TERMINATION AND RELEASE AGREEMENT
This TERMINATION AND RELEASE AGREEMENT (this "AGREEMENT"), dated as of
September 25, 1998, by and among Global Motorsport Group, Inc., a Delaware
corporation (the "COMPANY"), GMS Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of the Company ("ACQUISITION SUB") and Fremont
Acquisition Company III, LLC, a Delaware limited liability company
("PURCHASER"); collectively the "PARTIES." Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Merger Agreement.
RECITALS
A. The parties hereto have entered into that certain Amended and Restated
Agreement and Plan of Merger, dated as of June 28, 1998 (the "MERGER
AGREEMENT"), pursuant to which, among other things, the Company agreed to make a
cash tender offer (the "OFFER") to acquire up to 4,820,000 shares of its common
stock.
B. The Company commenced the Offer on July 13, 1998.
C. At the initial scheduled expiration date of the Offer on August 12,
1998, one or more conditions to the Offer were not satisfied.
D. Pursuant to Section 1.1(b) of the Merger Agreement, Purchaser requested
that the Company extend the scheduled expiration date of the Offer.
E. The Company extended the expiration date of the Offer to September 25,
1998.
F. At the scheduled expiration date of the Offer, the Parties anticipate
that one or more of the conditions to the Offer shall not be satisfied.
G. The Parties wish to terminate the Merger Agreement and clarify the
rights and obligations among them.
Therefore, in consideration of the foregoing recitals and promises and
payment specified below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
TERMINATION AND RELEASE
1. TERMINATION OF THE MERGER AGREEMENT. Subject to the terms of this
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Agreement and except for Section 8.3(b) of the Merger Agreement, the Parties
hereby agree to terminate the Merger Agreement and abandon the Transactions
pursuant to Section 10.1(a) of the Merger Agreement.
2. EFFECTIVENESS OF TERMINATION. The termination of the Merger Agreement
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as set forth above shall be effective upon execution of this Agreement by the
Parties.
3. EXPENSE REIMBURSEMENT PAYMENT IN SATISFACTION OF ALL CLAIMS. Pursuant
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to Section 10.3(b) of the Merger Agreement, the Company shall pay to Purchaser
One Million dollars ($1,000,000) (the "EXPENSE REIMBURSEMENT PAYMENT") by wire
transfer of immediately available funds to the bank account set forth in Exhibit
A attached hereto. The Expense Reimbursement Payment shall be made promptly
following execution of this Agreement, but in no event later than one (1)
business day following the date hereof. The Expense Reimbursement Payment shall
constitute full satisfaction of any and all obligations of the Company and
Acquisition Sub to reimburse Purchaser and its Affiliates pursuant to the Merger
Agreement for fees and expenses actually and reasonably incurred by any of them
or on their behalf in connection with the Merger Agreement and the Transactions
(the "EXPENSES"). For purposes hereof, the Expenses shall mean any fees, costs,
expenses and disbursements incurred or payable to Purchaser and its Affiliates,
Bank of America, NT & SA, BancAmerica Xxxxxxxxx Xxxxxxxx, XX Xxxx Xxxxx,
Xxxxxxxx Xxxxxx, Inc., Environ, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
O'Melveny & Xxxxxx LLP, Katten, Muchin & Xxxxx, Xxxxxx Xxxxxxxx LLP, American
Stock Transfer & Trust Company (but only with respect to its role as Depositary
in the Offer), MacKenzie Partners, Inc. (but only with respect to its role as
Information Agent in the Offer), R.R. Xxxxxxxx Financial Printers, Inc. and any
other credit or financing source, investment bankers, or counsel retained by
Purchaser or any of the foregoing in connection with the Merger Agreement and
the Transactions. In consideration of the Expense Reimbursement Payment,
Purchaser agrees to pay the Expenses.
4. PURCHASER RELEASE. Except for the obligations arising under this
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Agreement, Purchaser, with full understanding of the contents and legal effect
of this Agreement, on behalf of itself and on behalf of its subsidiaries,
shareholders, directors, officers, members, employees, agents, attorneys,
insurers, and any of its predecessors, successors-in-interest, and assigns
("AFFILIATES") hereby irrevocably and unconditionally releases and discharges
the Company and Acquisition Sub and their Affiliates from any and all actions,
causes of action, claims, obligations, fees, expenses, costs, attorneys' fees,
damages, losses, liabilities and demands, of whatever character, including,
without limiting the generality of the foregoing, actions arising from contract,
tort, and bankruptcy, and any other claims of any nature or kind which are or
could have been asserted with respect to, or in any way arise out of or are
related to, the Merger Agreement and the Transactions.
5. COMPANY AND ACQUISITION SUB RELEASE. Except for the obligations
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arising under this Agreement, the Company and Acquisition Sub, with full
understanding of the contents and legal effect of this Agreement, on behalf of
themselves and their Affiliates hereby irrevocably and unconditionally release
and discharge Purchaser and its Affiliates from any and all actions, causes of
action, claims, obligations, fees, expenses, costs, attorneys' fees, damages,
losses, liabilities and demands, of whatever character, including, without
limiting the generality of the foregoing, actions arising from contract, tort,
and bankruptcy, and any other claims of any nature or kind which are or could
have been asserted with respect to, or in any way arise out of or are related
to, the Merger Agreement and the Transactions.
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6. SECTION 1542 WAIVER. It is further understood and agreed by the
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Parties that, except for the obligations arising under this Agreement, the
foregoing Releases extend to all claims, of every nature and kind whatsoever,
known, suspected, or unsuspected, past, present or future, and all rights under
Section 1542 of the California Civil Code, in so far as applicable to this
Agreement, are hereby expressly waived by the Parties and their respective
Affiliates. Said section reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH, IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
The Parties hereby acknowledge that they may hereafter discover facts
different from, or in addition to, those which they now believe to be true with
respect to the released claims, and agree that this Agreement and releases
contained herein shall be and remain effective in all respects notwithstanding
such different or additional facts or the discovery thereof.
7. PRESS RELEASE; NONDISPARAGEMENT. With respect to the termination of
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the Merger Agreement, the Parties agree that the press release attached hereto
as Exhibit B shall be issued. Each of the Parties further agrees that it will
not disparage any of the other Parties, or their respective directors, officers,
stockholders, members, or employees, in any manner intended to be harmful to
Purchaser or the Company or any of their respective Affiliates, or their
respective reputations, or the personal or business reputation of such
directors, officers, stockholders, members or employees; provided, however, that
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each Party may respond accurately and fully to any question, inquiry or request
for information as may be required by applicable law.
8. ENTIRE AGREEMENT. It is further understood and agreed that this
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Agreement constitutes the entire understanding between the Parties. All prior
negotiations and understandings between the Parties, whether oral or written,
have been merged herein.
9. NO PROMISES, REPRESENTATIONS, WARRANTIES. It is further understood and
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acknowledged that none of the Parties have made any promise, representation, or
warranty whatsoever, express or implied, except as expressly set forth herein,
to induce the other to execute this Agreement, and the Parties acknowledge that
they have not executed this Agreement in reliance upon any such promise,
representation, or warranty; except that (i) the Company hereby represents that
it has complied in all respects with the provisions of Section 8.2 of the Merger
Agreement, and (ii) Purchaser hereby acknowledges and agrees that discussions or
negotiations by the Company, its Affiliates or advisors with financial
institutions concerning a repurchase of its shares by the Company, or similar
transactions not involving the sale of control of the Company to a third party,
shall not be deemed to breach the provisions of Section 8.2 of the Merger
Agreement.
10. NO ADMISSIONS. It is further understood and agreed that this
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Agreement represents the release of all claims, except as set forth in this
Agreement, by the Parties and their
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respective Affiliates. Neither the payment of any sums of money, nor the
execution of this Agreement, shall constitute or shall be construed as an
admission of any liability whatsoever by any of the Parties or their respective
Affiliates.
11. SUCCESSORS. The Parties further expressly agree that this Agreement
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shall be binding upon and inure to the benefit of their respective directors,
officers, members, servants, agents, employees, divisions, subsidiaries,
affiliated companies, heirs, administrators, successors and assigns, as
applicable.
12. ASSIGNMENT OF CLAIMS. The Parties represent and warrant that they
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have not made any assignment of any claim or cause of action related in any way
to this Agreement.
13. ATTORNEYS' FEES. In the event of any dispute, litigation or other
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adversary proceeding that may arise with respect to the subject matter of this
Agreement, the prevailing party will be entitled to receive from the other
reasonable attorneys' fees, costs and expenses incurred in said proceeding. The
"prevailing party" means the party determined by the court or arbitrator to have
most nearly prevailed, even if such party did not prevail in all matters, and
not necessarily the party in whose favor a judgment is rendered.
14. MODIFICATION. The Parties understand and agree that this Agreement
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may not be altered, amended, modified, or otherwise changed in any respect or
particular whatsoever except in writing duly executed by each of the Parties or
their authorized representatives.
15. SEVERABILITY. The provisions of this Agreement shall be considered
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severable, such that if any provision or part thereof shall at any time be held
under any law or ruling to be invalid, such provision or part shall remain in
force to the extent allowed by law, and all other provisions shall remain in
force and effect and enforceable.
16. CHOICE OF LAW. This Agreement shall be governed by, and construed in
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accordance with, the laws of the State of California, without giving effect to
the principles of conflicts of laws thereof.
17. CAPTIONS. The section captions used in this Agreement are used for
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convenience only and are not to be considered in construing or interpreting this
Agreement.
18. FACSIMILE SIGNATURES. Any signature page delivered by a fax machine
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or telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any Party who delivers such a signature page agrees to later deliver
an original counterpart to any Party which requests it.
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19. COUNTERPARTS. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be duly executed on its behalf as of the day and year first above written.
GLOBAL MOTORSPORT GROUP, INC., A DELAWARE FREMONT ACQUISITION COMPANY III, LLC, A
CORPORATION DELAWARE LIMITED LIABILITY COMPANY
BY: /s/ Xxxxxx X. Xxxxxx BY: /s/ Xxxxx Xxxxx
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Name: Xxxxxx X. Xxxxxx Name: Xxxxx Xxxxx
Title: Chairman of the Board Title: Vice President and Secretary
GMS ACQUISITION CORP., A DELAWARE CORPORATION
BY: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Sole Director
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