EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of July 31, 2003 (the
"Effective Date"), is entered into by and among TEI Acquisition, Inc., a Nevada
corporation ("TAI"), The Entity, Inc., a Colorado corporation and the parent
corporation of TAI ("Holdings"), ▇▇▇▇▇ ▇. ▇▇▇▇, the majority shareholder of
Holdings ("Holdings Shareholder"), Boundless Motor Sports Racing, Inc., a Nevada
corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ (each, a "Company Shareholder", and collectively,
the "Company Shareholders").
RECITALS
WHEREAS, the boards of directors of TAI, Holdings and the Company have
adopted this Agreement and Plan of Merger, providing for the merger of TAI with
and into the Company (the "Merger") under the Nevada Revised Statutes (the
"NRS") in accordance with the provisions of this Agreement and have recommended
the Merger to their respective shareholders for approval;
WHEREAS, the parties intend for the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the Code (as defined
below).
ARTICLE I
DEFINITIONS
Certain terms used in this Agreement but not otherwise defined shall
have the meanings ascribed thereto in Exhibit A attached hereto.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, TAI will be merged with and into the Company
in accordance with this Agreement, and the separate existence of TAI shall
cease, and the Company shall continue as the surviving corporation. The Company
as it exists from and after the Effective Time, is sometimes referred to
hereinafter as the "Surviving Corporation."
2.2 Effect of the Merger. Upon the effectiveness of the Merger,
the Surviving Corporation shall possess all the rights, privileges, immunities
and franchises, as well of a public as of a private nature, and be subject to
all the restrictions, disabilities and duties, of each of the Constituent
Companies; and all property, real, personal and mixed, and all debts due to any
of the Constituent Companies on whatever account, including subscriptions to
shares, and all other things in action and all and every other interest, of or
belonging to each of the Constituent Companies, shall be vested in the Surviving
Corporation without further act or deed and without any transfer or assignment
having occurred; and all property, rights, privileges, immunities and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the Constituent
Companies, and the title to any real estate vested by deed or otherwise in
either of the Constituent Companies shall not revert or be in any way impaired
by reason of the Merger; but all rights of creditors and all liens upon any
property of either of the Constituent Companies shall be preserved unimpaired,
and all debts, liabilities and duties of the Constituent
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Companies shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it; and all other effects of the Merger
specified in the NRS shall result therefrom.
2.3 Consummation of the Merger. As soon as practicable after the
satisfaction or waiver of the conditions to this Agreement, the parties hereto
will cause the Merger to be consummated by filing with the appropriate agency of
the State of Nevada properly executed Articles of Merger, substantially in the
form attached as Exhibit B, incorporating, to the extent required by the laws of
the State of Nevada, this Agreement.
2.4 Articles of Incorporation; Bylaws; Directors and Officers. The
Articles of Incorporation of Surviving Corporation, as amended by the Articles
of Merger from and after the Effective Time shall be the Articles of
Incorporation of the Company until thereafter amended in accordance with the
provisions therein and as provided by the NRS. The Bylaws of the Surviving
Corporation from and after the Effective Time shall be the Bylaws of the Company
as in effect immediately prior to the Effective Time, continuing until
thereafter amended in accordance with their terms and the Articles of
Incorporation of the Surviving Corporation and as provided by the NRS. The
directors of the Surviving Corporation shall be: ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, until their successors are duly elected and qualified, and the
officers of the Surviving Corporation shall be the officers of the Company
holding such positions immediately prior to the Effective Time until their
respective successors are duly appointed and qualified.
2.5 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, TAI or any holder
of any shares of capital stock of TAI or the Company:
(a) Each share of Company Stock that is held in the
treasury of the Company or of any of its subsidiaries shall be canceled and
retired and no capital stock of the Surviving Corporation or Holdings, cash or
other consideration shall be paid or delivered in exchange therefore.
(b) Each remaining outstanding share of Company Stock
shall be converted into the right to receive one share of duly authorized,
validly issued, fully paid and non-assessable shares of Holdings Common Stock
(13,461,200 in the aggregate), without interest (the "Merger Price").
(c) Each outstanding share of TAI shall be converted into
one (1) share of common stock of the Surviving Corporation.
2.6 Merger Payment Procedure. As soon as practicable after the
Effective Time, the Surviving Corporation will distribute to holders of record
of the Company Stock so converted, upon surrender to the Surviving Corporation
of one or more certificates for such shares of the Company Stock for
cancellation, a certificate representing the proportionate share of Holdings
Common Stock due as a result of the Merger. In no event shall the holder of any
surrendered certificates for shares of the Company Stock be entitled to receive
interest on account of any shares of Holdings Common Stock due as a result of
the Merger.
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2.7 Closing of the Company Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
shares of Company Stock shall thereafter be made.
2.8 Reorganization under Section 368(a) of the Code. The parties
intend that the Merger will qualify as a tax-free reorganization under Section
368(a) of the Code and this Agreement are to be interpreted to that effect. Each
party agrees to render to the other parties reasonable assistance to preserve
that tax treatment,, however, no representation is made by any party hereto as
to whether the transactions contemplated hereby will so qualify.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
COMPANY SHAREHOLDERS
The Company and the Company Shareholders represent and warrant to TAI,
Holdings and the Holdings Shareholder that the statements contained in this
Article III are true and correct as of the date hereof and will be true and
correct as of the Closing Date as if made on such date, except as set forth in
the Schedules delivered by the Company to Holdings concurrently herewith and
which are attached hereto. Notwithstanding any provision in this Agreement to
the contrary, any representation or warranty made by a Company Shareholder is
made only with respect to the Company and himself or herself and not with
respect any other Company Shareholder.
3.1 Organization. The Company is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Nevada. The
Company (a) is qualified or licensed in all jurisdictions where such
qualification or license is required to own and operate its properties and
conduct its business in the manner and at the places presently conducted; (b)
holds all franchises, grants, licenses, certificates, permits, consents and
orders, all of which are valid and in full force and effect, from all applicable
United States and foreign regulatory authorities necessary to own and operate
its properties and to conduct its business in the manner and at the places
presently conducted; and (c) has full power and authority (corporate and other)
to own, lease and operate its respective properties and assets and to carry on
its business as presently conducted and as proposed to be conducted, except, in
each case, where the failure to be so qualified or licensed or to hold such
franchises, grants, licenses, certificates, permits, consents and orders or to
have such power and authority would not, when taken together with all other such
failures, reasonably be expected to have a Material Adverse Effect with respect
to the Company, as the case may be. The Company does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
3.2 Capital Structure.
(a) As of the Effective Date, the authorized capital
stock of the Company consists of 13,461,200 shares of Company Stock, and no
shares of preferred stock. The Company Shareholders own approximately
ninety-four percent (94%) of the issued and outstanding Company Stock. There are
no bonds, debentures, notes or other indebtedness having voting rights (or
convertible or exchangeable into securities having such rights) ("Company Voting
Debt") of the Company issued and outstanding. Except as set forth on Schedule
3.1, there are no existing (i)
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options, warrants, calls, preemptive rights, subscriptions or other rights,
convertible or exchangeable securities, agreements, arrangements or commitments
of any character, relating to the issued or unissued equity or membership
interests of the Company, obligating the Company to issue, transfer or sell or
cause to be issued, transferred or sold any equity or membership interest or
Company Voting Debt of, or other equity or membership interest in, the Company,
as the case may be, (ii) securities convertible into or exchangeable for such
equity or membership interests, or (iii) obligations of the Company to grant,
extend or enter into any such option, warrant, call, preemptive right,
subscription or other right, convertible security, agreement, arrangement or
commitment.
(b) There are no voting trusts, proxies or other
agreements or understandings to which the Company is a party with respect to the
voting of the equity interest of the Company. Except as necessary to consummate
the transactions contemplated herein, the Company is not a party to any
agreement or obligation, contingent or otherwise, to redeem, repurchase or
otherwise acquire or retire any equity or membership interests of the Company,
whether as a result of the transactions contemplated by this Agreement or
otherwise.
(c) The Company has not (i) made or agreed to make any
split of its equity or dividend, or issued or permitted to be issued any equity
interests, or securities exercisable for or convertible into equity, of the
Company, (ii), repurchased, redeemed or otherwise acquired any equity of the
Company, or (iii) declared, set aside, made or paid any dividends or other
distributions on the outstanding equity of the Company.
3.3 Authorization and Validity. The Company and each of the
Company Shareholders have the appropriate power and authority and legal right to
execute and deliver this Agreement and to perform their respective obligations
hereunder. The execution and delivery by the Company and each of the Company
Shareholders of this Agreement and the performance of their respective
obligations hereunder have been duly authorized by proper corporate or other
proceedings, and this Agreement constitutes the legal, valid and binding
obligation of the Company and each of the Company Shareholders enforceable
against each in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
3.4 No Conflict; Consent. Neither the execution and delivery by
the Company and the Company Shareholders of this Agreement, nor the consummation
of the transactions therein contemplated, nor compliance with the provisions
thereof will violate (a) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Company or any of the Company
Shareholders, or (b) the Company's articles of incorporation or bylaws, or (c)
the provisions of any indenture, instrument or agreement to which the Company is
a party or is subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in, or require, the creation
or imposition of any Lien in, of or on the Property of the Company pursuant to
the terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by the Company or the Company Shareholders is required to
be obtained by the Company or the Company Shareholders in connection with the
execution and delivery of this Agreement, or the legality, validity, binding
effect or enforceability of any of this Agreement. No consent, approval or
authorization of, or notice to, any other person or entity, including, without
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limitation, parties to loans, contracts, leases or other agreements, is required
in connection with the execution, delivery and performance of this Agreement by
the Company or any Company Shareholder or the consummation by it or them of the
transactions contemplated hereby.
3.5 Company Information. The Company was formed on May 9, 2003,
and was created for the purpose of the Merger and acquiring and operating racing
and race track businesses. The Company has no operations.
3.6 Litigation. There is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the best knowledge of any of
its officers, threatened against or affecting the Company which could reasonably
be expected to have a Material Adverse Effect with respect to the Company.
3.7 Material Agreements. Schedule 3.7 lists all agreements,
contracts, leases, licenses and other instruments to which the Company is a
party; it being acknowledged and agreed that between the date hereof and the
Closing Date, the Company may enter into letters of intent and/or purchase
agreements with respect to various racing facilities and related entities and
services.
3.8 Compliance With Laws. The Company has complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect with respect to the Company.
3.9 Information Furnished to the Company and Company Shareholders.
The Company and each of the Company Shareholders have been provided with, and is
familiar with, the financial and other information regarding the business and
operations of Holdings, including, but not limited to, the Holdings SEC
Documents that the Company and the Company Shareholders deem necessary for
evaluating the merits and risks of the transactions contemplated by this
Agreement. Each of the Company Shareholders are knowledgeable and experienced in
financial and business matters and is capable of evaluating the merits and risks
of the transactions contemplated by this Agreement.
3.10 Investment Purposes. The Company Shareholders are acquiring
the Holdings Common Stock for investment purposes and not with a view toward
resale or distribution thereof, and has no present intention of selling,
granting any participation in, or otherwise distributing the Holdings Common
Stock.
3.11 Restricted Securities. The Company Shareholders understand
that the shares of Holdings Common Stock will be issued by Holdings pursuant to
an exemption from the registration requirements of the Securities Act, and are
characterized as "restricted securities" under the Securities Act and may be
resold without registration under the Securities Act only in limited
circumstances. In connection with the foregoing, each of the Company
Shareholders is familiar with Rule 144 and understand the resale limitations
imposed thereby on the Holdings Common Stock.
3.12 Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
the Company or any of its officers,
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directors or agents or the Company Shareholders with respect to the transactions
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES HOLDINGS AND
THE HOLDINGS SHAREHOLDER
Holdings and the Holdings Shareholders represent and warrant to the
Company and the Company Shareholders that the statements contained in the
Article IV are true and correct as of the date hereof and will be true and
correct as of the Closing Date as if made on such date, except as set forth in
the Schedules delivered by Holdings to the Company concurrently herewith.
4.1 Organization. Each of TAI and Holdings is a corporation, duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation. Each of TAI and Holdings (a) is qualified or
licensed in all jurisdictions where such qualification or license is required to
own and operate its properties and conduct its business in the manner and at the
places presently conducted; (b) holds all franchises, grants, licenses,
certificates, permits, consents and orders, all of which are valid and in full
force and effect, from all applicable United States and foreign regulatory
authorities necessary to own and operate its properties and to conduct its
business in the manner and at the places presently conducted; and (b) has full
power and authority (corporate and other) to own, lease and operate its
respective properties and assets and to carry on its business as presently
conducted and as proposed to be conducted, except, in each case, where the
failure to be so qualified or licensed or to hold such franchises, grants,
licenses, certificates, permits, consents and orders or to have such power and
authority would not, when taken together with all other such failures,
reasonably be expected to have a Material Adverse Effect with respect to TAI or
Holdings, as the case may be. Except for Holdings' ownership of the equity
interest in TAI or as otherwise as contemplated herein, neither TAI nor Holdings
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
4.2 Capital Structure.
(a) As of the Effective Date, the authorized capital
stock of Holdings consists of 100,000,000 shares of Holdings Common Stock, and
10,000,000 shares of preferred stock, par value $0.01 per share. As of the
Effective Date, (i) [81,400,000] shares of Holdings Common Stock and no shares
of preferred stock were issued and outstanding, (ii) no options or warrants for
shares of Holdings Common Stock were issued and outstanding; and (iii) no shares
of Holdings Common Stock were held in the treasury of the Company. All the
outstanding shares of Holdings Common Stock are duly authorized, validly issued,
fully paid and non-assessable. As of the Effective Date, TAI has 1,000
authorized and issued shares of common stock, par value $0.01 per share, all of
which shares are owned by Holdings. There are no bonds, debentures, notes or
other indebtedness having voting rights (or convertible or exchangeable into
securities having such rights) ("Voting Debt") of Holdings or TAI issued and
outstanding. Except as set forth above, there are no equity interests of
Holdings or TAI authorized, issued or outstanding and there are no existing (i)
options, warrants, calls, preemptive rights, subscriptions or other rights,
convertible or exchangeable securities, agreements, arrangements or commitments
of any character, relating to the issued or unissued equity interests of
Holdings or TAI, obligating Holdings or TAI to issue, transfer or sell or cause
to be
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issued, transferred or sold any equity interest or Voting Debt of, or other
equity interest in, Holdings or TAI, (ii) securities convertible into or
exchangeable for such equity interests or (iii) obligations of Holdings or TAI
to grant, extend or enter into any such option, warrant, call, preemptive right,
subscription or other right, convertible security, agreement, arrangement or
commitment. Holdings has not granted to any Person any rights to have any
securities registered under the Securities Act.
(b) There are no voting trusts, proxies, shareholders
agreements or other agreements or understandings to which Holdings is a party
with respect to the voting or transfer of the equity interests or capital stock
of Holdings. Holdings is not a party to any agreement or obligation, contingent
or otherwise, to redeem, repurchase or otherwise acquire or retire any equity
interests of Holdings, whether as a result of the transactions contemplated by
this Agreement or otherwise.
(c) Holdings has not (i) made or agreed to make any split
of its equity interests or dividend, or issued or permitted to be issued any
equity interests, or securities exercisable for or convertible into equity
interests, of Holdings, (ii), repurchased, redeemed or otherwise acquired any
equity or membership interests of Holdings, or (iii) declared, set aside, made
or paid any dividends or other distributions on the outstanding equity interests
of Holdings.
4.3 Authorization and Validity. TAI, Holdings and the Holdings
Shareholder has the appropriate power and authority and legal right to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery by TAI, Holdings and the Holdings Shareholder of this
Agreement and the performance of their respective obligations hereunder have
been duly authorized by proper corporate and other proceedings, and this
Agreement constitutes the legal, valid and binding obligation of TAI, Holdings
and the Holdings Shareholder enforceable against it and them in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally.
4.4 No Conflict; Government Consent. Neither the execution and
delivery by TAI, Holdings and the Holdings Shareholder of this Agreement, nor
the consummation of the transactions therein contemplated, nor compliance with
the provisions thereof will violate (a) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on TAI, Holdings or the Holdings
Shareholder, or (b) TAI or Holdings' articles or certificate of incorporation or
bylaws, or (c) the provisions of any indenture, instrument or agreement to which
either TAI or Holdings is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of TAI or Holdings pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by TAI,
Holdings or the Holdings Shareholder is required to be obtained by TAI, Holdings
or the Holdings Shareholder in connection with the execution and delivery of
this Agreement, or the legality, validity, binding effect or enforceability of
any of this Agreement. Except as set forth in Schedule 4.4, no consent, approval
or authorization of, or notice to, any other person or entity, including,
without limitation, parties to loans, contracts, leases or other agreements, is
required in connection with the execution, delivery and performance of this
Agreement by TAI, Holdings or the Holdings Shareholder or the consummation by it
of the transactions contemplated hereby.
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4.5 Holdings Financial Statements.
(a) Holdings has filed all forms, reports, statements,
schedules, registration statements and other documents required to be filed with
the SEC since January 1, 2000 (the "Holdings SEC Documents"), each of which
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. No Subsidiary of Holdings is required to file any
form, report, statement, schedule, registration statement or other document with
the SEC. No Holdings SEC Document, when filed (or, if amended or superseded by a
filing prior to the Closing Date, on the date of such filing) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated
financial statements of Holdings (including any related notes thereto) included
in the Holdings SEC Documents have been prepared in accordance with GAAP,
applied on a consistent basis during the relevant periods (except as may be
disclosed in the notes thereto), and present fairly the consolidated financial
position and consolidated results of operations and changes in cash flows of
Holdings and its Subsidiaries as of the respective dates or for the respective
periods reflected therein, except, in the case of the unaudited interim
financial statements, for normal and recurring year-end adjustments that are not
material.
(c) Except as set forth in Schedule 4.5(c) and on the
balance sheet of Holdings as of March 31, 2003 included in the Holdings SEC
Documents (the "Holdings Latest Balance Sheet"), or in the notes thereto,
Holdings does not have any liabilities, debts, claims or obligations of any
nature (whether accrued, absolute, direct or indirect, contingent or otherwise,
whether due or to become due), and there is no existing condition or set of
circumstances which would reasonably be expected, individually or in the
aggregate, to result in such a liability.
(d) TAI is a newly formed entity, formed for the purpose
of the Merger, and has no assets or liabilities of any kind whatsoever.
4.6 Material Adverse Change. Since March 31, 2003, there has been
no change in the business, property, condition (financial or otherwise) or
results of operations of Holdings which could reasonably be expected to have a
Material Adverse Effect with respect to Holdings.
4.7 Taxes. Holdings has filed all United States federal tax
returns and all other tax returns which are required to be filed and have paid
all taxes due pursuant to said returns or pursuant to any assessment received by
Holdings, except such taxes, if any, as are being contested in good faith and as
to which adequate reserves have been provided on the Holdings Latest Balance
Sheet and as to which no Lien exists. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Holdings in respect of any taxes or other governmental
charges are adequate. Holdings is taxable as a "C" corporation for federal
income tax purposes.
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4.8 Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
best knowledge of any of its officers, threatened against or affecting Holdings.
Holdings has no contingent obligations not provided for or disclosed in the
Holdings Latest Balance Sheet.
4.9 Material Agreements. Schedule 4.9 lists all agreements,
contracts, leases, licenses and other instruments to which Holdings is a party.
4.10 Compliance With Laws. Holdings has complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material Adverse
Effect with respect to Holdings.
4.11 Operations. Neither Holdings nor TAI has ever had any
operations.
4.12 Issuance of Holdings Common Stock. The shares of Holdings
Common Stock to be delivered to the Company Shareholders hereunder have been
duly and validly authorized and when issued in accordance with this Agreement,
will be duly and validly issued, fully paid and nonassessable and will not have
been issued in violation of any statutory preemptive rights, or any other
preemptive right, co-sale right, right of first refusal or other similar right.
4.13 Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
TAI, Holdings or any of its officers, directors or agents or the Holdings
Shareholder with respect to the transactions contemplated by this Agreement.
ARTICLE V
CLOSING
5.1 Closing. The closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
L.L.P., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ on or
before October 1, 2003, or such other date as mutually agreed to by the parties
(the "Closing Date")
5.2 TAI, Holdings and the Holdings Shareholder Conditions. The
obligation of TAI, Holdings and the Holdings Shareholder to consummate the
transactions contemplated under this Agreement is subject to the satisfaction,
prior to or at the Closing, of the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company and the Company Shareholders contained in Article
III shall be true and correct in all material respects and the covenants and
agreements of such parties set forth in Article VI shall have been complied with
at and as of the Closing Date as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
(b) Consents. EAI, Holdings and the Holdings Shareholder
shall have received all approvals and consents required under its loan
agreements, leases, and indentures, shareholders
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agreements or other debt documents or contracts necessary to consummate the
transactions contemplated herein, including without limitation, those set forth
on Schedule 4.4.
(c) No Injunctions. There shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction prohibiting or imposing any
condition on the consummation of any of the transactions contemplated hereby.
5.3 The Company and the Company Shareholders Conditions. The
obligation of the Company and the Company Shareholders to consummate the
transactions contemplated under this Agreement is subject to the satisfaction,
prior to or at the Closing, of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Holdings and the Holdings Shareholders contained in Article IV
hereof shall be true and correct in all material respects and the covenants and
agreements of such parties set forth in Article VI shall have been complied with
at and as of the Closing Date as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
(b) Consents. The Company and the Company Shareholders
shall have received all approvals and consents required under their respective
loan agreements, leases, and indentures, shareholders agreements or other debt
documents or contracts necessary to consummate the transactions contemplated
herein.
(c) No Injunctions. There shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction prohibiting or imposing any
condition on the consummation of any of the transactions contemplated hereby.
(d) Reverse Stock Split. Holdings shall have completed a
one for 100 reverse split of the outstanding Holdings Common Stock, and the
authorized shares of Holdings Common Stock shall remain at 100,000,000 shares.
5.4 Closing Deliverables.
(a) At the Closing, the Company will have delivered or
caused to be delivered to Holdings all of the following in form and substance
satisfactory to Holdings:
(i) copies of the resolutions unanimously and
duly adopted by the Company's board of
directors, authorizing the execution,
delivery and performance by the Company of
this Agreement, and the consummation of all
of the other transactions hereunder and
thereunder, certified as of the Closing Date
by the secretary of the Company;
(ii) a certificate dated as of the Closing Date
from an officer of the Company and from each
of the Company Shareholders stating that the
conditions specified in Section 5.3 have
been fully satisfied or waived by the
Company and the Company Shareholders, as
applicable; and
10
(iii) a certificate of good standing and existence
form the Secretary of State of the State of
Nevada, of a recent date, with respect to
the Company.
(b) At the Closing, Holdings will have delivered or
caused to be delivered to the Company and the Company Shareholders each of the
following in form and substance satisfactory to the Company and the Company
Shareholders:
(i) a certificate of the secretary of Holdings
and TAI, certifying (A) that a true, correct
and complete copy of the articles of
incorporation of Holdings and TAI, as
applicable is attached, and (B) that a true,
correct and complete copy of the bylaws of
Holdings and TAI, as applicable is attached;
(ii) copies of the resolutions unanimously and
duly adopted by each of Holdings' and TAI's
boards of directors authorizing the
execution, delivery and performance by
Holdings and TAI of this Agreement, and the
consummation of all of the other
transactions hereunder and thereunder,
certified as of the Closing Date by the
secretary or assistant secretary of Holdings
and TAI, as applicable;
(iii) a certificate dated as of the Closing Date
from an officer of each of TAI and Holdings
and the Holdings Shareholder stating that
the conditions specified in section 5.2 have
been fully satisfied or waived by TAI,
Holdings and the Holdings Shareholders, as
applicable;
(iv) certificates representing an aggregate of
[13,461,200] shares of Holdings Common
Stock, issued to the Company Shareholders in
accordance with Section 2.5(b) above; and
(v) a certificate of existence and good standing
from the Secretaries of State of the States
of Colorado and Nevada, each of a recent
date, with respect to Holdings and TAI, as
applicable.
ARTICLE VI
PRE-CLOSING COVENANTS
6.1 Covenants of the Company. After the Effective Date and until
the earlier of (a) the Closing Date or (b) the expiration or termination of this
Agreement, unless Holdings shall otherwise consent in writing:
(a) Conduct of Business. The Company will carry on and
conduct its businesses in substantially the same manner as it is presently
conducted and do all things necessary to remain duly organized, validly existing
and in good standing in its jurisdiction of organization and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted.
(b) Compliance with Laws. The Company will comply with
all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
11
6.2 Covenants of TAI and Holdings. After the Effective Date and
until the earlier of (a) the Closing Date, or (b) the expiration or termination
of this Agreement, unless the Company shall otherwise consent in writing;
(a) Conduct of Business. Holdings will carry on and
conduct its business in substantially the same manner as it is presently
conducted and do all things necessary to remain duly incorporated or organized,
validly existing and in good standing in its jurisdiction of incorporation or
organization and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted. Without limiting the
generality of the foregoing, the Holdings will not: (i) declare, pay or set
aside for payment any dividend or other distribution payable in cash, stock,
property or otherwise in respect of its equity ownership; or directly or
indirectly redeem, purchase, repurchase (except as required to consummate the
transactions contemplated herein) or otherwise acquire any Holdings Common Stock
or any securities or obligations convertible into or exchangeable for any of its
Holdings Common Stock, as the case may be; (ii)(A) incur or assume any debt or
issue any debt securities, except under its existing lines of credit, but not
exceeding the current credit limit under such lines of credit, (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, (C) make any
loans or advances to any person, other than with respect to extensions of credit
to their respective customers in the ordinary course of business consistent with
past practice, or (D) mortgage or pledge any of its assets, tangible or
intangible, or create any material Lien thereupon; (iii) enter into any lines of
business or otherwise commence operation of any business; or (iv) take any
action or agree, in writing or otherwise, to take any of the foregoing actions
or any action which would make any representation or warranty in Article IV
hereof materially untrue or incorrect. TAI will not conduct any business of any
kind whatsoever.
(b) Compliance with Laws. TAI and Holdings will comply
with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject.
(c) Merger. Except as contemplated by this Agreement,
neither TAI nor Holdings will merge or consolidate with or into any other
Person.
(d) Dilution of Ownership. Holdings will not consent to
or approve of the issuance of (i) any additional stock, securities or other
equity securities or interests, (ii) any instrument convertible voluntarily by
Holdings or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such stock, securities or interests, or
(iii) any warrants, options, contracts or other commitments entitling any third
party to purchase or otherwise acquire any such stock, securities or interests.
6.3 Access. From the Effective Date until the Closing Date (or the
termination of this Agreement), each party shall afford to the other party and
such other party's representatives reasonable access, upon reasonable notice
during normal business hours, to all its properties, books, contracts,
commitments, personnel and records and shall furnish promptly to such other
party all information concerning its business, properties and personnel as may
reasonably be requested. All such information as may be furnished by or on
behalf of a party to another party or such other party's representatives
pursuant to this Section 6.3 shall be and remain confidential. No investigation
pursuant to this Section 6.3 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto.
12
6.4 Notification of Certain Matters. Each of the Company, TAI,
Holdings, the Company Shareholders and the Holdings Shareholder shall promptly
advise the other parties orally and in writing of (a) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (b) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or (c) any event or change
or impending occurrence of any event or change of which it has knowledge and
which has resulted, or which, insofar as can reasonably be foreseen, is likely
to result, in any of the conditions to the transactions contemplated hereby set
forth in Article V not being satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
6.5 Simultaneous Closing. Notwithstanding anything herein to the
contrary, the parties hereto agree that Holdings is negotiating and/or executed,
an agreement and plan of merger with an affiliate of the Company, GPX Partners,
L.L.C. ("GPX"), and its members, and any and all representations, warranties,
covenants and agreements contained herein are deemed not to include such
transaction and/or the operations of GPX.
ARTICLE VII
POST CLOSING COVENANTS
7.1 Private Placement. Following the Merger, Holdings shall
undertake to negotiate and consummate a private placement or public offering of
additional shares of equity securities of Holdings (the "Financing") the
proceeds of which shall be at least $3,000,000 (less associated expenses). In
the event Holdings consummates the Financing, Holdings shall, within ten (10)
business days of receiving the proceeds therefrom, pay to the Holdings
Shareholder all of the outstanding debt owed by Holdings to the Holdings
Shareholder; provided that such debt is either listed on the Holdings Latest
Balance Sheet, or is set forth in Schedule 4.5(c).
7.2 Registration Rights. Holdings hereby grants to the Company
Shareholders, with respect to the shares of Holdings Common Stock to be received
by the Company Shareholders in the Merger, the registration rights set forth in
Exhibit C.
ARTICLE VIII
LIMITATION ON TRANSFER OF HOLDINGS COMMON STOCK
8.1 Restriction on Transfer. The shares of Holdings Common Stock
to be issued to the Company Stockholders in the Merger will not be registered
under the Securities Act on the Closing Date and may not be transferred, sold or
otherwise disposed of any of the Company Stockholders, except pursuant to an
effective registration statement under the Securities Act or in accordance with
an exemption from the registration requirements of the Securities Act.
8.2 Restrictive Legend. Each certificate representing shares of
Holdings Common Stock issued by Holdings to the Company Shareholders in
accordance with Section 2.5 shall bear the following legend:
13
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 UNDER THE ACT, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF
ANY STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
BY THE HOLDER WITHOUT COMPLIANCE WITH THE APPLICABLE
SECURITIES AND EXCHANGE COMMISSION RULES AND REGULATIONS.
8.3 Removal of Restrictive Legend. Holdings agrees to remove such
legend (or any relevant portion thereof), by prompt delivery of substitute
certificates upon the request of the holder if at such time such legend (or
portion thereof) is no longer required for purposes of, or applicable pursuant
to, the prior provisions of this Article VIII.
ARTICLE IX
INDEMNIFICATION; TERMINATION
9.1 Indemnification by the Company Shareholders. Each of the
Company Shareholders hereby agrees to defend, indemnify and hold Holdings and
the Holdings Shareholder, and their respective officers, directors,
shareholders, employees, successors, heirs, assigns, attorneys and
representatives harmless against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not Holdings or the Holdings
Shareholder is a party thereto) which Holdings or the Holdings Shareholder may
pay or incur arising out of or relating to a breach of any representation,
warranty or covenant of the Company or the Company Shareholders under this
Agreement. Notwithstanding the foregoing, a Company Shareholder's obligation to
indemnify Holdings and the Holdings Shareholders shall only apply to the extent
that the Company or such Company Shareholder breached his representations,
warranties or covenants (and not those of any other Company Shareholder).
9.2 Indemnification by the Holdings Shareholder. The Holdings
Shareholder agrees to defend, indemnify and hold the Company and the Company
Shareholders, and their respective officers, directors, shareholders, members,
employees, successors, assigns, attorneys and representatives harmless against
all losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not the Company or the Company Shareholder is a party
thereto) which the Company or the Company Shareholders may pay or incur arising
out of or relating to a breach of any representation, warranty or covenant of
Holdings or the Holdings Shareholders under this Agreement.
14
9.3 Survival of Representations and Warranties. The
representations and warranties made by parties in this Agreement and in any
certificate or schedule furnished hereunder shall survive the Effective Time for
a period of one (1) year thereafter. None of the covenants or agreements in this
Agreement shall survive the Effective Time, except for those covenants and
agreements contained herein or therein that by their terms apply or are to be
performed in whole or in part after the Effective Time, including without
limitation, the covenants and agreements contained in Section 9.1 and 9.2 above.
9.4 Termination. This Agreement may be terminated, and the
transactions contemplated hereby abandoned, prior to the Closing as follows:
(a) by mutual written consent of all the parties;
(b) by Holdings or the Holdings Shareholder in the event
any of the conditions in Section 5.2 have not been satisfied on or before
October 1, 2003 through no fault of TAI, Holdings or the Holdings Shareholder;
or
(c) by the Company in the event any of the conditions in
Section 5.3 have not been satisfied on or before October 1, 2003, through no
fault of the Company or any of the Company Shareholders;
9.5 Effect of Termination. If this Agreement is terminated
pursuant to Sections 9.4 all rights and obligations of the parties hereunder
shall terminate without liability of any party to any other party.
ARTICLE X
GENERAL PROVISIONS
10.1 Headings. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
10.2 Expenses. Each of the parties shall bear their own expenses
(including reasonable attorneys' fees and time charges of attorneys) paid or
incurred by such party in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification, and administration of this
Agreement and the Merger.
10.3 Entire Agreement; Assignment. This Agreement and the attached
Exhibits and Schedules embodies the entire agreement and understanding among
TAI, Holdings, the Holdings Shareholder, the Company and the Company
Shareholders and supersede all prior agreements and understandings among such
parties relating to the subject matter thereof. This Agreement may not be
assigned without the prior written consent of the other parties.
10.4 Benefits of this Agreement. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
10.5 Amendment. No amendment or modification to this Agreement
shall be effective, unless in writing and signed by all the parties.
15
10.6 Severability. Any provision in this Agreement that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.
10.7 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party at
(a) its address or facsimile number set forth on the signature pages hereof or
(b) such other address or facsimile number as such party may hereafter specify.
Each such notice, request or other communication shall be effective (i) if given
by facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mail, certified or registered
with first class postage prepaid, addressed as aforesaid, or (iii) if given by
any other means, when delivered (or, in the case of electronic transmission,
received) at the address specified in this Section.
10.8 Choice Of Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF
LAWS PROVISIONS.
10.9 Venue. THE EXCLUSIVE JURISDICTION FOR ANY CLAIM OR CONTROVERSY
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE IN THE STATE AND FEDERAL
COURTS LOCATED IN DALLAS COUNTY, TEXAS AND EACH PARTY HERETO IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
10.10 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement may be executed and delivered by facsimile
copy.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TAI ACQUISITION, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Title: President
Address: _______________________
_______________________
Fax: _______________________
THE ENTITY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Title: President
Address: _______________________
_______________________
Fax: _______________________
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Address: _______________________
_______________________
Fax: _______________________
BOUNDLESS MOTOR SPORTS
RACING, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Title: President and CEO
Address: _______________________
_______________________
Fax: _______________________
17
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: _______________________
_______________________
Fax: _______________________
/s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Address: _______________________
_______________________
Fax: _______________________
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: _______________________
_______________________
Fax: _______________________
/s/ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
Address: _______________________
_______________________
Fax: _______________________
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
18
EXHIBIT A
DEFINITIONS
As used in this Agreement:
"Agreement" means this agreement, as it may be amended or modified and
in effect from time to time.
"Closing" is defined in Section 5.1.
"Closing Date" is defined in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Company" is defined in the preamble to this Agreement.
"Company Stock" means the common stock, $0.001 par value per share, of
the Company.
"Company Voting Debt" is defined in Section 3.2.
"Constituent Companies" means the Company and TAI.
"Effective Date" is defined in the preamble to this Agreement.
"Effective Time" means the time at which the Articles of Merger are
filed with the Secretary of State of the State of Nevada, in accordance with the
NRS.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and any rule and regulation issued thereunder.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied in a consistent manner.
"Holdings" is defined in the preamble to this Agreement.
"Holdings Common Stock" means shares of Holdings' common stock, $0.0001
par value.
"Holdings Latest Balance Sheet" is defined in Section 4.5(c).
"Holdings SEC Documents" is defined in Section 4.5(a).
A-1
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"Material Adverse Effect" means, with respect to a Person, a material
adverse effect on (i) the business, Property, condition (financial or
otherwise), or results of operations of the Person taken as a whole, (ii) the
ability of the Person to perform its obligations under this Agreement, or (iii)
the validity or enforceability of this Agreement or the rights or remedies of
hereunder.
"Merger" is defined in the Recitals to this Agreement.
"NRS" is defined in the Recitals to the Agreement.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Private Placement" is defined in Section 7.1
"Private Placement" Deadline is defined in Section 7.2.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any rule and regulation issued thereunder.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
"Substantial Portion" means, with respect to the Property of the
Company, Property which (a) represents more than 10% of the consolidated assets
of the Company as would be shown in the consolidated financial statements of the
Company as at the beginning of the twelve-month period ending with the month in
which such determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Company as
reflected in the financial statements referred to in clause (a) above.
"Surviving Corporation" is defined in Section 2.1.
"TAI" is defined in the preamble to this Agreement.
A-2
"TAI Stock" means the common stock, $0.001 par value per share, of TAI.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes.
"Voting Debt" is defined in Section 4.2.
A-3
EXHIBIT B
ARTICLES OF MERGER
[See attached document]
B-1
EXHIBIT C
REGISTRATION RIGHTS
[See attached document]
C-1
REGISTRATION RIGHTS
1. Definitions.
(a) As used in this Exhibit C, the following terms shall have the
meanings specified below:
(i) "AFFILIATE," of any specified Person means any other
Person who directly, or indirectly through one or more intermediaries,
is in control of, is controlled by, or is under common control with,
such specified Person. For purposes of this definition, control of a
Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by
contract, securities ownership or otherwise; and the terms
"controlling" and "controlled" have the respective meanings correlative
to the foregoing.
(ii) "COMMISSION" means the Securities and Exchange
Commission.
(iii) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
thereunder, or any similar successor statute.
(iv) "INVESTORS" means all Persons receiving Holdings
Common Stock in the Merger pursuant to the terms and conditions of the
Agreement and any permitted transferee or assignee of Registrable
Securities who agrees to become bound by all of the terms and
provisions of this Exhibit C.
(v) "PERSON" means any individual, partnership,
corporation, limited liability company, joint stock company,
association, trust, unincorporated organization, or a government agency
or political subdivision thereof.
(vi) "PROSPECTUS" means the prospectus (including any
preliminary prospectus and/or any final prospectus filed pursuant to
Rule 424(b) under the Securities Act and any prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance on Rule 430A under the
Securities Act) included in the Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of
the offering of any portion of the Registrable Securities covered by
the Registration Statement and by all other amendments and supplements
to such prospectus, including all material incorporated by reference in
such prospectus and all documents filed after the date of such
prospectus by Holdings under the Exchange Act and incorporated by
reference therein.
(vii) "PUBLIC OFFERING" means a firm commitment
underwritten offering registered with the Commission and the
appropriate state securities commissions by Holdings of its Holdings
Common Stock and made pursuant to the Securities Act.
(viii) "REGISTRABLE SECURITIES" means the shares of Holdings
Common Stock received by Investors in the Merger; provided, however, a
share of Holdings Common Stock
1
shall cease to be a Registrable Security for purposes of this Exhibit C
when it no longer is a Restricted Security.
(ix) "REGISTRATION STATEMENT" means a registration
statement of Holdings filed on Form ▇-▇, ▇-▇, ▇-▇, ▇▇-▇ or SB-2 under
the Securities Act providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities pursuant to Rule 415 under the Securities Act, including the
Prospectus contained therein and forming a part thereof, any amendments
to such registration statement and supplements to such Prospectus, and
all exhibits and other material incorporated by reference in such
registration statement and Prospectus.
(x) "RESTRICTED SECURITY" means any share of Holdings
Common Stock received by Investors in the Merger except any share that
(i) has been registered pursuant to an effective registration statement
under the Securities Act and sold in a manner contemplated by the
prospectus included in such registration statement, (ii) has been
transferred in compliance with the resale provisions of Rule 144 under
the Securities Act (or any successor provision thereto) or is
transferable pursuant to paragraph (k) of Rule 144 under the Securities
Act (or any successor provision thereto), or (iii) otherwise has been
transferred and a new share of Holdings Common Stock not subject to
transfer restrictions under the Securities Act has been delivered by or
on behalf of Holdings.
(xi) "SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or
any similar successor statute.
(b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Agreement to which this Exhibit C is
attached.
2. Registration.
(a) Registration on Request. Except as provided in subsection (b)
of this Section 2, upon the written request of Investors owning at least a
majority of the then outstanding Registrable Securities that Holdings effect
pursuant to this Section 2(a) the registration of the requesting Investors'
Registrable Securities under the Securities Act (which request shall specify the
number of Registrable Securities to be registered), Holdings shall, as
expeditiously as reasonably possible, notify all other Investors of such request
(and allowing them to participate therein), and use its best efforts to effect
the registration under the Securities Act of the Registrable Securities of all
Investors which Holdings has been so requested to register. Notwithstanding the
above, Holdings shall not be obligated to take any action to effect any
registration requested by the Investors pursuant to the previous sentence (i)
after two years from the Closing Date, or (ii) after Holdings has effected one
(1) registration pursuant to this Section 2(a) and such registration has been
declared or ordered effective.
Notwithstanding any other provision hereof to the contrary, a
registration requested pursuant to this Section 2(a) shall not be deemed to have
been effected (i) unless it has become effective and remains effective for at
least 180 days; provided, however, that a registration which does not become
effective after Holdings has filed a registration statement with respect thereto
solely by reason of the refusal by a requesting Investor, in its sole
discretion, to proceed with such registration shall be
2
deemed to have been effected by Holdings at the request of the Investors unless
the requesting Investor shall have elected to pay all expenses of registration
provided for in Section 5 below in connection with such registration, (ii) if
after it has become effective such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
govern-mental agency or court for any reason other than a misrepresentation or
an omission by any participating Investor, or (iii) if the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied other than by reason of some
wrongful act or omission, or act or omission in bad faith, by any participating
Investor.
Holdings shall not be obligated to effect any registration pursuant to
this Section 2(a) within 90 days after the effective date of any underwritten
public offering by Holdings or of any previous registration withdrawn at the
request of the requesting Investors. Holdings may postpone for up to 90 days the
filing or the effectiveness of a registration statement for a registration
pursuant to this Section 2(a) if the financial advisor and/or underwriter to
Holdings certifies to the Investors that such registration would reasonably be
expected to have a material adverse effect on Holdings; provided, however, that
in such event the Investors requesting such registration shall be entitled to
withdraw such request and, if such request is withdrawn, such registration shall
not count as the one permitted registration under this Section 2(a) and Holdings
shall pay all the above referenced registration expenses in connection with such
postponed or withdrawn registration.
(b) Piggyback Registration Rights. (i) Without limiting the
obligations of Holdings pursuant to Section 2(a) above, until such date as the
Registration Statement to be filed in accordance with Section 2(a) is declared
effective by the Commission, if Holdings proposes to register any of its
Holdings Common Stock or any other shares of capital stock of Holdings under the
Securities Act (other than a registration (A) on Form S-8 or S-4 or any
successor or similar forms, (B) relating to Holdings Common Stock or any other
shares of common stock of Holdings issuable upon exercise of employee or
consultant share options or in connection with any employee benefit or similar
plan of Holdings or (C) in connection with a direct or indirect acquisition by
Holdings of another Person or any transaction with respect to which Rule 145 (or
any successor provision) under the Securities Act applies), whether or not for
sale for its own account, it will each such time, give prompt written notice at
least 20 days prior to the anticipated filing date of the registration statement
relating to such registration to the Investors, which notice shall set forth
such Investors' rights under this Section 2(c) and shall offer the Investors the
opportunity to include in such registration statement such number of Registrable
Securities as the Investors may request. Upon the written request of an Investor
made within 10 days after the receipt of notice from Holdings (which request
shall specify the number of Registrable Securities intended to be disposed of by
such Investors), Holdings will use all reasonable commercial efforts to effect
the registration under the Securities Act of all Registrable Securities that
Holdings has been so requested to register by the Investors, to the extent
requisite to permit the disposition of the Registrable Securities to be so
registered; provided, however, that (A) if such registration involves a Public
Offering, the Investors must sell their Registrable Securities to the
underwriters on the same terms and conditions as apply to Holdings and (B) if,
at any time after giving written notice of its intention to register any
Holdings Common Stock pursuant to this Section 2(b) and prior to the effective
date of the registration statement filed in connection with such registration,
Holdings shall determine for any reason not to register such Holdings Common
Stock, Holdings shall give written notice to the Investors and,
3
thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration.
The Company's obligations under this Section 2(b) shall terminate on
the date that the Registration Statement to be filed in accordance with Section
2(a) is declared effective by the Commission. If a registration pursuant to this
Section 2(b) involves a Public Offering and the managing underwriter thereof
advises Holdings that, in its view, the number of shares of Holdings Common
Stock, if any, or other shares of Holdings Common Stock that Holdings and the
Investors intend to include in such registration exceeds the largest number of
shares of Holdings Common Stock (including any other shares of Holdings Common
Stock or warrants of Holdings) that can be sold without having a material
adverse effect on such Public Offering (the "Maximum Offering Size"), Holdings
will include in such registration only that number of shares of Holdings Common
Stock which does not exceed the Maximum Offering Size, in the following order of
priorities: (1) first, all securities Holdings proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to inclusion of
their securities in the Registration Statement by reason of demand registration
rights, and (3) third, the securities requested to be registered by other
holders of securities entitled to participate in the registration, drawn from
them pro-rata based on the number of shares each has requested to be included in
such registration and the Investors pursuant to this Exhibit C. If as a result
of the proration provisions of this Section 2(b), the Investors are not entitled
to include all such Registrable Securities in such registration, such Investors
may elect to withdraw their request to include any Registrable Securities in
such registration.
Specifically, and not by way of limitation, all of the Registrable
Securities shall be included in any Registration Statement filed by the Company
on behalf of investors participating in the Private Placement.
Notwithstanding the foregoing, Holdings shall have no obligations under
this Section 2(b) hereof at any time that such Registrable Securities are the
subject of an effective registration statement.
3. Obligations of Holdings. In connection with the registration of the
Registrable Securities, Holdings shall use all commercially reasonable efforts
to:
(a) Subject to the provisions of Section 3(q) hereof, promptly (i)
prepare and file with the Commission such amendments (including post-effective
amendments) to the Registration Statement and supplements to the Prospectus as
may be necessary to keep the Registration Statement continuously effective and
in compliance with the provisions of the Securities Act applicable thereto so as
to permit the Prospectus forming part thereof to be current and useable by
Investors for resales of the Registrable Securities for a period of two years
from the date the Registration Statement is first declared effective by the
Commission (the "Effective Time") or such shorter period that will terminate
when all the Registrable Securities covered by the Registration Statement have
been sold pursuant thereto in accordance with the plan of distribution provided
in the Prospectus or otherwise cease to be Registrable Securities (the
"Registration Period") and (ii) take all lawful action such that each of (A) the
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, not misleading and (B) the Prospectus
4
forming part of the Registration Statement, and any amendment or supplement
thereto, does not at any time during the Registration Period include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Holdings' obligations hereunder shall terminate as to any investor at
such time as that Investor's Registrable Securities can be sold under Rule
144(k);
(b) During the Registration Period, comply with the provisions of
the Securities Act with respect to the Registrable Securities of Holdings
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Investors as set forth in the Prospectus forming part of the
Registration Statement;
(c) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements thereto), provide draft
copies thereof to the Investors and reflect in such documents all such comments
as the Investors reasonably may propose (including comments as to the Investors'
plans of distribution); and (ii) furnish to each Investor whose Registrable
Securities are included in the Registration Statement, (A) promptly after the
same is prepared and publicly distributed, filed with the Commission, or
received by Holdings, one copy of the Registration Statement, each Prospectus,
and each amendment or supplement thereto, and (B) such number of copies of the
Prospectus and all amendments and supplements thereto and such other documents,
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor;
(d) (i) Register or qualify the Registrable Securities covered by
the Registration Statement under such securities or "blue sky" laws of all
jurisdictions requiring blue sky registration or qualification, (ii) prepare and
file in such jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be reasonably
necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take all such other lawful actions as may be
reasonably necessary to maintain such registrations and qualifications in effect
at all times during the Registration Period, and (iv) take all such other lawful
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that Holdings shall not be
required in connection with any of its obligations under this Section 3(d) to
(A) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (B) subject itself to general
taxation in any such jurisdiction or (C) file a general consent to service of
process in any such jurisdiction;
(e) As promptly as practicable after becoming aware of such event,
notify each Investor of the occurrence of any event, as a result of which the
Prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Investor as such
Investor may reasonably request;
5
(f) Notify each Investor who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement on the date of receipt of any such
stop order or other suspension, and take all lawful action to effect the
withdrawal, recession or removal of such stop order or other suspension;
(g) Cause all the Registrable Securities covered by the
Registration Statement to be listed, not later than the date that Registration
Statement is declared effective by the Commission, on a principal national
securities exchange, or included in an inter-dealer quotation system of a
registered national securities association, on or in which securities of the
same class or series issued by Holdings are then listed or included;
(h) Maintain a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(i) Reasonably cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Investors reasonably may request and registered in such names as the Investors
may request; and, within five business days after a registration statement which
includes Registrable Securities is declared effective by the Commission, deliver
and cause legal counsel selected by Holdings to deliver to the transfer agent
for the Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such registration statement) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(j) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their Registrable
Securities in accordance with the intended methods therefor provided in the
Prospectus which are customary under the circumstances;
(k) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of Holdings and its subsidiaries complying with Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of Holdings, Rule 158);
(l) In the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which Holdings does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;
(m) In connection with any underwritten offering, make such
representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form,
6
substance and scope as are customarily made by Holdings to underwriters in
secondary underwritten offerings;
(n) In connection with any underwritten offering, obtain opinions
of counsel to Holdings (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managers) addressed to the
underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the date the Registration Statement is first declared
effective or most recent post- effective amendment thereto, as the case may be,
the absence from the Registration Statement and the Prospectus, including any
documents incorporated by reference therein, of an untrue statement of a
material fact or the omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, subject
to customary limitations);
(o) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public accountants of
Holdings (and, if necessary, from the independent public accountants of any
subsidiary of Holdings or of any business acquired by Holdings, in each case for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each underwriter
participating in such underwritten offering (if such underwriter has provided
such letter, representations or documentation, if any, required for such cold
comfort letter to be so addressed), in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings;
(p) In connection with any underwritten offering, deliver such
documents and certificates as may be reasonably required by the managers, if
any;
(q) Notwithstanding anything to the contrary in Section 3, at any
time after the Registration Statement has been declared effective, Holdings may
delay the disclosure of material non-public information concerning Holdings, the
disclosure of which at the time is not, in the good faith opinion of the Board
of Directors of Holdings and its counsel, in the best interest of Holdings (a
"Grace Period"); provided, that Holdings shall promptly (i) notify the Investors
in writing of the existence of material non-public information giving rise to a
Grace Period and the date on which the Grace Period will begin, and (ii) notify
the Investors in writing in advance of, or on the same date on which, the Grace
Period ends; and, provided further, that during the Registration Period, there
shall be only three Grace Periods (not to exceed 30 days each) nor more than one
Grace Period (not to exceed 30 days each) in any six-month period. For purposes
of determining the length of a Grace Period above, the Grace Period shall begin
on and include the date the holders receive the notice referred to in clause (i)
and shall end on and include the date specified as the Grace Period ending date
in the notice referred to in clause (ii).
Notwithstanding the foregoing, Holdings shall have no obligations under
Section 3(l) through (p) unless it is effecting an underwritten offering
pursuant to Section 2(b).
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations,
which obligations shall be several and not joint:
7
(a) It shall be a condition precedent to the obligations of
Holdings to complete the registration pursuant to this Exhibit C with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to Holdings such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as Holdings may reasonably request.
(b) Each Investor by its acceptance of the Registrable Securities
agrees to cooperate in all reasonable respects with Holdings in connection with
the preparation and filing of the Registration Statement hereunder, unless such
Investor has notified Holdings in writing of its election to exclude all of its
Registrable Securities from the Registration Statement;
(c) As promptly as practicable after becoming aware of such event,
notify Holdings of the occurrence of any event, as a result of which the
Prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(d) Each Investor agrees that, upon receipt of any notice from
Holdings of the occurrence of any event of the kind described in Section 3(e) or
3(f), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(e) and, if so directed by Holdings, such
Investor shall deliver to Holdings (at the expense of Holdings) or destroy (and
deliver to Holdings a certificate of destruction) all copies in such Investor's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice; and
(e) Each Investor agrees to comply with the obligations imposed by
Regulation M of the Securities Act.
5. Expenses of Registration. All expenses, other than underwriting
discounts and commissions arising from sales of Registrable Securities, incurred
in connection with registrations, filings or qualifications pursuant to Section
3, but including, without limitation, all registration, listing, and
qualifications fees, printing and engraving fees and accounting fees shall be
borne by Holdings.
6. Indemnification and Contribution.
(a) Holdings shall indemnify and hold harmless each Investor and
each underwriter, if any, which facilitates the disposition of Registrable
Securities, and each of their respective officers and directors, trustees,
employees, advisors, legal counsel and accountants and each person who controls
such Investor or underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each such person being sometimes
hereinafter referred to as an "Indemnified Person") from and against any losses,
claims, damages or liabilities, joint or several, to which such Indemnified
Person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Registration
8
Statement or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, not
misleading, or arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Prospectus or an omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and Holdings hereby
agrees to reimburse such Indemnified Person for all reasonable legal and other
expenses incurred by them in connection with investigating or defending any such
action or claim as and when such expenses are incurred; provided, however, that
Holdings shall not be liable to any such Indemnified Person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to Holdings
by such Indemnified Person expressly for use therein or (ii) in the case of the
occurrence of an event of the type specified in Section 3(e), the use by the
Indemnified Person of an outdated or defective Prospectus after Holdings has
provided to such Indemnified Person written notice that such Prospectus is
outdated or defective.
(b) Indemnification by the Investors and Underwriters. Each
Investor agrees, as a consequence of the inclusion of any of its Registrable
Securities in a Registration Statement, and each underwriter, if any, which
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless Holdings, its
directors (including any person who, with his or her consent, is named in the
Registration Statement as a director nominee of Holdings), its officers,
employees, advisors, legal counsel and accountants and each person, if any, who
controls Holdings within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which Holdings or such other persons may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (y)
an untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or Prospectus or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in light of the
circumstances under which they were made, in the case of the Prospectus), not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to
Holdings by such Investor or underwriter expressly for use therein; or (z) in
the case of the occurrence of an event of the type specified in Section 3(e)
above, the use by the Indemnified Person of an outdated or defective Prospectus
after the Indemnified Person has received from Holdings written notice that such
Prospectus is outdated or defective; provided, however, that no Investor or
underwriter shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Investor or underwriter in respect of shares sold
by it; and (ii) reimburse Holdings for any reasonable legal or other expenses
incurred by Holdings in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Notice of Claims, Etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party shall notify the party against whom indemnification pursuant
to this Section 6 is
9
being sought (the "Indemnifying Party") of the commencement thereof; but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ one separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (i) the
Indemnifying Party shall have agreed to pay such fees, costs and expenses, (ii)
counsel to the Indemnified Party shall reasonably have concluded that
representation of the Indemnified Party and the Indemnifying Party by the same
legal counsel would not be appropriate due to actual or, as reasonably
determined by legal counsel to the Indemnified Party, potentially differing
interests between such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified Party that are in
addition to or disparate from those available to the Indemnifying Party, or
(iii) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (i), (ii) or (iii) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnified Party shall not, without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld), settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnifying Party from all liabilities
with respect to such Claim or judgment.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Investors or any underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 6(d).
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such Indemnified Party
10
in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of the
Investors and any underwriters in this Section 6(d) to contribute shall be
several in proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(e) Notwithstanding any other provision of this Section 6, in no
event shall any (i) Investor be required to undertake liability to any person
under this Section 6 for any amounts in excess of the dollar amount of the net
proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act.
(f) The obligations of Holdings under this Section 6 shall be in
addition to any liability that Holdings may otherwise have to any Indemnified
Person and the obligations of any Indemnified Person under this Section 6 shall
be in addition to any liability that such Indemnified Person may otherwise have
to Holdings. The remedies provided in this Section 6 are not exclusive and shall
not limit any rights or remedies that may otherwise be available to an
indemnified party at law or in equity.
7. Rule 144. With a view to making available to the Investors the benefits
of Rule 144 under the Securities Act or any other similar rule or regulation of
the Commission that may at any time permit the Investors to sell securities of
Holdings to the public without registration ("Rule 144"), Holdings agrees to:
(a) comply with the provisions of paragraph (c) (1) of Rule 144; and (b) use all
commercially reasonable efforts to file with the Commission in a timely manner
all reports and other documents required to be filed by Holdings pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did file
such reports, it will, upon the request of any Investor, make available other
information as required by, and so long as necessary to permit sales of, its
Registrable Securities pursuant to Rule 144.
8. Assignment. The rights to have Holdings register Registrable Securities
pursuant to this Exhibit C may be assigned or transferred only with the prior
written consent of Holdings (which consent shall not be unreasonably withheld or
delayed), and any such assignment or transfer without such consent shall be void
and of no effect. Notwithstanding the foregoing, such consent of Holdings shall
not be required with respect to: (i) any assignment or transfer of Registrable
Securities to an Affiliate of Investor, including for this purpose if Investor
is an investment company, any fund or account advised by Investor's investment
adviser or any Affiliate thereof; or (ii) any assignment or transfer of all of
the Registrable Securities owned by an Investor. In the event of any such
permitted assignment or transfer by the Investors to any permitted transferee of
all or any portion of such Registrable Securities such transfer will be allowed
only if: (a) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to Holdings within
a reasonable time after such assignment, (b) Holdings is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities, (d)
at or before the time Holdings received the written notice contemplated by
clause (b) of this sentence
11
the transferee or assignee agrees in writing with Holdings to be bound by all of
the provisions contained herein, and (e) Holdings is furnished with an opinion
of counsel, which counsel and opinion shall be reasonably satisfactory to
Holdings, to the effect that the permitted assignment would be in compliance
with the Securities Act and State Acts.
12