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EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as
of December 31, 1997, is made and entered into by and among Wheels Sports Group,
Inc., a North Carolina corporation (the "Company"), and the holders
(collectively, together with their assigns, the "Holders") of the Warrants (as
defined herein).
WHEREAS, concurrently with the issuance of the Warrants the
Company is entering into this Agreement to define the rights which exist among
the Holders, on the one hand, and the Company, on the other, with respect tothe
registration of the Common Stock (as defined herein) into which the Warrants are
exercisable;
NOW, THEREFORE, in consideration of the mutual premises,
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
Definitions
For purposes of this Agreement, the following terms shall have
the following respective meanings (each such meaning to be equally applicable to
the singular and plural forms thereof):
"Agreement" means this Registration Rights Agreement.
"Commission shall mean the Securities and Exchange Commission,
and any other similar or successor agency of the federal government at
the time administering the Securities Act or the Securities Exchange
Act.
"Common Stock" means the Company's Common Stock, par value
$0.01 per share, and any stock into which such Common Stock may
hereafter be changed or for which such Common Stock may be exchanged
after giving effect to the terms of such change or exchange (by way of
reorganization, recapitalization, merger, consolidation or otherwise)
and shall also include any Common Stock of the Company hereafter
authorized which has ordinary voting power for the election of
directors and any capital stock of the Company of any other class
hereafter authorized which is not preferred as to dividends or
distribution of assets in liquidation over any other class of capital
stock of the Company or which has ordinary voting power for the
election of directors of the Company.
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"Company" has the meaning assigned such term in the preamble
hereto.
"Holders" has the meaning assigned such term in the preamble
hereto.
"Holders of Registrable Securities" shall mean a person who
owns as Securities or has the right to acquire such Registrable
Securities, whether or not such acquisition has actually been effected
an disregarding any legal restrictions upon the exercise of such right.
"NASD" means the National Association of Securities Dealers,
Inc.
"Prospectus" mans the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the term of the offering, registering for sale any of the
Registrable Securities and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" means any Common Stock which has been
or may be acquired upon the exercise of the Warrants in accordance with
their terms; provided, that any security's status as a Registrable
Security shall cease when the registration rights with respect to such
Security shall have terminated pursuant to Section 2.6.
"Registration Statement" means any registration statement of
the Company which registers for sale any of the Registrable Securities
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated
by reference in such Registration Statement.
"Requisite Holders" means the holder, at any time, of the
outstanding Warrants representing more than 50% of the aggregate of
Registrable Securities at the time outstanding.
"Rule 144" mans Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.
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"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any similar federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be
in effect at the time.
"Warrants" means the warrants to purchase shares of Common
Stock (i) issued by the Company to the Holders on the date hereof, and
(ii) which may be issued pursuant to the agreement between the Company
and Credit Agricole Indosuez dated the date hereof.
ARTICLE II
Registration Rights
SECTION 2.1. Registration on Demand
2.1.1 Demand. At any time following the date the warrants
become exercisable, upon the written request (the "Demand") of the Requisite
Holders (the "Demand Holders") that the Company effect the registration under
the Securities Act of the number of Registrable Securities specified by the
Demand Holders, the Company shall, subject to the provisions hereof, use its
best efforts to effect, as soon as practicable and in any event within 90 days
after the Demand is received from the Demand Holders, the registration under the
Securities Act of the Registrable Securities which the company has been so
requested to register by the Demand Holders.
2.1.2 Shelf Registration. At any time that the Company is
eligible to use a short-form registration statement for registering securities
for sale to the public at large, the Demand Holders may, at their option,
request (the "Shelf Demand") that any registration statement effected pursuant
to a Demand be effected on a delayed or continuous basis, pursuant to Rule 415
under the Securities Act (the "Shelf Registration"). The Company agrees to keep
effective such registration statement the ("Shelf Registration Statement") until
the earlier of (i) such date as of which all the Registrable Securities under
the Shelf Registration Statement have been disposed of in the manner described
in such registration statement, and (ii) 270 days after the date on which such
Shelf Registration Statement is declared effective.
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2.1.3 Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be selected by the Company. The Company shall include in any such
registration statement all information which, in the opinion of counsel to the
Company, is required to be included.
2.1.4 Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective,
(ii) if after it has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to the
Holders and has not thereafter become effective, or (iii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived or (iv) if a Shelf
Registration Statement, if such registration statement has not been kept
effective until the earlier of (a) such date as of which all of the Registrable
Securities under such Shelf Registration Statement have been disposed of in the
manner described in such registration statement and (b) 270 days after the date
on which such Shelf Registration Statement is declared effective.
2.1.5 Limitation on Registration on Demand, Shelf
Registrations. The Company shall not be required to prepare and file a
registration statement pursuant to this Section 2.1 which would become effective
within 90 days following the effective date of a registration statement (other
than pursuant to registrations on Form S-4 or Form S-8 or any successor form or
other forms not available for registering securities for sale to the public at
large) filed by the Company with the Commission pertaining to an underwritten
public offering of convertible debt securities or equity securities for cash for
the account of the Company or another holder of securities of the Company, and
in such case the Holders are afforded the opportunity to include Registrable
Securities in such registration pursuant to Section 2.2. Notwithstanding
anything in this Section 2.1 to the contrary, in no event shall the Company be
required (i) to effect in the aggregate, more than 2 registrations pursuant to
this Section 2.1 or (ii) to register any Common Stock which, upon giving effect
to the proposed disposition thereof, would be nonvoting Common Stock.
2.1.6 Holders' Ability to Withdraw Registration Statement. The
Holders of a majority of the Registrable Securities to be included in such
registration shall have the right to request that the Company not have a
registration statement filed pursuant to a Demand declared effective. Such
withdrawn registration statement shall not be counted for purposes of the
requests for
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registration to which such Demanding Holder is entitled pursuant to Section
2.1.5 hereof.
2.1.7 Selection of Underwriter. If a registration under this
Section 2.1 is an underwritten offering, the Holders of a majority of the
Registrable Securities to be included in such registration shall select a
managing underwriter or underwriters of recognized national standing reasonably
acceptable to the Company to administer the offering.
2.1.8 Registration of Other Securities. A registration
statement filed pursuant to the request of the Demand Holders may, subject to
the provisions of Section 2.5 hereof, include (i) Registrable Securities of
Holders not making a demand pursuant to this Section 2.1 and (ii) other
securities of the Company with respect to which registration rights have been
granted and may include securities of the Company being sold for the account of
the Company.
2.1.9 Suspension. The Company may delay, suspend or withdraw
the registration of the Registrable Securities required pursuant to this Section
2.1 or the preparation or furnishing of a supplemental or amended prospectus
pursuant to Section 2.3(i) for a period not exceeding 60 days if the Company
shall in good faith determine that any such registration would require the
Company to include disclosure that would reasonably be expected to have a
detrimental effect on any proposal, negotiations or plan by the Company or any
of its subsidiaries to engage in any acquisition or disposition of assets or any
merger, consolidation, tender offer, reorganization or similar transaction, or
any other material corporate event contemplated by the Company.
SECTION 2.2. Incidental Registration. If the Company, at any
time or any one or more occasions after the date of this Agreement, proposes to
register (other than pursuant to Section 2.1) any of its equity securities under
the Securities Act for sale to the public, whether for its own account or for
the account of other security holders; or both (other than pursuant to
registrations on Form S-4 or Form S-8 or any successor form or other forms not
available for registering securities for sale to the public at large), the
Company shall give not less than 30 days' nor more than 90 days' prior written
notice to each Holder of Registrable Securities of its intention to do so. Upon
the written request of any Holder of Registrable Securities given within 20 days
after receipt of such notice from the Company, the Company will use its best
efforts to cause the Registrable Securities requested to be registered to be so
registered under the Securities Act. A request pursuant to this Section 2.2
shall state the number of Registrable Securities requested to be registered and
the intended method of distribution thereof. In connection with any registration
subject to this Section 2.2, the Holders shall enter into such underwriting,
lock-up and other agreements, and shall execute and
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complete such questionnaires and other documents, as are customary in a
secondary offering. The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 2.2 prior to the
effectiveness of such registration whether or not any Holder has elected to
include any securities in such registration. Notwithstanding any other provision
of this Agreement, if the representative of the underwriters advises the Company
in writing that marketing factors require a limitation on the number of shares
to be underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 2.5 hereof.
No registration effected under this Section 2.2 shall relieve
the Company of its obligation to effect the registration required under Section
2.1.
SECTION 2.3. Registration Procedures. In connection with the
registration of any Registrable Securities, the Company shall effect such
registrations to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company shall as expeditiously as possible:
(a) prepare and file with the Commission within the time
limits prescribed herein a Registration Statement with respect to such
securities and use its best efforts to cause such Registration
Statement to become effective and remain effective as provided herein;
(b) prepare and file with the Commission such amendments and
post-effective amendments to each Registration Statement as may be
necessary and use its best efforts to keep such Registration Statement
continuously effective; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act, the Securities Exchange Act and the rules and
regulations of the Commission promulgated thereunder applicable to it
with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented; the Company shall not be deemed to have used its best
efforts to keep a registration statement effective during a period if
it voluntarily takes any action that results in participating Holders
not being able to sell such Registrable Securities during such period,
unless such action (i) is required under applicable law or (ii) is
determined in good faith by the Board of Directors of the Company to be
in the Company's best interest;
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(c) notify the Holders of Registrable Securities and
underwriters, if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of the issuance
(or, to the Company's best knowledge, the threat or contemplation) by
the Commission of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus or the initiation of an proceedings for
that purpose, and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Securities for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose;
(d) use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, and, if any
such order is issued, to obtain the withdrawal of any such order at the
earliest possible moment;
(e) furnish to each seller and to each duly authorized broker
or underwriter of each seller such number of authorized copies of a
prospectus, including copies of a preliminary Prospectus, in conformity
with the requirements of the Securities Act, and such other customary
documents as such seller, broker or underwriter may reasonably request
in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such seller;
(f) use its best efforts to register or qualify (and to keep
each such registration and qualification effective, including through
new filings, renewals or amendments, during the period such
registration statement is required to be kept effective) the securities
covered by such Registration Statement under such securities or blue
sky laws of such jurisdiction as each seller shall reasonably request,
and do any and all other reasonable acts and things which may be
necessary under such securities or blue sky laws to enable such seller
to consummate the public sale or other disposition in such
jurisdictions of the Registrable Securities to be sold by such seller,
except that the company shall not for any such purpose be required to
qualify or do business as a foreign corporation, or to consent to the
jurisdiction of any court or subject itself to suit in any jurisdiction
wherein it is not qualified;
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(g) before filing the Registration Statement or Prospectus or
amendments or supplement thereto, furnish to counsel for the Holders of
Registrable Securities included in such Registration Statement copies
of all such documents proposed to be filed, all of which shall be
subject to the review and comment of such counsel in the exercise of
their reasonable judgment;
(h) use its best efforts to cause such Registrable Securities
covered by such Registration Statement to be registered with or
approved by such other governmental agencies or authorities exercising
jurisdiction over the Company as may be necessary to enable the seller
or sellers thereof to consummate the disposition of such Registrable
Securities;
(i) notify each seller of any such Registrable Securities
covered by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act,
of the Company's becoming aware that the Prospectus included in such
Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstance under which they were made, not misleading,
and, at the written request of any such seller, promptly prepare and
furnish to such seller and each underwriter a reasonable number of
copies of a Prospectus supplemented or amended (whereupon all previous
versions of the Prospectus shall not be used by such seller or
underwriter and shall be promptly returned to the Company or destroyed)
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(j) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders, as
soon as reasonably practicable, an earnings statement covering the
period of at least twelve consecutive months beginning with the first
day of the Company's first calendar quarter after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) use its best efforts to cause all such Registrable
Securities covered by such Registration Statement to be listed or
quoted on the principal securities exchange (including NASDAQ) on which
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securities issued by the Company are then listed or quoted, if the
listing or quoting of such Registrable Securities is then permitted
under the rules of such exchange;
(l) provide a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later
than the effective date of such Registration Statement;
(m) cooperate with the selling holders of Registrable
Securities and the underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any
restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the underwriters, if
any, or holders may reasonably request at least two business days prior
to any sale of Registrable Securities in a firm commitment underwritten
public offering, or at least ten business days prior to any other such
sale;
(n) enter into such reasonable and customary agreements
(including an underwriting agreement in customary form) and take such
other reasonable and customary actions as the Requisite Holders shall
reasonably request in order to expedite or facilitate the registration
and disposition of such Registrable Securities;
(o) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants in
customary form and covering such matters as are customarily covered by
such opinion and "cold comfort" letters;
(p) upon execution and delivery of such confidentiality
agreements as the Company shall reasonably request (which agreement
shall not restrict any such person's obligations under applicable
securities laws), make available for inspection by any seller of such
Registrable Securities covered by such Registration Statement, by any
underwriter participating in any disposition to be effected pursuant to
such Registration Statement and by any attorney, accountant or other
agent retained by any such seller or any such underwriter, pertinent
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection
with such Registration Statement, all as necessary to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; and
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(q) permit any Holder of Registrable Securities which Holder,
in the sole reasonable judgment of such Holder, exercised in good
faith, might be deemed to be a controlling person of the Company to
participate through counsel in the preparation of such Registration
Statement and, if specifically requested by such counsel, in
discussions between the Company and the Commission or its staff with
respect to such Registration Statement, to require the insertion
therein of material, furnished in writing, which in the written opinion
of such counsel is necessary to include in order to avoid a likelihood
of potential liability for any such Holder of Registrable Securities or
such counsel.
If any such Registration Statement refers to any Holder by
name or otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not in the judgment
of the Company, as advised by counsel, required by the Securities Act or any
similar federal statute or any state "blue sky" or securities law then in force,
the deletion of the reference to such Holder.
SECTION 2.4. Expenses. All expenses incurred in effecting the
registrations (whether or not such registrations are consummated) provided for
in this Article II, including without limitation all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company,
expenses of any audits incident to or required by any such registration
(including the costs of any comfort letter) and expenses of complying with the
securities or blue sky laws of any jurisdictions pursuant to Subsection 2.3(f)
hereof, the costs and expenses associated with the filing required to be made by
the NASD (including, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel as may be required by the rules and
regulations of the NASD, provided such fees and expenses are not paid by the
underwriter), transfer taxes, fees of transfer agents and registrars, cost of
insurance (but excluding underwriting discounts and commissions to the extent
they relate to Registrable Securities), duplicating fees, delivery expenses,
expenses incurred with the listing of the securities on any securities exchange,
shall be paid by the Company, and the Company shall pay all reasonable fees and
disbursements of one counsel for the Holders of Registrable Securities for the
performance of the normal and customary functions of counsel for selling
shareholders in each such registration.
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SECTION 2.5. Marketing Restrictions. If (i) any Holder of
Registrable Securities requests registration of Registrable Securities under
Section 2.1 or 2.2, (ii) the offering proposed to be made is to be an
underwritten public offering and (iii) the managing underwriters of such public
offering furnish a written opinion that the total amount of securities to be
included in such offering would exceed the maximum amount of securities (the
"Maximum Amount") (as specified in such opinion) which can be marketed at a
price reasonably related to the then current market value of such securities and
without materially and adversely affecting such offering, then the rights of the
Company, the Holders of Registrable Securities and the holder of other
securities having the right to include such securities in such registration to
participate in such offering shall be as follows:
If such registration shall have been proposed by the Company,
(i) the Company shall be entitled to participate in such registration
first; (ii) then Holders of Registrable Securities under this Agreement
shall be entitled to participate in such registration (pro rata based
on the number of Registrable Securities held by each) and (iii) other
security holders of the Company shall be entitled to participate in
such registration (pro rata based on the number of securities held by
each security holder and in accordance with the relative priorities, if
any, as shall exist among them). If such registration shall have been
requested by the Demand Holders of Registrable Securities pursuant to
Section 2.1 hereof, (i) the Holders of Registrable Securities shall be
entitled to participate in such registration (pro rata based on the
number of Registrable Securities held by each) first; and (ii) then the
Company and other security holders of the Company entitled to
participate will be entitled to participate in such registration (with
the holders of such securities being entitled to participate in
accordance with the relative priorities, if any, as shall exist among
them), in each case with further pro rata allocations to the extent any
such person has requested registration of fewer securities than such
person is entitled to have registered so that the number of securities
to be included in such registration will not exceed the Maximum Amount.
If such registration shall have been requested by the holders of other
securities pursuant to a right granted by the Company to request such
registration, (i) the holders requesting such registration shall be
entitled to participate in such registration (with such holders being
entitled to participate in accordance with the relative priorities, if
any, as shall exist among them); (ii) then the Holders of Registrable
Securities shall be entitled to participate in accordance with the
number of shares held by them (pro rata based on the number of
Registrable Securities held by each); and (iii) then the Company and
other security holders of the Company entitled to participate
will be entitled to participate
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in such registration (with the holder of such securities being entitled
to participate in accordance with the relative priorities, if any, as
shall exist among them), in each case with further pro rata allocations
to the extent any such person has requested registration of fewer
securities than such person is entitled to have registered so that the
number of securities to be included in such registration will not
exceed the Maximum Amount;
and no securities (issued or unissued) other than those registered and included
in the underwritten offering shall be offered for sale or other disposition in a
transaction which would require registration under the Securities Act (but
excluding any issuance of shares pursuant to registrations on Form S-4 or Form
S-8 or any successor form or other forms not available for registering capital
stock for sale to the public at large) until the expiration of 90 days after the
effective date of the Registration Statement in which Registrable Securities
were included pursuant to Section 2.2 or such shorter period as may be
acceptable to the Company and the Holders of a majority of the Registrable
Securities who may be participating in such offering.
SECTION 2.6. Termination of Rights. Notwithstanding the
foregoing provisions of this Article II, the rights to registration shall
terminate as to any particular Registrable Securities when (a) a Registration
Statement covering such Registrable Securities has been declared effective and
such Registrable Securities have been disposed of in accordance with such
effective Registration Statement, (b) written opinion(s), to the effect that
such Registrable Securities may be sold without registration under the
Securities Act or applicable state law and without restriction as to the volume
and timing of such sale, shall have been received from counsel for the Company
reasonably acceptable to the Holder of a majority of such Registrable
Securities, (c) the Warrants expire unexercised or are otherwise terminated or
(d) such Registrable Securities have been sold through a broker, dealer or
underwriter in a public distribution or a public securities transaction in which
the transferee receives a certificate without a restrictive legend.
SECTION 2.7. Rule 144. The Company shall file the reports
required to be filed by it under the Securities Act and the Securities Exchange
Act and the rules and regulations promulgated thereunder (or, if the Company is
not required to file such reports, it will, upon the written request of any
Holder of Registrable Securities as soon as practicable, make publicly available
other information so long as such information is necessary to permit sales under
Rule 144), and will take such further actions as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemption provided by Rule 144.
Upon
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the request of any Holder of Registrable Securities, the Company shall deliver
to such Holder a written statement as to whether it has complied with such
requirements.
SECTION 2.8. Indemnification. (a) In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
this Agreement, the Company will, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, the seller of any Registrable Securities
covered by such Registration Statement, its directors and officers or general
and limited partners (and the directors and officers thereof) (each, a
"Person"), each person who participates as an underwriter or qualified
independent underwriter/pricer ("independent underwriter"), if any, in the
offering or sale of such securities, each officer, director or partner of such
underwriter or independent underwriter, and each other Person, if any, who
controls such seller or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including fees of counsel and any amounts paid
in any settlement approved by the Company (which such approval shall not be
unreasonably withheld or delayed)) to which such seller, any such director or
officer or general or limited partner or any such underwriter or independent
underwriter, such officer, director or partner of such underwater or independent
underwriter or controlling person may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings, whether commenced or threatened, in respect
thereof), or expenses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
statement under which such securities were registered under the Securities Act
or 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,
(ii) any untrue statement or alleged untrue statement of a material of fact
contained in any preliminary, final or summary Prospectus (together with the
documents incorporated by reference or filed with the Commission) and any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (iii) any violation by the Company of
any federal or state rule or regulation applicable to the Company and relating
to action required of or inaction by the Company in connection with any such
registration, and the Company will reimburse as incurred such seller and each
such director, officer, general
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or limited partner, underwriter, independent underwriter, director, or officer
or partner of such underwriter or independent underwriter and controlling person
for any legal or any other expenses incurred by any of them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable to any such seller or
any such director, officer, general or limited partner, underwriter, independent
underwriter, director or officer or partner or such underwriter or independent
underwriter or controlling person in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding, whether commenced or
threatened, in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement or amendment thereof or supplement thereto
or in any such preliminary, final or summary Prospectus in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of any such seller or any such director, officer, general or limited partner,
underwriter, independent underwriter, director or officer or partner of such
underwriter or independent underwriter or controlling person, expressly for use
in the preparation thereof.
(b) The Company, as a condition to including any Registrable
Securities in any Registration Statement filed in accordance with this
Agreement, shall have received an undertaking reasonably satisfactory to it from
the prospective seller of such Registrable Securities and any underwriter or
independent underwriter, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in paragraph (a) of this Section 2.8) the
Company and its directors and officers and all other prospective sellers and
their directors, officers, general and limited partners and respective
controlling Persons (within the meaning of the Securities Act) with respect to
any statement or alleged statement in or omission or alleged omission from such
Registration Statement, any preliminary, final or summary Prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or information has been furnished in writing to the
Company or its representative by or on behalf of such seller or underwriter
expressly for use in the preparation of such Registration Statement,
preliminary, final or summary Prospectus or amendment or supplement; provided,
however, that the aggregate amount which any such seller or prospective seller
shall be required to pay pursuant to such undertaking shall be limited to the
amount of the net proceeds received by such Person upon the sale of the
Registrable Securities pursuant to the Registration Statement giving rise to
such claim. Such indemnity shall remain in full force and effect following the
transfer of such securities by such seller.
(c) As soon as possible after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 2.8, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 2.8, except to
the extent
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that the indemnifying party is actually prejudiced by such failure to give
notice. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party; provided, that the indemnifying party shall not be entitled to so
participate or so assume the defense if, in the indemnified party's reasonable
judgment, a conflict of interest between the indemnified party and the
indemnifying party exists or may exist in respect of such claim. After notice
from the indemnifying party to such indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 2.8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof unless the indemnifying party has failed to assume the defense of such
claim or to employ counsel reasonably satisfactory to such indemnified party;
provided that the indemnified parties shall have the right to employ one counsel
(in each case together with appropriate local counsel) (such counsel to be
selected by the Holders of a majority of the Registerable Securities included in
such registration) to represent such indemnified parties if, in such indemnified
parties' reasonable judgment, a conflict of interest between the indemnified
parties and the indemnifying parties exists or may exist in respect of such
claim, and in that event the fees and expenses of such separate counsel shall be
paid as incurred by the indemnifying party; and provided, further that if, in
the reasonable judgment of any of the indemnified parties, a conflict of
interest between such indemnified parties, and any other indemnified parties
exists in respect of such claim, such indemnified parties shall be entitled to
additional counsel or counsels and the indemnifying party shall be obligated to
pay the fees and expenses of such additional counsel or counsels. No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimants or plaintiffs to such indemnified party of an unconditional
release from all liability in respect to such claim or litigation. No
indemnifying party will be liable for any settlement effected without its prior
written consent, which consent will not be unreasonably withheld or delayed.
(d) Indemnification similar to that specified in the preceding
paragraphs of this Section 2.8 (with appropriate modifications) shall be given
by the Company and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under any state
securities and "blue sky" laws.
(e) If the indemnification provided for in this Section 2.8 is
unavailable or insufficient to hold harmless an indemnified party under Section
2.8(a) or (b) of this agreement, then each indemnifying party hall
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contribute to the amount paid or payable by such indemnified party as a result;
of the losses, claims, damages or liabilities referred to in Section 2.8(a) or
(b) in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other hand
in connection with statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or other omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statements or omissions. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 2.8(e) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this Section 2.8(e). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 2.8(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim (which
shall be limited as provided in Section 2.8(c) if the indemnifying party has
assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this Section 2.8(e). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party under this Section 2.8(e) of notice of the commencement of any
action against such party in respect of which a claim for contribution may be
made against an indemnifying party under this Section 2.8(e), such indemnified
party shall notify the indemnifying party in writing of the commencement thereof
if the notice specified in section 2.8(c) has not been given with respect to
such action provided that the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise under this Section 2.8(e), except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
Notwithstanding anything in this Section 2.8(e) to the contrary, no indemnifying
party (other than the Company) shall be required pursuant to this Section 2.8(e)
to contribute any amount in excess of the proceeds received by such indemnifying
party from the sale of Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate.
(f) The provisions of this Section 2.8 shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may
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have pursuant to law or contract and shall remain in full force and effect
following the transfer of the Registrable Securities by any such party.
ARTICLE III
Changes in Common Stock
If, and as often as, there is any change in the Common Stock
by way of a combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Registrable
Securities as so changed.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to the Holders the
Registrable Securities as of the date of this Agreement as follows:
(a) Due Authorization. The execution, delivery and performance
of this Agreement by the Company has been duly authorized by all
requisite action.
(b) Binding Obligation. This Agreement has been duly executed
and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
(c) No Violation. The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated
herein, by the Company does not violate any provision of law, any order
of any court or other agency of government, any organizational document
of the Company or any provision of any material indenture, agreement or
other instrument to which the Company or any of its properties or
assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets
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of the Company which violation, conflict, breach or default or lien,
charge, restriction or encumbrance would have a material adverse effect
on the business, condition (financial or otherwise) of the company
taken as a whole.
(d) Government Action. No action has been taken and no
statute, rule or regulation or order has been enacted, no injunction,
retraining order or order of any nature has been issued by a federal or
state court of competent jurisdiction and no action, suit or proceeding
is pending against or affecting or threatened against, the Company
before any court or arbitrator or any governmental body, agency or
official which, if adversely determined, would in any manner draw into
question the validity of this Agreement. Other than filings required
with the Commission and under state securities laws, no action or
approval by, or filing or registration with, any court or governmental
agency or body is required for the consummation of the transactions
contemplated by this Agreement by the Company.
ARTICLE V
Benefits of Agreement
The obligations of the Company under this Agreement shall
inure to the benefit of, and be enforceable by, the initial Holders and their
successors and permitted assigns without any further action on the part of any
party hereto.
ARTICLE VI
Miscellaneous
SECTION 6.1. Notices. All notices, requests, consents and
other communications provided for herein shall be in writing and shall be
effective upon delivery in person, faxed or telecopied, or mailed by certified
or registered mail, return receipt requested, postage pre-paid, addressed as
follows:
(i) if to the Company, to Wheels Sport Group, Inc., 000
Xxxxxxxx Xxxxx Xxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Telecopy No.
(000) 000-0000, Attention: Xxxxxx X. Xxxxxxx, President; with a copy to
Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C., 0000 Xxxxxxx Xxxxxx, Xxxxx
0000,
00
00
Xxxxxx, Xxxxxxxx 00000-0000, Telecopy No. (000) 000-0000, Attention:
Xxxxxx X. Xxxxxx, Esq.;
(ii) if to an initial Holder of Registrable Securities, at
such address as may have been furnished to the Company in writing by
such Holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Registrable Securities) or
to the Holders of Registrable Securities (in the case of the Company) in
accordance with the provisions of this paragraph.
SECTION 6.2. Waivers; Amendments. No failure or delay of any
Holder of Registrable Securities or the Company in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
such Holder and the Company are cumulative and not exclusive of any right or
remedies which it would otherwise have. The provisions of this Agreement may be
amended, modified or waived with (and only with) the written consent of the
Company and a majority of the Holders of Registrable Securities outstanding
(exclusive of Registrable Securities then owned by the Company or any subsidiary
thereof). No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
SECTION 6.3. Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York without
regard to principles of conflicts of law.
SECTION 6.4. Survival of Agreements; Representations and
Warranties, etc. All warranties, representations and covenants made by the
Company herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Holders of Registrable Securities and shall continue in full
force and effect so long as this Agreement is in effect regardless of any
investigation made by such Holders. All statements in any such certificate or
other instrument shall constitute representations and warranties hereunder.
SECTION 6.5 Covenants to Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Agreement contained by
or on behalf of the parties hereto shall bind their successors and assigns,
whether so expressed or not.
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SECTION 6.6. Severability. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 6.7. Section Headings. The section headings used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 6.8. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
SECTION 6.9. Termination. The obligations of the Company to
register the Registrable Securities hereunder shall terminate in accordance with
the terms of this Agreement.
SECTION 6.10. Complete Agreement. This document and the
documents referred to herein contain the complete agreement between the parties
and supersede any prior understandings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way, and any other agreements or understandings as to
securities registration or similar rights among the parties hereto are hereby
terminated.
SECTION 6.11. No More Favorable Agreements. The Company has
not previously, and will not hereafter, enter into any agreement with respect to
its securities with any person which grants such person rights that are, taken
as a whole, more favorable than the rights granted to the Holders in this
Agreement.
SECTION 6.12. Submission to Jurisdiction; Venue. (a) Any legal
action or proceeding with respect to this Agreement may be brought in the courts
of the State of New York or of the United States for the Southern District of
New York, and, by execution and delivery of this Agreement, the Company hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The
Company further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
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thereof by registered or certified mail, postage prepaid, to CT Corporation
Systems at its address at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, such service
to become effective 30 days after such mailing. Nothing herein shall affect the
right of any Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any other
jurisdiction.
(b) The company hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first set forth above.
WHEELS SPORTS GROUP, INC.
By:
-------------------------------------
Name:
Title:
HOLDERS:
INDOSUEZ XX XX, INC.
By:
--------------------------
Name:
Title:
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