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EXHIBIT 99
Exchange Agreement dated as of December 8, 1997, among
Checkers and Rally's, Fidelity, CKE and others as listed.
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EXHIBIT 99
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (the "Agreement"), dated as of December 8,
1997, is made by and between RALLY'S HAMBURGERS, INC., a Delaware corporation
(the "Company" or "Rally's"), on the one hand, and CKE RESTAURANTS, INC., a
Delaware corporation ("CKE"), FIDELITY NATIONAL FINANCIAL, INC., a Delaware
corporation ("FNF"), GIANT GROUP, LTD., a Delaware corporation ("GIANT") and
the other parties set forth on Exhibit A attached hereto (referred to
collectively herein as the "Sellers," and individually as a "Seller"), on the
other hand, with reference to the following facts:
A. Sellers are the owners of record, as of September 19,
1997, of an aggregate of 19,100,960 shares of Common Stock, par value $0.001
per share (the "Checkers Common Stock"), of Checkers Drive-In Restaurants,
Inc., a Delaware corporation ("Checkers").
B. Each Seller desires to sell, and the Company desires to
buy, the shares of Checkers Common Stock owned by such Seller as set forth on
Exhibit A hereto on the terms and conditions set forth herein.
C. As consideration for the shares of Checkers Common Stock
acquired by the Company pursuant hereto, the Company will issue an aggregate of
up to 3,909,336 shares of the Company's common stock, par value $0.10 per share
(the "Rally's Common Stock"), and will authorize and issue an aggregate of up
to 45,667 shares of the Company's Series A Preferred Stock, $0.10 par value per
share (the "Series A Stock"), on the terms set forth in the form of Certificate
of Designation attached hereto as Exhibit B (the "Certificate of Designation").
D. The number of shares of Rally's Common Stock and Series A
Stock issued in exchange for the Checkers Common Stock bought and sold pursuant
to this Agreement will be based on the ratio of 0.44375 shares of Rally's
Common Stock for each share of Checkers Common Stock.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1. Purchase and Sale. Subject to the provisions of this
Agreement, on the Closing Date (as defined herein), the Sellers will sell and
transfer to the Company, and the Company will purchase from the Sellers, the
number of shares of Checkers Common Stock set forth opposite the respective
Seller's name on Exhibit A hereto (collectively, the "Checkers Shares").
1.2. Consideration; Exchange of Stock. In exchange for the
Checkers Shares transferred by each of the Sellers, the Company will issue and
cause to be delivered to each Seller
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the number of shares of Rally's Common Stock and Series A Stock set forth
opposite the respective Seller's name on Exhibit A hereto (collectively, the
"Rally's Shares").
1.3. Closing; Closing Date. The purchase and sale of the
Checkers Shares pursuant to Section 1.1 (the "Closing") shall take place at the
offices of Christensen, Miller, Fink, Jacobs, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, 2121
Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other place as may be agreed upon by the Company and Sellers, at 10:00 a.m.
local time on the third business day after the later of termination or
expiration of all waiting periods required for consummation of this Agreement
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
("HSR"), or receipt of the fairness opinion referred to in Section 5.1 hereof,
or at such other time as may be mutually agreed upon by the Company and the
Sellers (the "Closing Date").
1.4. Transactions at Closing. At the Closing,
(a) The Company shall deliver to each Seller or
such Seller's representative:
(i) A duly executed Compliance
Certificate, substantially in the form of Exhibit C hereto;
(ii) A duly executed Certificate of
Designation, stamped to show that it has been filed with the Secretary of State
of the State of Delaware;
(iii) Certificates registered in the
names of the Seller representing the number of Rally's Shares to be issued to
such Seller pursuant to Section 1.2 hereof;
(iv) A copy of the Notification of
Listing of Additional Shares to be delivered to the NASDAQ National Market with
respect to the Rally's Shares; and
(v) Such other documents and
instruments as the Sellers and their counsel may reasonably request relating to
the consummation of this Agreement.
(b) Each Seller shall deliver to the Company:
(i) A duly executed Compliance
Certificate, substantially in the form of Exhibit D hereto;
(ii) Certificate(s) representing the
Checkers Shares being delivered by such Seller pursuant to Section 1.1 hereof,
duly endorsed for transfer or together with a stock power duly executed in
blank, together with any opinions of counsel required by the transfer agent for
the Checkers Common Stock in connection with the transfer of the Checkers
Shares to the Company; and
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(iii) Such other documents and
instruments as the Company may reasonably request relating to the consummation
of this Agreement.
(c) The conditions set forth in Articles 5 and 6
hereof shall have been satisfied or waived as provided therein.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
2.1. Organization, Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
own, lease and operate its property and assets and to conduct its business as
presently and proposed to be conducted by it. The Company is in good standing
under the laws of all jurisdictions in which the Company is required to qualify
to do business, except where the failure to so qualify would not result in a
Company Material Adverse Effect (as hereinafter defined).
2.2. Capitalization.
(a) Authorized Capital Stock. Immediately prior to
the Closing, the authorized capital stock of the Company will consist of:
(i) Common Stock. 50,000,000 shares of
Common Stock, par value $0.10 per share (the "Common Stock"), of which (A)
20,649,454 shares are issued and outstanding as of the date of this Agreement;
and (B) 10,989,282 shares are initially reserved for issuance upon exercise of
the warrants and options listed in Schedule 2.2(a)(i) hereto. The Company has
reserved a sufficient number of shares of unissued Common Stock to enable it to
issue the Common Stock being issued pursuant to this Agreement, both at Closing
and upon conversion of the Series A Stock into Common Stock.
(ii) Preferred Stock. 5,000,000 shares
of Preferred Stock, $0.10 par value per share, of which 45,632 shares have been
designated as Series A Stock pursuant to the Certificate of Designation and
none of which will be issued and outstanding prior to the Closing Date.
(b) Warrants, Options and Other Subscription
Rights. Except as set forth in Schedule 2.2(a)(i) hereto and as contemplated
herein, there are (i) no outstanding warrants, options, convertible securities
or rights to subscribe for or purchase any capital stock or other securities
from the Company, (ii) to the best knowledge of the Company, no voting trusts
or voting agreements among, or irrevocable proxies executed by, stockholders of
the Company, (iii) no existing rights of stockholders to require the Company to
register any securities of the Company or to participate with the Company in
any registration by the Company of its securities,
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(iv) to the best knowledge of the Company, no agreements among stockholders
providing for the purchase or sale of the Company's capital stock and (v) no
obligations (contingent or otherwise) of the Company to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof.
(c) Validity of Securities. Subject only to
approval by the Company's stockholders of the matters set forth in Section 2 of
the Certificate of Designation, the Rally's Shares, when issued, sold and
delivered in accordance with the terms of this Agreement, and the Rally's
Common Stock issuable upon conversion of the Series A Stock, when issued and
delivered in accordance with the Certificate of Designation, will be duly
authorized, validly issued, fully paid and non-assessable. When the Rally's
Shares are sold in accordance with this Agreement, each Seller will have good
title to the Rally's Shares sold to such Seller, free and clear of any liens,
pledges, claims, options, restrictions or other encumbrances or rights of third
parties ("Liens"), other than Liens resulting from the actions of Sellers and
restrictions on transfer imposed by the Securities Act of 1933, as amended (the
"Securities Act"), applicable state securities laws or this Agreement. The
Series A Stock, when issued, sold and delivered in accordance with the terms of
this Agreement, will have the rights, preferences and privileges specified in
the Certificate of Designation. Holders of shares of the Company's capital
stock have no preemptive rights.
2.3. Investment Representations.
(a) The Company is acquiring the Checkers Shares
for its own account, for investment purposes and not with a view to, or for
sale in connection with, any distribution of the Checkers Shares in violation
of the Securities Act or any applicable state securities law.
(b) The Company acknowledges that the certificates
representing Checkers Shares to be issued to the Company will bear Checker's
standard restrictive legend for unregistered sales of securities.
2.4. Authorization; Enforceability. The Company has all
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to carry out the transactions contemplated
by this Agreement. All corporate action on the part of the Company necessary
for the authorization, execution, delivery and performance of all of its
obligations under this Agreement, including the approval and authorization of
this Agreement by a committee of Rally's Board of Directors comprised of
persons unaffiliated with any of the Sellers (the "Independent Committee"), has
been taken; provided, that the approval of the Independent Committee is subject
to receipt of a written opinion of L.H. Friend, Weinress, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
Inc. ("L.H. Friend") provided for in Section 5.1 hereof. This Agreement had
been duly executed and delivered by the Company and constitutes the valid and
legally binding obligation of the Company, except as the enforcement hereof may
be limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally.
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2.5. Filing of SEC Reports. The Company has filed with the
Securities and Exchange Commission (the "Commission") all reports and
registration statements (the "Company SEC Reports") required under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder, except
to the extent that the failure to file any Company SEC Report will not have a
Company Material Adverse Effect (as hereinafter defined). As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading.
2.6. No Material Adverse Effects. Except as disclosed in a
Company SEC Report or other publicly released announcement, no events have
occurred since the end of the Company's last fiscal year that, singly or in the
aggregate, would reasonably be expected to result in a material adverse change
in the condition (financial or otherwise), net assets, business or prospects of
the Company and its subsidiaries taken as a whole (a "Company Material Adverse
Effect").
2.7. Consents and Approvals. Except as set forth on Schedule
2.7 hereto, the execution and delivery by the Company of this Agreement and any
related documents and instruments, the offer, issuance and delivery of the
Rally's Shares, and the performance by the Company of its obligations under
this Agreement and any related documents and instruments do not require the
consent of any person or entity under any material agreement to which the
Company is a party or otherwise binding on the Company.
2.8. No Conflict with Documents and Instruments. The execution
and delivery by the Company of this Agreement and any related documents and
instruments do not, and the performance by the Company of its obligations
hereunder and thereunder will not, contravene or constitute a default under (a)
the charter or by-laws of the Company, (b) any applicable law or regulation or
(c) any agreement, judgment, injunction, order, decree or other instrument to
which the Company is a party or by which the Company and its assets are
otherwise bound, which in the case of (b) or (c) would constitute a Company
Material Adverse Effect.
2.9. Full Disclosure. Neither this Agreement, nor any
certificates delivered in connection herewith by the Company contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading, in view of the
circumstances in which they were made.
2.10. Brokers and Finders. No person or entity has or will have
any valid claim against the Seller as a result of the transactions contemplated
herein for any commission, fee or other compensation as a broker or finder or
in any similar capacity arising out of any act of the Company.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each Seller represents and warrants as to such Seller that:
3.1. Organization, Standing and Qualification.
(a) If a corporation or other entity, such Seller
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is in good standing under the laws of all
jurisdictions in which such Seller is required to qualify to do business,
except where the failure to so qualify would not result in a Seller Material
Adverse Effect (as hereinafter defined).
(b) To Seller's knowledge, Checkers is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is in good standing under the laws of all jurisdictions in which
Checkers is required to qualify to do business, except where the failure to so
qualify would not result in a Checkers Material Adverse Effect (as hereinafter
defined).
3.2. Validity of Checkers Shares. The Checkers Shares held by
Seller are duly authorized and validly issued in accordance with applicable
law, fully paid and nonassessable and, when sold in accordance with this
Agreement, the Company will have good title to the Checkers Shares, free and
clear of any Liens, other than Liens resulting from the actions of the Company
and restrictions on transfer imposed by the Securities Act, applicable state
securities laws or this Agreement.
3.3. Investment Representations.
(a) Seller is acquiring the Rally's Shares for
Seller's own account, for investment purposes and not with a view to, or for
sale in connection with, any distribution of the Rally's Shares in violation of
the Securities Act or any applicable state securities law.
(b) Seller acknowledges that the Rally's Shares,
including the shares of Rally's Common Stock issuable upon conversion of the
Series A Stock, will bear the Company's standard restrictive legend for
unregistered sales of securities.
3.4. Authorization; Enforceability. If a corporation or other
entity, such Seller has all requisite power and authority to enter into and
perform its obligations under this Agreement and to carry out the transactions
contemplated by this Agreement. If an individual, such Seller has full legal
capacity to enter into this Agreement and to perform his or her obligations
under this Agreement. All action on the part of Seller necessary for the
authorization, execution, delivery and performance of all of its, his or her
obligations under this Agreement has been taken. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and legally
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binding obligation of Seller, except as the enforcement hereof may be limited
by bankruptcy, insolvency or other laws affecting the enforcement of creditors'
rights generally.
3.5. Filing of SEC Reports. To Seller's knowledge, Checkers
has filed with the Commision all reports and registration statements (the
"Checkers SEC Reports") required under the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder, except to the extent that
the failure to file any Checkers SEC Report will not have a Checkers Material
Adverse Effect (as hereinafter defined). To Seller's knowledge, as of their
respective dates, the Checkers SEC Reports did not contain any untrue statement
of a material fact or omit to state a fact required to be stated therein or
necessary to make the statements made therein not misleading.
3.6. No Material Adverse Effects. To Seller's knowledge,
except as disclosed in a Company SEC Report or other publicly released
announcement, no events have occurred since the end of Checkers' last fiscal
year that, singly or in the aggregate, would reasonably be expected to result
in a material adverse change in the condition (financial or otherwise), net
assets, business or prospects of Checkers and its subsidiaries taken as a whole
(a "Checkers Material Adverse Effect") or a material adverse effect on the
ability of the Sellers to perform their obligations under this Agreement (a
"Seller Material Adverse Effect").
3.7. Consents and Approvals. Except as set forth on Schedule
3.7 hereto, the execution and delivery by the Seller of this Agreement and any
related documents and instruments, the sale and delivery of the Checkers
Shares, and the performance by the Seller of Seller's obligations under this
Agreement and any related documents and instruments do not require the consent
of any person or entity under any material agreement to which such Seller is a
party or which is otherwise binding on such Seller.
3.8. No Conflict with Documents and Instruments. The execution
and delivery by the Seller of this Agreement and any related documents and
instruments do not, and the performance by the Seller of Seller's obligations
hereunder and thereunder will not, contravene or constitute a default under (a)
the charter or by-laws of the Seller, if any, or, to the knowledge of Seller,
of Checkers, (b) any applicable law or regulation or (c) any agreement,
judgment, injunction, order, decree or other instrument to which the Seller or,
to the knowledge of Seller, Checkers is a party or by which the Seller and its
assets or, to the knowledge of Seller, Checkers and its assets are otherwise
bound, which in the case of (b) or (c) would constitute a Checkers Material
Adverse Effect or a Seller Material Adverse Effect.
3.9. Full Disclosure. Neither this Agreement, nor any
certificates delivered in connection herewith by the Seller contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements herein or therein not misleading, in view of the
circumstances in which they were made, as to such Seller.
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3.10. Brokers and Finders. No person or entity has or will have
any valid claim against the Company as a result of the transactions
contemplated herein for any commission, fee or other compensation as a broker
or finder or in any similar capacity arising out of any act of the Seller.
ARTICLE 4
PRE-CLOSING COVENANTS.
4.1. Mutual Covenants. Each of the parties hereby covenants
and agrees that such party will (a) proceed forthwith, but no later than five
business days from the date hereof, to file, to the extent not already filed,
all notices and documents required under HSR to consummate this Agreement, and
(b) take all action reasonably within its power and authority to duly and
timely carry out all of its, his or her obligations hereunder, to perform and
comply with all of its, his or her covenants, agreements, representations and
warranties hereunder and to cause all conditions to the obligations of the
other parties to complete the transactions provided for herein to be satisfied
as promptly as possible.
4.2. Covenants of Sellers.
(a) Each Seller hereby undertakes and agrees that, between
the effective date of this Agreement and the Closing Date, each will use its,
his or her commercially reasonable best efforts to cause Checkers to:
(i) do nothing to materially and adversely affect
the prospects or continued viability of Checker's business;
(ii) pay no extraordinary compensation to any of
Checker's officers, directors or stockholders and not incur any additional debt
other than in the ordinary course of business;
(iii) except in order to satisfy outstanding options
and/or warrants and/or other commitments, not issue or sell any of its
securities or any securities of any of its subsidiaries, or any rights to
acquire such securities;
(iv) not pay any dividends, redeem any securities
or otherwise cause any asset to be distributed to its stockholders in their
capacities as such;
(v) promptly inform the Company of any offer or
proposal, directly or indirectly, with respect to the sale or transfer of all
or any material part of Checker's stock or assets, and shall furnish such
information with respect thereto as the Company may request; provided that
nothing herein shall preclude Checkers or its Board of Directors from acting in
good faith to comply with the Board's fiduciary obligations under applicable
law;
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(vi) use its best efforts to preserve intact
Checker's business organization, its goodwill and its customers, suppliers, and
others having business relations with it; and
(vii) file, to the extent not already filed, all
notices and documents required under HSR to consummate this Agreement.
(b) Each Seller hereby undertakes and agrees to vote its
shares of Rally's Common Stock in favor of the conversion provision contained
in Section 9 of the Certificate of Designation.
4.3. Covenants of the Company. The Company undertakes and
agrees that, between the effective date of this Agreement and the Closing Date,
it will:
(a) do nothing to materially and adversely affect
the prospects or continued viability of the Company's business;
(b) pay no extraordinary compensation to any of
its officers, directors or stockholders and shall not incur any additional debt
other than in the ordinary course of business;
(c) except in order to satisfy outstanding options
and/or warrants and/or other commitments, not issue or sell any of its
securities or any securities of any of its subsidiaries, or any rights to
acquire such securities;
(d) not pay any dividends, redeem any securities
or otherwise cause any asset to be distributed to its stockholders in their
capacities as such;
(e) promptly inform Sellers of any offer or
proposal, directly or indirectly, with respect to the sale or transfer of all
or any material part of the Company's stock or assets, and shall furnish such
information with respect thereto as any Seller may request; provided that
nothing herein shall preclude the Company or its Board of Directors from acting
in good faith to comply with the Board's fiduciary obligations under applicable
law; and
(f) use its best efforts to preserve intact the
Company's business organization, its goodwill and its customers, suppliers, and
others having business relations with it.
ARTICLE 5
CONDITIONS TO CLOSING OF SELLERS.
The obligation of Sellers on the Closing Date to purchase the
Rally's Shares under this Agreement shall be subject to each of the following
conditions precedent, any one or more of which may be waived by each Seller as
to itself, himself or herself:
5.1 Fairness Opinion. The Independent Committee shall have
received from L.H. Friend a written opinion, satisfactory in form and substance
to the Independent Committee, to the
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effect that the transactions provided for herein and the terms and conditions
of this Agreement are fair the Company and to the stockholders of the Company
(other than the Sellers), from a financial point of view (the "Fairness
Opinion").
5.2 Representations and Warranties. The representations and
warranties made by the Company herein shall be true and accurate on and as of
the Closing Date as if made on such Closing Date.
5.3 Performance. The Company shall have performed and
complied with all agreements and conditions contained herein or in other
ancillary documents incident to the transactions contemplated by this Agreement
required to be performed or complied with by it prior to or at the Closing.
5.4 Consents.
(a) The Company and Sellers shall have secured all
permits, consents and authorizations that shall be necessary to consummate this
Agreement.
(b) Any applicable waiting period under HSR, and
the rules and regulations promulgated thereunder, shall have expired or been
terminated.
(c) The Certificate of Designation shall have been
duly filed with the Secretary of State of the State of Delaware.
5.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to Sellers and their respective
counsel, and Sellers and their counsel shall have received all such counterpart
originals or certified or other copies of such documents as any Seller or its
counsel may reasonably request.
ARTICLE 6
CONDITIONS TO CLOSING OF COMPANY.
The obligation of the Company on the Closing Date to issue and sell
the Rally's Shares to be purchased under this Agreement shall be subject each
of the following conditions precedent, any one or more of which may be waived
by the Company:
6.1. Fairness Opinion. The Independent Committee shall have
received the Fairness Opinion.
6.2 Representations and Warranties. The representations and
warranties made by each Seller herein shall be true and accurate as to such
Seller on and as of the Closing Date as if made on such Closing Date.
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6.3 Performance. Each Seller shall have performed and
complied with all agreements and conditions contained herein or in other
ancillary documents incident to the transactions contemplated by this Agreement
required to be performed or complied with by such Seller prior to or at the
Closing.
6.4 Consents.
(a) The Company and Sellers shall have secured all
permits, consents and authorizations that shall be necessary to consummate this
Agreement.
(b) Any applicable waiting period under HSR, and
the rules and regulations promulgated thereunder, shall have expired or been
terminated.
(c) The Certificate of Designation shall have been
duly filed with the Secretary of State of the State of Delaware.
6.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Company and its counsel,
and the Company and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as the Company or its
counsel may reasonably request.
6.6 Minimum Sale. The aggregate amount of Checkers Shares
delivered at the Closing pursuant to Sections 1.1 and 1.4(b)(ii) of this
Agreement shall be no less than 15,500,000 shares.
ARTICLE 7
POST CLOSING COVENANTS.
7.1. Proxy Statement. At the next annual or special meeting of
the Company's stockholders or other action of its stockholders, the Company
shall include a proposal in its proxy statement or consent solicitation
statement, as the case may be, to approve conversion of the Series A Stock to
Common Stock in accordance with the terms of the Certificate of Designation and
a recommendation for the approval thereof. The date of the stockholder approval
of such proposal is referred to as the "Approval Date." Notwithstanding the
foregoing, the Company shall not submit such proposal to its stockholders until
the expiration of 90 days after the Closing Date.
7.2. Reservation of Rally's Common Stock. From and after the
effective date of this Agreement, the Company shall continuously maintain in
reserve a number of shares of Common Stock equal to the Common Stock issuable
upon the Closing of the Agreement and upon conversion of the Series A Stock.
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ARTICLE 8
REGISTRATION OF RALLY'S SHARES
The following provisions govern the registration of the Rally's
Common Stock to be issued at the Closing and Common Stock issuable upon
conversion of the Series A Stock to be issued at the Closing:
8.1. Definitions. As used in this Article, the following terms
have the following meanings:
Form S-3: The form so designated, promulgated by the
Commission for registration of securities under the
Securities Act, and any forms succeeding to the functions
of such form, whether or not bearing the same designation.
Holder: A holder of Registrable Securities, provided that
anyone who acquires any Registrable Securities in a
distribution pursuant to a registration statement filed by
the Company under the Securities Act or in a transaction
under Rule 144 under the Securities Act shall not thereby
be deemed to be a "Holder."
Register, registered and registration: A registration
effected by filing a registration statement in compliance
with the Securities Act and the declaration or ordering by
the Commission of effectiveness of such registration
statement.
Registrable Securities: All shares of Rally's Common Stock
sold hereunder or issuable upon conversion of, or payment
of any dividends in shares of Common Stock on, the Series
A Stock and held by the Sellers upon consummation of the
transactions contemplated herein.
8.2. Shelf Registration.
(a) Filing; Effectiveness.
(i) As soon as practicable, but in no
event more than 45 days after the date of this Agreement, the Company shall
prepare and file with the Commission a "shelf" registration statement (the
"Shelf Registration Statement") on the appropriate form for an offering by
Sellers to be made on a continuous or extended basis pursuant to Rule 415 under
the Securities Act, or such successor rule or similar provision then in effect
("Rule 415"), covering all of the Registrable Securities issuable at the
Closing Date.
(ii) As soon as practicable, but in no
event more than 45 days after the Approval Date or the date of a Dividend paid
in Common Stock, the Company shall prepare and file with the Commission a shelf
registration statment (a "Subsequent Shelf Registration Statement" and,
together with the Shelf Registration Statement, the "Registration
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Statements") on the appropriate form for an offering by the Sellers to be made
on a continuous or extended basis pursuant to Rule 415 covering all of the
Registrable Securities issued upon conversion of the Series A Stock or payment
of such Dividend, as the case may be.
(iii) The Company shall use its
commercially reasonable best efforts to have the Registration Statements
declared effective within 90 days after their respective filings are made and
to keep such Registration Statements continuously effective for the period
beginning on such date and ending on the earlier of (A) the date on which the
Holders no longer hold any Registrable Securities and (ii) the date that is two
years after the effective date of the respective Registration Statement.
(b) Effective Registration. A registration will
not be deemed to have been effective unless the Registration Statement with
respect thereto has been declared effective by the Commission and the Company
has complied in all material respects with its obligations under this Agreement
with respect thereto; provided, however, that if after it has been declared
effective, the offering of Registrable Securities pursuant to a Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. If a registration
made pursuant to this Section 8.2 is deemed not to have been effected, then the
Company shall continue to be obligated to effect a registration pursuant to
this Section 8.2.
(c) Form Used for Registration. In the event that
Form S-3 is not available for use by the Company for a Registration Statement
pursuant to this Section 8.2, the Company shall prepare and file a registration
statement on such form as shall be available for use by the Company at the time
the Company is obliged to prepare and file a registration statement hereunder.
In the event that Form S-3 thereafter becomes available for use by the Company,
the Company may prepare and file such Form S-3 in order to comply with its
obligations hereunder.
8.3. Demand Registration.
(a) Request for Registration. Subject to Section
8.7 hereof, from time to time after the Shelf Registration Statement or the
Subsequent Shelf Registration Statement, as the case may be, ceases to be
effective, one or more of the Holders may make written demand that the Company
file a registration statement (a "Demand Registration Statement") under the
Securities Act with the Commission to register shares of Registrable Securities
formerly covered by the Shelf Registration Statement or the Subsequent Shelf
Registration Statement, with an aggregate market value of at least $1,000,000,
which demand shall specify the number of Registrable Securities intended to be
disposed of by each such Holder and the intended method of distribution
thereof. Within 10 days after receipt of such request, the Company shall give
written notice of such registration request to all other Holders. Any Holder
electing to participate in such Demand Registration Statement shall deliver a
written request, which request shall specify the number of Registrable
Securities intended to be disposed of by such Holder and the intended
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15
method of distribution thereof, within 15 days after the receipt by the
applicable Holders of the notice from the Company of a request for Demand
Registration Statement. Thereupon, the Company shall prepare and file such
Demand Registration Statement and shall include therein all Registrable
Securities with respect to which the Company has received written demand or
request for registration. The Company shall use commercially reasonable efforts
to have the Demand Registration Statement declared effective on or before the
date which is 120 days after receipt by the Company of the applicable request
for filing of a Demand Registration Statement (a "Demand Registration Filing
Date").
(b) Effective Registration. The Company's
obligations with respect to a Demand Registration Statement will not be deemed
to have been satisfied unless the applicable Demand Registration Statement has
been declared effective by the Commission and the Company has complied in all
material respects with its obligations under this Agreement with respect
thereto; provided, however, that if after it has been declared effective, the
offering of Registrable Securities pursuant to a Demand Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the Commission or any other governmental agency or court, such Demand
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Demand Registration Statement may legally resume. If a
registration requested pursuant to this Section 8.3 is deemed not to have been
effected, then the Company shall continue to be obligated to effect a
registration pursuant to this Section 8.3.
(c) Selection of Underwriter. If the Holders elect
to conduct an offering pursuant to a Demand Registration Statement in the form
of an underwritten offering, a majority in interest of the requesting the
Holders participating in such Demand Registration Statement shall have the
right to designate and to select one or more nationally recognized firms of
investment bankers reasonably acceptable to the Company to act as the
book-running managing underwriter or underwriters in connection with such
offering and shall select any additional investment bankers and managers
reasonably acceptable to the Company to be used in connection with the
offering.
8.4. Piggy-Back Registration.
(a) Request for Registration. At any time from and
after the termination of effectiveness of the Registration Statements, each
time the Company proposes to file a registration statement under the Securities
Act with respect to an offering by the Company for its own account or for the
account of its security holders of any class of equity security (other than a
registration statement (A) on Form S-4 or S-8 (or any substitute form that is
adopted by the Commission), (B) filed in connection with an exchange offer or
offering of securities solely to the Company's existing security holders) or
(C) filed in connection with an acquisition, merger or similar transaction, the
Company shall give written notice of such proposed filing to the Holders of
Registrable Securities as soon as practicable (but in no event less than ten
business days before the anticipated filing date), and such notice shall offer
such Holders the opportunity to register such number of shares of Registrable
Securities as each such Holder may request (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended
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method of distribution thereof) (a "Piggy-Back Registration"). The Company
shall use commercially reasonable best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggy-Back Registration to
be included on the same terms and conditions as any other similar securities of
the Company or any other security holder included therein and to permit the
sale or other disposition of such Registrable Securities in accordance with the
intended method of distribution thereof. Any Holder shall have the right to
withdraw its request for inclusion of its Registrable Securities in any
registration statement pursuant to this Section 8.4(a) by giving written notice
to the Company of such withdrawal. The Company, in its sole discretion, may
withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective, provided that the Company shall give immediate notice of such
withdrawal to the Holders of Registrable Securities requested to be included in
such Piggy-Back Registration.
(b) Reduction of Offering. In connection with an
underwritten offering where Piggy-Back Registration has been requested as
provided in Section 9.4(a), the Company shall use commercially reasonable
efforts to cause all Registrable Securities requested to be included in such
Piggy-Back Registration to be included as provided in Section 9.4(a). If the
managing underwriter or underwriters of any such underwritten offering have
given written notice to the Holders of Registrable Securities requesting
inclusion in such offering that it is their opinion that the total number of
shares which the Company, Holders of Registrable Securities and any other
persons participating in such registration intend to include in such offering
is such as to materially and adversely affect the success of such offering,
then (i) the number of shares to be offered for the account of all other
persons (other than the Company and the Holders) participating in such
registration other than pursuant to demand registration rights shall be reduced
or limited (to zero if necessary) pro rata in proportion to the respective
number of shares requested to be registered by such persons to the extent
necessary to reduce the total number of shares requested to be included in such
offering to the number of shares, if any, recommended by the managing
underwriter or underwriters and (ii) if such managing underwriter or
underwriters recommend a further reduction in the number of shares in the
offering, then the number of shares to be offered for the account of the
Holders shall be reduced or limited (to zero if necessary) pro rata in
proportion to the respective number of shares requested to be registered by
such Holders to the extent necessary to reduce the total number of shares
requested to be include in such offering to the number of shares, if any,
recommended by such managing underwriter or underwriters.
(c) In the case of any registration initiated by
the Company, the Company shall have the right to designate the managing
underwriter in any underwritten offering.
8.5. Registration Procedures. In connection with the
obligations of the Company to effect or cause the registration of any
Registrable Securities pursuant to the terms and conditions of this Agreement,
the Company shall use its commercially reasonable best efforts to effect the
registration and sale of such Registrable Securities in accordance with the
intended method of distribution, and in connection therewith, the Company will:
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(i) prepare and file with the Commission a
registration statement with respect to such shares and use commercially
reasonable efforts to cause such registration statement to become and remain
effective as provided herein;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of the
Securities Act with respect to the disposition of all shares covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition from time to time of
the prospective seller or sellers of such shares;
(iii) furnish to each prospective seller such number
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents, as such
seller or the managing underwriter may reasonably request in order to
facilitate the public sale or other disposition of the shares owned by such
seller;
(iv) use commercially reasonable best efforts to
register or qualify the shares covered by such registration statement under
such other securities or blue sky or other applicable laws of such jurisdiction
within the United States as each prospective seller shall reasonably request,
to enable such seller to consummate the public sale or other disposition in
such jurisdictions of the shares owned by such seller; provided, however, that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not at the time so qualified or to take any action
which would subject it to service of process in suits other than those arising
out of the offer or sale of the Registrable Securities covered by such
registration statement in any jurisdiction where it is not at the time so
subject;
(v) furnish to each prospective seller a signed
counterpart, addressed to the prospective sellers, of an opinion of counsel for
the Company, dated the effective date of the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) as are customarily covered (at the time of
such registration) in opinions of issuer's counsel delivered to the
underwriters in underwritten public offerings of securities;
(vi) in the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering; each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement;
(vii) notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act or the happening
of any event as a result of which the prospectus included
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in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;
(viii) apply for listing and use its commercially
reasonable best efforts to list the Registrable Securities being registered on
any national securities exchange on which a class of the Company's equity
securities are listed or, if the Company does not have a class of equity
securities listed on a national securities exchange, apply for qualification
and use its commercially reasonable best efforts to qualify the Registrable
Securities being registered for inclusion on the automated quotation system of
the National Association of Securities Dealers, Inc. or on a national
securities exchange; and
(ix) Provide a transfer agent and registrar for all
Registrable Securities registered hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
8.6. Information by Holder
(a) Each Holder of Registrable Securities and each
underwriter designated by a majority in interest of the requesting Holders,
will furnish to the Company such information as the Company may reasonably
require from such seller or underwriter in connection with the registration
statement (and the prospectus included therein).
(b) Failure of a prospective seller of Registrable
Securities to furnish the information and agreements described in this Section
8.6 shall not affect the obligations of the Company under this Article 8 to
Holders who furnish such information and agreements, unless such failure
impairs or may impair the viability of the offering or the legality of the
registration statement or the underlying offering.
8.7. Limitations on Required Registrations
(a) The Company shall not be required to effect
more than one registration in any twelve-month period, or more than an
aggregate of three registrations, pursuant to Section 8.3 hereof for all
Holders on a combined basis.
(b) If at the time of any demand to register
Registrable Securities pursuant to Section 8.3 hereof, the Company is engaged,
or has fixed plans to engage within 90 days of the time of the request, in a
registered public offering as to which the Holders may include such Stock
pursuant to Section 8.4 hereof or is engaged in any other activity that, in the
good faith determination of the Company's Board of Directors, would be
adversely affected by the demanded registration to the material detriment of
the Company, then the Company may at its option direct that such demand be
delayed for a period not in excess of six months from the effective date of
such offering, or the date or commencement of such other material activity, as
the case may be,
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such right to delay a demand to be exercised by the Company not more than once
in each 12 month period while the rights set forth in Section 8.3 are in
effect.
(c) Notwithstanding anything to the contrary in
this Agreement, the obligation of the Company pursuant to Section 8.3 hereof
shall expire on the seventh anniversary of the Closing.
8.8. Expenses of Registration. All expenses incurred in
effecting any registration pursuant to Sections 8.2, 8.3 and 8.4 including,
without limitation, all registration and filing fees, printing expenses,
expenses of compliance with blue sky laws, fees and disbursements of counsel
for the Company, and expenses of any audits incidental to or required by any
such registration, shall be borne by the Company, except:
(a) all expenses, fees and disbursements of any
counsel retained by the Holders, and all underwriting discounts and commissions
shall be borne by the Holders of the securities registered pursuant to such
registration, pro rata according to the quantity of their securities so
registered;
(b) the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 8.3 if
the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered pursuant
thereto (in which case all participating Holders shall bear such expenses); and
(c) a Holder who withdraws from an underwritten
registration pursuant to Section 8.3 shall be required to pay the percentage of
the expenses of such registration which is equal to the percentage that the
number of shares such Holder requested to be registered bears to the total
number of shares to be registered.
8.9. Indemnification
(a) Indemnification by Company. To the extent
permitted by law, the Company will indemnify each Holder requesting or joining
in a registration, each agent, officer and director of such Holder, each person
controlling such Holder and each underwriter and selling broker of the
securities so registered (each, an "Indemnitee" and collectively,
"Indemnitees") against all claims, losses, damages and liabilities, or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering,
circular or other document incident to any registration, qualification or
compliance (or in any related registration statement, notification or the like)
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act, the Exchange
Act, or state securities laws or any rule or regulation promulgated under the
Securities Act, the Exchange Act or a state securities law, in each case
applicable to the Company, and will reimburse each Indemnitee for any legal and
any other fees and expenses reasonably incurred in
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connection with investigating or defending any such claim, loss, damage,
liability or action, provided however, that the Company will not be liable to
any Indemnitee in any such case to the extent that any such claim, loss, damage
or liability is caused by any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by such
Indemnitee for use therein and except that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in the preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
becomes effective or in the amended prospectus filed with the Commission
pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of any underwriter or any Indemnitee if there is
no underwriter, if a copy of the Final Prospectus was not furnished by such
underwriter of Indemnitee to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act and such underwriter or Indemnitee was required under the
Securities Act to furnish such Final Prospectus; provided further, that this
indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations; provided, further, that the indemnity agreement
contained in this Section 8.9(a) shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld.
(b) Indemnification by Holders. To the extent
permitted by law, each Holder (severally and not jointly) requesting or joining
in a registration and each underwriter and selling broker of the securities so
registered will indemnify the Company and its officers and directors and each
person, if any, who controls any thereof within the meaning of Section 15 of
the Securities Act, and their respective successors against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other documents incident to
any registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission) to
state therein a material fact required to be so stated therein or necessary to
make the statements therein not misleading and will reimburse the Company and
each other person indemnified pursuant to this paragraph (b) for any legal and
any other fees and expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
provided, however, that this paragraph (b) shall apply only if (and only to the
extent that) such statement or omission was made in reliance upon and in strict
conformity with written information (including, without limitation, written
negative responses to inquiries) furnished to the Company by an instrument duly
executed by such Holder, underwriter or selling broker and stated to be
specifically for use in such prospectus, offering circular or other document
(or related registration statement, notification or the like) or any amendment
or supplement thereto; provided, that the indemnity agreement contained in this
Section 8.9(b) shall not apply to amounts paid in settlement or any such claim,
loss, damage, liability or action if such settlement is effected without the
consent of the Holder or underwriter, as the case may be, which consent shall
not be unreasonably withheld and provided, further, that the obligation of any
such Holder shall be limited to an amount equal to the net proceeds received by
such Holder from the sale of the Registered Securities in such offering
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contemplated herein, unless such claim, loss, damage, liability or action
resulted from such Holder's fraudulent misconduct.
(c) Each party entitled to indemnification
hereunder (the "Indemnified Party") shall give notice to the party required to
provide the indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party (at its expense) to assume
the defense of any claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, shall conduct the defense of such claim or
litigation, shall be reasonably satisfactory to he Indemnified Party and the
Indemnified Party may participate in such defense at such party's expense, and
provided further that the omission by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 8.9 except to the extent that the omission results in a
failure of actual notice to the Indemnifying Party and such Indemnifying Party
is damaged solely as a result of the failure to give notice. The Indemnified
Party may retain separate counsel; provided that the fees and expenses of such
separate counsel shall be paid by the Indemnifying Party only if the
Indemnified Party reasonably concludes that there may be defenses available to
it, him or her which are different from or additional to those available to the
Indemnifying Party and the Indemnifying Party approves such conclusion, which
approval shall not be unreasonably withheld. No Indemnifying Party, in the
defense of any such claim or litigation, shall consent, except with the consent
of each Indemnified Party, to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this
Section 8.9 is held by a court of competent jurisdiction to be unavailable to
an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expenses in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. This relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
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(f) The reimbursement required by this Section 8.9
shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred.
(g) The obligations of the Company under this
Section 8.9 shall survive the conversion, if any, of the Series A Stock, the
completion of any offering of Registrable Securities in a registration
statement under this Section 8, or otherwise.
8.10. Transfer of Registration Rights. The registration rights
granted to Holders under this Article 8 may be transferred but only to (i) a
transferee who shall acquire not less than the greater of 6,000 shares of
Registrable Securities or 50% of the Registrable Securities held by any Holder
and (ii) affiliates of any Holder. Any such transfer shall become effective
only after receipt by the Company of (i) a written notice of the transfer,
including the name, address and tax payer identification number of the
transferee and the number of Registrable Securities transferred, and (ii) an
agreement executed by the transferee to be bound by the terms of this
Agreement.
8.11. "Stand Off" Agreement. In consideration for the Company
performing its obligations under this Section 8, Holders agree that for a
period of time (not to exceed 120 days) from the effective date of any
registration of an underwritten public offering of securities of the Company
(upon request of the Company or of the underwriters managing such underwritten
offering), Holder shall not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
or any other stock of the Company held by Holder, other than shares of
Registrable Securities included in the registration without the prior written
consent of the Company or such underwriters, as the case may be.
8.12. Delay of Registration. A Holder shall have no right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Article.
8.13. Reports Under the Securities Act and the Exchange Act.
With a view to making available to the Holders the benefits of any rule or
regulation of the Commission that may at any time permit a Holder to sell
securities of the Company to the public pursuant to a registration on Form S-3,
the Company agrees to file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act.
8.14. Affiliate Status of Holder. At any time after the second
anniversary of the issuance of any Registrable Securities, if a Holder is not,
and has not been for at least the prior three months, an affiliate of the
Company for purposes of Rule 144 under the Securities Act and delivers to the
Company an opinion to that effect from counsel reasonably acceptable to the
Company, such Holder may request the Company to remove any related restrictive
legend on such Holder's certificates representing shares of Rally's Common
Stock, which request the Company agrees to honor promptly in the normal course
of business. After such removal, the owner of any
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such shares no longer shall be a Holder and such shares no longer shall be
Registrable Securities subject to this Article 8.
ARTICLE 9
MISCELLANEOUS
9.1. Expenses. Each party to this Agreement shall bear its own
expenses relating to the preparation, execution, delivery and performance of
this Agreement and all transactions contemplated thereby.
9.2. Survival of Agreements. All agreements, presentations and
warranties and covenants contained herein or made in writing by or on behalf of
any party in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement (despite any investigation at any
time made by any other party or on its behalf). All statements contained in any
certificate or other instrument executed and delivered by any party or its duly
authorized officers or representatives pursuant hereto in connection with the
transactions contemplated hereby shall be deemed representations by the that
party hereunder.
9.3. Sellers' Obligations Several. Each Seller's obligations
under this Agreement are several, and no Seller is jointly obligated hereunder
to render the performance of any other Seller, nor excused from performance
hereunder by reason of any other Seller's nonperformance.
9.4. Notices. All notices, requests, consents and other
communications herein shall be in writing and shall be deemed to be delivered
(i) on the date delivered, if personally delivered or transmitted via facsimile
with return confirmation of such transmission; (ii) on the business day after
the date sent, if sent by recognized overnight courier service and (iii) on the
fifth day after the date sent, if mailed by first-class certified mail, postage
prepaid and return receipt requested, as follows:
If to the Company: Rally's Hamburgers, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Christensen, Miller, Fink, Jacobs, ▇▇▇▇▇▇,
Weil & ▇▇▇▇▇▇▇, LLP
2121 Avenue of the Stars, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sellers: To the parties at such addresses as are
listed on Exhibit A attached hereto
or other such addresses as each of the parties hereto may provide from time to
time in writing to the other parties.
9.5. Modifications; Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally or in
writing, except that any provision of this Agreement may be amended and the
observance of any such provision may be waived (either generally or in a
particular instance and either retroactively or prospectively) with (but only
with) the written consent of the Company and each of the Sellers.
9.6 Entire Agreement. This Agreement, together with the
schedules and exhibits attached hereto and made a part hereof, contains the
entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negations, agreements, representations,
warranties, commitments, whether in writing or oral, prior to the date hereof.
9.7 Successors and Assigns. Except as otherwise expressly
provided in this Agreement, all of the terms of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and transferees of the parties hereto.
9.8 Enforcement.
(a) Remedies at Law or in Equity. If any party
hereto shall default in any of its obligations under this Agreement or if any
representation or warranty made by or on behalf of it in this Agreement or in
any certificate, report or other instrument delivered by it under or pursuant
to any term hereof shall be untrue or misleading in any material respect as of
the date of this Agreement or as of the Closing Date or as of the date it was
made, furnished or delivered, any other party may proceed to protect and
enforce its rights by suit in equity or action at law, whether for the specific
performance of any term contained in this Agreement, injunction against the
breach of any such term or in furtherance of the exercise of any power granted
in this Agreement, or to enforce any other legal or equitable right of such
party or to take any one of more of such actions. In the event any party brings
such an action against another, the prevailing party in such dispute, as
determined by a final non-appealable order, shall be entitled to recover from
the losing party all fees, costs and expenses enforcing any right of such
prevailing party under or with respect to
-23-
25
this Agreement, including without limitation such reasonable fees and expenses
of attorneys and accountants, which shall include, without limitation, all
fees, costs and expenses of appeals.
(b) Remedies Cumulative; Waiver. No remedy
referred to herein is intended to be exclusive, but each shall be cumulative
and in addition to any other remedy referred to above or otherwise available at
law or in equity. No express or implied waiver by any party of any default
shall be a waiver of any future or subsequent default. The failure or delay of
any party in exercising any rights granted hereunder shall not constitute a
waiver of any such right and any single or partial exercise of any particular
right by any party shall not exhaust the same or constitute a waiver of any
other right provided herein.
9.9 Execution and Counterparts; Facsimile Execution. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and all such counterparts
together shall constitute one instrument. In addition, to the extent that
receipt is confirmed, this Agreement may be executed and sent by telecopy with
the original to follow by a nationally recognized overnight delivery service.
9.10 Governing Law; Jurisdiction; and Severability. This
Agreement shall be governed by the internal laws of the State of Delaware,
without regard to principles of conflicts of law. Each party hereto consents to
the jurisdiction of any federal court located in the State of California,
County of Los Angeles for the purpose of any action, suit or proceeding arising
out of or based on this Agreement or any provision hereof. In the event any
provision of this agreement of the application of any such provision to any
party shall be held by a court of competent jurisdiction to be contrary to law,
the remaining provisions of this agreement shall remain in full force and
effect.
9.11 Headings. The descriptive headings of the Sections hereof
and the Schedules and Exhibits hereto are inserted only and do not constitute a
part of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
-24-
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
by their duly authorized officers as of the date first written above.
THE COMPANY:
RALLY'S HAMBURGERS, INC.
By:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SELLERS:
CKE RESTAURANTS, INC.
By:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
FIDELITY NATIONAL FINANCIAL, INC.
By:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
GIANT GROUP, LTD.
By:
-------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
-25-
27
-------------------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, AS
TRUSTEE FOR THE RETIRE-
MENT PLAN FOR THE EMPLOY-
EES OF ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, A
PROF. CORP.
-------------------------------------------
▇▇ ▇▇▇▇▇▇▇▇
THE TRAVELERS INDEMNITY COMPANY
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-26-
28
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
WEDBUSH ▇▇▇▇▇▇, AS CUSTODIAN
FOR THE ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇,
ACCOUNT # ▇▇▇▇▇▇▇▇
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇
-27-
29
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
TRUSTEES OF THE ▇▇▇▇▇ AND ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ REVOCABLE TRUST
DTD 1/2/91
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-28-
30
▇▇▇▇▇▇▇ ▇▇▇▇▇, AS TRUSTEE FOR
THE ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ACCOUNT
#223-86756
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, AS TRUSTEE FOR THE
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ACCOUNT #223-8301
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-29-
31
EXHIBIT A
Rally's
Checker's -----------------------
Common Shares Common Preferred
to be Shares Shares
Converted Issued Issued
------------- --------- ---------
CKE Restaurants, Inc. 12,754,885 2,798,080 28,619
Fidelity National Financial, Inc. 1,680,616 368,673 3,771
GIANT GROUP, LTD. 200,045 43,869 449
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 113,438 24,838 255
▇▇▇▇ ▇▇▇▇▇▇▇▇ 113,438 24,838 255
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 272,230 59,702 611
▇ ▇ ▇▇▇▇▇▇▇▇ 27,168 5,955 61
▇▇▇▇▇ ▇▇▇▇▇▇▇ 272,230 59,702 611
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 55,353 12,162 124
▇▇ ▇▇▇▇▇▇▇▇ 45,353 9,925 102
Travelers 1,270,769 -- 5,639
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇ 453,754 99,553 1,018
▇▇▇▇▇ ▇▇▇▇▇▇ 226,877 49,776 509
▇▇▇▇ ▇▇▇▇▇▇ 64,353 14,156 144
▇▇▇▇▇▇ ▇▇▇▇▇▇ 45,353 9,925 102
▇▇▇ ▇▇▇▇▇ 45,353 9,925 102
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 226,877 49,776 509
▇▇▇▇▇▇ ▇. ▇▇▇▇ 181,522 39,850 ▇▇▇
▇▇▇▇▇ ▇▇▇▇ 45,353 9,925 102
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 45,353 9,925 102
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 90,707 19,851 204
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 226,877 49,776 ▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 90,707 19,851 204
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 272,230 59,702 611
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 45,353 9,925 ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 90,707 19,851 204
▇▇▇▇▇ ▇▇▇▇▇ 45,353 9,925 102
▇▇▇ ▇▇▇▇▇▇▇▇ 45,353 9,925 102
▇▇▇▇ ▇▇ ▇▇▇▇▇ 53,353 9,975 137
---------- --------- ------
Total 19,100,960 3,909,336 45,667
========== ========= ======
32
CKE Restaurants
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fidelity National Financial, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
GIANT GROUP, LTD.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o GIANT GROUP, LTD.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o GIANT GROUP, LTD.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇ ▇ ▇▇▇▇▇▇▇▇
c/o GIANT GROUP, LTD.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇-▇
▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ Avenue of the Stars, 1800
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, as Trustee for the
Retirement Plan for the Employees of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, a Prof. Corp.
2121 Avenue of the Stars, 1800
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇
c/o GIANT GROUP, LTD.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Travelers Indemnity Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Wedbush ▇▇▇▇▇▇, as Custodian for the
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇, Account #▇▇▇▇▇▇▇▇
A-2
34
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o Aames Financial
▇▇▇ ▇▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-3
35
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Trustees of the
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Revocable Trust DTD 1/2/91
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee for the ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, Account #223-86756
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee for the ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇, Account #223-83014
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-4