1
EXHIBIT 2.10
PREFERRED STOCKHOLDERS AGREEMENT
DATED AS OF __________ __, 1997
BETWEEN
FORD MOTOR COMPANY
AND
TEAM RENTAL GROUP, INC.
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.................................... 1
SECTION 1.1. Definitions.................................................. 1
ARTICLE II
BUSINESS COMBINATIONS BETWEEN THE COMPANY AND Ford;
VOTING OF SHARES OF CLASS A COMMON STOCK....................... 8
SECTION 2.1. Purchases of Equity Securities............................... 8
SECTION 2.2. Additional Limitations....................................... 9
ARTICLE III
CONDUCT OF THE COMPANY BUSINESS....................................... 10
SECTION 3.1. Conduct of the Company Business............................... 10
SECTION 3.2. Consent Rights................................................ 12
SECTION 4.1. Transfer of Class A Common Stock.............................. 13
ARTICLE V
REGISTRATION RIGHTS................................................... 14
SECTION 5.1. Restrictive Legend............................................ 14
SECTION 5.2. Notice of Proposed Transfer................................... 15
SECTION 5.3. Request for Registration...................................... 16
SECTION 5.4. Incidental Registration....................................... 22
SECTION 5.5. Registration on Form S-3...................................... 25
SECTION 5.6. Obligations of the Company.................................... 26
SECTION 5.7. Furnish Information........................................... 35
SECTION 5.8. Expenses of Registration...................................... 35
SECTION 5.9. Underwriting Requirements..................................... 36
SECTION 5.10. Rule 144 and Rule 144A Information............................ 36
SECTION 5.11. Indemnification............................................... 37
SECTION 5.12. Lockup........................................................ 44
SECTION 5.13. Transfer of Registration Rights............................... 45
SECTION 5.14. Selection of Counsel.......................................... 45
ARTICLE VI
REPRESENTATIONS AND WARRANTIES........................................ 46
SECTION 6.1. Representations of the Company................................ 46
SECTION 6.2. Representations of Ford....................................... 48
-i-
3
Page
----
ARTICLE VII
MISCELLANEOUS............................. 51
SECTION 7.1. Notices...................................................... 51
SECTION 7.2. Costs and Expenses........................................... 52
SECTION 7.3. Amendment and Modification................................... 52
SECTION 7.4. Waivers and Extensions....................................... 53
SECTION 7.5. Interpretation............................................... 53
SECTION 7.6. Entire Agreement; Third Party
Beneficiaries; Assignment............................ 54
SECTION 7.7. Severability................................................. 54
SECTION 7.8. Governing Law................................................ 55
SECTION 7.9. Specific Performance......................................... 55
SECTION 7.10. Resolution of Disputes....................................... 55
SECTION 7.11. Consent to Jurisdiction; Waiver of
Jury Trial........................................... 55
-ii-
4
INDEX OF DEFINED TERMS
Term Page
---- ----
Acquisition................................................................. 12
Affiliate................................................................... 1
Associate................................................................... 1
Board Action Matter......................................................... 13
Board of Directors.......................................................... 1
Business Combination........................................................ 1
Class A Common Stock........................................................ 2
Class B Common Stock........................................................ 2
Common Stock................................................................ 2
Common Stock Voting Power................................................... 3
Company .................................................................... 1
Control..................................................................... 53
Equity Security............................................................. 3
Exchange Act................................................................ 3
Existing Company Registration Rights........................................ 3
Fair Market Value........................................................... 3
Ford........................................................................ 1
Ford Affiliate.............................................................. 4
Ford's Interest............................................................. 4
Governmental Entity......................................................... 47
Holder...................................................................... 4
Indemnified party........................................................... 40
Indemnifying party.......................................................... 40
Initial Percentage.......................................................... 4
Initiating Holders.......................................................... 16
Line of Business............................................................ 4
Minimum Amount.............................................................. 5
NASD........................................................................ 35
New Security................................................................ 5
NYSE........................................................................ 3
Permitted Acquisition Transaction........................................... 5
Person...................................................................... 53
Preferred Stock............................................................. 6
Protection Period........................................................... 6
Register.................................................................... 6
Registered.................................................................. 6
Registrable Security........................................................ 6
Registration................................................................ 6
Response Notice............................................................. 12
SEC......................................................................... 7
Securities Act.............................................................. 7
Standstill Period .......................................................... 8
Subsidiary.................................................................. 8
Substantial Part............................................................ 8
To the Company's knowledge.................................................. 53
Transaction Notice.......................................................... 12
U.S. Corporation............................................................ 46
Unaffiliated Stockholders................................................... 8
-iii-
5
PREFERRED STOCKHOLDERS AGREEMENT
PREFERRED STOCKHOLDERS AGREEMENT, dated as of ________ __,
1997, between FORD MOTOR COMPANY, a Delaware corporation ("Ford"), and TEAM
RENTAL GROUP, INC., a Delaware corporation (the "Company").
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used herein which
are not otherwise defined have the same meaning as in the Preferred Stock
Purchase Agreement. As used in this Agreement, the following terms have the
following meanings:
(a) "Affiliate" has the same meaning as in Rule 12b-2
promulgated under the Exchange Act.
(b) "Associate" has the same meaning as in Rule 12b-2
promulgated under the Exchange Act.
(c) "Board of Directors" means the Board of Directors
of the Company.
(d) "Business Combination" means any one of the
following transactions:
(i) Any merger or consolidation of the Company
or any Subsidiary of the Company with (A) Ford or (B) any
other person (other than the Company) which is, or after such
merger or consolidation would be, an Affiliate or Associate of
Ford;
(ii) Any sale, lease, exchange, mortgage, pledge,
transfer or other disposition by the Company (in one
transaction or a series of transactions) to or with
6
Ford or any Affiliate or Associate of Ford of all or a
Substantial Part of the consolidated assets of the
Company; or
(iii) The adoption of any plan or proposal for the
liquidation or dissolution of the Company proposed by
or on behalf of Ford or any Affiliate or Associate of
Ford; or
(iv) Any reclassification of securities
(including any reverse stock split), recapitalization of the
Company, or any merger or consolidation of the Company with
any Subsidiary thereof or any other transaction to which the
Company is a party (whether or not with or into or otherwise
involving Ford or any Affiliate or Associate of Ford) which
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Company or any
Subsidiary thereof which is directly or indirectly owned by
Ford or any Affiliate or Associate of Ford
(e) "Class A Common Stock" means the Class A Common Stock, par
value $.01 per share, of the Company.
(f) "Class B Common Stock" means the Class B Common Stock, par
value $.01 per share, of the Company.
(g) "Common Stock" means the Class A Common Stock and/or the
Class B Common Stock.
-2-
7
(h) "Common Stock Voting Power" means the total number of
votes which could be cast in respect of Common Stock at a properly
called stockholders meeting.
(i) "Equity Security" means any (i) Common Stock, (ii)
securities of the Company convertible into or exchangeable for Common
Stock, including the Preferred Stock, and (iii) options, rights,
warrants and similar securities issued by the Company to acquire Common
Stock.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
and the rules and regulations promulgated thereunder, as amended.
(k) "Existing Company Registration Rights" means the
registration rights described on Schedule A.
(l) "Fair Market Value" means: (i) in the case of a security,
the average of the closing sale prices during the thirty day period
immediately preceding the date in question of such security on the
Composite Tape for New York Stock Exchange ("NYSE") listed stocks or,
if such security is not quoted on the Composite Tape, on the NYSE or,
if such security is not listed on the NYSE, on the principal United
States securities exchange registered under the Exchange Act on which
such security is listed or, if such Security is not listed on any such
exchange, the average of the closing sale prices or the closing bid
quotations of such security during the thirty day period preceding the
date of determination on The Nasdaq National Market or any system then
in use or, if no such quotations are available, the fair market value
on
-3-
8
the date in question of such security as determined by the Board of
Directors in good faith; and (ii) in the case of property other than
cash or a security, the fair market value of such property on the date
in question as determined by the Board of Directors in good faith.
(m) "Ford Affiliate" means any person controlled by Ford,
controlling, or under common control with, Ford, and any person acting
in concert with Ford. Notwithstanding the foregoing, however, the
Company shall not be deemed to be an Affiliate of Ford
(n) "Ford's Interest" means the percentage of Common Stock
Voting Power represented by the shares of Class A Common Stock issuable
upon conversion of the Preferred Stock controlled directly or
indirectly by Ford and the Ford Affiliates.
(o) "Holder" shall mean any holder of Registrable
Securities.
(p) "Initial Percentage" means the percentage of Common Stock
Voting Power represented immediately after the Closing by the shares of
Class A Common Stock issuable upon conversion of the Preferred Stock
that Ford and the Ford Affiliates acquire from the Company on the
Closing Date pursuant to the Preferred Stock Purchase Agreement.
(q) "Line of Business" means, with respect to the Company, the
business of owning and operating car and truck rental locations, as
owner or licensee, parking locations, van pools, used car sales and
purchase locations, and any
-4-
9
other activities reasonably incidental to the foregoing activities,
including owning, operating and licensing computer reservation systems
relating thereto.
(r) "Minimum Amount" means Registrable Securities representing
at least 33% of the Registrable Securities comprising the Initial
Percentage; provided that, if, at any time, fewer than such amount of
Registrable Securities are held by all Holders, then the Minimum Amount
shall be the Registrable Securities held by all such Holders.
(s) "New Security" means any Equity Security issued by the
Company for cash or cash equivalents; provided that "New Security"
shall not include (i) securities issuable upon conversion of any
convertible Equity Security, (ii) securities issuable upon exercise of
any option, warrant or other similar Equity Security, (iii) securities
issuable at any time to employees, directors or consultants of the
Company, or any Subsidiary of the Company, pursuant to any employee
stock offering, plan, or arrangement approved by the Board of Directors
(or an appropriate committee thereof), and (iv) securities issuable in
connection with any stock split, stock dividend or recapitalization of
the Company.
(t) A "Permitted Acquisition Transaction" means either (i) a
tender or exchange offer for outstanding shares of Common Stock, (ii) a
Business Combination that is conditioned upon approval by Unaffiliated
Stockholders holding at least a majority of the shares of Common Stock
-5-
10
held by Unaffiliated Stockholders, or (iii) a merger following the
consummation of a tender or exchange offer described in clause (i)
above pursuant to which Unaffiliated Stockholders would receive
consideration identical to that which they would have received had they
participated in such tender or exchange offer.
(u) "Preferred Stock" means the Series A Preferred
Stock of the Company.
(v) "Protection Period" means the period commencing on the
date hereof and ending on the earliest of (i) nine months following the
date hereof, (ii) the date on which Ford's Interest is less than 50% of
the Initial Percentage and (iii) if, on the date eight months from the
date hereof (the "Eight Month Anniversary"), there shall not be pending
a request for registration pursuant to Section 5.3 (including a request
in connection with which a registration statement has been declared
effective but the Registrable Securities thereunder shall not all have
been offered or fully distributed), then, on the Eight Month
Anniversary.
(w) "Register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act and
the declaration or ordering of effectiveness of such registration
statement or document.
(x) "Registrable Security" shall mean (i) any Equity Security
held by Ford that was issued to Ford by the Company pursuant to, or
otherwise acquired by Ford in accordance
-6-
11
with, the terms of this Agreement or the Preferred Stock Purchase
Agreement, (ii) any Equity Security issued as (or issued upon the
conversion or exercise of any warrant, right, option or other
convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of,
a Registrable Security, and (iii) any Equity Security issued by way of
a stock split of a Registrable Security. For purposes of this
Agreement, any Registrable Securities shall cease to be Registrable
Securities when (w) a registration statement covering such Registrable
Securities has been declared effective and such Registrable Securities
have been disposed of pursuant to such effective registration
statement, (x) such Registrable Securities shall have been disposed of
pursuant to Rule 144 (or any similar provision then in effect) under
the Securities Act, (y) such Registrable Securities are sold by a
person in a transaction in which the rights under the provisions of
this Agreement are not assigned, or (z) such Registrable Securities
shall cease to be outstanding. In no event shall the Company be
required to register the Preferred Stock under the Exchange Act.
(y) "SEC" means the Securities and Exchange
Commission.
(z) "Securities Act" means the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as amended.
-7-
12
(aa) "Standstill Period" means a period of time commencing at
the Closing Date and terminating on the first anniversary of the
Closing Date.
(ab) "Subsidiary" has the same meaning as in Rule 12b-2
promulgated under the Exchange Act.
(ac) A "Substantial Part" of the Company means more than 10%
of the Fair Market Value of the total assets of the Company and its
Subsidiaries as of the end of its most recent fiscal quarter ending
prior to the time the determination is made.
(ad) "Unaffiliated Stockholders" means stockholders of the
Company other than Ford or Ford Affiliates.
ARTICLE II
BUSINESS COMBINATIONS BETWEEN THE COMPANY AND Ford;
VOTING OF SHARES OF CLASS A COMMON STOCK
SECTION 2.1. Purchases of Equity Securities. (a)
During the Standstill Period, Ford and the Ford Affiliates shall not (i)
directly or indirectly, purchase or otherwise acquire, or propose or offer to
purchase or otherwise acquire, any Equity Securities whether by tender offer,
market purchase, privately negotiated purchase, Business Combination or
otherwise, if, immediately after such purchase or acquisition, Ford's Interest
would equal or exceed the Initial Percentage, or (ii) directly or indirectly
propose or offer to enter into a Business Combination.
(b) The prohibitions contained in Section 2.1(a) shall not
apply (i) during any period in which Ford's Interest is less than 10%, (ii) to
any Permitted Acquisition Transaction following
-8-
13
(A) the commencement by any third party of (1) a bona fide tender or exchange
offer to purchase in excess of 20% of the Common Stock Voting Power that the
Board of Directors either recommends acceptance of, expresses no opinion and
remains neutral toward or is unable to take a position with respect to, (2) a
bona fide proposal to acquire all or substantially all of the assets of the
Company that the Board of Directors is actively entertaining and the
consummation of which would require approval by the Stockholders of the Company
pursuant to Section 271 of the Delaware General Corporation Law or (3) a bona
fide proposal to enter into any acquisition or other business combination
transaction with the Company that the Board of Directors is actively
entertaining, in the case of each of clauses (1) through (3), which shall not
have been approved in advance by the Company or the Board of Directors, or (B)
the Company entering into (or announcing its intention to do so) a definitive
agreement, or an agreement contemplating a definitive agreement, for any of the
transactions described in clauses (1) through (3) above, or (iii) to any
issuance and sale of New Securities by the Company to Ford or an Ford Affiliate.
SECTION 2.2. Additional Limitations. During the
Standstill Period, Ford and the Ford Affiliates shall not:
(a) other than in connection with an election contest to which
Rule 14a-11 under the Exchange Act applies, and which is initiated by a
third party or which is otherwise approved by the Board of Directors,
make, or in any way participate, directly or indirectly, in any
"solicitation"
-9-
14
of "proxies" to vote (as such terms are used in the proxy rules of the
SEC) or seek to advise, encourage or influence any person or entity
with respect to the voting of any shares of capital stock of the
Company, initiate, propose or otherwise solicit stockholders of the
Company for the approval of one or more stockholder proposals or induce
or attempt to induce any other individual, firm, corporation,
partnership or other entity to initiate any stockholder proposal;
(b) deposit any Equity Securities into a voting trust or
subject any Equity Securities to any arrangement or agreement with
respect to the voting of such securities or form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any Equity Securities; provided that the
foregoing shall not prohibit any such action to effectuate the
provisions of Section 2.3; or
(c) except in connection with a transaction permitted by
Section 2.1(b) hereof, make any public announcement with respect to a
transaction of the type described in Section 2.1(a) hereof.
-10-
15
ARTICLE III
CONDUCT OF THE COMPANY BUSINESS
SECTION 3.1. Conduct of the Company Business. Subject
to Section 3.2, the Company agrees, during the Protection Period,
that:
(a) the Company shall not, directly or indirectly, issue or
sell Equity Securities, except (i) in connection with acquisitions of
Budget Licensees (as defined in the Supply Agreement dated __________,
1997 among the Company, Budget Rent A Car Corporation and Ford), (ii)
in transactions not required to be registered pursuant to the
Securities Act, (iii) in transactions involving the issuance of Equity
Securities (other than Common Stock), (iv) issuances to employees,
officers or directors of the Company or its subsidiaries pursuant to
compensation arrangements or benefit plans existing on the date hereof
and (v) issuances pursuant to any other option, right or warrant of the
Company outstanding on the date hereof; provided that, in the case of
any transaction permitted under clauses (i), (ii) and (iii) above,
except as required pursuant to Existing Company Registration Rights,
during the Protection Period, no holder of Common Stock issued in
connection with, or pursuant to conversion, exchange or exercise of
Equity Securities issued in connection with, such transaction (or any
transferee thereof) shall have the right to request the Company to
register such Common Stock under the Securities Act;
-11-
16
(b) the Company shall not acquire control of any person
(whether by merger, consolidation, purchase of stock or assets,
assumption of liabilities, or otherwise), or any assets or business of
any person (an "Acquisition") for cash consideration in excess of $20
million, except that the foregoing shall not prohibit any Acquisition
of a Budget Licensee; and
(c) the Company shall not make any Acquisition in a
transaction involving the issuance of Equity Securities, other than
Acquisitions within the Company's Line of Business.
SECTION 3.2. Consent Rights. If the Company desires to engage
in a transaction prohibited by Section 3.1, then the Company shall request
Ford's consent to such transaction by giving notice to Ford in writing (which
notice shall provide reasonable detail concerning the proposed transaction so
that Ford can reasonably evaluate such proposed transaction) (a "Transaction
Notice"). Ford shall have seven days from the date of its receipt of a
Transaction Notice to evaluate the proposed transaction. If Ford shall not have
notified the Company in writing (any such notice, a "Response Notice") on or
prior to the seventh day following the date of its receipt of the Transaction
Notice that Ford (i) does not consent to the proposed transaction or (ii)
requires additional time to evaluate the proposed transaction, then Ford shall
be deemed to have consented to the proposed transaction. If Ford delivers a
Response Notice and it contains the response indicated in clause (ii) above,
then such
-12-
17
Response Notice shall also indicate in good faith whether consent to the
proposed action would require approval by Ford's Board of Directors or any
committee thereof (a "Board Action Matter"). If a Response Notice indicates that
the proposed transaction is a Board Action Matter, then Ford shall have 30 days
from the date of the Response Notice to notify the Company in writing that it
does not consent to the proposed transaction. If a Response Notice does not
indicate that the proposed transaction is a Board Approval Matter, then Ford
shall have 7 days from the date of the Response Notice to notify the Company in
writing that it does not consent to the proposed transaction. If no such notice
is delivered to the Company within such 30-day or 7-day period, as the case may
be, then Ford shall be deemed to have consented to the proposed transaction.
Notwithstanding anything to the contrary in this Section 3.2, Ford shall use
reasonable efforts to respond to any Transaction Notice as promptly as
practicable after its receipt thereof and shall act reasonably in withholding
its consent, provided that it shall have received information with regard to a
proposed transaction reasonable for it to be able to properly evaluate it.
ARTICLE IV
TRANSFER OF COMMON STOCK
SECTION 4.1. Transfer of Class A Common Stock. (a) Ford will
not, and will not permit any Ford Affiliate to, directly or indirectly sell,
transfer or otherwise dispose of any Equity Securities, except (i) pursuant to a
registered underwritten public offering in accordance with Article V,
-13-
18
(ii) pursuant to an applicable exemption from the registration requirements of
the Securities Act, (iii) to the Company or a Subsidiary thereof, or (iv) to a
Ford Affiliate (or any Associate of Ford or a Ford Affiliate).
(b) Proposed transfers of Equity Securities that are not in
compliance with this Article IV shall be of no force or effect and the Company
shall not be required to file a registration statement under the Securities Act
in connection with such proposed transfers.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.1. Restrictive Legend. Each certificate representing
Registrable Securities shall, except as otherwise provided in this Section 5.1
or in Section 5.2, be stamped or otherwise imprinted with a legend substantially
in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that Xxxxxxx Xxxxxxx & Xxxxxxxx or
the Assistant General Counsel of Ford shall be satisfactory) the securities
being sold thereby may be publicly sold without registration under the
Securities Act.
-14-
19
SECTION 5.2. Notice of Proposed Transfer. Prior to any
proposed transfer of any Registrable Securities (other than under the
circumstances described in Section 5.3, 5.4 or 5.5), the Holder thereof shall
give written notice to the Company of its intention to effect such transfer.
Each such notice shall describe the manner of the proposed transfer and, if
requested by the Company, shall be accompanied by an opinion of counsel
satisfactory to the Company (it being agreed that Xxxxxxx Xxxxxxx & Xxxxxxxx or
the Assistant General Counsel of Ford shall be satisfactory) to the effect that
the proposed transfer does not violate the terms of this Agreement and that the
proposed transfer may be effected without registration under the Securities Act,
whereupon the Holder of such security shall be entitled to transfer such
security in accordance with the terms of its notice; provided, however, that no
such opinion of counsel shall be required for a transfer to an Ford Affiliate.
Each certificate for Registrable Securities transferred as above provided shall
bear the legend set forth in Section 5.1, except that such certificate shall not
bear such legend if (i) such transfer is in accordance with the provisions of
Rule 144 (or any other rule permitting public sale without registration under
the Securities Act) or (ii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee (other than an
Affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 5.2 shall not apply to securities that are
-15-
20
not required to bear the legend prescribed by Section 5.1 in accordance with the
provisions of that Section.
SECTION 5.3. Request for Registration. (a) At any time, and
from time to time, on and after the date hereof, any of the Holders (the
"Initiating Holders") may request in a written notice that the Company file a
registration statement under the Securities Act (or a similar document pursuant
to any other statute then in effect corresponding to the Securities Act)
covering the registration of at least the Minimum Amount of Registrable
Securities in the manner specified in such notice; provided that, at the time of
such request, such Holders shall have a good faith intention to offer and sell
pursuant to such registration statement at least the Minimum Amount of
Registrable Securities. Following receipt of any notice under this Section 5.3
the Company shall (x) within ten days notify all other Holders of such request
in writing and (y) thereupon will, as expeditiously as possible, use its best
efforts to cause to be filed for registration under the Securities Act all
Registrable Securities that the Initiating Holders and such other Holders have,
within ten days after the Company has given such notice, requested to be
registered in accordance with the manner of disposition specified in such notice
by the Initiating Holders; provided, however, that, if (i) (A) the Company is in
possession of material non-public information, (B) the Board of Directors of the
Company determines in good faith that disclosure of such material non-public
information would not be in the best interests of the Company and its
stockholders and (C) the Board
-16-
21
of Directors of the Company or the Chief Executive Officer or the Chief
Financial Officer of the Company determines (based on advice of counsel) that
such prohibition is necessary in order to avoid a requirement to disclose such
material non-public information, or (ii) the Company has made a public
announcement relating to an acquisition or business combination transaction
including the Company and/or one or more of its subsidiaries (A) that is
material to the Company and its subsidiaries taken as a whole (and for such
purpose no transaction shall be deemed material unless, on a pro forma basis and
after giving effect thereto, consolidated assets or consolidated revenues of the
Company and its subsidiaries as of the end of or for the most recently completed
fiscal year would be increased by at least 10%) and (B) the Board of Directors
of the Company or the Chief Executive Officer or the Chief Financial Officer of
the Company determines in good faith that offers and sales of Registrable
Securities prior to the consummation of such transaction (or such earlier date
as the Board of Directors or the Chief Executive Officer or the Chief Financial
Officer of the Company shall determine) is not in the best interests of the
Company and its stockholders, then the Company shall not be required to file a
registration statement until the earlier of (x) the second day after the
conditions in clause (i) or (ii) have ceased to exist and (y) the 30th day
following receipt by the Company of the notice from the Initiating Holders under
this Section 5.3; provided, further, that, (I) notwithstanding anything to the
contrary contained herein, the Company shall not be required to
-17-
22
cause any such registration statement to be declared effective prior to the date
which is three months from the date hereof and (II) the Company shall not be
required to file more than four registration statements in response to requests
pursuant to this Section 5.3. Notwithstanding clause (II) of the second proviso
to the immediately preceding sentence, after the third month from the date
hereof, if (1) a Transaction Notice is received by Ford from the Company
pursuant to Section 3.2, (2) Ford rejects the proposal included in such
Transaction Notice and (3) within three months of the date of receipt of the
Transaction Notice (such three-month period, the "Demand Period"), the Holders
do not make a registration request under Section 5.3 (provided that such a
registration request shall be deemed to have been made by the Holders during the
Demand Period if such a registration request was already pending at the time the
Company's request was made, including a registration request in which a
registration statement has been declared effective but the Registrable
Securities thereunder shall not all have been offered or fully distributed),
then the number of registration requests that may be made by the Holders
pursuant to Section 5.3 as to which the Company will be required to pay expenses
pursuant to Section 5.8 shall be reduced by one; provided that at least one
right to make a registration request under Section 5.3 shall always be paid by
the Company; and provided, further, that any further Transaction Notice received
from the Company during any Demand Period shall not lead to a reduction of the
number of registration requests under Section 5.3 that may be made by the
Holders and shall not
-18-
23
cause another Demand Period to commence whether or not Ford rejects the proposal
included by the Company in such Transaction Notice.
(b) If the Initiating Holders intend to have the Registrable
Securities distributed by means of an underwritten offering, the Company shall
include such information in the written notice referred to in clause (x) of
Section 5.3(a) above. 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 underwritten offering and the inclusion of such
Holder's Registrable Securities in the underwritten offering to the extent
provided below. All Holders proposing to distribute Registrable Securities
through such underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. The lead managing
underwriter shall be selected by a majority in interest of the Initiating
Holders and any co-managing underwriters shall be selected jointly by a majority
in interest of the Initiating Holders and the Company, each acting reasonably.
No Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the statements contained in the
registration statement that were supplied by such Holder in writing expressly
for use therein, the Registrable Securities of such Holder and such Holder's
intended method of distribution and any other representations required by law or
reasonably required by the underwriter. If any Holder of
-19-
24
Registrable Securities disapproves of the terms of the underwriting, such Holder
may elect to withdraw all its Registrable Securities by written notice to the
Company, the managing underwriter and the Initiating Holders. The securities so
withdrawn also shall be withdrawn from registration.
(c) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a registration pursuant to
this Section 5.3 during the period starting with the date of filing by the
Company of, and ending on a date 90 days following the effective date of, (i)
any other registration statement requested under this Section 5.3 or Section 5.5
or (ii) a registration statement pertaining to a public offering of securities
for the account of the Company or on behalf of the selling stockholders under
any other registration rights agreement, in each case which the Holders have
been entitled to join pursuant to Section 5.4 and, in the case of clause (ii)
only, pursuant to which the Holders have had the opportunity to sell all
Registrable Securities which the Holders desired to sell thereunder; provided
that (x) the Company shall actively employ in good faith all reasonable efforts
to cause any such registration statement referred to in clause (i) or (ii) above
to become effective as soon as possible and (y) with respect to any such
registration statement involving an underwritten offering, the 90 day period
referred to above may be reduced or waived in the discretion of the managing
underwriter for such offering.
-20-
25
(d) A registration requested pursuant to this Section 5.3
shall not be deemed to have been effected pursuant to this Section 5.3 for
purposes of Section 5.8 unless (i) it has been declared effective by the SEC,
(ii) it has remained effective for the period set forth in Section 5.6(a), and
(iii) the offering of Registrable Securities pursuant to such registration is
not subject to any stop order, injunction or other order or requirement of the
SEC.
(e) Subject to the following sentence, if a requested
registration pursuant to this Section 5.3 involves an underwritten offering and
the lead managing underwriter advises the Company in writing that, in its
opinion, the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number that can reasonably be sold in such offering, the Company
will first include in such registration all the Registrable Securities requested
to be included in such registration by the Initiating Holders. In the event that
the number of Registrable Securities requested to be included in such
registration exceeds the number which, in the opinion of such lead managing
underwriter, may reasonably be sold, the number of such Registrable Securities
to be included in such registration shall not exceed the number of Registrable
Securities that the lead managing underwriter advises can reasonably be sold and
shall be allocated pro rata among all Initiating Holders on the basis of the
relative number of shares of Registrable Securities then held by each such
Holder (provided
-21-
26
that any shares hereby allocated to any such Holder that exceed such Holder's
request shall be reallocated among the remaining requesting Holders in like
manner). In the event that the number of Registrable Securities requested to be
included in such registration is less than the number which, in the opinion of
the lead managing underwriter, may reasonably be sold, the Company may include
in such registration any securities the Company wishes to sell up to the number
of securities that, in the opinion of the lead managing underwriter, may
reasonably be sold. During the Protection Period, the Company will not, except
as required pursuant to Existing Company Registration Rights, include in any
requested registration pursuant to this Section 5.3 any securities which are not
Registrable Securities (other than securities to be issued and sold by the
Company) without the prior written consent of the holders of at least a majority
of the Registrable Securities included in such registration.
SECTION 5.4. Incidental Registration. Subject to Section 5.9,
if at any time the Company determines that it shall file a registration
statement under the Securities Act (other than a registration statement on a
Form S-4 or S-8 or any successor or similar forms) on any form that also would
permit the registration of the Registrable Securities and such filing is to be
on its behalf and/or on behalf of selling holders of its securities for the
general registration of Common Stock to be sold for cash, the Company shall each
such time promptly give each Holder written notice of such determination setting
forth the date on which the Company proposes to file such registration
-22-
27
statement, which date shall be no earlier than thirty days from the date of such
notice, and advising each Holder of its right to have Registrable Securities
included in such registration. Upon the written request of any Holder received
by the Company no later than fifteen days after the date of the Company's
notice, the Company shall use its best efforts to cause to be included for
registration under the Securities Act all of the Registrable Securities that
each such Holder has so requested to be registered; provided that if, at any
time after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
proceed with the proposed registration of the securities to be sold by it, the
Company may, at its election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any Holder
to request such registration to be effected as a registration under Section 5.3.
If, in the written opinion of the lead managing underwriter (or, in the case of
a non-underwritten offering, in the written opinion of the Company), the total
number of such securities to be so registered, including such Registrable
Securities, will exceed the maximum number of the Company's securities that can
reasonably be sold, then the Company shall
-23-
28
include in such registration (i) first, all the securities the Company proposes
to sell for its own account or is required to register on behalf of any third
party exercising rights similar to those granted in Section 5.3(a) up to such
maximum number, and (ii) second, to the extent that the number of securities
which the Company proposes to sell for its own account or is required to
register on behalf of any third party exercising rights similar to those granted
in Section 5.3(a) is less than the number of equity securities which the Company
has been advised can reasonably be sold, all Registrable Securities requested to
be included in such registration by the Holders pursuant to this Section 5.4 and
all shares of Common Stock requested to be included by third parties exercising
the rights similar to those granted in this Section 5.4; provided that if the
number of Registrable Securities and other shares of Common Stock requested to
be included in such registration by the Holders pursuant to this Section 5.4 and
third parties exercising rights similar to those granted in this Section 5.4,
together with the number of securities to be included in such registration
pursuant to clause (i) of this Section 5.4, exceeds the number which the Company
has been advised can reasonably be sold in such offering, the number of such
Registerable Securities requested to be included in such registration by the
Holders pursuant to this Section 5.4 shall, except to the extent required under
the Existing Company Registration Rights, be limited to such extent and shall be
allocated pro rata among all such requesting Holders and third parties
exercising rights similar to those granted in this
-24-
29
Section 5.4 on the basis of the relative number of Registrable Securities each
such Holder has requested to be included in such registration and the number of
shares of Equity Securities requested to be included in such registration by
such third parties.
SECTION 5.5. Registration on Form S-3. If at any time (a) any
Holder requests in writing that the Company file a registration statement on
Form S-3 or any successor thereto for a public offering of all or any portion of
the Registrable Securities held by such requesting Holder and (b) the Company is
a registrant entitled to use Form S-3 or any successor thereto, then the Company
shall use its best efforts to cause to be filed for registration under the
Securities Act on Form S-3 or any successor thereto, for public sale in
accordance with the method of disposition specified in such request, including,
without limitation, pursuant to Rule 415 under the Securities Act, the
Registrable Securities specified in such request. Whenever the Company is
required by this Section 5.5 to use its best efforts to cause to be filed for
registration Registrable Securities, each of the limitations, procedures and
requirements of Section 5.3(b), (c), (e) and (f) (including but not limited to
the requirement that the Company notify all Holders from whom a request has not
been received and provide them with the opportunity to participate in the
offering) shall apply to such registration. Any underwritten offering of
Registrable Securities pursuant to a registration statement filed under this
Section 5.5 which permits offers and sales pursuant to Rule 415
-25-
30
under the Securities Act shall, in each case, be for the Minimum Amount of
Registrable Securities. Any registration requested pursuant to this Section 5.5
shall be considered a request pursuant to Section 5.3.
SECTION 5.6. Obligations of the Company. Whenever required
under Section 5.3 or Section 5.5 to use its best efforts to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as possible:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its reasonable best
efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
determined as provided hereafter;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement, and
furnish to the Holders of the Registrable Securities copies of any such
amendments and supplements prior to their being used or filed with the
SEC;
(c) furnish to the Holders such numbers of copies of the
registration statement and the prospectus included therein (including
each preliminary prospectus and any amendments or supplements thereto
in conformity with the
-26-
31
requirements of the Securities Act) and such other documents and
information as they may reasonably request and make available for
inspection by the parties referred to in Section 5.6(d) below such
financial and other information and books and records of the Company,
and cause the officers, directors, employees, counsel and independent
certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
(d) provide (i) the Holders of the Registrable Securities to
be included in such registration statement, (ii) the underwriters
(which term, for purposes of this Agreement, shall include a person
deemed to be an underwriter within the meaning of Section 2(11) of the
Securities Act), if any, thereof, (iii) the sales or placement agent,
if any, therefor, (iv) counsel for such underwriters or agent, and (v)
not more than one counsel for all the Holders of such Registrable
Securities, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with
the SEC, and each amendment or supplement thereto;
(e) use its best efforts to file for registration or
qualification the Registrable Securities covered by such registration
statement under such other securities or blue
-27-
32
sky laws of such jurisdictions within the United States and Puerto Rico
as shall be reasonably appropriate for the distribution of the
Registrable Securities covered by the registration statement; provided,
however, that the Company shall not be required in connection therewith
or as a condition thereto to register or qualify to do business in, or
to file a general consent to service of process in any jurisdiction
wherein it would not but for the requirements of this paragraph (e) be
obligated to do so, or to take any action that would subject it to
taxation in an amount greater than it would be subject but for the
requirements of this paragraph; and provided further that the Company
shall not be required to qualify such Registrable Securities in any
jurisdiction in which the securities regulatory authority requires that
any Holder submit its Registrable Securities to the terms, provisions
and restrictions of any escrow, lockup or similar agreement(s) for
consent to sell Registrable Securities in such jurisdiction unless such
Holder agrees to do so;
(f) promptly notify the selling Holders of Registrable
Securities, the sales or placement agent, if any, therefor and the
managing underwriter or underwriters, if any, thereof and confirm such
advice in writing, (i) when such registration statement or the
prospectus included therein or any prospectus amendment or supplement
or post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when
-28-
33
the same has become effective, (ii) of any comments by the SEC or by
any Blue Sky or securities commissioner or regulator of any state with
respect thereto or any request by the SEC for amendments or supplements
to such registration statement or prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceedings for that purpose, (iv) if
at any time the representations and warranties of the Company contained
in any underwriting agreement or other customary agreement cease to be
true and correct in all material respects or (v) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(g) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of such registration
statement or any post-effective amendment thereto at the earliest
practicable date;
(h) promptly notify each Holder for whom such Registrable
Securities are 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 or incorporated by reference in such registration
-29-
34
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make, in light of the circumstances under which
they were made, the statements therein not misleading, and at the
request of any such Holder promptly prepare and furnish to such Holder
a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such 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, in light of the
circumstances under which they were made, the statements therein not
misleading;
(i) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to Section 5.3 or
Section 5.5, if the method of distribution is by means of an
underwriting, on the date that the Registrable Securities are delivered
to the underwriters for sale pursuant to such registration, or if such
Registrable Securities are not being sold through underwriters, on the
date that the registration statement with respect to such Registrable
Securities becomes effective, (1) a signed opinion, dated such date, of
the independent legal counsel representing the Company for the purpose
of such registration, addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through
-30-
35
underwriters, then to the Holders making such request, as to such
matters as such underwriters or the Holders holding a majority of the
Registrable Securities included in such registration, as the case may
be, may reasonably request and as would be customary in such a
transaction; and (2) letters dated such date and the date the offering
is priced from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and if such Registrable
Securities are not being sold through underwriters, then to the Holders
making such request and, if such accountants refuse to deliver such
letters to such Holders, then to the Company (i) stating that they are
independent certified public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the
financial statements and other financial data of the Company included
or incorporated by reference in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements of
the Securities Act and (ii) covering such other financial matters
(including information as to the period ending not more than five (5)
business days prior to the date of such letters) with respect to the
registration in respect of which such letter is being given as such
underwriters or the Holders holding a majority of the Registrable
Securities included in such registration, as the
-31-
36
case may be, may reasonably request and as would be customary in such a
transaction;
(j) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form, including, without limitation, customary
indemnification provisions substantially consistent with Section 5.11
and, to the extent required by the underwriters, customary lockup
provisions substantially consistent with Section 5.12) and take such
other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities to be so
included in the registration statement;
(k) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal,
state or local, which may be required to effect registration or the
offering or sale in connection therewith or to enable the selling
Holder or Holders to offer, or to consummate the disposition of, their
Registrable Securities;
(l) cooperate with the Holders of the Registrable Securities
and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall conform to the
requirements of The Nasdaq National Market or any securities exchange
on which the Registrable Securities are then listed or admitted to
trading and shall not bear any restrictive legends; and, in
-32-
37
the case of an underwritten offering, enable such Registrable
Securities to be in such denominations and registered in such names as
the managing underwriters may request at least two business days prior
to any sale of the Registrable Securities;
(m) otherwise comply with all applicable rules and regulations
of the SEC, and make available to its security holders, as soon as
reasonably practicable, but not later than eighteen months after the
effective date of the registration statement, an earnings statement
covering the period of at least twelve months beginning with the first
full month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act;
(n) use its reasonable best efforts to list the Registrable
Securities covered by such registration statement with any securities
exchange or quotation system on which the Class A Common Stock of the
Company is then listed or quoted; and
(o) use its best efforts to make available the executive
officers of the Company to participate with the Holders of Registrable
Securities and any underwriters in any "road shows" or other selling
efforts that may be reasonably requested by the Holders in connection
with the methods of distribution for the Registrable Securities.
For purposes of Sections 5.6(a) and 5.6(b), and with respect to (i) registration
required pursuant to Section 5.3, (A) the period
-33-
38
of distribution of Registrable Securities in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it and (B) the period of
distribution of Registrable Securities in any other registration shall be deemed
to extend until the earlier of the sale of all Registrable Securities covered
thereby and 180 days (or such shorter period as may be required in the
underwriting agreement) after the effective date thereof and (ii) registrations
required pursuant to Section 5.5, the period of distribution of Registrable
Securities in any registration (firm commitment underwritten or otherwise) shall
be deemed to extend until the earlier of the sale of all Registrable Securities
covered thereby and two years after the effective date thereof.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (h) of this Section 5.6, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (h) of this
Section 5.6, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice; provided, however,
that any period of time during which a Holder
-34-
39
must discontinue disposition of Registrable Securities shall not be included in
the determination of a period of distribution for purposes of Section 5.6(a) and
Section 5.6(b).
SECTION 5.7. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
SECTION 5.8. Expenses of Registration. All expenses incurred in
connection with (i) each registration or attempted registration pursuant to
Section 5.4, (ii) the first three registrations effected pursuant to Section 5.3
or 5.5 and (iii) any attempted registration (or partial registration deemed not
to have been effected pursuant to Section 5.3 or 5.5 by operation of Sections
5.3(d) or (e)) occurring prior to the third registration effected pursuant to
Section 5.3 or 5.5 of this Agreement, excluding underwriters' discounts and
commission, but including without limitation all registration, filing and
qualification fees, word processing, duplicating, printers' and accounting fees
(including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance), fees of the National
Association of Securities Dealers, Inc. (the "NASD") or listing fees, all fees
and expenses of complying with state securities or blue sky laws, fees and
-35-
40
disbursements of counsel for the Company, any fees and disbursements of
underwriters customarily paid by the issuers or sellers of securities, including
liability insurance if the Company so desires or if the underwriters so require,
and the reasonable fees and expenses of any special experts retained in
connection with the requested registration and other reasonable out-of-pocket
expenses of Holders, shall be paid by the Company. The foregoing provisions with
respect to expenses shall in no way limit the rights of the Holders to request
registration pursuant to Sections 5.3 and 5.5 or the number of registrations
which may be requested thereunder.
SECTION 5.9. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 5.4 to
include Registrable Securities in such underwritten offering unless the Holders
of such Registrable Securities accept the terms of the underwriting of such
offering that have been reasonably agreed upon between the Company and the
underwriters selected by the Company.
SECTION 5.10. Rule 144 and Rule 144A Information. With a view to making
available the benefits of certain rules and regulations of the SEC which may at
any time permit the sale of the Registrable Securities to the public without
registration, at all times, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
-36-
41
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(c) furnish to each Holder of Registrable Securities forthwith
upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by
the Company as such Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing such Holder to sell any
Registrable Securities without registration.
SECTION 5.11. Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder,
such Holder's directors and officers, and each person, if any, who
controls such Holder or participating person within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any
such action or claim) to which they may become subject under the
Securities Act or otherwise,
-37-
42
insofar as such losses, claims, damages or liabilities (or proceedings
in respect thereof) arise out of or are based on any untrue or alleged
untrue statement of a material fact contained in such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the indemnity agreement contained in this
Section 5.11(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 the Company (which consent shall not be
unreasonably withheld); provided further that the Company shall not be
liable to any Holder, such Holder's directors and officers or
controlling person 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 an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder, such Holder's directors and officers or controlling
person; provided, further, that as to any preliminary prospectus or any
final prospectus this indemnity agreement shall not
-38-
43
inure to the benefit of any Holder, such Holder's directors and
officers or controlling persons on account of any losses, claims,
damages or liability arising from the sale of Class A Common Stock to
any person by such Holder if such Holder or its representatives failed
to send or give a copy of the final prospectus or a prospectus
supplement, as the case may be (excluding documents incorporated by
reference therein), as the same may be amended or supplemented, to that
person within the time required by the Securities Act, and the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact in such preliminary
prospectus or final prospectus was corrected in the final prospectus or
such prospectus supplement, as the case may be (excluding documents
incorporated by reference therein), unless such failure resulted from
non-compliance by the Company with Section 5.6(c). Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of any such Holder, such Holder's directors and officers,
participating person or controlling person, and shall survive the
transfer of such securities by such Holder.
(b) Each Holder requesting or joining in a registration
severally and not jointly shall indemnify and hold harmless the
Company, each of its directors and officers and each person, if any,
who controls the Company within the meaning of either Section 15 of the
Securities
-39-
44
Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the Holders but only with
reference to written information relating to such Holder furnished to
the Company expressly for use in connection with such registration;
provided, however, that the indemnity agreement contained in this
Section 5.11(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 such Holder (which consent shall not be
unreasonably withheld); and provided further that the liability of each
Holder hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense that is equal to the proportion
that the net proceeds from the sale of the shares sold by such Holder
under such registration statement bears to the total net proceeds from
the sale of all securities sold thereunder, but not in any event to
exceed the net proceeds received by such Holder from the sale of
Registrable Securities covered by such registration statement.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to either of the two preceding
paragraphs, such person (the "indemnified party") shall promptly notify
the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably
-40-
45
satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the Holders, in
the case of parties indemnified pursuant to the second preceding
paragraph, and by the Company, in the case of parties indemnified
pursuant to the first preceding paragraph. The indemnifying party shall
not be liable for any settlement of any proceeding
-41-
46
effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the indemnifying
party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement
is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) If the indemnification provided for in the first or second
paragraph of this Section 5.11 is unavailable to
-42-
47
an indemnified party or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, 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 any action in question, including any untrue or alleged
untrue statement of material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.11(d) were
determined by pro rata allocation or by any other
-43-
48
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5.11, no Holder shall be
required to contribute any amount in excess of the amount of net
proceeds received by such Holder from the sale of Registrable
Securities covered by such registration statement. 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 remedies
provided for in this Section 5.11 are not exclusive and shall not limit
any right or remedies that may otherwise be available to any
indemnified party at law or in equity.
SECTION 5.12. Lockup. Each Holder shall, in connection with
any registration of the Company's securities, upon the request of the Company or
the underwriters managing any underwritten offering of such securities, agree in
writing not to effect any sale, disposition or distribution of any Registrable
Securities (other than that included in the registration) without the prior
written consent of the managing underwriter for such period of time (not to
exceed 90 days) from the effective date of such registration as the Company or
the underwriters may specify; provided, however, that, to the extent required by
the underwriters in an underwritten offering, all executive officers and
directors of the Company (other than executive officers and directors owning an
aggregate of less than 1% of the outstanding
-44-
49
Common Stock as of the effective date of such registration statement) shall also
have agreed not to effect any sale, disposition or distribution of any
Registrable Securities under the circumstances and pursuant to the terms set
forth in this Section 5.12.
SECTION 5.13. Transfer of Registration Rights. The registration rights
of any Holder under this Agreement with respect to the Registrable Securities
may be transferred to any transferee of such Registrable Securities who acquires
any Registrable Securities of any Holder; provided, that (i) the transferring
Holder shall give the Company written notice at or prior to the time of such
transfer stating the name and address of the transferee and identifying the
securities with respect to which the rights under this Agreement are being
transferred, (ii) such transferee shall agree in writing, in form and substance
reasonably satisfactory to the Company, to be bound as a Holder by the
provisions of this Article V, and (iii) immediately following such transfer the
further disposition of such securities by such transferee is restricted under
the Securities Act.
SECTION 5.14. Selection of Counsel. In connection with any
registration of Registrable Securities pursuant to Sections 5.3, 5.4 and 5.5
hereof, the Holders of a majority of the Registrable Securities covered by any
such registration may select one counsel to represent all Holders of Registrable
Securities covered by such registration.
ARTICLE VI
-45-
50
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations of the Company. The
Company represents and warrants as follows:
(a) Due Organization of the Company and its Subsidiaries. Each
of the Company and its Subsidiaries is a corporation duly organized,
validly existing, and, with respect to those Subsidiaries of the
Company organized under the laws of one of the states of the United
States of America or the District of Columbia (a "U.S. Corporation"),
is in good standing as a domestic corporation under the laws of the
state of its organization with all requisite corporate power and
authority to own, lease and operate its properties and to conduct its
business as presently conducted. Each of the Subsidiaries of the
Company which is a U.S. Corporation is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, except where the
failure to be so qualified as required would not prevent or materially
hinder or delay the ability of the Company to perform its obligations
hereunder.
(b) Validity of Agreement. The Company has all necessary
corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company have been duly authorized
by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and,
assuming due
-46-
51
authorization, execution and delivery by Ford, constitutes a legal,
valid and binding obligation of the Company enforceable against it in
accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law).
(c) Consents and Approvals; No Violations. The execution,
delivery or performance of this Agreement by the Company will not (i)
conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws or similar organizational
documents of the Company or any of its Subsidiaries, (ii) require the
Company or any of its Subsidiaries to make any filing with, or the
Company or any of its Subsidiaries to obtain any permit, authorization,
consent or approval of, any court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory
authority, commission or agency (a "Governmental Entity"), except for
filings with any Governmental Entity in connection with an offering of
securities pursuant to Article V hereof, (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
-47-
52
guarantee, other evidence of indebtedness, lease, concession agreement,
franchise agreement, license, contract, agreement or other instrument
or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may
be bound or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its Subsidiaries
or any of their properties or assets, except, in the case of clauses
(ii), (iii) and (iv), for failures to make filings, or to obtain
permits, authorizations, consents or approvals, or violations,
breaches, defaults, or rights of termination, amendment, cancellation
or acceleration, which would not prevent or materially hinder or delay
the ability of the Company to perform its obligations hereunder.
(d) Litigation. There is no action, suit or proceeding before
or by any Governmental Entity, domestic or foreign, now pending or, to
the Company's knowledge, threatened against the Company or any of its
Subsidiaries which, if adversely determined, would prevent or
materially hinder or delay the ability of the Company to perform its
obligations under this Agreement.
SECTION 6.2. Representations of Ford. Ford represents
and warrants as follows:
(a) Due Organization of Ford and its Subsidiaries.
Each of Ford and its Subsidiaries is a corporation duly
organized, validly existing, and, with respect to those
Subsidiaries of Ford which are U.S. Corporations, is in good
-48-
53
standing as a domestic corporation under the laws of the state of its
organization with all requisite corporate power and authority to own,
lease and operate its properties and to conduct its business as
presently conducted. Each of the Subsidiaries of Ford which is a U.S.
Corporation is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, except where the failure to be so qualified
as required would not prevent or materially hinder or delay the ability
of Ford to perform its obligations hereunder.
(b) Validity of Agreement. Ford has all necessary corporate
power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement by Ford have been duly authorized by all necessary corporate
action on the part of Ford. This Agreement has been duly executed and
delivered by Ford and, assuming due authorization, execution and
delivery by Ford, constitutes a legal, valid and binding obligation of
Ford enforceable against it in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(c) Consents and Approvals; No Violations. The
execution, delivery or performance of this Agreement by Ford
-49-
54
will not (i) conflict with or result in any breach of any provision of
the certificate of incorporation or by-laws or similar organizational
documents of Ford or any of its Subsidiaries, (ii) require Ford or any
of its Subsidiaries to make any filing with, or Ford or any of its
Subsidiaries to obtain any permit, authorization, consent or approval
of, any Governmental Entity, except for filings with any Governmental
Entity in connection with an offering of securities pursuant to Article
V hereof, (iii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, guarantee, other evidence of indebtedness, lease,
concession agreement, franchise agreement, license, contract, agreement
or other instrument or obligation to which Ford or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Ford or
any of its Subsidiaries or any of their properties or assets, except,
in the case of clauses (ii), (iii) and (iv), for failures to make
filings, or to obtain permits, authorizations, consents or approvals,
or violations, breaches, defaults, or rights of termination, amendment,
cancellation or acceleration, which would not
-50-
55
prevent or materially hinder or delay the ability of Ford to
perform its obligations hereunder.
(d) Litigation. There is no action, suit or proceeding before
or by any Governmental Entity, domestic or foreign, now pending or, to
Ford's knowledge, threatened against Ford or any of its Subsidiaries
which, if adversely determined, would prevent or materially hinder or
delay the ability of Ford to perform its obligations under this
Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Notices. All notices, requests, demands or other
communications provided herein shall be made in writing and shall be deemed to
have been duly given (unless otherwise specifically provided in any Section of
this Agreement) if delivered as follows:
If to Ford:
Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Fax: (000) 000-0000
Tel: (000) 000-0000
-and-
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
-51-
56
If to the Company:
Team Rental Group, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
Tel: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx III, Esq.
Fax: (000) 000-0000
Tel: (000) 000-0000
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on (i) the date of delivery
if sent by messenger, (ii) on the business day following the business day on
which delivered to a recognized courier service if sent by overnight courier, or
(iii) on the fifth business day after the mailing thereof if sent by mail.
Notices may also be delivered by fax, provided that any such notice also is
delivered in a manner contemplated by clause (i), (ii) or (iii) above.
SECTION 7.2. Costs and Expenses. All costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except as otherwise
provided in Article V.
SECTION 7.3. Amendment and Modification. This
Agreement may be amended, modified and supplemented in any and
all respects by written agreement of the parties hereto.
-52-
57
SECTION 7.4. Waivers and Extensions. Each party to this Agreement may
waive any right of such party or any breach or default of the other party to
this Agreement or conditions to its own obligations; provided that such waiver
will not be effective against the waiving party unless it is in writing, is
signed by such party and specifically refers to this Agreement. Waivers may be
made in advance or after the right waived has arisen or the breach or default
waived has occurred. Any waiver may be conditional. No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
SECTION 7.5. Interpretation. (a) Titles and headings of sections of
this Agreement are for convenience only and shall not affect the construction of
any provision of this Agreement.
(b) Whenever the phrase "to the Company's knowledge" is used in this
Agreement, such phrase means the actual knowledge of the persons listed on
Schedule 8.6.
(c) The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
(d) The term "person" means an individual, corporation, partnership,
limited liability company, association,
-53-
58
trust, incorporated organization, Governmental Entity or other entity.
SECTION 7.6. Entire Agreement; Third Party Beneficiaries; Assignment.
This Agreement: (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto and any Holder any rights or remedies
hereunder. Except as otherwise provided in Section 5.13, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party. This Agreement will be binding upon
the parties and their respective successors and assigns.
SECTION 7.7. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement in accordance with
Section 7.3 so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in
-54-
59
order that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
SECTION 7.8. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
SECTION 7.9. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any material provision of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to the remedy of specific performance of the material
terms hereof, in addition to any other remedy at law or equity.
SECTION 7.10. Resolution of Disputes. If a dispute arises between the
parties relating to this Agreement, then the parties hereto (and Ford, as a
third party beneficiary of the provisions of this Agreement) shall implement the
procedures set forth in Section 8.11 of the Preferred Stock Purchase Agreement,
subject to the provisions thereof.
SECTION 7.11. Consent to Jurisdiction; Waiver of Jury Trial. (a)
Subject to Section 7.10, each of the parties hereto:
(i) consents to submit itself to the personal jurisdiction of
(A) the United States District Court for the Eastern District of
Michigan in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement to the extent such
court
-55-
60
would have jurisdiction with respect to such dispute and (B)
the Courts of the State of Michigan otherwise;
(ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction or venue by motion or other request for leave
from any such court;
(iii) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this
Agreement in any court other than such courts; and
(iv) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in Section 7.1 or at
such other address of which the other party shall have been notified
pursuant thereto; and
(v) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction.
-56-
61
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT
AND FOR ANY COUNTERCLAIM THEREIN.
-57-
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TEAM RENTAL GROUP, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chairman and Chief
Executive Officer
FORD MOTOR COMPANY
By: /s/ X.X. Xxxxxx
-------------------------------------
Name: X.X. Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
-58-
63
PREFERRED STOCKHOLDERS AGREEMENT
SCHEDULE A
BUYER'S OUTSTANDING REGISTRATION RIGHTS
1. Registration Rights Agreement dated as of August 25, 1994 between
buyer and the Individuals listed therein, as amended by First Amendment to
Registration Rights Agreement dated as of November 1, 1994, as amended by First
Amendment to Registration Rights Agreement, dated as of November 1, 1994.
2. Registration Rights Agreement dated as of March 8, 1995 between
Buyer and Xxxxx Xxxxxxx.
3. Registration Rights Agreement dated as of October 20, 1995 between
Buyer and Budget Rent A Car of Southern California (BRAC-OPCO).
4. Registration Rights granted pursuant to Warrant dated as of April
26, 1996 to purchase 187,500 shares of Class A Common Stock Granted to
NationsBank.
5. Registration Rights Agreement dated as of December 18, 1996 between
Buyer and the holders of 7.0% Convertible Subordinated Notes due 2003.
6. Registration Rights granted pursuant to Warrant dated as of August
24, 1994 to purchase 175,000 shares of Class A Common Stock granted to Budget
Rent A Car Corporation.
