Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Current Report 4 15K
2: EX-4.1REGISTRATIONRI Instrument Defining the Rights of 17 87K
Security Holders
3: EX-4.2WARRANTAGREEME Instrument Defining the Rights of 20 81K
Security Holders
4: EX-10.1COMMITMENTLET Material Contract 13 62K
5: EX-99.1PRESSRELEASE Miscellaneous Exhibit 2 9K
EX-10.1COMMITMENTLET — Material Contract
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July 2, 2001
GenesisIntermedia, Inc.
5805 Sepulveda Blvd., 8th Floor
Van Nuys, CA 91411
Attn: Ramy El-Batrawi
Re: Acquisition Loan Commitment
Investment Banking Services
Gentlemen:
I am pleased to advise you that Riverdale LLC ("Riverdale") is
conditionally committing that one or more of its affiliates will provide to
GenesisIntermedia, Inc. (the "Company") an acquisition financing loan facility
(the "Facility") on the terms and conditions set forth in this letter (the
entity making such Facility available, the "Lender"). In addition, this letter
will confirm the understanding between the Company and Riverdale (the "Banker")
pursuant to which the Company has retained the Banker to perform certain
investment banking functions, as described herein, on the terms and subject to
the conditions set forth herein. As will be more specifically set forth below,
Banker will consult with the Company from time to time in connection with the
sourcing, structuring and financing of the Company's proposed acquisitions,
provided, however, it is understood that Banker will not be providing all
investment banking functions for the Company and should not be considered the
Company's investment banker.
1. The basic financial terms of the Facility are as follows:
(a) The maximum amount of the Facility at any time outstanding and/or
committed shall not exceed One Hundred Million Dollars
($100,000,000.00).
(b) The purpose of the Facility is to provide financing to the
Company and its subsidiaries in order to enable the Company to
make acquisitions of other issuers or their assets which are
identified by the Company as consistent with the Company's
business plan of aggressive growth through acquisition (the
"Acquisitions"). The proceeds of loans made under the Facility
(the "Loans") may be used to (i) fund the purchase price for the
stock or assets acquired in the Acquisitions, (ii) refinance
indebtedness acquired in the Acquisitions, and (iii) finance
capital expenditures and capital assets (such as real estate)
acquired or identified as necessary or appropriate in connection
with Acquisitions. Loans made under the Facility may be bridge
loans or short- or long-term loans for Acquisitions. The Company
GenesisIntermedia, Inc.
July 2, 2001
Page 2
and Lender are currently discussing the making by Lender of a
bridge loan to the Company to enable the Company to acquire, in a
merger, the assets and business of another issuer. While the
Company and the Lender fully expect that if the transaction is
accomplished the bridge loan will be made under the Facility,
each is presently involved in a stage of due diligence and cannot
predict whether the loan will be made, that decision to be
determined by the Lender in its sole discretion after it has
obtained what it considers sufficient information regarding the
transaction and the proposed loan as well as other factors which
Lender, in its sole discretion, may deem relevant to it.
(c) Each loan made under the Facility, if approved by Lender, will
carry such terms as the Lender and the Company agree upon at the
time that the specific Loan is made. Such factors shall be
determined by each of them taking into account all of the
circumstances surrounding the loan and the transaction, if any,
to which it may relate. Solely by way of example and without
intending to create limitations on either Company or Lender,
interest rate, term, collateral and covenants will be among those
material terms which will be determined on a loan-by-loan basis
under the Facility by negotiation between Lender and the Company.
All of such material terms of any loan will depend upon economic
factors general to the marketplace as well as specific factors
concerning the Company and the issuer or assets, if any, proposed
to be acquired. Unless the parties otherwise agree, upon the
occurrence of a default of the Loans, interest shall thereafter
during such default accrue on the outstanding principal amount of
the Loans at the lesser of such rate plus 200 basis points or the
maximum rate permitted by law (the "Default Rate"). A default by
the Company under one or more Loans shall be considered a default
under each and every Loan outstanding under the Facility and
shall provide, among other things, Lender the right to terminate
the Facility and/or accelerate any one or more of the outstanding
Loans.
(d) The terms of Lender's commitment to make Loans under the Facility
shall expire on June 30, 2004 (the "Commitment Termination
Date"). Any Loans outstanding on the Commitment Termination Date
which do not provide amortization terms shall be amortized
(straight line) over the term commencing on the date that the
loan is extended and ending on June 30, 2011, (the "Maturity
Date") with equal payments of principal, together with interest
applicable thereto, being made on the last day of each calendar
quarter from and after the funds are extended. All principal and
interest on all Loans that do not provide for another maturity
date shall be due and payable on the Maturity Date.
(e) Both Lender and the Company expect that a Loan, if made, under
the Facility will be secured by a lien on substantially all
GenesisIntermedia, Inc.
July 2, 2001
Page 3
assets of the Company and its subsidiaries (subject only to
permitted liens, to the extent agreed upon by Lender, for working
capital loan facilities and leases, real estate financing,
equipment facilities and the like) and on substantially all of
the assets and/or stock of any acquired businesses (subject only
to liens securing agreed permitted indebtedness).
(f) Unless otherwise agreed upon, prepayment of the Loans shall be
permitted without premium or penalty. An expense charge
aggregating $275,000 shall be paid to Lender by the Company upon
execution of this letter by Lender. In addition, there shall be a
funding fee of $900,000 due upon funding of the first Loan made
under the Facility.
2. (a) The following items and requirements are among the conditions
which will be required to be fulfilled prior to establishment of
the Facility and shall be provided to Lender and/or satisfied by
the Company, at the Company's expense, in form and substance
satisfactory to Lender and to counsel for Lender prior to the
closing:
(i) Execution and delivery of a Credit Agreement and
related Credit Documents (as defined therein) in form
and substance mutually acceptable to Lender and the
Company.
(ii) Delivery of such financial statements, balance sheets
and other information with respect to the Company and
its subsidiaries as Lender may request.
(iii)There shall be no material adverse change in the
financial condition of the Company and its subsidiaries
taken as a whole. In addition, there shall be no
material misrepresentation, inaccuracy, omission or
error in any of the information, documents or materials
submitted by the Company to Lender in connection with
the Facility or in any documents filed with the
Securities and Exchange Commission pursuant to the
Federal Securities laws.
(iv) An opinion from the Company's counsel (in form and
substance satisfactory to Lender in its sole
discretion). (v) Such other matters as Lender or its
counsel determine are required by it.
(b) There is being delivered herewith to Lender a corporate
resolution of the Company, which shall include specific authority
to establish and borrow under the Facility, issue the Warrants
and issue the Common Stock issuable upon exercise of the
Warrants, and certificates of incumbency for the officers acting
on behalf of the Company.
3. Lender shall receive either (as relevant) simultaneously herewith an
opinion from the Company's counsel in the form attached hereto. The Company
GenesisIntermedia, Inc.
July 2, 2001
Page 4
will provide such additional documents, agreements, certificates and
requirements as Lender or Lender's counsel may deem necessary or
appropriate to effectuate the terms and conditions hereof to further secure
the Facility or the Loans, or to otherwise protect the interests of Lender.
4. The following items and requirements, the satisfaction of which shall be at
the Lender's sole discretion, are conditions precedent to the funding of
any Loans under the Facility:
(a) The Loan shall be secured by collateral with a value and of a
nature acceptable to Lender.
(b) Lender shall have received and reviewed such legal and business
information relating to the Acquisition target as Lender shall
request and Lender shall be satisfied with the results of such
review.
(c) Lender shall have received such customary loan and security
closing documents as Lender shall request, all in form and
substance acceptable to Lender and as required under the Credit
Agreement.
5. The execution and delivery of the Credit Agreement will occur at Lender's
place of business in New York, New York, on or before the fifth (5th)
business day subsequent to satisfaction by the Company of all of the
conditions set forth herein to be satisfied prior to such signing,
including but not limited to delivery of all documents and evidence of
satisfaction of other requirements to Lender's counsel, or such other date
as is mutually agreeable to the parties.
6. Lender shall have the right to withdraw this conditional commitment should
any of the following events occur:
(a) The filing, by or against the Company of a petition in bankruptcy
or insolvency, or for reorganization or for the appointment of a
receiver or trustee, or making by the Company of an assignment
for the benefit of creditors or the filing of a petition for
arrangement by the Company, which petition is not withdrawn or
dismissed or which appointment, assignment or arrangement is not
canceled or terminated prior to signing of the Credit Agreement.
(b) The Company fails to execute and deliver the Warrant Agreement or
the Warrants or fails to provide evidence of the due
authorization of the issuance thereof and the issuance of the
Common Stock issuable upon exercise of the Warrants.
(c) Ramy El-Batrawi fails to execute and deliver the Option Agreement
or the Options.
(d) Any action or proceeding is commenced by any third party seeking
to prevent or invalidate the consummation of the transactions
contemplated hereby.
GenesisIntermedia, Inc.
July 2, 2001
Page 5
(e) The Company incurs an event of default under the Credit Agreement
or any Loan.
7. The Company hereby retains the Banker to provide certain investment banking
services as set forth herein for a period of 24 months from the date hereof
in connection with possible Acquisitions being considered from time to time
by the Company whether on its own or as a result of recommendations made by
Banker to the Company, and the Banker agrees to act in that role, subject
to the terms and conditions of set forth in this letter. Subject to the
terms and conditions of this Agreement, the nature and scope of the
Banker's efforts shall be limited solely to matters relating to the
sourcing, structuring and financing of the Company's Acquisitions (the
"Services"), including, at the reasonable request of the Company, the
following:
o Advising the Company regarding the Company's Acquisition
strategy;
o Suggesting from time to time possible Acquisition candidates for
the Company, it being understood that Banker shall be under no
obligation to bring any minimum number of candidates to the
Company's attention and it being further understood that Banker
shall not be in violation of this agreement if Banker or its
affiliates bring potential Acquisition candidates to the
attention of other companies or arrange or otherwise themselves
enter into transactions with such potential candidates;
o Structuring Acquisitions, it being understood that Banker is
providing consulting services only and that the Company shall be
under no obligation to follow Banker's advice;
o Proposing to the Company alternative sources of financing outside
of the Facility for whatever purposes the Company may require and
which are consistent with the terms of the Facility and any Loans
made thereunder; and
o Undertaking, on behalf of the Company, certain due diligence
functions in connection with any proposed Acquisitions being
considered by the Company.
Notwithstanding the foregoing, all final determinations on the advisability
of the identity, structure and financing for any Acquisition shall be made
by the Company's Board of Directors upon advice of its advisors other than
the Banker, whose Services described herein shall be limited to proposing
targets, structures and financing for consideration by the Board and such
advisors.
The Company agrees to retain its own legal counsel, accountants and
broker-dealers for any necessary legal and tax advice, including any such
services or related services in connection with the Services to be provided
by the Banker. In addition, the Services shall not include any underwriting
or broker-dealer related activities, and the Company agrees to bear the
sole responsibility for the negotiation, preparation, filing, amending and
distribution of any financing materials or transaction documents in
connection with any of the Acquisitions.
GenesisIntermedia, Inc.
July 2, 2001
Page 6
As partial consideration for the Services to be rendered by the Banker, the
Company agrees to indemnify the Banker and the other Indemnified Persons,
as set forth in Annex I hereto, which is incorporated herein and made a
part hereof. The purpose of this Section 7 is to set forth the services
that the Banker will provide to the Company, as an independent contractor,
either as specifically provided herein or as subsequently requested in
writing by the Company and agreed to by the Banker. The parties hereto do
not intend to create any special, fiduciary or agency relationship between
them. The Services to be provided by the Banker hereunder are to be
provided solely by the Banker and that the fees to be paid by the Company
hereunder are solely for the benefit of the Banker. There may be other
services which are required to be provided to the Company in connection
with any transaction contemplated by this Agreement and which will be
provided by others (e.g., independent auditors or appraisers). Furthermore,
the parties hereto understand that the Banker is not required to purchase
any securities.
8. (a) (i) the Company shall issue to Riverdale warrants (the
"Warrants") to purchase an aggregate of 4 million shares of the
Company's common stock, par value $.001 per share ("Common
Stock") pursuant to the Warrant Agreement dated concurrently
herewith between Riverdale and the Company which will provide for
three-year Warrants to purchase 1 million shares at $2 per share
and 1 million shares at $4 per share and 2 million shares at $9
per share and (ii) Ramy El-Batrawi, the Chairman and Chief
Executive Officer of the Company, will grant to Riverdale options
(the "Options") to purchase an aggregate of 1.5 million shares of
Common Stock pursuant to the Option Agreement dated concurrently
herewith between Riverdale and Mr. El-Batrawi which provides that
Riverdale shall have the right to purchase 1 million shares at $2
per share and 500,000 at $4 per share. Mr. El-Batrawi agrees to
place, no later than 30 days from the date hereof, the 1 million
shares subject to the $2 option granted by him, and any other
shares that may become subject to such option, as a result of the
anti-dilution provisions of such option, in escrow pursuant to an
escrow agreement in the form attached hereto.
(b) Riverdale shall not dispose of any of the Options or Warrants
described herein or any shares purchased upon exercise thereof
until the earlier of (i) July 2, 2002 (such date, the "One-Year
Date; (ii) the date on which Mr. El-Batrawi directly or
indirectly disposes of any Restricted Shares (the date of any
such sale, the "Sale Date") whether or not such disposition is
not prohibited pursuant to Section 9(a) hereof; or (iii) Holdings
or any successor to Holdings (defined below) that acquires
beneficial ownership in all or any of the Restricted Shares
(defined below), directly or indirectly disposes of such
Restricted Shares in violation of the terms of the lock-up
arrangement described in Section 9(a) below (the date of any such
sale, the "Lock-Up Violation Date"); at which time, the
GenesisIntermedia, Inc.
July 2, 2001
Page 7
obligation on the part of Riverdale not to sell shall be
terminated and Riverdale shall thereafter be entitled to sell any
of the Options, Warrants or shares acquired upon the exercise
thereof (the period ending on the earlier of the One-Year Date,
the Sale Date, or the Lock-Up Violation Date, referred to
collectively as the "Restricted Period").
(c) Notwithstanding anything to the contrary in this letter, the
Warrant Agreement, the Option Agreement, the Warrants or the
Options, Riverdale agrees not to offer, sell, transfer, pledge,
hypothecate, contract to sell, grant any option for the sale of
the shares of Warrant Common Stock or Option Common Stock or
otherwise dispose of, directly or indirectly (including through
short sale, loan of securities or derivatives based on the
Company's Common Stock), any of the shares of Warrant Common
Stock or Option Common Stock until after the end of the
Restricted Period. The Company and Mr. El-Batrawi agree not to
file, or cause to be filed, with the Internal Revenue Service,
any 1099 or similar form with respect to the grant or exercise of
the Options or Warrants without the prior consent of Riverdale
which shall not be unreasonably withheld.
(d) The Company shall promptly after the date hereof file and cause
to become effective within 90 days from the date hereof a
registration statement under the Securities Act of 1933 covering
the securities described herein so as to permit the sale by
Lender and/or to the public of the shares into which the Options
and Warrants are exercisable. Such registration statement shall
remain in effect until the date on which Riverdale no longer own
any Warrants, Options or shares of Common Stock acquired upon the
exercise of the Warrants and/or Options or the date Riverdale may
sell all Common Stock acquired upon the exercise of the Warrants
and/or Options under Rule 144 without limitation as to volume. In
addition, the Company and Riverdale are today entering into a
Registration Rights Agreement granting Riverdale additional
registration rights. Riverdale shall have a right to direct Mr.
El-Batrawi to vote the shares underlying the Options on any
matters requiring the vote of the Company's stockholders and
relating to the issuance of securities of the Company, amendments
to the Company's charter documents which affect the rights of the
holders of Common Stock, the sale of assets of the Company, a
merger or consolidation of the Company, or any other
recapitalization or reorganization of the Company.
9. In order to induce Riverdale to enter into this Agreement:
(a) Each of Ultimate Holdings, Ltd. ("Holdings") and Mr. El-Batrawi
hereby agrees not to directly or indirectly sell or dispose of,
transfer, pledge, hypothecate, contract to sell, grant any option
for the sale of the shares of Warrant Common Stock or Option
Common Stock that is subject to the escrow in favor of Riverdale
or otherwise dispose of, directly or indirectly (including
through short sale, loan of securities or derivatives based on
the Company's Common Stock) any of the shares of Common Stock
owned by Holdings or Mr. El-Batrawi on the date hereof
(collectively, the "Restricted Shares") during the period that
GenesisIntermedia, Inc.
July 2, 2001
Page 8
commences on the date hereof and terminates at 5:00 p.m. Pacific
Time on July 1, 2002; provided, however, that the foregoing shall
not apply to (i) sales of no fewer than 500,000 shares per sale
of Restricted Shares to "qualified institutional buyers" (as
defined in Rule 144A(a)(1) promulgated under the Securities Act
of 1933, as amended ("Securities Act")) or (ii) sales to
accredited investors ((as defined in Regulation D of the
Securities Act), except that in the case of individual investors
and accredited investors whose accreditation is based upon
accredited individual investors, only those individuals whose
individual net worth at the time of his purchase exceeds
$1,000,000, will qualify as an accredited investor for purposes
of this Agreement) (a) who are acceptable to Riverdale in its
sole discretion and (b) who agree to enter into a lock-up
agreement with respect to any Restricted Shares acquired from
Holdings or Mr. El-Batrawi that is (1) acceptable to Riverdale
and is (2) no less restrictive on such purchaser than the lock-up
agreement of Holdings and Mr. El-Batrawi herein is restrictive on
their sales of Restricted Shares. In the case of sales to
qualified institutional buyers, such buyers must be completely
unaffiliated with Holdings, its controlling persons, Mr.
El-Batrawi, the Company or any of its affiliates and there must
be no understandings, agreements or arrangements, written or
oral, other than solely that the buyer is purchasing shares from
the seller for cash and that the shares will be delivered to the
buyer regular way. Mr. El-Batrawi and Holdings each agree that
Riverdale shall be entitled to seek injunctive relief for any
violation or threatened violation of this Section 9 in the
courts, Federal and State, located in the State of New York and
that Mr. El-Batrawi and Holdings submit to the jurisdiction of
such courts for the purposes of this agreement. Prior to July 2,
2002, the Company will not purchase or arrange for the purchase
of any Restricted Shares.
(b) Holdings and Mr. El-Batrawi agree to place a legend, satisfactory
to Riverdale, on any physical certificates representing
Restricted Shares which they now have or which they obtain in the
future and to notify any other holders of their Restricted Shares
(including pledgees thereof) to the effect that the transfer of
the Restricted Shares is restricted by the terms of this
agreement and that such restrictions may not be lifted prior to
July 2, 2002. Holdings and Mr. El-Batrawi shall further instruct
in writing (and obtain the written agreement of such holders to
follow such instructions) such holders to periodically, and in no
event less frequently than monthly, report to Riverdale and the
Company any dispositions or other transfers of Restricted Shares
and to report to Riverdale each month their holdings of
Restricted Shares at the end of said month. Such instruction
shall be irrevocable through to July 1, 2002 without the consent
of Riverdale. In addition, at the end of the Restricted Period
each of Holdings and Mr. El-Batrawi shall prove to Riverdale and
the Company's satisfaction its compliance with the restrictions
set forth in subparagraph (a) immediately above. Should the
agreement set forth in subparagraph (a) immediately above be
violated by either Mr. El-Batrawi or Holdings (or any subsequent
transferee thereof who has entered into a similar agreement), the
GenesisIntermedia, Inc.
July 2, 2001
Page 9
violating party shall owe Riverdale, in addition to any other
relief that Riverdale may be entitled to pursue, the sum of
$35,000 per day from the date of the violation through July 1,
2002. The Company agrees that it will not effect any transfer of
any of Holdings or Mr El-Batrawi's directly or indirectly owned
Restricted Shares in violation of this Section 9 including any
shares which bear any legend that shall be placed upon the
certificates and that should the Company effect any transfer of
any shares owned directly or indirectly by Holders or by Mr.
El-Batrawi in violation of the restrictions required to be placed
on the certificates or knowingly otherwise effect such transfer,
then the Company shall be responsible for the payment of the
$35,000 per day to the extent it is not paid by Holdings and/or
Mr. El-Batrawi and Holdings and the Company agree that to the
extent that the $35,000 per day is due and payable by Holdings
(including by virtue of not certifying to compliance at the end
of the Restricted Period) and Riverdale informs the Company that
it has not paid, the Company will pay to Riverdale any and all
amounts owed to Holdings from the Company for any obligations,
including interest, owed by the Company to Holdings
(c) In addition to and notwithstanding the foregoing, each of
Holdings and Mr. El-Batrawi agree that during the period which
ends at 5:00 p.m. Pacific Time on July 1, 2002, should either
party wish to dispose from time to time of shares of Common Stock
at a price which price is lower than 90% of the average closing
market price of the Common Stock, as reported by a national
securities exchange on which the shares are listed and is the
primary market for such shares or if the primary market for such
shares is the Nasdaq, then on Nasdaq during the prior five
business days, the proposed seller shall notify Riverdale of its
intent to do so and Riverdale shall have the right within two
business days to purchase such shares on the terms on which they
are being proposed to be sold, the closing for which shall take
place no later than three business days after Riverdale agrees to
so purchase such shares; provided however, that if Riverdale does
not so propose to purchase such shares on such basis, the
proposed seller may dispose of such shares on such proposed terms
and no more favorable terms to the buyer thereof for a period of
10 business days thereafter but, if it does not do so, it shall
again be subject to this requirement. Nothing in the preceding
sentence is intended to modify any of the agreements otherwise
contained in this Section 9.
(d) A sale of Common Stock by Mr. El-Batrawi or Holdings as the
result of the exercise of a Warrant or Option by Riverdale shall
not constitute a sale for purposes of Sections 8 and 9 herein.
This exclusion includes the sale pursuant to the exercise of an
option granted by Mr. El-Batrawi or Holdings to the Company that
is exercisable solely upon and at the same price as the exercise
of a Warrant or Option by Riverdale.
GenesisIntermedia, Inc.
July 2, 2001
Page 10
If the Company agrees with the foregoing, please countersign below and
return the original of this letter to the undersigned by July 2, 2001, or this
conditional commitment will terminate.
We thank you for the opportunity to serve your Acquisition financing needs.
Sincerely,
RIVERDALE LLC
By: _________________________________
Robert J. Mitchell
Manager
Agreed and Accepted:
GENESISINTERMEDIA, INC.
By: ________________________________
Ramy El-Batrawi
Chief Executive Officer and Chairman
RAMY EL-BATRAWI
--------------------------------
ULTIMATE HOLDINGS, LTD.
By: ________________________________
Adnan Khashoggi
Annex 1
The Company agrees to indemnify and hold harmless the Banker and its
affiliates, the respective directors, officers, agents and employees of the
Banker and its affiliates and each other person, if any, controlling the Banker
or any of its affiliates (the Banker and each such person and entity being
referred to as an "Indemnified Person"), to the full extent lawful, from and
against any losses, claims, damages or liabilities (or actions, including
shareholder actions, in respect thereof) related to or arising out of this
engagement or the Banker's role in connection therewith, and will reimburse any
Indemnified Person for all expenses (including counsel fees) incurred by such
Indemnified Person in connection with investigating, preparing or defending any
such action or claim, whether or not in connection with pending or threatened
litigation in which any Indemnified Person is a party. The Company will not,
however, be responsible for any claims, liabilities, losses, damages or expenses
which result from any compromise or settlement not approved by the Company or
which result primarily from the recklessness or the gross negligence of any
Indemnified Person or a breach of the Banker's obligations under this
engagement. The Company also agrees that no Indemnified Person shall have any
liability to the Company for or in connection with this engagement, except for
any such liability for losses, claims, damages, liabilities or expenses incurred
by the Company that results from gross negligence or willful misconduct of the
Indemnified Person. The foregoing agreement shall be in addition to any rights
that any Indemnified Person may have at common law or otherwise, including, but
not limited to, any right to contribution. The Company's agreement to indemnify
the Banker and other Indemnified Persons pursuant to this engagement shall not
be disclosed publicly or made available to third parties by either party hereto
without the other party's prior written consent.
If any action or proceeding is brought against any Indemnified Person in
respect of which indemnity may be sought against the Company pursuant hereto, or
if any Indemnified Person receives notice from any potential litigant of a claim
which such person reasonably believes will result in the commencement of any
such action or proceeding, such Indemnified Person shall promptly notify the
Company in writing of the commencement of such action or proceeding, or of the
existence of any such claim, but the omission so to notify the Company of any
such action or proceeding shall not relieve the Company from any other
obligation or liability which it may have to any Indemnified Person otherwise
than under this agreement or with respect to any other action or proceeding. In
case any such action or proceeding shall be brought against any Indemnified
Person, the Company shall be entitled to participate in such action or
proceeding, and after written notice from the Company to such Indemnified
Person, to assume the defense of such action or proceeding with counsel of the
Company's choice, or compromise or settle such action or proceeding, at its
expense (in which case the Company shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by such Indemnified Person),
provided, however, that such counsel shall be satisfactory to the Indemnified
Person in the exercise of its reasonable judgment. Notwithstanding the Company's
election to assume the defense of such action or proceeding, such Indemnified
Person shall have the right to employ separate counsel and to participate in the
defense of such action or proceeding, and the Company shall bear the reasonable
fees, costs and expenses of such separate counsel, if (a) the use of counsel
chosen by the Company to represent such Indemnified Person would present such
counsel with a conflict of interest; (b) the defendants in, or targets of, any
such action or proceeding include both an Indemnified Person and the Company,
and such Indemnified Person shall have reasonably concluded that there may be
legal defenses available to it or to other Indemnified Persons which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to direct the defense of such action or
proceeding on behalf of the Indemnified Person); (c) the Company shall not have
employed counsel satisfactory to such Indemnified Person in the exercise of the
Indemnified Person's reasonable judgment to represent such Indemnified Person
within a reasonable time after notice of the institution of such action or
proceeding; or (d) the Company shall authorize such Indemnified Person to employ
separate counsel at the Company's expense.
To provide for just and equitable contribution, if the indemnification
provided for in this Annex I is unavailable to an Indemnified Person in respect
of any loss, liability, claim, damage or expense referred to therein because the
same is determined unenforceable on grounds of illegality, policy or otherwise,
then the Company, in lieu of indemnifying such Indemnified Person, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, liabilities, claims, damages and expenses in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Banker, provided, however, that if applicable law does not permit such
allocation, then other relevant equitable considerations such as the relative
fault of the Company and the Banker in connection with the facts which resulted
in such losses, liabilities, claims, damages and expenses shall also be
considered. The relative benefits received by the Banker shall be deemed to be
in the same proportion as the total fee the Banker receives hereunder and bears
to the total net proceeds from any loan obtained by the Company. The balance of
all benefits from the Sale not received by the Banker shall be deemed to be
received by the Company. The relative fault, in the case of an untrue statement,
alleged untrue statement, omission, or alleged omission, shall be determined by,
among other things, whether such statement, alleged statement, omission, or
alleged omission related to information supplied by the Company or the Banker,
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission or
alleged omission. The Company and the Banker agree that it would be unjust and
inequitable if the respective obligations of the Company and the Banker for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the Banker
and the other Indemnified Persons were treated as one entity for such purpose)
or by any other method of allocation that does not reflect the equitable
considerations referred to in this Annex I. Notwithstanding the provisions of
this Annex I, the Banker shall not be required to contribute any amount in
excess of the amount by which the total fee received by the Banker exceeds the
amount of any damages which the Banker has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act of 1933, as amended (the "Securities
Act") shall be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. For purposes of this Annex I, each person, if
any, who controls an Indemnified Person within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act of 1934, as amended (the
"Exchange Act"), and each employee, agent and counsel of an Indemnified Person
who is acting within the scope of his or her employment, agency or appointment,
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shall have the same rights to contribution as such Indemnified Person. Anything
in this Annex I to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Annex I is intended to supersede any other
right to contribution under the Securities Act, the Trust Indenture Act of 1939,
as amended, the Exchange Act, or otherwise. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Annex I, notify such party
or parties from whom contribution may be sought, but the failure to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Annex I.
Dates Referenced Herein and Documents Incorporated by Reference
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