Exhibit 10.5
EXHIBIT E
GP STRATEGIES CORPORATION
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated ________, 2003 (the "Original
Issue Date"), between GP Strategies Corporation, a Delaware corporation ("GP"),
and Gabelli Funds, LLC, as agent (the "Agent") for the Holders (as hereinafter
defined).
WHEREAS, pursuant to a Note and Warrant Purchase Agreement, dated as of
August 8, 2003 (the "Purchase Agreement"), among GP, its wholly-owned
subsidiaries National Patent Development Corporation and MXL Industries, Inc.,
the purchasers named therein (the "Purchasers"), and the Agent, GP is on the
Original Issue Date issuing to the Purchasers certain Notes and GP Warrants to
purchase GP's Common Stock; and
WHEREAS, as a condition to the purchase of such Notes and GP Warrants,
the Purchasers have required that GP extend to them certain registration rights
as provided in this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises set forth in this Agreement and in the Purchase Agreement, the
parties hereto, intending to be legally bound, agree as follows:
Section 1. General
1.1 Definitions. As used in this Agreement, in addition to terms defined
elsewhere herein, the following terms shall have the following respective
meanings:
(a) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
(b) "Form S-3" means such form under the Securities Act (including Rule 415
thereunder) as in effect on the date hereof or any successor registration form
under the Securities Act subsequently adopted by the SEC which permits inclusion
or incorporation of substantial information by reference to other documents
filed by GP with the SEC.
(c) "GP Common Stock" means GP's Common Stock, par value $.01 per share.
(d) "GP Warrants" has the meaning as defined in the Purchase Agreement.
(e) "GP Warrant Shares" means the shares of GP Common Stock issued or issuable
upon exercise of the GP Warrants.
(f) "Holder" means each Purchaser and each other person to whom rights under
this Agreement are transferred as permitted by Section 2.11, so long as such
Purchaser or other person owns of record Registrable Securities or GP Warrants
exercisable for Registrable Securities.
(g) "Majority Holders" means Holders who own, or on exercise of all then
outstanding GP Warrants would own, a majority of the Registrable Securities then
outstanding owned by all Holders.
(h) "Notes" has the meaning as defined in the Purchase Agreement.
(i) "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
(j) "Registrable Securities" means the GP Warrant Shares and any shares of
capital stock of GP issued as (or issuable upon the conversion or exercise of
any warrant, right, or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the GP
Warrant Shares (but not any shares of capital stock of National Patent
Development Corporation issued in the Spin-Off (as defined in the Purchase
Agreement)), provided that Registrable Securities shall not include any
securities (i) sold to the public pursuant to a registration statement or Rule
144, (ii) sold in a private transaction in which the transferor's rights under
this Agreement are not assigned, or (iii) which are eligible for sale under
paragraph (k) of Rule 144.
(k) "Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of GP Warrant Shares that are
Registrable Securities and either (i) are then issued and outstanding or (ii)
are issuable pursuant to then outstanding GP Warrants.
(l) "Registration Expenses" shall mean all expenses incurred by GP in complying
with Sections 2.2, 2.3, and 2.4, hereof, including, without limitation, all
registration and filing fees, printing expenses, escrow fees, listing fees, fees
and disbursements of counsel for GP, reasonable fees and disbursements of a
single special counsel for the Holders, blue sky fees and expenses (including
reasonable fees and disbursements of underwriter's counsel in connection with
blue sky qualifications and filings), and the expense of any special audits
and/or comfort letters incident to or required by any such registration (but
excluding the compensation of regular employees of GP).
(m) "Rule 144" means Rule 144 promulgated by the SEC under the Securities Act.
(n) "SEC" means the Securities and Exchange Commission.
(o) "Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(p) "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to a sale of Registrable Securities.
Section 2. Restrictions On Transfer; Registration.
2.1 Restrictions on Transfer. No Holder shall make any disposition of all or any
portion of the GP Warrants or GP Warrant Shares except as permitted by the GP
Warrants.
2.2 Form S-3 Registration. GP shall use its best efforts to prepare and file, as
promptly as practicable, and in any event within 60 days, after the Original
Issue Date, with the SEC a registration statement on Form S-3 or on such form as
is then available under the Securities Act covering the Registrable Securities
held by the Holders.
2.3 Demand Registration.
(a) Subject to the conditions of this Section 2.3, if GP receives a request
from Holders who own, or on exercise of all GP Warrants would own, 25%
of the Registrable Securities then outstanding (the "Initiating
Holders") that GP file a registration statement under the Securities
Act covering the registration of all or a part of such Initiating
Holders' Registrable Securities, then GP shall, within 15 days of the
receipt thereof, give notice of such request to all Holders, and use
its best efforts to effect, as soon as practicable, the registration
under the Securities Act of all Registrable Securities that the
Initiating Holders request to be registered and all Registrable
Securities owned by any other Holder which notifies GP in writing,
within 30 days after receipt of GP's notice contemplated in this
Section 2.3, that it intends to participate in the demand registration
(such notification to include the number of Registrable Securities
sought to be included and the intended method or methods of
distribution of such Registrable Securities), subject to and in
accordance with the terms, conditions, procedures, and limitations
contained in this Agreement. The Initiating Holders may at any time
prior to the effective date of the registration statement relating to a
requested registration under this Section 2.3 revoke their request by
providing written notice to GP, in which case the Registration Expenses
will be borne in accordance with Section 2.6.
(b) GP shall not be required to effect a registration pursuant to this
Section 2.3:
(i) prior to 120 days after the Original Issue Date, so long as GP is in
compliance with its obligations under Section 2.2, or at any time when
a registration statement filed pursuant to Section 2.2 is effective
under the Securities Act;
(ii) after GP has effected two registrations pursuant to this Section 2.3,
provided, however, that a registration shall not count as having been
effected unless and until it has become effective, and unless and until
the Holders participating in such registration shall have had the
opportunity to register and sell 100% of the Registrable Securities
initially requested to be registered pursuant thereto, except that a
registration the request for which has been revoked shall count as
having been effected unless the revocation is based upon material
adverse information concerning GP of which the Initiating Holders were
not aware at the time of their request;
(iii) during the period starting with the date of filing of, and ending on
the date 90 days following the effective date of, a registration
statement pertaining to any underwritten public offering made pursuant
to this Section 2.3; provided that GP makes reasonable and diligent
good faith efforts to cause such registration statement to become
effective; or
(iv) during the period starting with the date of filing of, and ending on
the date 90 days following the effective date of, a registration
statement pertaining to any underwritten public offering in which the
Holders were given the opportunity to participate pursuant to Section
2.4 for not less than 20% of the amount of the offering; provided that
GP uses best efforts to cause such registration statement to become
effective.
(c) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they
shall so advise GP as a part of their request made pursuant to Section
2.3 and GP shall include such information in its written notice to the
Holders referred to in Section 2.3(a). In such event, the right of any
Holder to include its Registrable Securities in such registration shall
be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into
an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by GP and approved by
Holders of a majority of the Registrable Securities to be included in
such underwriting. Notwithstanding any other provision of this Section
2.3 to the contrary, if the underwriter advises GP that marketing
factors require a limitation of the number of securities to be
underwritten (including Registrable Securities) then GP shall so advise
all Holders of Registrable Securities electing to participate in the
registration under this Section 2.3, and the number of shares that may
be included in the underwriting shall be allocated to the Holders of
such Registrable Securities on a pro rata basis based on the number of
Registrable Securities held by all such electing Holders (including the
Initiating Holders). If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written
notice to GP and the underwriter, delivered at least 10 business days
prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting
shall be excluded and withdrawn from the registration.
2.4 Piggyback Registrations.
(a) GP shall notify all Holders at least 30 days prior to the filing of any
registration statement under the Securities Act for a public offering of
securities of GP (including, but not limited to, registration statements
relating to secondary offerings of securities of GP, but excluding registration
statements relating to employee benefit plans or corporate reorganizations or
other transactions under Rule 145 of the Securities Act) and will afford each
such Holder an opportunity to include in such registration statement all or part
of the Registrable Securities held by such Holder; provided, that no such notice
shall be required, and this Section 2.4 shall not be applicable, at any time
when the registration statement filed under Section 2.2 is effective. Such
notice shall (i) offer each Holder the opportunity to register such number of
Registrable Securities as it may request and (ii) describe such securities and
specify the form and manner and other relevant facts involved in such proposed
registration (including, without limitation, if known, the price at which such
securities are reasonably expected to be sold to the public, whether or not such
registration will be in connection with an underwritten offering and, if so, the
identity of the managing underwriter, whether such underwritten offering will be
pursuant to a "best efforts" or "firm commitment" underwriting, and, if known,
the amount of underwriting discount reasonably expected to be incurred in
connection therewith). Each Holder desiring to include in any such registration
statement all or part of the Registrable Securities held by it shall, within 15
days after receipt of the above-described notice from GP, so notify GP in
writing. Such notice shall state the number of Registrable Securities which such
Holder requests to be included in such registration and the intended method of
disposition of the Registrable Securities by such Holder. If a Holder decides
not to include all of its Registrable Securities in any registration statement
thereafter filed by GP, such Holder shall nevertheless continue to have the
right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by GP, all upon the terms
and conditions set forth herein.
(b) If the registration statement under which GP gives notice under this Section
2.4 is for an underwritten offering, the right of any Holder to be included in a
registration pursuant to this Section 2.4 shall be conditioned upon the Holder's
participation in the underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by GP.
Notwithstanding any other provision of this Section 2.4, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of securities to be underwritten (including Registrable Securities), then
GP shall so advise all participating Holders, and the number of securities that
may be included in the underwriting shall be allocated first, to GP; second, to
the participating Holders and to any other stockholders of GP having comparable
rights, on a pro rata basis based on the total number of Registrable Securities
requested to be sold by all such Holders and such other stockholders; and third,
to any other stockholders of GP (other than Holders and any other stockholders
of GP having comparable rights) on a pro rata basis. If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to GP and the underwriter, delivered at least 10
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.
(c) GP shall have the right to terminate or withdraw any registration initiated
by it under this Section 2.4 prior to the effectiveness of such registration
whether or not any Holder has elected to include securities in such
registration. The Registration Expenses of such withdrawn registration shall be
borne by GP in accordance with Section 2.6.
2.5 Suspension of Registration. Under any registration statement filed pursuant
to Section 2 hereof, GP may restrict disposition of Registrable Securities, and
Holders will not be able to dispose of such Registrable Securities, if GP shall
have delivered a certificate signed by an officer of GP stating that in the good
faith judgment of the Board of Directors of GP a delay in the disposition of
such Registrable Securities is necessary because GP has determined that such
sales would require public disclosure by GP of material nonpublic information
that is not included in such registration statement. In the event of the
delivery of such certificate, GP shall use its best efforts to amend such
registration statement or amend or supplement the related prospectus as
necessary, and take all other actions necessary, to allow the proposed sale to
take place as promptly as possible (or, if in the reasonable judgment of the
Board of Directors of GP disclosure of such event would be detrimental to GP,
promptly after the earlier of (a) the date that disclosure of such event would
not be detrimental to GP and (b) 90 days after the date of such certificate,
provided, however, that such right to delay the sales of Registrable Securities
may be exercised by GP not more than once in any 12-month period and that, in
each such case, the delay in the sale of the Registrable Securities included in
the registration statement shall not exceed 120 days from the date of the
certificate).
2.6 Expenses of Registration. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration pursuant to
Section 2.2, 2.3, or 2.4 shall be borne by GP. All Selling Expenses incurred in
connection with any registrations hereunder shall be borne by the holders of the
securities so registered pro rata on the basis of the number of shares so
registered. GP shall not, however, be required to pay for expenses of (a) any
registration begun pursuant to Section 2.3, the request for which has been
subsequently withdrawn by the Holders, unless (i) the withdrawal is based upon
material adverse information concerning GP of which the Holders were not aware
at the time of such request or (ii) the Initiating Holders agree to forfeit one
of their requested registrations under Section 2.3, in which event such right
shall be forfeited by all Holders, or (b) more than one registration initiated
under Section 2.3 (other than any such registration the request for which is
withdrawn as described in Section 2.6(a)(i)). If GP is not required to pay the
Registration Expenses, such expenses shall be borne by the Holders requesting
such registration in proportion to the number of shares for which registration
was requested; and, if GP has previously paid any such expenses, such Holders
shall promptly reimburse GP therefore.
2.7 Obligations of GP. Whenever required to register any Registrable Securities,
GP shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective.
(b) Use its best efforts to keep such registration statement effective (i) in
the case of a registration statement filed under Section 2.2, until the earliest
to occur of (A) the date on which all Registrable Securities have been sold
pursuant to such registration statement or Rule 144 and (B) the date on which no
Registrable Securities remain outstanding, and (ii) in the case of a
registration statement under Section 2.3 or 2.4, for up to 90 days (or three
years if the registration statement is on Form S-3), as requested by the Holders
of a majority of the Registrable Securities registered thereunder, or, if
earlier, until the Holder or Holders have completed the distribution related
thereto.
(c) Prepare and file with the SEC such amendments (including post effective
amendments and supplemental opinions of counsel, if required) and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
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Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in Section 2.7(b).
(d) Furnish to the Holders such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request to facilitate the
disposition of Registrable Securities owned by them.
(e) Use its best efforts to register and qualify the Registrable Securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders, and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holders to consummate the disposition of the
Registrable Securities owned by such Holder in such jurisdictions; provided that
GP shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(f) Use its best efforts to cause the Registrable Securities covered by such
registration statement to be registered or qualified with or approved by such
other governmental agencies or authorities (including, without limitation, state
securities commissions) as may be necessary to enable the Holder or Holders
thereof to consummate the disposition of such Registrable Securities.
(g) Notify each Holder, promptly after GP shall receive notice thereof, of the
date and time the registration statement and each post-effective amendment
thereto has become effective or a supplement to any prospectus forming a part of
such registration statement has been filed.
(h) Notify each Holder of Registrable Securities covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and, at the
request of any such Holder, subject to Section 2.5, deliver a reasonable number
of copies of an amended or supplemental prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(i) Within a reasonable time before each filing of the registration statement or
any amendment or supplement thereto with the SEC, furnish to one counsel,
selected by the Holders of a Majority of the Registrable Securities included
therein, copies of such documents proposed to be filed, which documents shall be
subject to the reasonable approval of such counsel.
(j) Use its best efforts to prevent the issuance of any order suspending the
effectiveness of a registration statement and, if one is issued, immediately
notify each selling Holder of the receipt of such notice and use its best
efforts to obtain the withdrawal of any order suspending the effectiveness of a
registration statement at the earliest possible moment.
(k) Make available to each selling Holder and any attorney, accountant, or other
agent or representative retained by any such selling Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents, and properties of GP, as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause GP's
officers, directors, and employees to supply all information requested by any
such Inspector in connection with such registration statement, subject, in each
case, to such confidentiality agreements as GP shall reasonably request.
(l) Use its best efforts to cause the securities covered by such registration
statement to be listed on any securities exchange or quoted on any quotation
system on which similar securities issued by GP are then listed or quoted.
(m) Otherwise use its best efforts to cooperate with the SEC and other
regulatory agencies and take all reasonable actions and execute and deliver or
cause to be executed and delivered all documents reasonably necessary to effect
the registration of any securities under this Agreement.
(n) Provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of such registration statement.
(o) If such registration involves an underwritten offering, obtain and furnish a
comfort letter, dated the effective date of such registration statement, and the
date of the closing under the underwriting agreement, signed by GP's independent
public accountants and addressed to the Holders, in customary form and covering
such matters as are customarily covered by comfort letters by independent public
accountants in such public offerings and such other financial matters as the
holders of a majority of the Registrable Securities being sold in such
registration may reasonably request.
(p) If such registration involves an underwritten offering, furnish a legal
opinion of GP's counsel, dated the date of the closing under the underwriting
agreement and addressed to the Holders, with respect to the registration
statement, each amendment and supplement thereto, the prospectus included
therein (including the preliminary prospectus) and other documents relating
thereto, in customary form and covering such matters as are customarily covered
by legal opinions of issuers' counsel in such public offerings.
(q) During the period when a prospectus is required to be delivered under the
Securities Act, promptly file all documents required to be filed with the SEC
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act.
2.8 Termination of Registration Rights. A Holder's registration rights shall
expire if all Registrable Securities held by and issuable to such Holder may be
sold under SEC Rule 144 during any 90 day period.
2.9 Furnishing Information. It shall be a condition precedent to the obligations
of GP to take any action pursuant to Section 2.2, 2.3, or 2.4 that the selling
Holders shall furnish to GP such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
2.10 Indemnification. If any Registrable Securities are included in a
registration statement under Section 2.2, 2.3, or 2.4:
(a) To the extent permitted by law, GP will indemnify and hold harmless each
Holder and the partners, members, officers, directors, trustees, stockholders,
employees, and agents of each Holder, any underwriter (as defined in the
Securities Act) for such Holder, and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act, or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions, or violations (collectively a
"Violation") by GP: (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by GP of the
Securities Act, the Exchange Act, or any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act, or any state
securities law in connection with the offering covered by such registration
statement; and GP will pay as incurred to each such Holder, partner, member,
officer, director, trustee, stockholder, employee, agent, underwriter, or
controlling person any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 2.10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of GP, which consent shall not be unreasonably withheld, nor
shall GP be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Holder, partner,
member, officer, director, trustee, stockholder, employee, agent, underwriter,
or controlling person. With respect to any untrue statement or alleged untrue
statement made in, or omission or alleged omission from, any preliminary
prospectus, any Rule 430A prospectus, or any prospectus, the indemnity agreement
contained in this Section 2.10(a) with respect to such preliminary prospectus,
Rule 430A prospectus, or prospectus, to the extent it is based on the claim of a
person who purchased securities directly from a person, shall not inure to the
benefit of such person (or to the benefit of any of its partners, members,
officers, directors, trustees, stockholders, employees, agents, or counsel, or
any person controlling such person ) if the prospectus (or the prospectus as
amended or supplemented if GP shall have filed with the SEC any amendment or
supplement thereto) which shall have been furnished to such person prior to the
time it sent written confirmation of or otherwise confirmed such sale to such
purchaser does not contain such statement, alleged statement, omission, or
alleged omission and a copy of the prospectus (or the prospectus as amended or
supplemented if GP shall have filed with the SEC any amendment or supplement
thereto) shall not have been sent or given to such purchaser and such purchaser
shall not otherwise have received a copy thereof at or prior to the written
confirmation of such sale.
(b) To the extent permitted by law, each Holder will, if Registrable Securities
held by such Holder are included in the securities as to which such registration
is being effected, indemnify and hold harmless GP, each of its directors, its
officers, and each person, if any, who controls GP within the meaning of the
Securities Act, any underwriter, and any other Holder selling securities under
such registration statement or any of such other Holder's partners, members,
officers, directors, trustees, stockholders, employees, agents, or any person
who controls such Holder, against any losses, claims, damages, or liabilities
(joint or several) to which GP or any such person may become subject under the
Securities Act, the Exchange Act, or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder specifically for use in connection
with such registration; and each such Holder will pay as incurred any legal or
other expenses reasonably incurred by GP or any such person in connection with
investigating or defending any such loss, claim, damage, liability, or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.10(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; provided further, that in no event
shall any indemnity obligation of any Holder under this Section 2.10 exceed the
net proceeds received by such Holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Promptly after receipt by an indemnified party under this Section 2.10 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.10, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.10.
(d) If the indemnification provided for in this Section 2.10 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any losses, claims, damages, or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage, or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage,
or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder hereunder exceed
the net proceeds from the offering received by such Holder. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 2.10 were determined by pro rata allocation or any other method of
allocation which does not take into account the equitable consideration referred
to in this Section 2.10(d).
(e) The obligations of GP and the Holders under this Section 2.10 shall survive
completion of any offering of Registrable Securities in a registration statement
and the termination of this Agreement. No indemnifying party, in the defense of
any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
2.11 Assignment of Registration Rights. A Holder may assign such Holder's rights
under this Agreement, including, without limitation, its rights to cause GP to
register Registrable Securities pursuant to this Section 2, to any person to
whom GP Warrants or Registrable Securities are transferred in compliance with
the restrictions of this Agreement, the GP Warrants, and the Purchase Agreement,
provided that (a) in the case of a transfer of Registrable Securities, such
transferee (i) is a subsidiary, parent, general partner, limited partner,
member, or affiliate of such Holder or an investment company registered under
the Investment Company Act of 1940, as amended, advised by Gabelli Funds, LLC or
(ii) acquires at least 50,000 shares of Registrable Securities (as adjusted for
stock splits, stock dividends, combinations, reorganizations, reclassifications,
and other similar events), (b) the transferor, within ten days after such
transfer, furnishes to GP written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned, and (c) such transferee agrees in
writing to be subject to all restrictions set forth in this Agreement.
2.12 Rule 144. With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, GP agrees to use its
best efforts to, at all times at which any Registrable Securities are eligible
for sale under Rule 144 (other than paragraph (k) thereof):
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 or any similar or analogous rule
promulgated under the Securities Act;
(b) file with the SEC, in a timely manner, all reports and other documents
required of GP under the Exchange Act;
(c) furnish to each Holder, forthwith upon request, a written statement by
GP as to its compliance with the reporting requirements of Rule 144 and
of the Exchange Act, a copy of the most recent annual or quarterly
report of GP, and such other reports and documents as such Holder may
reasonably request to sell Registrable Securities under Rule 144; and
(d) cooperate with each Holder in good faith to enable such Holder to
deliver, promptly upon any sale of Registrable Securities (or
securities which, in the absence of eligibility for sale under Rule
144, would be Registrable Securities) by such Holder under Rule 144
under the Securities Act, certificates representing such securities
which shall not contain any restrictive legend.
Section 3. Miscellaneous.
3.1 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to conflict of laws.
3.2 Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors, assigns, heirs, executors, and administrators of the
parties hereto; provided, however, that prior to the receipt by GP of adequate
written notice of the transfer of any Registrable Securities specifying the full
name and address of the transferee, GP may deem and treat the person listed as
the holder of such securities in its records as the absolute owner and holder of
such securities for all purposes.
3.3 Entire Agreement. This Agreement, the GP Warrants, the Purchase Agreement,
and the other documents delivered pursuant thereto set forth the entire
understanding of the parties with respect to the subject matter hereof and
supersede all existing agreements among them concerning such subject matter.
3.4 Severability. If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
3.5 Amendment and Waiver.
(a) Any provision of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), by written instrument executed by GP and the
Agent with the written consent of Majority Holders. Any amendment or waiver
effected in accordance with this Section 3.5 shall be binding upon each Holder
and GP.
(b) Any waiver of a breach of any provision of this Agreement shall not operate
as or be construed to be a waiver of any other breach of such provision or of
any breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing.
3.6 Notices and Consents. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be given by
Federal Express, Express Mail, or similar overnight delivery or courier service
or delivered (in person or by telecopy, telex, or similar telecommunications
equipment) against receipt to the party to whom it is to be given (a) in the
case of GP, to its address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or (b) in the case of any Holder, to its address as set
forth in GP's books and records (or, in either case, to such other address as
the party shall have furnished in writing in accordance with the provisions of
this Section 3.6). Any notice shall be deemed given at the time of receipt
thereof.
3.7 Specific Performance. In addition to any other remedy provided at law or
equity, the parties hereto shall be entitled to specific performance of this
Agreement.
3.8 Headings. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
3.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. The transmission by facsimile by each party of a signed
counterpart copy of this Agreement to the other party shall be deemed proof of
signature of the original and the signed facsimile so transmitted shall be
deemed an original for the purposes of this Agreement.
3.10 Pronouns. All pronouns contained herein, and any variations thereof, shall
be deemed to refer to the masculine, feminine or neutral, singular or plural, as
to the identity of the parties hereto may require.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
GP STRATEGIES CORPORATION
By:_________________________
Name:
Title:
AGENT
GABELLI FUNDS, LLC
By:_________________________
Name:
Title:
NY\224976.5
