STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of May 3, 2002 (this "Agreement"), by
and between GP Strategies Corporation, a Delaware corporation (the "Company"),
and EGI-Fund (02-04) Investors, L.L.C., a Delaware limited liability company
("Investor"). All capitalized terms used and not otherwise defined herein have
the meanings ascribed to them in Article VIII hereof.
WHEREAS, the Company desires to issue and sell to Investor, and Investor
desires to purchase from the Company, (i) 1,000,000 newly-issued shares ("New
Common Shares") of common stock of the Company, par value $0.01 per share
("Common Stock"), and (ii) 300,000 newly-issued shares ("New Class B Shares") of
Class B capital stock, par value $0.01 per share ("Class B Stock"), convertible
into 300,000 shares of the Company's Common Stock ("Underlying Shares") in
accordance with the terms of the Class B Stock under the Amended and Restated
Certificate of Incorporation of the Company ("Charter"). The 1,000,000 New
Common Shares and 300,000 New Class B Shares to be issued to Investor hereunder
are referred to collectively herein as the "Shares."
WHEREAS, in connection with the issuance and sale of the Shares to Investor
hereunder, Investor has agreed to grant to the Company the Call Option (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises, representations and
warranties and the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND WARRANT
1.1 Purchase and Sale. Upon the terms and subject to the satisfaction of
the conditions contained in this Agreement, at the Closing, the Company shall
issue and sell to Investor, and Investor shall so purchase from the Company, the
Shares free and clear of all Liens.
1.2 Consideration. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, at the Closing, Investor shall pay to
the Company an aggregate of $4,760,000 for the Shares, consisting of $3,500,000
for the New Common Shares and $1,260,000 for the New Class B Shares (the
"Purchase Price").
ARTICLE II
THE CLOSING
2.1 Time and Place. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, the closing of the issuance and sale of
the Shares contemplated by this Agreement (the "Closing") shall take place at
the offices of the Company at 0 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
on the date hereof, or at such other place as Investor and the Company may
agree. The date and time at which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
2.2 Deliveries by the Company. At the Closing, the Company shall
deliver the following to Investor:
(a) stock certificates representing the Shares, in the name of Investor,
dated as of the Closing Date, and in such denominations as Investor
may request in writing at least 10 days prior to the Closing;
(b) the opinion of Xxxxxx X. Xxxxxx, Vice President and General Counsel of
the Company, in the form of opinion attached hereto as Exhibit A; and
(c) all other documents, instruments and writings required to be delivered
by the Company at or prior to the Closing Date pursuant to this
Agreement.
2.3 Deliveries by Investor. At the Closing, Investor shall deliver the
following to the Company:
(a) the Purchase Price by interbank transfer of federal funds to one or
more accounts designated in a writing delivered by the Company to Investor no
less than two (2) business days prior to the Closing Date or by such other means
as may be agreed upon in writing by the Company and Investor; and
(b) all other documents, instruments and writings required to be delivered
by Investor at or prior to the Closing Date pursuant to this Agreement.
2.4 Restrictive Legends.
(a) All certificates representing the Shares (including the Underlying
Shares) will bear on their face the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws. These securities may not be pledged, sold,
hypothecated or transferred in the absence of such registration or any
exemption therefrom under the Securities Act of 1933, as amended, or
any applicable state securities laws."
(b) All certificates representing the New Class B Shares (excluding the
Underlying Shares) will bear on their face the following legend:
"The transfer and voting of the securities represented by this
certificate is subject to terms and conditions of an agreement, dated
as of May 3, 2002, between the Company and the holder of record of
this certificate, and no transfer of such securities shall be valid or
effective except in accordance with the agreement and until such terms
and conditions have been fulfilled. Copies of the agreement may be
obtained at no cost by written request made the by the holder of
record of this certificate to the Secretary of the Company at the
principal offices thereof."
(c) The legend set forth in Section 2.4(a) hereof shall be removed and the
Company shall issue a certificate or certificates without such legend to the
holder thereof upon the earliest to occur of (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
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accordance with such registration statement; (ii) the securities shall have been
sold to the public pursuant to Rule 144 (or any successor provision under the
Securities Act), or (iii) such securities may be sold by the holder without
restriction or registration under Rule 144(k) under the Securities Act (or any
successor provision).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to Investor on the date of
this Agreement, which representations, warranties and covenants are relied upon
by Investor in entering into this Agreement and shall survive the Closing in
accordance with Section 6.2, as follows:
3.1 Organization and Qualification. Each of the Company and each Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of the Company and each Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
(including any foreign country) where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed or in good standing which would not, individually or in
the aggregate, have a Material Adverse Effect.
3.2 Certificate of Incorporation and Bylaws. The Company has heretofore
furnished to Investor a complete and correct copy of the Charter of the Company
and the certificate of incorporation of each Subsidiary and the bylaws of the
Company and each Subsidiary as currently in effect (collectively, the
"Organizational Documents"). Such Organizational Documents are in full force and
effect, and no other organizational documents are applicable to or binding upon
the Company or any Subsidiary. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its Organizational Documents.
3.3 Capitalization; Subsidiaries.
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of a total of 37,800,000 shares consisting of 25,000,000 shares
of Common Stock, 2,800,00 shares of Class B Stock and 10,000,000 shares of
preferred stock of the Company, par value $0.01 per share ("Preferred Stock"),
of which 10,000 shares of Series A Junior Participating Preferred Stock, par
value $0.01 per share, of the Company ("Series A Preferred") has been
designated.
(b) As of the date of this Agreement, (i) 13,616,084 shares of Common Stock
were issued and outstanding, all of which shares were validly issued, fully paid
and nonassessable, (ii) 900,000 shares of Class B Stock were issued and
outstanding, all of which shares were validly issued, fully paid and
nonassessable, (iii) except for 10,000 shares of Series A Preferred, no series
of Preferred Stock have been designated, (iv) no shares of Preferred Stock,
including Series A Preferred, have been issued or are outstanding, and (v)no
shares of Common Stock and no shares of Class B Stock or Preferred Stock were
held in the treasury of the Company.
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(c) Except as set in Schedule 3.3(c) hereto, there are no outstanding
Equity Securities of the Company. Schedule 3.3(c) includes a true and correct
table summarizing all outstanding stock options, warrants and other rights to
acquire from the Company Equity Securities of the Company or any Subsidiary,
including the number of shares covered, the vesting schedule therefor, the
exercise price therefor, the termination date therefor, and, except in respect
of stock options issued to officers, directors or employees of the Company or
any Subsidiary under the Company's Non-Qualified Stock Option Plan, the identity
of the holder thereof.
(d) As of the date of this Agreement, immediately following issuance of the
Shares to Investor hereunder, the relative percentage ownership and voting power
of the New Common Shares and the New Class B Shares will be is as follows:
---------------------------------------------------------------------------------------------------------------------------------
% of
% of Common % of Diluted Fully-Diluted
Stock % of Class B Common Stock Common Stock % of Voting % of Fully-Diluted
Shares Outstanding Stock Outstanding Outstanding Outstanding Power Voting Power
---------------------------------------------------------------------------------------------------------------------------------
1,000,000 New 6.84% N/A 6.70% 5.09% 3.75% 3.28%
Common Shares
1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
divided by divided by divided by divided by divided by
14,616,084 14,916,084 19,658,142 26,616,084 30,458,142
---------------------------------------------------------------------------------------------------------------------------------
N/A 25.00% 2.01% 1.52% 11.27% 9.84%
300,000 300,000 300,000 3,000,000 3,000,000
divided by divided by divided by divided by divided by
1,200,000 14,916,084 19,658,142 26,616,084 30,458,142
300,000 New
Class B Shares
---------------------------------------------------------------------------------------------------------------------------------
N/A N/A 8.71% 6.61% 15.03% 13.13%
1,300,000 1,300,000 4,000,000 4,000,000
divided by divided by divided by divided by
14,916,084 19,658,142 26,616,084 30,458,142
Total
---------------------------------------------------------------------------------------------------------------------------------
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13,616,084 + 1,000,000 = 14,616,084
13,616,084 + 1,000,000 + 300,000 = 14,916,084
13,616,084 + 1,000,000 + 1,200,000 + 3,842,058 = 19,658,142
13,616,084 + 1,000,000 + 12,000,000 = 26,616,084
13,616,084 + 1,000,000 + 12,000,000 + 3,842,058 = 30,458,142
(e) Each of the outstanding shares of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by the Company free and clear of all Liens, and there are no
outstanding Equity Securities of any Subsidiary other than such shares. The
Company does not own, directly or indirectly, any capital stock or other equity
interest in any Person, other than (i) the Subsidiaries, (ii) capital stock or
other equity interest in a Person with a fair market value of less than $100,000
and (iii) as set forth on Schedule 3.3(e).
3.4 The Shares. Upon payment of the Purchase Price at the Closing, Investor
will acquire good title to the Shares, free and clear of all Liens. Upon payment
of the Purchase Price, the Shares shall be validly issued, fully paid and
nonassessable. Upon conversion of the New Class B Shares, in whole, or, from
time to time, in part, in accordance with the terms of the Class B Stock,
Investor will acquire good title to the Underlying Shares, free and clear of all
Liens, and such shares of Common Stock shall be validly issued, fully paid and
nonassessable.
3.5 Power and Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and all other documents,
instruments and other writings to be executed and/or delivered by or on behalf
of the Company to Investor or any of its representatives in connection with the
transactions contemplated hereby or thereby (collectively, the "Company
Transaction Documents"), to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of each of the Company Transaction Documents by the
Company, and the consummation by the Company of the transactions contemplated
hereby and thereby, have been duly and validly authorized by the Board of
Directors of the Company (the "Board") or a duly authorized Committee thereof
("Committee"), and no other corporate proceedings on the part of the Company are
necessary to authorize the execution, delivery and performance of the Company
Transaction Documents or the consummation of the transactions contemplated
hereby and thereby. The Board or a Committee has approved each of the Company
Transaction Documents and the transactions contemplated hereby and thereby so as
to render inapplicable to such transactions, including, without limitation, the
issuance to Investor of the Shares (including any Underlying Shares), the
restrictions contained in Section 203 of the Delaware General Corporation Law.
Each of the Company Transaction Documents has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof and thereof by Investor, each constitutes a legal, valid and
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binding obligation of the Company enforceable against the Company in accordance
with its terms.
3.6 No Conflict; Required Filings and Consents. The execution, delivery and
performance of the Company Transaction Documents by the Company do not and will
not: (a) conflict with or violate the Organizational Documents of the Company or
any Subsidiary; (b) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary or by which its
or any of their respective properties are bound or affected; (c) require any
consent, approval, authorization or permit of, action by, filing with or
notification to, any Governmental Entity (other than any filing required under
Section 13(a) or (d), 14, 15(d) or 16(a) of the Exchange Act); (d) require the
approval of the Company's stockholders under applicable state or federal law or
the rules and regulations applicable to companies listed on the New York Stock
Exchange ("NYSE"); (e) assuming that no member of the Investor Group is part of
a "group," as such term is defined under the Exchange Act, with any person who
is not a member of the Investor Group, result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
could become a default) or result in the loss by the Company or any Subsidiary
of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets of the Company or any Subsidiary pursuant to,
any Contract, Permit, Employment, Consulting or Severance Agreement or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any of their respective properties are
bound or affected; or (f) assuming that no member of the Investor Group is part
of a "group," as such term is defined under the Exchange Act, with any person
who is not a member of the Investor Group, give rise to any obligation on the
part of the Company or any Subsidiary to pay or provide any Severance Payment;
other than (i) in the case of clauses (b) and (e) for such conflicts,
violations, breaches, defaults, rights, losses and Liens as would not have a
Material Adverse Effect and (ii) in the case of clause (c), such consents,
approvals, authorizations, permits, actions, filings and notifications, the
absence of which would not have a Material Adverse Effect.
3.7 Employment, Consulting and Severance Agreements and Related Matters.
Except as disclosed in Schedule 3.7 or in the SEC Documents, (i) there are no
material, individually or in the aggregate, Employment, Consulting or Severance
Agreements to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any of their respective assets may be bound in
which the Company and/or any of its Subsidiaries are obligated to make payments
of $150,000 or more, in the aggregate, to any person, and (ii) no present or
former employee, officer, director, consultant, independent contractor or other
agent of the Company or any Subsidiary is a party to or the beneficiary of any
such Employment, Consultant or Severance Agreements in which the Company and/or
any of its Subsidiaries are obligated to make payments of $150,000 or more, in
the aggregate, to any person.
3.8 SEC Documents. As of their respective filing dates, neither of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, nor the Company's Amendment Number 1 and Number 2 on Form 10-K/A to the
Company's Annual Report on Form 10-K, to file the information required in Part
III of the Form 10-K (collectively, the "SEC Documents"), 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. The consolidated
financial statements of the Company included in the SEC Documents have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved and fairly present the
consolidated financial position of the Company and its
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consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
3.9 Absence of Certain Changes or Events. Except as disclosed in the SEC
Documents or otherwise expressly permitted by or disclosed in this Agreement,
since December 31, 2001, the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice, and there has not occurred any event, condition, circumstance, change
or development (whether or not in the ordinary course of business) that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect.
3.10 Absence of Litigation. Except as disclosed in Schedule 3.10 or in the
SEC Documents: (a) there are no suits, claims, actions, proceedings or
investigations pending or, to the Company's knowledge, overtly threatened
against the Company or any Subsidiary before any arbitrator or Governmental
Entity that (i) if determined adversely to the Company or any Subsidiary could,
individually or in the aggregate, reasonably be expected to result in Damages to
the Company and/or its Subsidiaries in excess of $1,000,000 or to have a
Material Adverse Effect or (ii) seek to delay or prevent the consummation of the
transactions contemplated by this Agreement or any other Transaction Document;
and (b) neither the Company nor any Subsidiary nor any of their respective
properties is or are subject to any order, writ, judgment, injunction, decree,
determination or award which in the future could reasonably be expected to (i)
result in Damages to the Company and/or its Subsidiaries in excess of
$1,000,000, (ii) have, individually or in the aggregate, a Material Adverse
Effect, or (iii) prevent or delay the consummation of the transactions
contemplated by this Agreement or any other Transaction Document.
3.11 Tax Matters. Each of the Company and the Subsidiaries has filed all
Tax Returns, or requests for extensions to file Tax Returns, which the Company
and the Subsidiaries were required to have filed on or before the date hereof,
except where the failure so to file would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. All Tax Returns filed
by the Company or the Subsidiaries are complete and accurate, except where the
failure so to be complete and accurate would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
and the Subsidiaries have paid (or the Company has paid on behalf of the
Subsidiaries) or have made adequate provision for the payment of all Taxes shown
as due on such Tax Returns.
3.12 No Brokers. The Company has not engaged any broker or finder who is
entitled to any fee or commission from the Company in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby represents, warrants and covenants to the Company on the
date of this Agreement and again on the Closing Date, which representations and
warranties shall survive the Closing, as follows:
4.1 Organization. Investor is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware.
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4.2 Authority Relative to This Agreement. Investor has all necessary
limited liability company power and authority to execute and deliver this
Agreement and all other documents, instruments and other writings to be executed
and/or delivered by or on behalf of Investor to the Company or any of its
representatives in connection with the transactions contemplated hereby or
thereby (collectively, "Investor Transaction Documents"), to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of the
Investor Transaction Documents by Investor and the consummation by Investor of
the transactions contemplated hereby and thereby have been duly authorized, and
no other limited liability company proceedings on the part of Investor are
necessary to authorize the execution, delivery and performance of the Investor
Transaction Documents or the transactions contemplated hereby or thereby. Each
of the Investor Transaction Documents has been duly executed and delivered by
Investor, and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Investor
enforceable against Investor in accordance with its terms.
4.3 No Conflict; Required Filings and Consents. The execution, delivery and
performance of the Investor Transaction Documents by Investor do not and will
not: (i) conflict with or violate the organizational documents of Investor; (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Investor or by which any of its properties are bound or affected;
(iii) require any consent, approval, authorization or permit of, action by,
filing with or notification to, any Governmental Entity (other than any filing
required under Section 13(a) or (d), 14, 15(d) or 16(a) of the Exchange Act); or
(iv) result in any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both could become a default) or result in
the loss of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the property or assets of Investor pursuant to, any Contract, Permit
or other instrument or obligation to which Investor is a party or by which
Investor or any of its properties are bound or affected, except, in the case of
clauses (ii), (iii) and (iv), for any such conflicts, violations, breaches,
defaults or other occurrences which could not, individually or in the aggregate,
reasonably be expected to impair or delay the ability of Investor to perform its
obligations under this Agreement.
4.4 Securities Laws.
(a) Investor is acquiring the Shares acquired hereunder for its own account
with the intention of holding such securities for purposes of investment, and
the Investor has no present intention of selling such securities in violation of
the federal securities laws or any applicable state securities laws.
(b) Investor has had an opportunity to ask questions and receive answers
from the Company and review documents, books and records of the Company as it
deems necessary to evaluate the investment considerations involved concerning
the Company as it has requested.
(c) Investor has such knowledge and expertise in financial and business
matters that the Investor is capable of evaluating the merits and risks involved
in an investment in the Shares and acknowledges that an investment in the Shares
entails a number of very significant risks, including the risks set forth in the
SEC Documents. Investor is able to bear the economic risk and lack of liquidity
inherent in holding the Shares. Investor is an "accredited investor" as defined
in Regulation D promulgated under the Securities Act. Specifically, Investor is
a limited liability company, not organized for the specific purpose of acquiring
the Shares, with total assets of in excess of $5,000,000.
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(d) Investor understands that the Shares acquired pursuant hereto are not
registered under the Securities Act, or any state securities acts and are
instead being offered and sold in reliance on an exemption for private offerings
under the Securities Act and are subject to restrictions on transfer.
4.5 No Brokers or Finders. Investor has not engaged any broker or finder
who is entitled to any fee or commission from the Company in connection with
this Agreement or the transactions contemplated hereby. Investor has not been
offered the Shares by any form of general advertising or general solicitation.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Standstill. For a period of 18 months from the Closing Date, neither
Investor nor any other member of the Xxxx Group will in any manner, directly or
indirectly, without the consent of a majority of disinterested members of the
Board, (a) effect; seek, offer, or propose (whether publicly or otherwise) to
effect; participate in; or in any way assist any other person to effect, seek,
offer, or propose (whether publicly or otherwise) to effect, or participate in,
(i) any acquisition of any assets of the Company or any of its subsidiaries
(Equity Securities of the Company are not assets of the Company for purposes of
this Section 5.1(a)(i)); (ii) any tender or exchange offer, merger, or other
business combination involving the Company or any of its subsidiaries not
approved by the Board; (iii) any recapitalization, restructuring, liquidation,
dissolution, reverse stock split, or other extraordinary transaction with
respect to the Company or any of its subsidiaries not approved by the Board; or
(iv) any solicitation (as such term is defined in the Exchange Act) of a proxy
(as such term is defined in the Exchange Act) to vote any voting securities of
the Company; (b) form, join, or in any way participate in, a group (as such term
is defined in the Exchange Act) other than the Investor Group; (c) otherwise
act, alone or in concert with others, to seek to control or influence the
management, Board, or policies of the Company, except through the Investor
Designee in his or her capacity as a member of the Board, (d) take any action
which might obligate the Company to make a public announcement regarding any of
the types of matters set forth in (a) above; or (e) enter into any discussions
or arrangements with any third party with respect to any of the foregoing;
provided, however, that, notwithstanding the foregoing, nothing contained in
this Section 5.1 is intended to or shall limit or otherwise impair the Investor
Designee's ability to fully exercise his or her rights and obligations under
applicable law as a member of the Board or to present to the Board or the
Company's management privately any proposals or views of the Investor or
otherwise regarding any of the matters described in this Section 5.1. This
Section 5.1 may be amended, waived or terminated only with the approval of a
majority of disinterested members of the Board.
5.2 Disposition of Shares and Conversion of New Class B Shares.
(a) Investor acknowledges and agrees that the Shares and the Underlying
Shares are not registered under the Securities Act or any foreign or state
securities laws. The Investor agrees that the Shares and the Underlying Shares
will not be sold, offered for sale, transferred, pledged, hypothecated, or
otherwise disposed of (collectively, "Disposed Of" or "Disposition Of") except
in compliance with the Securities Act and applicable foreign and state
securities laws. The Investor has been advised that, except as set forth in
Article VII, the Company has no obligation, and does not intend, to cause the
Shares or the Underlying Shares to be
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registered under the Securities Act or the securities law of any other
jurisdiction or to comply with the requirements for any exemption under the
Securities Act, including but not limited to those provided by Rule 144 and Rule
144A promulgated under the Securities Act, or under the securities law of any
other jurisdiction.
(b) Upon the Disposition Of any of the New Class B Shares other than to a
Permitted Class B Transferee (as hereinafter defined), the Investor and all
Permitted Class B Transferees shall be deemed to have exercised, immediately
prior to such Disposition Of such New Class B Shares, the right under the
Charter to convert all of the New Class B Shares then owned by the Investor and
all Permitted Class B Transferees into Underlying Shares in accordance with the
applicable Charter provisions. The Investor may not Dispose Of any New Class B
Shares other than to a Permitted Class B Transferee prior to their conversion
into Underlying Shares. As used herein, a Permitted Class B Transferee shall
mean a transferee of the New Class B Shares that (i) is a member of the Investor
Group or is approved by a majority (excluding the Investor Designee) of the
entire Board, and (ii) prior to and as a condition precedent to becoming a
transferee of such New Class B Shares, executes an agreement, in form and
substance reasonably satisfactory to the Company, agreeing to be bound by the
provisions of this Agreement with respect to the transferred New Class B Shares
as if such transferee were the Investor hereunder. If Investor and all Permitted
Class B Transferees are deemed pursuant to this Section 5.2(b) to have exercised
the right under the Charter to convert all of the New Class B Shares then owned
by the Investor and all Permitted Class B Transferees into Underlying Shares in
accordance with the applicable Charter provisions, Investor and all Permitted
Class B Transferees shall promptly surrender to the Company the stock
certificate or certificates representing the New Class B Shares in exchange for
a stock certificate or certificates representing an equal number of Underlying
Shares. During the period commencing on the date that Investor and all Permitted
Class B Transferees shall be deemed to have exercised such right to convert New
Class B Shares and terminating on the date that the stock certificate or
certificates representing all such New Class B Shares are so surrendered, the
Investor and all Permitted Class B Transferees shall vote or (if requested by
the Company) execute a written consent with respect to 90% of such new Class B
Shares in accordance with the duly adopted recommendation of the Board, and the
Investor and all Permitted Class B Transferees hereby grant to such officer of
the Company as shall be designated by the Board an irrevocable proxy coupled
with an interest to vote 90% of such New Class B Shares in accordance with such
recommendation of the Board.
(c) For a period of twelve (12) months after the Closing Date ("Call
Period"), provided the Investor or any Permitted Class B Transferee then owns
any New Class B Shares, the Company shall have the right, upon 15 business days
prior written notice (the "Call Notice") to Investor, to purchase all, but not
less than all, of the New Class B Shares then owned by Investor or any Permitted
Class B Transferee (the "Call Option"). Upon the Company delivering the Call
Notice to Investor, the Company shall have the right and irrevocable obligation
to purchase all of the New Class B Shares then owned by Investor or any
Permitted Class B Transferee. The Company's purchase of all such New Class B
Shares shall close (the "Call Closing") on the 15th business day (the "Call
Closing Date") after delivery of the Call Notice. The per share purchase price
for the New Class B Shares purchased by the Company pursuant to the Call Option
(the "Call Price") shall be the greater of (i) the 90 day trailing average of
the closing prices of the Common Stock through the date immediately prior to the
date of the exercise of the Call Option and (ii) $5.25 (subject to adjustment,
in each case, for stock dividends, stock splits, and similar transactions),
payable to Investor (and any Permitted Class B Transferee) in cash at the Call
Closing in immediately available funds. The Call Notice shall specify the Call
Price and whether the Company has Adequate Liquidity as of the date that the
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Call Notice is delivered to Investor. During the period commencing on the date
that Investor shall have received a Call Notice, the Investor and all Permitted
Class B Transferees shall vote or (if requested by the Company) execute a
written consent with respect to 90% of their New Class B Shares in accordance
with the duly adopted recommendation of the Board, and the Investor and all
Permitted Class B Transferees hereby grant to such officer of the Company as
shall be designated by the Board an irrevocable proxy coupled with an interest
to vote such New Class B Shares in accordance with such recommendation of the
Board. "Adequate Liquidity" shall exist if (iii) the Company and its
Subsidiaries collectively have available under their aggregate credit facilities
at least $10 million and (iv) the draw(s) under such credit facilities that
would be required to allow the Company to close on the purchase of all of the
New Common Shares pursuant to Section 5.2(d) would not result in (A) the
Company's consolidated debt to EBITDA ratio (as such terms and ratio are defined
under the applicable credit facility documentation) exceeding 2 to 1 and (B) any
breach of any covenant contained in the credit facility documentation which
breach would or could reasonably be expected to result in the Company's lenders
being entitled (with or without notice or the lapse of time or both) to
accelerate the Company's payment obligations under the credit facility.
(d) Provided the Investor or any Permitted Common Transferee (as
hereinafter defined) owns any New Common Shares as of the date the Call Notice
is delivered to Investor, the Investor shall have the right, upon written notice
(the "Put Notice") to the Company given at least 10 business days prior to the
Call Closing Date, to require the Company to purchase such number (the "Put New
Common Shares") of New Common Shares then owned by Investor or any Permitted
CommonTransferee as shall be specified in the Put Notice (the "Put Option"). As
used herein, a Permitted CommonTransferee shall mean a transferee of the New
Common Shares that (i) is a member of the Investor Group or is approved by a
majority (excluding the Investor Designee) of the entire Board and (ii) prior to
and as a condition precedent to becoming a transferee of such New Common Shares,
executes an agreement, in form and substance satisfactory to the Company,
agreeing to be bound by the provisions of this Agreement with respect to the
transferred New Common Shares as if such transferee were the Investor hereunder.
Upon Investor delivering the Put Notice to the Company:
(A) If the Company has Adequate Liquidity as of the date that the Call
Notice is delivered to Investor, (1) Investor and any Permitted
CommonTransferee then owning Put New Common Shares shall have the right and
irrevocable obligation to sell to the Company the Put New Common Shares on
the Call Closing Date, (2) the Company's purchase of all such Put New
Common Shares shall close simultaneously with the Call Closing, and (3) the
purchase price per share shall be $3.50 (subject to adjustment for stock
dividends, stock splits, and similar transactions), payable to Investor
(and any Permitted CommonTransferee) in cash at the closing in immediately
available funds.
(B) If the Company does not have Adequate Liquidity as of the date
that the Call Notice is delivered to Investor:
(1) (x) Investor and any Permitted CommonTransferee then owning
Put New Common Shares shall have the right and irrevocable obligation
to sell to the Company one-eighth of the Put New Common Shares on the
Call Closing Date, (y) the Company's purchase of such Put New Common
Shares shall close simultaneously with the Call Closing, and (z) the
purchase price per share shall be $3.50 (subject to adjustment for
stock dividends, stock splits, and similar transactions), payable to
Investor (and any Permitted Common Transferee) in cash at the closing
in immediately available funds.
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(2) Investor shall have the right, upon written notice (each, a
"Secondary Put Notice") to the Company given at least 10 business days
prior to each of the next seven three-month anniversaries of the Call
Closing Date (each, a "Put Closing Date"), to require the Company to
purchase such number of Put New Common Shares then owned by Investor
or any Permitted Common Transferee, not to exceed one-eighth of the
total number of Put New Common Shares owned by Investor or such
Permitted CommonTransferee at the time the Call Notice was delivered
to Investor, as shall be specified in the Secondary Put Notice. If no
Secondary Put Notice is delivered by Investor at least 10 business
days prior to any Put Closing Date, Investor shall be deemed to have
delivered a Secondary Put Notice requiring the Company to purchase
one-eighth of the total number of Put New Common Shares owned by
Investor or such Permitted CommonTransferee at the time the Call
Notice was delivered to Investor. Upon Investor delivering, or being
deemed to have delivered, a Secondary Put Notice to the Company, (1)
Investor and any Permitted Common Transferee then owning Put New
Common Shares shall have the right and irrevocable obligation to sell
to the Company on the next Put Closing Date the number of Put New
Common Shares as shall have been specified or deemed specified in such
Secondary Put Notice and (2) the per share purchase price for the Put
New Common Shares purchased by the Company shall be $3.50 (subject to
adjustment for stock dividends, stock splits, and similar
transactions) plus interest thereon accruing from the Call Closing
Date until paid at the prime rate published from time to time in the
Wall Street Journal, payable in cash at the applicable closing in
immediately available funds.
(e) Notwithstanding the foregoing, if, on any date prior to the Call
Closing, Investor and all other Permitted Class B Transferees then owning New
Class B Shares elect to convert all, but not less than all, of the New Class B
Shares then owned by them into Underlying Shares, then the Call Option and Put
Option shall immediately terminate and be cancelled as if they were never
exercised and had never existed.
5.3 Board of Directors.
From and after the Company's 2002 Annual Meeting of Stockholders, and until
the sum of (a) the number of New Class B Shares sold or otherwise Disposed Of by
Investor and Permitted Class B Transferees, except to Permitted Class B
Transferees, and (b) the number of New Common Shares and Underlying Shares sold
or otherwise Disposed Of by Investor and Permitted Common Transferees, except to
Investor or Permitted Common Transferees, exceeds 50% of the aggregate number of
New Common Shares and New Class B Shares, Investor shall be entitled to
designate one representative to serve as a member of the Board. Investor shall
be entitled to designate any person ("Investor Designee") as its designee for
membership on the Board, subject to the approval of the Company, which approval
shall not be unreasonably denied or delayed. The initial Investor Designee shall
be Xxxx Xxxxxx. The Company shall take all necessary or appropriate action to
assist in the nomination of such designee and use commercially reasonable
efforts to assist in the nomination and election of the designee as director.
5.4 Advisory Services Agreement. As of the Closing Date, and as a condition
to Investor's obligations hereunder, the Company and Investor shall enter into
the Advisory Services Agreement in the form attached hereto as Exhibit B.
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5.5 Agreement to Cooperate; Further Assurances. Subject to the terms and
conditions of this Agreement, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement and the other Transaction Documents, including providing
information and using reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals, and effecting all necessary registrations and
filings. In case at any time after the Closing Date any further action is
necessary or desirable to transfer any Shares to Investor or otherwise to carry
out the purposes of this Agreement and the other Transaction Documents, the
Company and Investor shall execute such further documents and shall take such
further action as shall be necessary or desirable to effect such transfer and to
otherwise carry out the purposes of this Agreement and the other Transaction
Documents, in each case to the extent not inconsistent with applicable law.
5.6 Public Announcements. Any public announcement made by or on behalf of
either Investor or the Company concerning this Agreement, the transactions
described herein or in any other Transaction Document or any other aspect of the
dealings heretofore had or hereafter to be had between the Company and Investor
and their respective Affiliates must first be approved in writing by the other
(any such approval not to be unreasonably withheld, conditioned or delayed),
subject to the Company's obligations under applicable law NYSE rules and listing
requirements as a public company (but the Company shall use its commercially
reasonable efforts to consult with Investor as to all such public
announcements).
5.7 Issuance of Series A Preferred. As long as Investor, any Permitted
Common Transferee or any Permitted Class B Transferee owns of record or
beneficially any New Common Shares or any New Class B Shares, the Company shall
not issue any shares of Series A Preferred or securities convertible into Series
A Preferred, for any or no consideration, to any person or entity, or enter into
any agreement or arrangement to do so (except in each case for the issuance of
Series A Preferred or rights to purchase Series A Preferred pursuant to and in
accordance with the provisions of the Rights Agreement dated as of June 23,
1997, by and between the Company and Xxxxxx Trust Company of New York, as rights
agent, as the same may be amended from time to time in accordance with its
terms), without concurrently offering to issue to Investor, upon the same or
equivalent terms, such number of shares of Series A Preferred or securities
convertible into Series A Preferred such that, if the Investor accepted such
offer in full, the percentage of votes the Investor and all Permitted Common
Transferees and Permitted Class B Transferees are collectively entitled to cast
in the election of directors of the Company immediately prior to such issuance
would be equal to the percentage of votes the Investor and all Permitted Common
Transferees and Permitted Class B Transferees would be collectively entitled to
cast in the election of directors of the Company immediately after such issuance
(assuming the conversion of any securities convertible into Series A Preferred).
ARTICLE VI
INDEMNIFICATION
6.1 General. From and after the Closing, the parties shall indemnify each
other as provided in this Article VI. No specifically enumerated indemnification
obligation with respect to a particular subject matter as set forth below shall
limit or affect the applicability of a more general indemnification obligation
as set forth below with respect to the same subject matter.
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No Person which may be subject to an indemnification obligation under this
Article VI shall be entitled to require that any action be brought against any
other Person before action is brought against it hereunder by a Person seeking
indemnification by such Person.
6.2 The Company's Indemnification Obligations. The Company shall indemnify,
save and keep harmless the Investor Group and their officers, directors,
employees, members, partners, agents, representatives, successors and permitted
assigns ("Investor Indemnitees") against and from all Damages sustained or
incurred by any of them resulting from or arising out of or by virtue of any
inaccuracy in, breach of or other failure to comply with any representation,
warranty or covenant made by the Company in this Agreement or any other Company
Transaction Document. A claim for indemnification under this Section 6.2 must be
asserted by notice delivered to the Company within thirty (30) days after the
Company delivers to Investor the Company's quarterly report on Form 10-Q (or
similar form) as filed with the SEC for the quarter ended September 30, 2002
(such thirtieth (30th) day, hereinafter the "Survival Date"). The Company shall
not have any obligation to indemnify the Investor Indemnitees against and from
any Damages by reason of any inaccuracy in or breach (or alleged inaccuracy or
breach) of any representation or warranty of the Company contained in Article
III unless the Investor Indemnitees collectively shall have suffered in the
aggregate Damages by reason of all such inaccuracies and breaches (or alleged
inaccuracies and breaches) in excess of $300,000, after which point the Company
will be obligated to indemnify Investor Indemnitees only with respect to Damages
in excess of such amount. The Company shall not have any obligation to indemnify
an Investor Indemnitee against and from any Damages by reason of any inaccuracy
in or breach (or alleged inaccuracy or breach) of any representation or warranty
of the Company contained in Article III if a court of competent jurisdiction has
determined that any Investor Indemnitee had actual knowledge thereof prior to
the Closing. The aggregate amount of all payments made by the Company in
satisfaction of claims made by Investor Indemnities under this Agreement for
Damages arising from all breaches shall not exceed $3,500,000.
6.3 Investor's Indemnification Obligations. Investor shall indemnify, save
and keep harmless the Company, its Subsidiaries and their respective officers,
directors, employees, agents, representatives, successors and permitted assigns
against and from all Damages sustained or incurred by any of them resulting from
or arising out of or by virtue of any inaccuracy in, breach of or other failure
to comply with any representation, warranty or covenant made by Investor to the
Company in this Agreement or in any other Investor Transaction Document. A claim
for indemnification under this Section 6.3 must be asserted by notice delivered
to the party from whom indemnification is sought no later than the Survival
Date.
6.4 Remedies. Each party hereby acknowledges and agrees that its sole and
exclusive remedy with respect to any and all Damages arising out of or by virtue
of any inaccuracy in, breach of or other failure to comply with any
representation, warranty or covenant made by the other party, in the absence of
fraud, shall be pursuant to the indemnification provisions set forth in this
Article VI.
ARTICLE VII
REGISTRATION RIGHTS
7.1 Definitions. For purposes of this Article VII:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act.
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(b) The term "Registrable Securities" means shares of Common Stock,
including Underlying Shares, held, from time to time, by any Holder.
(c) The term "Holder" means Investor, any Permitted Class B Transferee and
any Permitted Common Transferee.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act.
(e) The term "Shelf Registration Statement" means a registration statement
intended to effect a shelf registration in connection with a Rule 415 Offering.
7.2 Shelf Registration Statement. No later than ninety (90) days after the
Closing Date, the Company shall prepare and file with the SEC a Shelf
Registration Statement (which shall include, to the extent possible under the
Securities Act and any SEC regulations, pledgees and distributees of any selling
stockholder under the caption "plan of distribution" contained in such Shelf
Registration Statement) with respect to all shares of Common Stock held by
Holders, including Underlying Shares, and use its reasonable efforts to cause
such Shelf Registration Statement to become effective and keep such registration
statement effective (a) until such time as all Registrable Securities have been
sold or disposed of thereunder or sold, transferred or otherwise disposed of
(other than pursuant to a pledge of such Registrable Securities) to a person who
is not Investor, a Permitted Class B Transferee or a Permitted Common
Transferee, or (b) until such time as all Registrable Securities held by all
Holders can be sold without registration and without regard to the volume
limitations under Rule 144 under the Securities Act or any similar law.
Notwithstanding the foregoing, if the Company shall furnish to Investor a
certificate signed by the Chief Executive, Chief Operating, or Chief Financial
Officer of the Company stating that, in the good faith judgment of a majority of
the disinterested directors, it would be materially detrimental to the Company
for such registration statement to be filed, the Company shall have the right to
defer such filing for a period of not more than 90 days; provided, however, that
the Company may not utilize this right more than once in any 12-month period.
7.3 Additional Obligations of the Company. Whenever the Company has filed a
Shelf Registration Statement under this Article VII, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to such
Shelf Registration Statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered thereby or such other
reports under the Exchange Act as are necessary to incorporate by reference such
information as is necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered thereby, or, to the
extent possible under the Securities Act and any SEC regulations, add additional
Holders.
(b) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities covered by such Shelf
Registration Statement owned by them.
15
(c) If necessary, use its commercially reasonable efforts to register and
qualify the securities covered by such Shelf Registration Statement under such
other securities or blue sky laws of such states or other jurisdictions as shall
be reasonably requested by the Holders, provided that the Company shall not be
required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions where it is not so subject.
(d) Notify each Holder of Registrable Securities covered by such Shelf
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and then use its commercially reasonable efforts to promptly correct
such statement or omission. Notwithstanding the foregoing and anything to the
contrary set forth in this Section 7.3, each Holder acknowledges that the
Company shall have the right to suspend the use of the prospectus forming a part
of a Shelf Registration Statement if such offering would interfere with a
pending corporate transaction or for other reasons until such time as an
amendment to the Shelf Registration Statement has been filed by the Company and
declared effective by the SEC, or until such time as the Company has filed an
appropriate report with the SEC pursuant to the Exchange Act. Each Holder hereby
covenants that it will (a) keep any such notice strictly confidential, and (b)
not buy or sell any shares of Common Stock during the period commencing at the
time at which the Company gives the Holder notice of the suspension of the use
of such prospectus and ending at the time the Company gives the Holder notice
that it may thereafter effect sales pursuant to such prospectus. The Company
shall only be able to suspend the use of such prospectus for periods aggregating
no more than 90 days at any one time.
7.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article VII with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities and as may be required from time to time to keep such registration
current.
7.5 Expenses of Shelf Registration. Except as provided in the following
sentence, all expenses incurred by or on behalf of the Company in connection
with registrations, filings or qualifications pursuant to Section 7.2 ,
including, without limitation, all registration, filing and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel for the
Company, shall be borne by the Company. In no event shall the Company be
obligated to bear any underwriting discounts or commissions or brokerage fees or
commissions relating to Registrable Securities or the fees and expenses of
counsel to the selling Holders.
7.6 Indemnification. In the event any Registrable Securities are included
in a Shelf Registration Statement under this Article VII:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and its respective directors, officers, general and limited
partners, members, agents and representatives (and the directors, officers, and
controlling persons thereof), and each other person, if any, who controls such
Holder within the meaning of the Securities Act,
16
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus (but only if such
statement is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Securities Act, the Exchange Act, any state securities law or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will pay, as incurred, any legal or other
expenses reasonably incurred by such Holders, affiliates, or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action, subject to this Section 7.6(a); provided, however, that the
Company shall not, in connection with any such loss, claim, damage, liability or
action or related losses, claims, damages, liabilities or actions in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to one firm acting as local counsel) for all
indemnified parties; and provided, further, that, the indemnity agreement
contained in this Section 7.6(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the prior written consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder or controlling person. Each
indemnified party shall furnish such information regarding itself or the claim
in question as an indemnifying party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter, any other Holder
selling securities in such registration statement and any controlling person of
any such underwriter or other Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 7.6(b) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 7.6(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the prior written
consent of such Holder, which consent shall not be unreasonably withheld;
provided, further, that, in no event shall any indemnity under this Section
7.6(b) exceed the gross proceeds from the offering received by such Holder.
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(c) Promptly after receipt by an indemnified party under this Section 7.6
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 7.6, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel chosen by the indemnifying party subject to the
consent of the indemnified party, which consent shall not be unreasonably
withheld or delayed. The failure to deliver written notice to the indemnifying
party within a reasonable time after the commencement of any such action, if
materially prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7.6 to the extent of such prejudice, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 7.6. The
indemnified party shall have the right, but not the obligation, to participate
in the defense of any action referred to above through counsel of its own
choosing and shall have the right, but not the obligation, to assert any and all
separate defenses, cross claims or counterclaims which it may have, and the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of such counsel has been specifically authorized in
advance by the indemnifying party, (ii) there is a conflict of interest that
prevents counsel for the indemnifying party from adequately representing the
interests of the indemnified party or there are defenses available to the
indemnified party that are different from, or additional to, the defenses that
are available to the indemnifying party, (iii) the indemnifying party does not
employ counsel that is reasonably satisfactory to the indemnified party within a
reasonable period of time, or (iv) the indemnifying party fails to assume the
defense or does not reasonably contest such action in good faith, in which case,
if the indemnified party notifies the indemnifying party that it elects to
employ separate counsel, the indemnifying party shall not have the right to
assume the defense of such action on behalf of the indemnified party and the
reasonable fees and expenses of such separate counsel shall be borne by the
indemnifying party; provided, however, that, the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to one firm acting as local counsel) for all
indemnified parties.
(d) The obligations of the Company and the holders under this Section 7.6
shall survive the completion of any offering of Registrable Securities in a
Shelf Registration Statement under this Article VII through the expiration of
the applicable statute of limitations.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
7.7 Reports Under the Exchange Act. With a view to making available to the
holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration, the Company agrees to:
(a) use all commercially reasonable efforts to make and keep public
information available, as those terms are understood and defined in Rule 144;
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(b) use all commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required under the Securities Act
and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written statement by
the Company as to its compliance with the reporting requirements of Rule 144,
and (ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company.
7.8 No Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Article VII may only be
assigned by a Holder to a transferee or assignee of any Registrable Securities
if (i) in the case of a transferee or assignee of Common Stock, such transferee
or assignee is a Permitted Common Transferee, (ii) in the case of a transferee
or assignee of Class B Stock, such transferee or assignee is a Permitted Class B
Transferee, (iii) such transferee or assignee executes and delivers to the
Company a joinder agreement, agreeing to be legally bound by this Article VII,
and (iv) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act.
7.9 Waiver Procedures. The observance by the Company of any provision of
this Article VII may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of the Holders
of a majority of the Registrable Securities, and any waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities.
7.10 "Market Stand-off" Agreement. Any Holder of Registrable Securities, if
requested by an underwriter of any registered public offering of Company
securities being sold in a firm commitment underwriting, agrees not to sell or
otherwise transfer or dispose of any Company securities held by such Holder
other than shares of Registrable Securities included in the registration during
the seven days prior to, and during a period of up to 180 days following, the
effective date of the registration statement, except where securities being sold
for the account of stockholders are included in the registration unless all
Registrable Securities requested to be included therein by any Holders are
included subject to pro rata cut-back with the other selling stockholders
included therein. Such agreement shall be in writing in a form reasonably
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of the required stand-off period.
7.11 Listing of Shares. The Company shall use its commercially reasonable
efforts to cause the shares of Common Stock and the Underlying Shares to be
listed on the NYSE as soon as practicable after the Closing.
ARTICLE VIII
DEFINITIONS
"Affiliate" shall mean, with respect to any person, any other person that
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such first person. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management or policies, whether
19
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals to this
Agreement.
"Contract" means any contract, agreement, commitment, indenture, lease,
note, bond, mortgage, license, plan, arrangement or understanding, whether
written or verbal.
"Damages" means all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, and reasonable costs and
expenses, including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any of the foregoing.
"Diluted Common Stock" means (i) the Common Stock issued and outstanding
(including the New Common Shares) and (ii) the Underlying Shares issuable upon
conversion of the New Class B Shares.
"Employment, Consulting or Severance Agreements" means all verbal and
written (i) agreements for the employment for any period of time whatsoever, or
in regard to the employment, or restricting the employment, of any employee of
the Company or any Subsidiary, (ii) consulting, independent contractor or
similar agreements, and (iii) policies, agreements, arrangements or
understandings relating to the payment or provision of severance, termination or
similar pay or benefits to any present or former employees, officers, directors,
consultants, independent contractors or other agents of the Company or any
Subsidiary.
"Equity Securities" means, with respect to the Company or any Subsidiary,
as the case may be, (i) any class or series of common stock, preferred stock or
other capital stock, whether voting or non-voting, including, without
limitation, with respect to the Company, Common Stock, Class B Stock, and
Preferred Stock, (ii) any other equity securities issued by the Company or such
Subsidiary, as the case may be, whether now or hereafter authorized for issuance
by the Company's or such Subsidiary's, as the case may be, Certificate of
Incorporation, (iii) any debt, hybrid or other securities issued by the Company
or such Subsidiary, as the case may be, which are convertible into, exercisable
for or exchangeable for any other Equity Securities, whether now or hereafter
authorized for issuance by the Company's or such Subsidiary's, as the case may
be, Certificate of Incorporation, (iv) any equity equivalents (including,
without limitation, stock appreciation rights, phantom stock or similar rights),
interests in the ownership or earnings of the Company or such Subsidiary, as the
case may be, or other similar rights, (v) any written or verbal rights, options,
warrants, subscriptions, calls, preemptive rights, rescission rights or other
rights to subscribe for, purchase or otherwise acquire any of the foregoing,
(vi) any written or verbal obligation of the Company or such Subsidiary, as the
case may be, to issue, deliver or sell, any of the foregoing, (vii) any written
or verbal obligations of the Company or such Subsidiary, as the case may be, to
repurchase, redeem or otherwise acquire any Equity Securities, and (viii) any
bonds, debentures, notes or other indebtedness of the Company or such
Subsidiary, as the case may be, having the right to vote (or convertible into,
or exchangeable for securities having the right to vote) on any matters on which
the stockholders of the Company or such Subsidiary, as the case may be, may
vote.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fully-Diluted Common Stock" means (i) the Common Stock issued and
outstanding (including the New Common Shares) and (ii) the shares of Common
Stock issuable upon conversion, exchange or other exercise of the Company's
issued and outstanding Equity Securities (other than the rights (the "Rights")
issued pursuant to the Rights Agreement dated, as of June 23, 1997, as amended,
but including the Underlying Shares issuable upon conversion of the New Class B
Shares.
"Fully-Diluted Voting Power" means the aggregate number of votes entitled
to be cast by the holders of (i) the Common Stock issued and outstanding
(including the New Common Shares), (ii) the Class B Stock issued and outstanding
(including the New Class B Shares), and (iii) the Company's other issued and
outstanding Equity Securities, assuming the conversion, exchange or other
exercise of such other Equity Securities (other than the Rights) into Common
Stock or Class B Stock.
"Governmental Entity" means any court, administrative agency or commission
or other governmental authority or instrumentality, whether domestic (federal,
state or local) or foreign.
"Investor Group" means (i) Investor, (ii) any direct or indirect Affiliate
of Investor, under control of, or common control with, Investor, (iii) any
direct or indirect member of Investor or such Affiliate, and (iv) any direct or
indirect Affiliate of any member of Investor under control of, or common control
with, such member; provided, however, that in the case of clauses (ii), (iii)
and (iv) hereof, that at least 80% of the aggregate economic interests in the
New Common Shares and the New Class B Shares are owned ultimately, directly or
indirectly, by or for the benefit of Xxxxxx Xxxx and his family members.
"Lien" means any preemptive or similar rights of any third party, purchase
options, calls, proxies, voting trusts, voting agreements, judgments, pledges,
charges, assessments, levies, escrows, rights of first refusal or first offer,
transfer restrictions, mortgages, indentures, claims, liens, equities,
mortgages, deeds of trust, deeds to secure debt, security interests and other
encumbrances of every kind and nature whatsoever, whether arising by agreement,
operation of law or otherwise, other than any resulting from the acts or failure
to act of Investor or a member of the Investor Group or from the Investor
Transaction Documents.
"material" means material to the Company and the Subsidiaries, taken as a
whole.
"Material Adverse Effect" means a material adverse effect (or any
development which could reasonably be expected to have a material adverse
effect) on the business, operations, assets, financial or other condition or
results of operations of the Company and the Subsidiaries, taken as a whole, or
that could reasonably be expected to impair or delay the ability of the Company
to perform its obligations under this Agreement.
"Parachute Payment" means any Severance Payment constituting a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code and the
regulations issued thereunder.
"Permit" means any permit, certificate, consent, approval, authorization,
order, license, variance, franchise or other similar indicia of authority issued
or granted by any Governmental Entity.
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"Person" or "person" means any individual, corporation, partnership,
limited liability partnership, limited liability company, joint venture,
association, joint stock company, trust, unincorporated organization or
Governmental Entity, or any agency or political subdivision thereof, or any
other entity.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Severance Payment" means any termination, severance or similar payment or
benefit, including without limitation any such payment or benefit as would
constitute a Parachute Payment, to which any present or former employee,
officer, director, consultant, independent contractor or other agent of the
Company or any Subsidiary might be entitled pursuant to any Employment,
Consulting or Severance Agreement or otherwise.
"Shares" shall have the meaning set forth in the recitals to this
Agreement.
"Subsidiary" means General Physics Corporation, a Delaware corporation.
"Taxes" means all federal, state, local and foreign taxes, duties, fees,
levies, governmental charges or other assessments of any kind (whether imposed
directly or through withholding), including any interest, additions to tax or
penalties applicable thereto.
"Tax Return" means all federal, state, local and foreign tax returns,
declarations, statements, reports, schedules, forms and information returns and
any amendment to any of the foregoing.
"Transaction Document" means any Company Transaction Document and any
Investor Transaction Document.
"Underlying Shares" shall have the meaning set forth in the recitals to
this Agreement.
"Voting Power" means the aggregate number of votes entitled to be cast by
the holders of (i) the Common Stock issued and outstanding (including the New
Common Shares) and (ii) the Class B Stock issued and outstanding (including the
New Class B Shares).
"Xxxx Group" means (i) Investor, (ii) any member of Investor who
beneficially owns any New Common Shares or New Class B Shares, and (iii) any
Affiliate of Investor or any such member of Investor; provided, however, that no
presumption of control or status as an Affiliate shall arise with respect to
entities that might fall within this definition solely because Investor, a
member of Investor or a representative of Investor or any such member of
Investor sits on the Board of Directors of such entity or holds 10% or more of
the outstanding voting securities of such entity in a non-controlling position.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by documented
overnight delivery service
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or, to the extent receipt is confirmed, facsimile, to the appropriate address or
facsimile number set forth below (or at such other address or facsimile number
for a party as shall be specified by like notice):
if to Investor:
EGI-Fund (02) Investors, L.L.C.
Two X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000
With a copy to:
Equity Group Investments, LLC
Two X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
if to the Company:
GP Strategies Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, President
Fax: 000-000-0000
With copies to:
GP Strategies Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, General Counsel
Fax: 000-000-0000
9.2 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible
9.3 Entire Agreement; Amendment; Waiver; Assignment. This Agreement,
together with the other Transaction Documents, constitutes the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersedes all prior agreements and undertakings, both written and verbal, among
the parties, or any of them, with respect to the
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subject matter hereof and thereof, other than the Confidentiality Agreement,
dated as of March 1, 2002, between the Company and Equity Group Investments,
L.L.C. No amendment, supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided. This Agreement shall not be assigned by operation of law or
otherwise; provided, however, that, notwithstanding the foregoing, (a) Investor
may assign all or any part of its rights and obligations hereunder to any one or
more members of the Investor Group at any time after the Closing and (b) the
Company may assign the Call Option; provided, further, however, that no such
assignment shall relieve the assigning party of any of its liabilities or
obligations under this Agreement or adversely affect the exemption from
registration under the Securities Act relied upon by the Company in issuing the
Shares or Underlying Shares or otherwise violate the Securities Act or any other
applicable federal or state securities law. Any attempted assignment which does
not comply with the provisions of this Section 9.3 shall be null and void ab
initio.
9.4 Governing Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Delaware applicable to contracts
made in that State.
9.5 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.6 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Investor and the Company have executed this Stock
Purchase Agreement as of the date first above written.
EGI-FUND (02-04) INVESTORS, L.L.C.
-------------------------------------
By:
Its:
GP STRATEGIES CORPORATION
---------------------------------------
By:
Its:
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