company or the Members is required to be obtained
by the Company or the Members in connection with the execution and delivery of
this Agreement, or the legality, validity, binding effect or enforceability of
any of this Agreement. No consent, approval or authorization of, or notice to,
any other person or entity, including, without limitation, parties to loans,
contracts, leases or other agreements, is required in connection with the
execution, delivery and performance of this Agreement by the Company or any
Member or the consummation by it or them of the transactions contemplated
hereby.
3.5 Company Financial Information
(a) The Company has delivered to Holdings the following
financial statements of the Company: (i) unaudited balance sheet of the Company
as of December 31, 2002 and the related statements of operations, members'
equity and cash flows for the year ended December 31, 2002 and (ii) unaudited
balance sheets of the Company as of March 31, 2003 (the "Company's Latest
Balance Sheet") and the related statements of operations, members' equity and
cash flows for the three months then ended.
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(b) Each of the unaudited financial statements of the
Company have been prepared in accordance with GAAP, applied on a consistent
basis during the relevant periods (except as may be disclosed in the notes
thereto), and present fairly the consolidated financial position and
consolidated results of operations and changes in cash flows of the Company as
of the respective dates or for the respective periods reflected therein, except,
in the case of the unaudited interim financial statements, for normal and
recurring year-end adjustments that are not material.
(c) Except as set forth in Schedule 3.5(c) and on the
Company's Latest Balance Sheet, or in the notes thereto, the Company does not
have any liabilities, debts, claims or obligations of any nature (whether
accrued, absolute, direct or indirect, contingent or otherwise, whether due or
to become due), and there is no existing condition or set of circumstances which
would reasonably be expected, individually or in the aggregate, to result in
such a liability.
3.6 Taxes. The Company has filed all United States federal tax
returns and all other tax returns which are required to be filed and have paid
all taxes due pursuant to said returns or pursuant to any assessment received by
the Company, except such taxes, if any, as are being contested in good faith and
as to which adequate reserves have been provided on the Company's Latest Balance
Sheet and as to which no Lien exists. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Company in respect of any taxes or other
governmental charges are adequate.
3.7 Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
best knowledge of any of its officers or managers, threatened against or
affecting the Company which could reasonably be expected to have a Material
Adverse Effect with respect to the Company. The Company has no contingent
obligations not provided for or disclosed in the Company's Latest Balance Sheet.
3.8 Material Agreements. Schedule 3.8 lists all agreements,
contracts, leases, licenses and other instruments to which the Company is a
party; it being acknowledged and agreed that between the date hereof and the
Closing Date, the Company may enter into letters of intent and/or purchase
agreements with respect to various racing facilities and related entities and
services.
3.9 Compliance With Laws. The Company has complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect with respect to the Company.
3.10 Information Furnished to the Company and Members. The Company
and each of the Members have been provided with, and is familiar with, the
financial and other information regarding the business and operations of
Holdings, including, but not limited to, the Holdings SEC Documents that the
Company and the Members deem necessary for evaluating the merits and risks of
the transactions contemplated by this Agreement. Each of the Members are
knowledgeable and experienced in financial and business matters and is capable
of evaluating the merits and risks of the transactions contemplated by this
Agreement.
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3.11 Investment Purposes. The Members are acquiring the Holdings
Common Stock for investment purposes and not with a view toward resale or
distribution thereof, and has no present intention of selling, granting any
participation in, or otherwise distributing the Holdings Common Stock.
3.12 Restricted Securities. The Members understand that the shares
of Holdings Common Stock will be issued by Holdings pursuant to an exemption
from the registration requirements of the Securities Act, and are characterized
as "restricted securities" under the Securities Act and may be resold without
registration under the Securities Act only in limited circumstances. In
connection with the foregoing, each of the Members is familiar with Rule 144 and
understand the resale limitations imposed thereby on the Holdings Common Stock.
3.13 Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
the Company or any of its officers, directors or agents or the Members with
respect to the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES HOLDINGS AND
THE HOLDINGS SHAREHOLDER
Holdings and the Holdings Shareholder represent and warrant to the
Company and the Members that the statements contained in the Article IV are true
and correct as of the date hereof and will be true and correct as of the Closing
Date as if made on such date, except as set forth in the Schedules delivered by
Holdings to the Company concurrently herewith.
4.1 Organization. Holdings is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Colorado.
GAI is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Texas. Each of GAI and Holdings (a) is
qualified or licensed in all jurisdictions where such qualification or license
is required to own and operate its properties and conduct its business in the
manner and at the places presently conducted; (b) holds all franchises, grants,
licenses, certificates, permits, consents and orders, all of which are valid and
in full force and effect, from all applicable United States and foreign
regulatory authorities necessary to own and operate its properties and to
conduct its business in the manner and at the places presently conducted; and
(b) has full power and authority (corporate and other) to own, lease and operate
its respective properties and assets and to carry on its business as presently
conducted and as proposed to be conducted, except, in each case, where the
failure to be so qualified or licensed or to hold such franchises, grants,
licenses, certificates, permits, consents and orders or to have such power and
authority would not, when taken together with all other such failures,
reasonably be expected to have a Material Adverse Effect with respect to GAI or
Holdings, as the case may be. Except for Holdings' ownership of the equity
interest in GAI or as otherwise as contemplated herein, neither GAI nor Holdings
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
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4.2 Capital Structure.
(a) As of the Effective Date, the authorized capital
stock of Holdings consists of 100,000,000 shares of Holdings Common Stock, and
10,000,000 shares of preferred stock, par value $0.01 per share. As of the
Effective Date, (i) 814,000 shares of Holdings Common Stock and no shares of
preferred stock were issued and outstanding, (ii) no options or warrants for
shares of Holdings Common Stock were issued and outstanding; and (iii) no shares
of Holdings Common Stock were held in the treasury of the Company. All the
outstanding shares of Holdings Common Stock are duly authorized, validly issued,
fully paid and non-assessable. As of the Effective Date, Holdings is the sole
member of GAI. There are no bonds, debentures, notes or other indebtedness
having voting rights (or convertible or exchangeable into securities having such
rights) ("Voting Debt") of Holdings or GAI issued and outstanding. Except as set
forth above, there are no equity interests of Holdings or GAI authorized, issued
or outstanding and there are no existing (i) options, warrants, calls,
preemptive rights, subscriptions or other rights, convertible or exchangeable
securities, agreements, arrangements or commitments of any character, relating
to the issued or unissued equity interests of Holdings or GAI, obligating
Holdings or GAI to issue, transfer or sell or cause to be issued, transferred or
sold any equity interest or Voting Debt of, or other equity interest in,
Holdings or GAI, (ii) securities convertible into or exchangeable for such
equity interests or (iii) obligations of Holdings or GAI to grant, extend or
enter into any such option, warrant, call, preemptive right, subscription or
other right, convertible security, agreement, arrangement or commitment.
Holdings has not granted to any Person any rights to have any securities
registered under the Securities Act.
(b) There are no voting trusts, proxies, shareholders
agreements or other agreements or understandings to which Holdings is a party
with respect to the voting or transfer of the equity interests or capital stock
of Holdings. Holdings is not a party to any agreement or obligation, contingent
or otherwise, to redeem, repurchase or otherwise acquire or retire any equity
interests of Holdings, whether as a result of the transactions contemplated by
this Agreement or otherwise.
(c) Holdings has not (i) made or agreed to make any split
of its equity interests or dividend, or issued or permitted to be issued any
equity interests, or securities exercisable for or convertible into equity
interests, of Holdings, (ii), repurchased, redeemed or otherwise acquired any
equity or membership interests of Holdings, or (iii) declared, set aside, made
or paid any dividends or other distributions on the outstanding equity interests
of Holdings.
4.3 Authorization and Validity. GAI, Holdings and the Holdings
Shareholder has the appropriate power and authority and legal right to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery by GAI, Holdings and the Holdings Shareholder of this
Agreement and the performance of their respective obligations hereunder have
been duly authorized by proper corporate and other proceedings, and this
Agreement constitutes the legal, valid and binding obligation of GAI, Holdings
and the Holdings Shareholder enforceable against it and them in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally.
4.4 No Conflict; Government Consent. Neither the execution and
delivery by GAI, Holdings and the Holdings Shareholder of this Agreement, nor
the consummation of the transactions
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therein contemplated, nor compliance with the provisions thereof will violate
(a) any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on GAI, Holdings or the Holdings Shareholder, or (b) Holdings'
articles of incorporation or bylaws, (c) GAI's articles of organization or
regulations, or (d) the provisions of any indenture, instrument or agreement to
which either GAI or Holdings is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of GAI or Holdings pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by GAI,
Holdings or the Holdings Shareholder is required to be obtained by GAI, Holdings
or the Holdings Shareholder in connection with the execution and delivery of
this Agreement, or the legality, validity, binding effect or enforceability of
any of this Agreement. Except as set forth in Schedule 4.4, no consent, approval
or authorization of, or notice to, any other person or entity, including,
without limitation, parties to loans, contracts, leases or other agreements, is
required in connection with the execution, delivery and performance of this
Agreement by GAI, Holdings or the Holdings Shareholder or the consummation by it
of the transactions contemplated hereby.
4.5 Holdings Financial Statements.
(a) Holdings has filed all forms, reports, statements,
schedules, registration statements and other documents required to be filed with
the SEC since January 1, 2000 (the "Holdings SEC Documents"), each of which
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. No Subsidiary of Holdings is required to file any
form, report, statement, schedule, registration statement or other document with
the SEC. No Holdings SEC Document, when filed (or, if amended or superseded by a
filing prior to the Closing Date, on the date of such filing) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated
financial statements of Holdings (including any related notes thereto) included
in the Holdings SEC Documents have been prepared in accordance with GAAP,
applied on a consistent basis during the relevant periods (except as may be
disclosed in the notes thereto), and present fairly the consolidated financial
position and consolidated results of operations and changes in cash flows of
Holdings and its Subsidiaries as of the respective dates or for the respective
periods reflected therein, except, in the case of the unaudited interim
financial statements, for normal and recurring year-end adjustments that are not
material.
(c) Except as set forth in Schedule 4.5(c) and on the
balance sheet of Holdings as of March 31, 2003 included in the Holdings SEC
Documents (the "Holdings Latest Balance Sheet"), or in the notes thereto,
Holdings does not have any liabilities, debts, claims or obligations of any
nature (whether accrued, absolute, direct or indirect, contingent or otherwise,
whether due or to become due), and there is no existing condition or set of
circumstances which would reasonably be expected, individually or in the
aggregate, to result in such a liability.
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(d) GAI is a newly formed entity, formed for the purpose
of the Merger, and has no assets or liabilities of any kind whatsoever.
4.6 Material Adverse Change. Since March 31, 2003, there has been
no change in the business, property, condition (financial or otherwise) or
results of operations of Holdings which could reasonably be expected to have a
Material Adverse Effect with respect to Holdings.
4.7 Taxes. Holdings has filed all United States federal tax
returns and all other tax returns which are required to be filed and have paid
all taxes due pursuant to said returns or pursuant to any assessment received by
Holdings, except such taxes, if any, as are being contested in good faith and as
to which adequate reserves have been provided on the Holdings Latest Balance
Sheet and as to which no Lien exists. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Holdings in respect of any taxes or other governmental
charges are adequate. Holdings is taxable as a "C" corporation for federal
income tax purposes.
4.8 Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
best knowledge of any of its officers, threatened against or affecting Holdings.
Holdings has no contingent obligations not provided for or disclosed in the
Holdings Latest Balance Sheet.
4.9 Material Agreements. Schedule 4.9 lists all agreements,
contracts, leases, licenses and other instruments to which Holdings is a party.
4.10 Compliance With Laws. Holdings has complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect with respect to Holdings.
4.11 Operations. Neither Holdings nor GAI has ever had any
operations.
4.12 Issuance of Holdings Common Stock. The shares of Holdings
Common Stock to be delivered to the Members hereunder have been duly and validly
authorized and when issued in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable and will not have been issued in
violation of any statutory preemptive rights, or any other preemptive right,
co-sale right, right of first refusal or other similar right.
4.13 Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
GAI, Holdings or any of its officers, directors or agents or the Holdings
Shareholder with respect to the transactions contemplated by this Agreement.
ARTICLE V
CLOSING
5.1 Closing. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxx
L.L.P., 0000 X. Xxxxxxx Xxxxxxxxxx,
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Xxxxx 000, Xxxxxxxxxx, Xxxxx, 00000 on or before October 1, 2003, or such other
date as mutually agreed to by the parties (the "Closing Date")
5.2 GAI, Holdings and the Holdings Shareholder Conditions. The
obligation of GAI, Holdings and the Holdings Shareholder to consummate the
transactions contemplated under this Agreement is subject to the satisfaction,
prior to or at the Closing, of the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company and the Members contained in Article III shall be
true and correct in all material respects and the covenants and agreements of
such parties set forth in Article VI shall have been complied with at and as of
the Closing Date as though then made, except to the extent of changes caused by
the transactions expressly contemplated herein.
(b) Consents. EGAI, Holdings and the Holdings Shareholder
shall have received all approvals and consents required under its loan
agreements, leases, and indentures, shareholders agreements or other debt
documents or contracts necessary to consummate the transactions contemplated
herein, including without limitation, those set forth on Schedule 4.4.
(c) No Injunctions. There shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction prohibiting or imposing any
condition on the consummation of any of the transactions contemplated hereby.
5.3 The Company and the Members Conditions. The obligation of the
Company and the Members to consummate the transactions contemplated under this
Agreement is subject to the satisfaction, prior to or at the Closing, of the
following conditions:
(a) Representations and Warranties. The representations
and warranties of Holdings and the Holdings Shareholders contained in Article IV
hereof shall be true and correct in all material respects and the covenants and
agreements of such parties set forth in Article VI shall have been complied with
at and as of the Closing Date as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
(b) Consents. The Company and the Members shall have
received all approvals and consents required under their respective loan
agreements, leases, and indentures, shareholders agreements or other debt
documents or contracts necessary to consummate the transactions contemplated
herein.
(c) No Injunctions. There shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction prohibiting or imposing any
condition on the consummation of any of the transactions contemplated hereby.
(d) Reverse Stock Split. Holdings shall have completed a
one for 100 reverse split of the Holdings Common Stock.
5.4 Closing Deliverables.
(a) At the Closing, the Company will have delivered or
caused to be delivered to Holdings all of the following in form and substance
satisfactory to Holdings:
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(i) copies of the resolutions unanimously and
duly adopted by the Company's managers,
authorizing the execution, delivery and
performance by the Company of this
Agreement, and the consummation of all of
the other transactions hereunder and
thereunder, certified as of the Closing Date
by the secretary of the Company;
(ii) a certificate dated as of the Closing Date
from an officer or manager of the Company
and from each of the Members stating that
the conditions specified in Section 5.3 have
been fully satisfied or waived by the
Company and the Members, as applicable; and
(iii) a certificate of good standing and existence
form the Secretary of State of the State of
Texas, of a recent date, with respect to the
Company.
(b) At the Closing, Holdings will have delivered or
caused to be delivered to the Company and the Members each of the following in
form and substance satisfactory to the Company and the Members:
(i) a certificate of the secretary of Holdings
and GAI, certifying (A) that a true, correct
and complete copy of the articles of
incorporation of Holdings and articles of
organization of GAI, respectively, is
attached, and (B) that a true, correct and
complete copy of the bylaws of Holdings and
the regulations of GAI, respectively, is
attached;
(ii) copies of the resolutions unanimously and
duly adopted by the board of directors of
Holdings and the managers of GAI,
respectively, authorizing the execution,
delivery and performance by Holdings and GAI
of this Agreement, and the consummation of
all of the other transactions hereunder and
thereunder, certified as of the Closing Date
by the secretary of Holdings and GAI, as
applicable;
(iii) a certificate dated as of the Closing Date
from an officer of each of GAI and Holdings
and the Holdings Shareholder stating that
the conditions specified in section 5.2 have
been fully satisfied or waived by GAI,
Holdings and the Holdings Shareholders, as
applicable;
(iv) certificates representing an aggregate of
1,465,200 shares of Holdings Common Stock,
issued to the Members in accordance with
Section 2.5(b) above; and
(v) a certificate of existence and good standing
from the Secretaries of State of the States
of Colorado and Texas, each of a recent
date, with respect to Holdings and GAI, as
applicable.
11
ARTICLE VI
PRE-CLOSING COVENANTS
6.1 Covenants of the Company. After the Effective Date and until
the earlier of (a) the Closing Date or (b) the expiration or termination of this
Agreement, unless Holdings shall otherwise consent in writing:
(a) Conduct of Business. The Company will carry on and
conduct its businesses in substantially the same manner as it is presently
conducted and do all things necessary to remain duly organized, validly existing
and in good standing in its jurisdiction of organization and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted.
(b) Compliance with Laws. The Company will comply with
all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
6.2 Covenants of GAI and Holdings. After the Effective Date and
until the earlier of (a) the Closing Date, or (b) the expiration or termination
of this Agreement, unless the Company shall otherwise consent in writing;
(a) Conduct of Business. Holdings will carry on and
conduct its business in substantially the same manner as it is presently
conducted and do all things necessary to remain duly incorporated or organized,
validly existing and in good standing in its jurisdiction of incorporation or
organization and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted. Without limiting the
generality of the foregoing, the Holdings will not: (i) declare, pay or set
aside for payment any dividend or other distribution payable in cash, stock,
property or otherwise in respect of its equity ownership; or directly or
indirectly redeem, purchase, repurchase (except as required to consummate the
transactions contemplated herein) or otherwise acquire any Holdings Common Stock
or any securities or obligations convertible into or exchangeable for any of its
Holdings Common Stock, as the case may be; (ii)(A) incur or assume any debt or
issue any debt securities, except under its existing lines of credit, but not
exceeding the current credit limit under such lines of credit, (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, (C) make any
loans or advances to any person, other than with respect to extensions of credit
to their respective customers in the ordinary course of business consistent with
past practice, or (D) mortgage or pledge any of its assets, tangible or
intangible, or create any material Lien thereupon; (iii) enter into any lines of
business or otherwise commence operation of any business; or (iv) take any
action or agree, in writing or otherwise, to take any of the foregoing actions
or any action which would make any representation or warranty in Article IV
hereof materially untrue or incorrect. GAI will not conduct any business of any
kind whatsoever.
(b) Compliance with Laws. GAI and Holdings will comply
with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject.
(c) Merger. Except as contemplated by this Agreement,
neither GAI nor Holdings will merge or consolidate with or into any other
Person.
(d) Dilution of Ownership. Holdings will not consent to
or approve of the issuance of (i) any additional stock, securities or other
equity securities or interests, (ii) any
12
instrument convertible voluntarily by Holdings or automatically upon the
occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such stock, securities or interests, or (iii) any warrants, options,
contracts or other commitments entitling any third party to purchase or
otherwise acquire any such stock, securities or interests.
6.3 Access. From the Effective Date until the Closing Date (or the
termination of this Agreement), each party shall afford to the other party and
such other party's representatives reasonable access, upon reasonable notice
during normal business hours, to all its properties, books, contracts,
commitments, personnel and records and shall furnish promptly to such other
party all information concerning its business, properties and personnel as may
reasonably be requested. All such information as may be furnished by or on
behalf of a party to another party or such other party's representatives
pursuant to this Section 6.3 shall be and remain confidential. No investigation
pursuant to this Section 6.3 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto.
6.4 Notification of Certain Matters. Each of the Company, GAI,
Holdings, the Members and the Holdings Shareholder shall promptly advise the
other parties orally and in writing of (a) any representation or warranty made
by it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or (b)
the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement or (c) any event or change or impending occurrence of any event
or change of which it has knowledge and which has resulted, or which, insofar as
can reasonably be foreseen, is likely to result, in any of the conditions to the
transactions contemplated hereby set forth in Article V not being satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
6.5 Simultaneous Closing. Notwithstanding anything herein to the
contrary, the parties hereto acknowledge and agree that Holdings is negotiating
and/or executed an agreement and plan of merger with an affiliate of the
Company, Boundless Motor Sports Racing, Inc. ("Boundless"), and its
shareholders, and any and all representations, warranties, covenants and
agreements contained herein are deemed not to include such transaction and/or
the operations of Boundless.
ARTICLE VII
POST CLOSING COVENANTS
7.1 Registration Rights. Holdings hereby grants to the Members,
with respect to the shares of Holdings Common Stock to be received by the
Members in the Merger, the registration rights set forth in Exhibit D.
ARTICLE VIII
LIMITATION ON TRANSFER OF HOLDINGS COMMON STOCK
8.1 Restriction on Transfer. The shares of Holdings Common Stock
to be issued to the Members in the Merger will not be registered under the
Securities Act on the Closing Date and may not be transferred, sold or otherwise
disposed of by any Member, except pursuant to an effective
13
registration statement under the Securities Act or in accordance with an
exemption from the registration requirements of the Securities Act.
8.2 Restrictive Legend. Each certificate representing shares of
Holdings Common Stock issued by Holdings to the Members in accordance with
Section 2.5 shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 UNDER THE ACT, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF
ANY STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
BY THE HOLDER WITHOUT COMPLIANCE WITH THE APPLICABLE
SECURITIES AND EXCHANGE COMMISSION RULES AND REGULATIONS.
8.3 Removal of Restrictive Legend. Holdings agrees to remove such
legend (or any relevant portion thereof), by prompt delivery of substitute
certificates upon the request of the holder if at such time such legend (or
portion thereof) is no longer required for purposes of, or applicable pursuant
to, the prior provisions of this Article VIII.
ARTICLE IX
INDEMNIFICATION; TERMINATION
9.1 Indemnification by the Members. Each of the Members hereby
agrees to defend, indemnify and hold Holdings and the Holdings Shareholder, and
their respective officers, directors, shareholders, employees, successors,
heirs, assigns, attorneys and representatives harmless against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor whether
or not Holdings or the Holdings Shareholder is a party thereto) which Holdings
or the Holdings Shareholder may pay or incur arising out of or relating to a
breach of any representation, warranty or covenant of the Company or the Members
under this Agreement. Notwithstanding the foregoing, a Member's obligation to
indemnify Holdings and the Holdings Shareholders shall only apply to the extent
that the Company or such Member breached his representations, warranties or
covenants (and not those of any other Member).
9.2 Indemnification by the Holdings Shareholder. The Holdings
Shareholder agrees to defend, indemnify and hold the Company and the Members,
and their respective officers, directors, shareholders, members, employees,
successors, assigns, attorneys and representatives harmless against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor whether
or not the Company or the
14
Member is a party thereto) which the Company or the Members may pay or incur
arising out of or relating to a breach of any representation, warranty or
covenant of Holdings or the Holdings Shareholders under this Agreement.
9.3 Survival of Representations and Warranties. The
representations and warranties made by parties in this Agreement and in any
certificate or schedule furnished hereunder shall survive the Effective Time for
a period of one (1) year thereafter. None of the covenants or agreements in this
Agreement shall survive the Effective Time, except for those covenants and
agreements contained herein or therein that by their terms apply or are to be
performed in whole or in part after the Effective Time, including without
limitation, the covenants and agreements contained in Section 9.1 and 9.2 above.
9.4 Termination. This Agreement may be terminated, and the
transactions contemplated hereby abandoned, prior to the Closing as follows:
(a) by mutual written consent of all the parties;
(b) by Holdings or the Holdings Shareholder in the event
any of the conditions in Section 5.2 have not been satisfied on or before
October 1, 2003 through no fault of GAI, Holdings or the Holdings Shareholder;
or
(c) by the Company in the event any of the conditions in
Section 5.3 have not been satisfied on or before October 1, 2003, through no
fault of the Company or any of the Members;
9.5 Effect of Termination. If this Agreement is terminated
pursuant to Sections 9.4 all rights and obligations of the parties hereunder
shall terminate without liability of any party to any other party.
ARTICLE X
GENERAL PROVISIONS
10.1 Headings. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
10.2 Expenses. Each of the parties shall bear their own expenses
(including reasonable attorneys' fees and time charges of attorneys) paid or
incurred by such party in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification, and administration of this
Agreement and the Merger.
10.3 Entire Agreement; Assignment. This Agreement and the attached
Exhibits and Schedules embodies the entire agreement and understanding among
GAI, Holdings, the Holdings Shareholder, the Company and the Members and
supersede all prior agreements and understandings among such parties relating to
the subject matter thereof. This Agreement may not be assigned without the prior
written consent of the other parties.
15
10.4 Benefits of this Agreement. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
10.5 Amendment. No amendment or modification to this Agreement
shall be effective, unless in writing and signed by all the parties.
10.6 Severability. Any provision in this Agreement that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.
10.7 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party at
(a) its address or facsimile number set forth on the signature pages hereof or
(b) such other address or facsimile number as such party may hereafter specify.
Each such notice, request or other communication shall be effective (i) if given
by facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mail, certified or registered
with first class postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered (or, in the case of electronic transmission,
received) at the address specified in this Section.
10.8 Choice Of Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF
LAWS PROVISIONS.
10.9 Venue. THE EXCLUSIVE JURISDICTION FOR ANY CLAIM OR CONTROVERSY
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL
COURTS LOCATED IN DALLAS COUNTY, TEXAS AND EACH PARTY HERETO IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
10.10 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement may be executed and delivered by facsimile
copy.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GPX ACQUISITION, LLC
By: /s/ Xxxxx Xxxx
Title: President
Address: _______________________
_______________________
Fax: _______________________
THE ENTITY, INC.
By: /s/ Xxxxx Xxxx
Title: President
Address: _______________________
_______________________
Fax: _______________________
/s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
Address: _______________________
_______________________
Fax: _______________________
GPX PARTNERS, L.L.C.
By: /s/ Xxxxxx Xxxx
Title: President
Address: _______________________
_______________________
Fax: _______________________
17
MEMBERS:
/s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
Address: ____________________
____________________
Fax: ____________________
Phone: ____________________
Email: ____________________
Soc. Sec. # ____________________
/s/ Xxxx Xxxxx
--------------------------------
Xxxx Xxxxx
Address: ____________________
____________________
Fax: ____________________
Phone: ____________________
Email: ____________________
Soc. Sec. # ____________________
/s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Address: ____________________
____________________
Fax: ____________________
Phone: ____________________
Email: ____________________
Soc. Sec. # ____________________
________________________________
Xxx Xxxx
Address: ____________________
____________________
Fax: ____________________
Phone: ____________________
Email: ____________________
Soc. Sec. # ____________________
18
/s/ Xxxx Xxxx
Xxxx Xxxx
Address: ____________________
____________________
Fax: ____________________
Phone: ____________________
Email: ____________________
Soc. Sec. # ____________________
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Address: ____________________
____________________
Fax: ____________________
Phone: ____________________
Email: ____________________
Soc. Sec. # ____________________
19
EXHIBIT A
DEFINITIONS
As used in this Agreement:
"Agreement" means this agreement, as it may be amended or modified and
in effect from time to time.
"Closing" is defined in Section 5.1.
"Closing Date" is defined in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Company" is defined in the preamble to this Agreement.
"Company Voting Debt" is defined in Section 3.2.
"Company's Latest Balance Sheet" is defined in Section 3.5
"Constituent Companies" means the Company and GAI.
"Effective Date" is defined in the preamble to this Agreement.
"Effective Time" means the time at which the Articles of Merger are
filed with the Secretary of State of the State of Texas, in accordance with the
TLLCA.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and any rule and regulation issued thereunder.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied in a consistent manner.
"GAI" is defined in the preamble to this Agreement.
"Holdings" is defined in the preamble to this Agreement.
"Holdings Common Stock" means shares of Holdings' common stock, $0.0001
par value.
"Holdings Latest Balance Sheet" is defined in Section 4.5(c).
"Holdings SEC Documents" is defined in Section 4.5(a).
A-1
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"Material Adverse Effect" means, with respect to a Person, a material
adverse effect on (i) the business, Property, condition (financial or
otherwise), or results of operations of the Person taken as a whole, (ii) the
ability of the Person to perform its obligations under this Agreement, or (iii)
the validity or enforceability of this Agreement or the rights or remedies of
hereunder.
"Membership Interests" means the Interests of the Members in the
Company (with "Interests" being as defined in the Regulations of the Company,
dated as of November 11, 2002, as amended).
"Merger" is defined in the Recitals to this Agreement.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule and regulation issued thereunder.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
"Substantial Portion" means, with respect to the Property of the
Company, Property which (a) represents more than 10% of the consolidated assets
of the Company as would be shown in the consolidated financial statements of the
Company as at the beginning of the twelve-month period ending with the month in
which such determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Company as
reflected in the financial statements referred to in clause (a) above.
"Surviving Company" is defined in Section 2.1.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes.
A-2
"TLLCA" is defined in the Recitals to the Agreement.
"Voting Debt" is defined in Section 4.2.
A-3
EXHIBIT B
ARTICLES OF MERGER
[See attached document]
B-1
EXHIBIT C
EXCHANGE RATIO
MEMBERSHIP INTEREST SHARES OF HOLDINGS COMMON
NAME PERCENTAGE STOCK
---- ------------------- -------------------------
Xxxxx Xxxxxxxx 24% 351,648
Xxxx Xxxxx 22% 322,344
Xxxxx Xxxxxxxxx 15% 219,780
Xxx Xxxx 19% 278,388
Xxxx Xxxx 10% 146,520
Xxxxx Xxxxxxx 10% 146,520
---- ---------
100% 1,465,200
==== =========
C-1
EXHIBIT D
REGISTRATION RIGHTS
[See attached document]
D-1
REGISTRATION RIGHTS
1. Definitions.
(a) As used in this Exhibit D, the following terms shall have the
meanings specified below:
(i) "AFFILIATE," of any specified Person means any other
Person who directly, or indirectly through one or more intermediaries,
is in control of, is controlled by, or is under common control with,
such specified Person. For purposes of this definition, control of a
Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by
contract, securities ownership or otherwise; and the terms
"controlling" and "controlled" have the respective meanings correlative
to the foregoing.
(ii) "COMMISSION" means the Securities and Exchange
Commission.
(iii) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
thereunder, or any similar successor statute.
(iv) "INVESTORS" means all Persons receiving Holdings
Common Stock in the Merger pursuant to the terms and conditions of the
Agreement and any permitted transferee or assignee of Registrable
Securities who agrees to become bound by all of the terms and
provisions of this Exhibit D.
(v) "PERSON" means any individual, partnership,
corporation, limited liability company, joint stock company,
association, trust, unincorporated organization, or a government agency
or political subdivision thereof.
(vi) "PROSPECTUS" means the prospectus (including any
preliminary prospectus and/or any final prospectus filed pursuant to
Rule 424(b) under the Securities Act and any prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance on Rule 430A under the
Securities Act) included in the Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of
the offering of any portion of the Registrable Securities covered by
the Registration Statement and by all other amendments and supplements
to such prospectus, including all material incorporated by reference in
such prospectus and all documents filed after the date of such
prospectus by Holdings under the Exchange Act and incorporated by
reference therein.
(vii) "PUBLIC OFFERING" means a firm commitment
underwritten offering registered with the Commission and the
appropriate state securities commissions by Holdings of its Holdings
Common Stock and made pursuant to the Securities Act.
(viii) "REGISTRABLE SECURITIES" means the shares of Holdings
Common Stock received by Investors in the Merger; provided, however, a
share of Holdings Common Stock
S-1
shall cease to be a Registrable Security for purposes of this Exhibit D
when it no longer is a Restricted Security.
(ix) "REGISTRATION STATEMENT" means a registration
statement of Holdings filed on Form X-0, X-0, X-0, XX-0 or SB-2 under
the Securities Act providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities pursuant to Rule 415 under the Securities Act, including the
Prospectus contained therein and forming a part thereof, any amendments
to such registration statement and supplements to such Prospectus, and
all exhibits and other material incorporated by reference in such
registration statement and Prospectus.
(x) "RESTRICTED SECURITY" means any share of Holdings
Common Stock received by Investors in the Merger except any share that
(i) has been registered pursuant to an effective registration statement
under the Securities Act and sold in a manner contemplated by the
prospectus included in such registration statement, (ii) has been
transferred in compliance with the resale provisions of Rule 144 under
the Securities Act (or any successor provision thereto) or is
transferable pursuant to paragraph (k) of Rule 144 under the Securities
Act (or any successor provision thereto), or (iii) otherwise has been
transferred and a new share of Holdings Common Stock not subject to
transfer restrictions under the Securities Act has been delivered by or
on behalf of Holdings.
(xi) "SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or
any similar successor statute.
(b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Agreement to which this Exhibit D is
attached.
2. Registration.
(a) Registration on Request. Except as provided in subsection (b)
of this Section 2, upon the written request of Investors owning at least a
majority of the then outstanding Registrable Securities that Holdings effect
pursuant to this Section 2(a) the registration of the requesting Investors'
Registrable Securities under the Securities Act (which request shall specify the
number of Registrable Securities to be registered), Holdings shall, as
expeditiously as reasonably possible, notify all other Investors of such request
(and allowing them to participate therein), and use its best efforts to effect
the registration under the Securities Act of the Registrable Securities of all
Investors which Holdings has been so requested to register. Notwithstanding the
above, Holdings shall not be obligated to take any action to effect any
registration requested by the Investors pursuant to the previous sentence (i)
after two years from the Closing Date, or (ii) after Holdings has effected one
(1) registration pursuant to this Section 2(a) and such registration has been
declared or ordered effective.
Notwithstanding any other provision hereof to the contrary, a
registration requested pursuant to this Section 2(a) shall not be deemed to have
been effected (i) unless it has become effective and remains effective for at
least 180 days; provided, however, that a registration which does not become
effective after Holdings has filed a registration statement with respect thereto
solely by reason of the refusal by a requesting Investor, in its sole
discretion, to proceed with such registration shall be
S-2
deemed to have been effected by Holdings at the request of the Investors unless
the requesting Investor shall have elected to pay all expenses of registration
provided for in Section 5 below in connection with such registration, (ii) if
after it has become effective such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
govern-mental agency or court for any reason other than a misrepresentation or
an omission by any participating Investor, or (iii) if the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied other than by reason of some
wrongful act or omission, or act or omission in bad faith, by any participating
Investor.
Holdings shall not be obligated to effect any registration pursuant to
this Section 2(a) within 90 days after the effective date of any underwritten
public offering by Holdings or of any previous registration withdrawn at the
request of the requesting Investors. Holdings may postpone for up to 90 days the
filing or the effectiveness of a registration statement for a registration
pursuant to this Section 2(a) if the financial advisor and/or underwriter to
Holdings certifies to the Investors that such registration would reasonably be
expected to have a material adverse effect on Holdings; provided, however, that
in such event the Investors requesting such registration shall be entitled to
withdraw such request and, if such request is withdrawn, such registration shall
not count as the one permitted registration under this Section 2(a) and Holdings
shall pay all the above referenced registration expenses in connection with such
postponed or withdrawn registration.
(b) Piggyback Registration Rights. (i) Without limiting the
obligations of Holdings pursuant to Section 2(a) above, until such date as the
Registration Statement to be filed in accordance with Section 2(a) is declared
effective by the Commission, if Holdings proposes to register any of its
Holdings Common Stock or any other shares of capital stock of Holdings under the
Securities Act (other than a registration (A) on Form S-8 or S-4 or any
successor or similar forms, (B) relating to Holdings Common Stock or any other
shares of common stock of Holdings issuable upon exercise of employee or
consultant share options or in connection with any employee benefit or similar
plan of Holdings or (C) in connection with a direct or indirect acquisition by
Holdings of another Person or any transaction with respect to which Rule 145 (or
any successor provision) under the Securities Act applies), whether or not for
sale for its own account, it will each such time, give prompt written notice at
least 20 days prior to the anticipated filing date of the registration statement
relating to such registration to the Investors, which notice shall set forth
such Investors' rights under this Section 2(c) and shall offer the Investors the
opportunity to include in such registration statement such number of Registrable
Securities as the Investors may request. Upon the written request of an Investor
made within 10 days after the receipt of notice from Holdings (which request
shall specify the number of Registrable Securities intended to be disposed of by
such Investors), Holdings will use all reasonable commercial efforts to effect
the registration under the Securities Act of all Registrable Securities that
Holdings has been so requested to register by the Investors, to the extent
requisite to permit the disposition of the Registrable Securities to be so
registered; provided, however, that (A) if such registration involves a Public
Offering, the Investors must sell their Registrable Securities to the
underwriters on the same terms and conditions as apply to Holdings and (B) if,
at any time after giving written notice of its intention to register any
Holdings Common Stock pursuant to this Section 2(b) and prior to the effective
date of the registration statement filed in connection with such registration,
Holdings shall determine for any reason not to register such Holdings Common
Stock, Holdings shall give written notice to the Investors and,
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thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration.
The Company's obligations under this Section 2(b) shall terminate on
the date that the Registration Statement to be filed in accordance with Section
2(a) is declared effective by the Commission. If a registration pursuant to this
Section 2(b) involves a Public Offering and the managing underwriter thereof
advises Holdings that, in its view, the number of shares of Holdings Common
Stock, if any, or other shares of Holdings Common Stock that Holdings and the
Investors intend to include in such registration exceeds the largest number of
shares of Holdings Common Stock (including any other shares of Holdings Common
Stock or warrants of Holdings) that can be sold without having a material
adverse effect on such Public Offering (the "Maximum Offering Size"), Holdings
will include in such registration only that number of shares of Holdings Common
Stock which does not exceed the Maximum Offering Size, in the following order of
priorities: (1) first, all securities Holdings proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to inclusion of
their securities in the Registration Statement by reason of demand registration
rights, and (3) third, the securities requested to be registered by other
holders of securities entitled to participate in the registration, drawn from
them pro-rata based on the number of shares each has requested to be included in
such registration and the Investors pursuant to this Exhibit D. If as a result
of the proration provisions of this Section 2(b), the Investors are not entitled
to include all such Registrable Securities in such registration, such Investors
may elect to withdraw their request to include any Registrable Securities in
such registration.
Specifically, and not by way of limitation, all of the Registrable
Securities shall be included in any Registration Statement filed by the Company
on behalf of investors participating in the Private Placement.
Notwithstanding the foregoing, Holdings shall have no obligations under
this Section 2(b) hereof at any time that such Registrable Securities are the
subject of an effective registration statement.
3. Obligations of Holdings. In connection with the registration of the
Registrable Securities, Holdings shall use all commercially reasonable efforts
to:
(a) Subject to the provisions of Section 3(q) hereof, promptly (i)
prepare and file with the Commission such amendments (including post-effective
amendments) to the Registration Statement and supplements to the Prospectus as
may be necessary to keep the Registration Statement continuously effective and
in compliance with the provisions of the Securities Act applicable thereto so as
to permit the Prospectus forming part thereof to be current and useable by
Investors for resales of the Registrable Securities for a period of two years
from the date the Registration Statement is first declared effective by the
Commission (the "Effective Time") or such shorter period that will terminate
when all the Registrable Securities covered by the Registration Statement have
been sold pursuant thereto in accordance with the plan of distribution provided
in the Prospectus or otherwise cease to be Registrable Securities (the
"Registration Period") and (ii) take all lawful action such that each of (A) the
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, not misleading and (B) the Xxxxxxxxxx
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forming part of the Registration Statement, and any amendment or supplement
thereto, does not at any time during the Registration Period include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Holdings' obligations hereunder shall terminate as to any investor at
such time as that Investor's Registrable Securities can be sold under Rule
144(k);
(b) During the Registration Period, comply with the provisions of
the Securities Act with respect to the Registrable Securities of Holdings
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Investors as set forth in the Prospectus forming part of the
Registration Statement;
(c) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements thereto), provide draft
copies thereof to the Investors and reflect in such documents all such comments
as the Investors reasonably may propose (including comments as to the Investors'
plans of distribution); and (ii) furnish to each Investor whose Registrable
Securities are included in the Registration Statement, (A) promptly after the
same is prepared and publicly distributed, filed with the Commission, or
received by Holdings, one copy of the Registration Statement, each Prospectus,
and each amendment or supplement thereto, and (B) such number of copies of the
Prospectus and all amendments and supplements thereto and such other documents,
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor;
(d) (i) Register or qualify the Registrable Securities covered by
the Registration Statement under such securities or "blue sky" laws of all
jurisdictions requiring blue sky registration or qualification, (ii) prepare and
file in such jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be reasonably
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take all such other lawful actions as may be
reasonably necessary to maintain such registrations and qualifications in effect
at all times during the Registration Period, and (iv) take all such other lawful
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that Holdings shall not be
required in connection with any of its obligations under this Section 3(d) to
(A) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (B) subject itself to general
taxation in any such jurisdiction or (C) file a general consent to service of
process in any such jurisdiction;
(e) As promptly as practicable after becoming aware of such event,
notify each Investor of the occurrence of any event, as a result of which the
Prospectus included in the 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, in
light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Investor as such
Investor may reasonably request;
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(f) Notify each Investor who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement on the date of receipt of any such
stop order or other suspension, and take all lawful action to effect the
withdrawal, recession or removal of such stop order or other suspension;
(g) Cause all the Registrable Securities covered by the
Registration Statement to be listed, not later than the date that Registration
Statement is declared effective by the Commission, on a principal national
securities exchange, or included in an inter-dealer quotation system of a
registered national securities association, on or in which securities of the
same class or series issued by Holdings are then listed or included;
(h) Maintain a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(i) Reasonably cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Investors reasonably may request and registered in such names as the Investors
may request; and, within five business days after a registration statement which
includes Registrable Securities is declared effective by the Commission, deliver
and cause legal counsel selected by Holdings to deliver to the transfer agent
for the Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such registration statement) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(j) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their Registrable
Securities in accordance with the intended methods therefor provided in the
Prospectus which are customary under the circumstances;
(k) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of Holdings and its subsidiaries complying with Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of Holdings, Rule 158);
(l) In the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which Holdings does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;
(m) In connection with any underwritten offering, make such
representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form,
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substance and scope as are customarily made by Holdings to underwriters in
secondary underwritten offerings;
(n) In connection with any underwritten offering, obtain opinions
of counsel to Holdings (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managers) addressed to the
underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the date the Registration Statement is first declared
effective or most recent post- effective amendment thereto, as the case may be,
the absence from the Registration Statement and the Prospectus, including any
documents incorporated by reference therein, of an untrue statement of a
material fact or the omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, subject
to customary limitations);
(o) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public accountants of
Holdings (and, if necessary, from the independent public accountants of any
subsidiary of Holdings or of any business acquired by Holdings, in each case for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each underwriter
participating in such underwritten offering (if such underwriter has provided
such letter, representations or documentation, if any, required for such cold
comfort letter to be so addressed), in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings;
(p) In connection with any underwritten offering, deliver such
documents and certificates as may be reasonably required by the managers, if
any;
(q) Notwithstanding anything to the contrary in Section 3, at any
time after the Registration Statement has been declared effective, Holdings may
delay the disclosure of material non-public information concerning Holdings, the
disclosure of which at the time is not, in the good faith opinion of the Board
of Directors of Holdings and its counsel, in the best interest of Holdings (a
"Grace Period"); provided, that Holdings shall promptly (i) notify the Investors
in writing of the existence of material non-public information giving rise to a
Grace Period and the date on which the Grace Period will begin, and (ii) notify
the Investors in writing in advance of, or on the same date on which, the Grace
Period ends; and, provided further, that during the Registration Period, there
shall be only three Grace Periods (not to exceed 30 days each) nor more than one
Grace Period (not to exceed 30 days each) in any six-month period. For purposes
of determining the length of a Grace Period above, the Grace Period shall begin
on and include the date the holders receive the notice referred to in clause (i)
and shall end on and include the date specified as the Grace Period ending date
in the notice referred to in clause (ii).
Notwithstanding the foregoing, Holdings shall have no obligations under
Section 3(l) through (p) unless it is effecting an underwritten offering
pursuant to Section 2(b).
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations,
which obligations shall be several and not joint:
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(a) It shall be a condition precedent to the obligations of
Holdings to complete the registration pursuant to this Exhibit D with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to Holdings such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as Holdings may reasonably request.
(b) Each Investor by its acceptance of the Registrable Securities
agrees to cooperate in all reasonable respects with Holdings in connection with
the preparation and filing of the Registration Statement hereunder, unless such
Investor has notified Holdings in writing of its election to exclude all of its
Registrable Securities from the Registration Statement;
(c) As promptly as practicable after becoming aware of such event,
notify Holdings of the occurrence of any event, as a result of which the
Prospectus included in the 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, in
light of the circumstances under which they were made, not misleading;
(d) Each Investor agrees that, upon receipt of any notice from
Holdings of the occurrence of any event of the kind described in Section 3(e) or
3(f), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(e) and, if so directed by Holdings, such
Investor shall deliver to Holdings (at the expense of Holdings) or destroy (and
deliver to Holdings a certificate of destruction) all copies in such Investor's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice; and
(e) Each Investor agrees to comply with the obligations imposed by
Regulation M of the Securities Act.
5. Expenses of Registration. All expenses, other than underwriting
discounts and commissions arising from sales of Registrable Securities, incurred
in connection with registrations, filings or qualifications pursuant to Section
3, but including, without limitation, all registration, listing, and
qualifications fees, printing and engraving fees and accounting fees shall be
borne by Holdings.
6. Indemnification and Contribution.
(a) Holdings shall indemnify and hold harmless each Investor and
each underwriter, if any, which facilitates the disposition of Registrable
Securities, and each of their respective officers and directors, trustees,
employees, advisors, legal counsel and accountants and each person who controls
such Investor or underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each such person being sometimes
hereinafter referred to as an "Indemnified Person") from and against any losses,
claims, damages or liabilities, joint or several, to which such Indemnified
Person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Registration
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Statement or an 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 arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Prospectus or an omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and Holdings hereby
agrees to reimburse such Indemnified Person for all reasonable legal and other
expenses incurred by them in connection with investigating or defending any such
action or claim as and when such expenses are incurred; provided, however, that
Holdings shall not be liable to any such Indemnified Person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to Holdings
by such Indemnified Person expressly for use therein or (ii) in the case of the
occurrence of an event of the type specified in Section 3(e), the use by the
Indemnified Person of an outdated or defective Prospectus after Holdings has
provided to such Indemnified Person written notice that such Prospectus is
outdated or defective.
(b) Indemnification by the Investors and Underwriters. Each
Investor agrees, as a consequence of the inclusion of any of its Registrable
Securities in a Registration Statement, and each underwriter, if any, which
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless Holdings, its
directors (including any person who, with his or her consent, is named in the
Registration Statement as a director nominee of Holdings), its officers,
employees, advisors, legal counsel and accountants and each person, if any, who
controls Holdings within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which Holdings or such other persons may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (y)
an untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or Prospectus or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in light of the
circumstances under which they were made, in the case of the Prospectus), not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to
Holdings by such Investor or underwriter expressly for use therein; or (z) in
the case of the occurrence of an event of the type specified in Section 3(e)
above, the use by the Indemnified Person of an outdated or defective Prospectus
after the Indemnified Person has received from Holdings written notice that such
Prospectus is outdated or defective; provided, however, that no Investor or
underwriter shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Investor or underwriter in respect of shares sold
by it; and (ii) reimburse Holdings for any reasonable legal or other expenses
incurred by Holdings in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Notice of Claims, Etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party shall notify the party against whom indemnification pursuant
to this Section 6 is
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being sought (the "Indemnifying Party") of the commencement thereof; but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ one separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (i) the
Indemnifying Party shall have agreed to pay such fees, costs and expenses, (ii)
counsel to the Indemnified Party shall reasonably have concluded that
representation of the Indemnified Party and the Indemnifying Party by the same
legal counsel would not be appropriate due to actual or, as reasonably
determined by legal counsel to the Indemnified Party, potentially differing
interests between such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified Party that are in
addition to or disparate from those available to the Indemnifying Party, or
(iii) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (i), (ii) or (iii) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnified Party shall not, without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld), settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnifying Party from all liabilities
with respect to such Claim or judgment.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Investors or any underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 6(d).
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such Indemnified Party
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in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of the
Investors and any underwriters in this Section 6(d) to contribute shall be
several in proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(e) Notwithstanding any other provision of this Section 6, in no
event shall any (i) Investor be required to undertake liability to any person
under this Section 6 for any amounts in excess of the dollar amount of the net
proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act.
(f) The obligations of Holdings under this Section 6 shall be in
addition to any liability that Holdings may otherwise have to any Indemnified
Person and the obligations of any Indemnified Person under this Section 6 shall
be in addition to any liability that such Indemnified Person may otherwise have
to Holdings. The remedies provided in this Section 6 are not exclusive and shall
not limit any rights or remedies that may otherwise be available to an
indemnified party at law or in equity.
7. Rule 144. With a view to making available to the Investors the benefits
of Rule 144 under the Securities Act or any other similar rule or regulation of
the Commission that may at any time permit the Investors to sell securities of
Holdings to the public without registration ("Rule 144"), Holdings agrees to:
(a) comply with the provisions of paragraph (c) (1) of Rule 144; and (b) use all
commercially reasonable efforts to file with the Commission in a timely manner
all reports and other documents required to be filed by Holdings pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did file
such reports, it will, upon the request of any Investor, make available other
information as required by, and so long as necessary to permit sales of, its
Registrable Securities pursuant to Rule 144.
8. Assignment. The rights to have Holdings register Registrable Securities
pursuant to this Exhibit C may be assigned or transferred only with the prior
written consent of Holdings (which consent shall not be unreasonably withheld or
delayed), and any such assignment or transfer without such consent shall be void
and of no effect. Notwithstanding the foregoing, such consent of Holdings shall
not be required with respect to: (i) any assignment or transfer of Registrable
Securities to an Affiliate of Investor, including for this purpose if Investor
is an investment company, any fund or account advised by Investor's investment
adviser or any Affiliate thereof; or (ii) any assignment or transfer of all of
the Registrable Securities owned by an Investor. In the event of any such
permitted assignment or transfer by the Investors to any permitted transferee of
all or any portion of such Registrable Securities such transfer will be allowed
only if: (a) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to Holdings within
a reasonable time after such assignment, (b) Holdings is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities, (d)
at or before the time Holdings received the written notice contemplated by
clause (b) of this sentence
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the transferee or assignee agrees in writing with Holdings to be bound by all of
the provisions contained herein, and (e) Holdings is furnished with an opinion
of counsel, which counsel and opinion shall be reasonably satisfactory to
Holdings, to the effect that the permitted assignment would be in compliance
with the Securities Act and State Acts.
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