REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 17, 1999 by and among The FINOVA Group Inc., a
Delaware corporation ("FINOVA" or the "Company") and the undersigned shareholder
(each a "Holder" and collectively, the "Holders") of Preferred Business Credit,
Inc. ("PBC") common stock.
WHEREAS, the Holders will acquire shares of FINOVA common stock in
connection with the acquisition by way of merger (the "Acquisition") of PBC into
FINOVA, pursuant to the terms of a Merger Agreement, dated as of the date of
this agreement (the "Acquisition Agreement"); and
WHEREAS, pursuant to the terms of the Acquisition Agreement, the
Company has agreed to grant to the Holders the registration rights provided for
herein, in which FINOVA will register their FINOVA shares with the SEC, among
other obligations.
NOW, THEREFORE, in consideration of the above recitals, the mutual
covenants and agreements set forth in the Acquisition Agreement and this
agreement, the parties agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein without
definition have the meaning given to them in the Acquisition Agreement. As used
in this Agreement, the following capitalized terms mean:
"FORM S-3" means the Form S-3 authorized for use by the SEC to
register securities issued by publicly traded companies and any successor form.
"PERSON" shall mean an individual or a corporation, partnership,
limited liability company, association or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PROSPECTUS" shall mean any prospectus included in a Shelf
Registration Statement, or a registration statement with respect to an
underwritten offering in which the Holders participate, including any resale
prospectus and any preliminary prospectus, and any amendment or supplement
thereto, and in each case including all material incorporated by reference
therein.
"REGISTRATION EXPENSES" shall mean any and all expenses incident
to the performance of or compliance with this Agreement, including, without
limitation: (i) all applicable registration and filing fees imposed by the SEC
and such securities exchange or exchanges on which Shares are then listed or The
Nasdaq Stock Market ("Nasdaq") (ii) all fees and expenses incurred in connection
with compliance with state securities or "blue sky" laws (including reasonable
fees and disbursements of counsel for the Company in connection with
qualification of any of the Shares under any state securities or blue sky laws
and the preparation of a blue sky memorandum) and compliance with the rules of
the NASD; (iii) all expenses of printing and distributing the Shelf Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Shares on any
securities exchange or exchanges pursuant to Section 3(i) hereof; and (v) the
fees and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses relating to any special
audits or "cold comfort" letters required by or incident to such performance and
compliance. Registration Expenses shall specifically exclude underwriting
discounts and commissions, counsel and other fees of Holders and transfer taxes,
if any, relating to the sale or disposition of Shares by the Holders.
"SHARES" shall mean the shares of FINOVA common stock issued to
the Holders pursuant to the Acquisition Agreement and any equity securities
issued or issuable directly or indirectly with respect to the Shares issued to
the Holders by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 2(a).
"SUSPENSION EVENT" shall have the meaning ascribed to it in
Section 6(b).
Other terms are defined elsewhere in this Agreement.
2. REGISTRATION UNDER THE SECURITIES ACT.
(a) Subject to Sections 2(b) and 6 below, the Company shall file a
registration statement on Form S-3 or an amendment to an existing registration
statement on Form S-3, either of which may be on a comparable or successor form
and which may include shares of FINOVA common stock for resale by the Company or
other Company stockholders (the "Shelf Registration Statement"), registering the
Shares for resale by the Holders under the Securities Act of 1933 (the
"Securities Act"). FINOVA shall use its commercially reasonable efforts to cause
the Shelf Registration Statement to be declared effective by the SEC as soon as
practicable thereafter, but in any event no later than 90 days following the
closing of the Acquisition, except as provided in Sections 2(b) or 6 below.
(b) Notwithstanding the foregoing, if there is a Suspension Event
occurring at the time of issuance of the FINOVA Shares, FINOVA's obligation to
file a Registration Statement and to seek its effectiveness shall be suspended
during that Suspension Event. FINOVA shall give notice to the Holders of the
Suspension Event. As soon as practicable thereafter the Company shall use its
commercially reasonable efforts to cause that registration statement to be
declared effective by the SEC as soon as practicable thereafter, but in any
event no later than 90 days following termination of the last applicable
Suspension Event.
(c) The Company agrees to use its commercially reasonable efforts to
keep the Shelf Registration Statement continuously effective (and to include a
Prospectus at all times meeting the requirements of the Securities Act) for a
period of one year from the original issuance of the Shares covered thereby
(such period is referred to as the "Shelf Period"), except as provided in
Sections 2(b) and 6.
(d) The Company shall pay all Registration Expenses in connection
with a registration pursuant to this Agreement.
3. REGISTRATION PROCEDURES. In connection with the obligations of the
Company under Section 2 hereof, but subject to Sections 2(b) and 6 below, in the
event that the Company files any Shelf Registration Statement, it shall:
(a) prepare and file with the SEC, within the time period set forth
in Section 2 hereof, and use its commercially reasonable efforts to have
declared effective by the SEC, the Shelf Registration Statement, which shall (i)
be available for public resale of the Shares by the Holders and (ii) comply as
to form in all material respects with the requirements of the applicable form;
(b) furnish to a representative of the Holders (the "Representative")
the Shelf Registration Statement no later than two days following its filing
with the SEC;
(c) (i) use its commercially reasonable efforts to prepare and file
with the SEC such amendments to the Shelf Registration Statement as may be
necessary to keep it effective for the applicable periods; (ii) cause any
Prospectus to be amended or supplemented as required and to be filed as required
by Rule 424 or any similar rule that may be adopted under the Securities Act;
and (iii) respond as promptly as practicable to any comments received from the
SEC with respect to the Shelf Registration Statement or any amendments thereto;
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(d) furnish to the Holders, upon request and without charge,
reasonable quantities of any Prospectus and any amendment or supplement thereto
as the Holders request to facilitate the public sale or other disposition of the
Shares;
(e) use its commercially reasonable efforts to register or qualify
the Shares under all applicable state securities or blue sky laws of such
jurisdictions in the United States as the Holders may reasonably request in
writing and keep such registration or qualification effective during the period
the Shelf Registration Statement is required to be kept effective; PROVIDED,
HOWEVER, that in connection therewith, the Company shall not be required to (i)
qualify as a foreign corporation to do business or to register as a broker or
dealer in any such jurisdiction where it would not otherwise be required to
qualify or register but for this Section 3(e), (ii) subject itself to taxation
in any jurisdiction with respect to that registration or qualification, or (iii)
file a general consent to service of process in any jurisdiction;
(f) notify the Holders promptly and, if requested by the Holders,
confirm in writing, (i) when the Shelf Registration Statement and any
post-effective amendments have become effective, (ii) when any amendment or
supplement to a Prospectus has been filed with the SEC, except for an amendment
through incorporation by reference of subsequent filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (iii) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of the Shelf Registration Statement or any part thereof or the
initiation of any proceedings for that purpose, (iv) if the Company receives any
notification with respect to the suspension of the qualification of the Shares
for offer or sale in any jurisdiction or the initiation of any proceeding for
such purpose, and (v) of the happening of any event during the periods the Shelf
Registration Statement is effective as a result of which (A) the Shelf
Registration Statement contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or (B) a Prospectus as then amended or
supplemented contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(g) use commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of the Shelf Registration Statement by
the SEC or any state securities authority as promptly as possible;
(h) furnish to the Holders upon request, without charge, at least one
conformed copy of the Shelf Registration Statement and any post-effective
amendments (without documents incorporated therein by reference or exhibits
thereto, unless requested);
(i) cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Shares to be sold and not bearing any
Securities Act legend and enable certificates for Shares to be issued and
registered in names and numbers as the Holders may reasonably request;
(j) use its commercially reasonable efforts to cause all Shares to be
listed on any securities exchange on which the Shares are then listed, or
included on Nasdaq if the Shares are then so included; and
(k) use its commercially reasonable efforts to make available
adequate current public information about the Company as contemplated by Rule
144(c) promulgated under the Securities Act.
4. CERTAIN AGREEMENTS OF THE HOLDERS.
(a) Each of the Holders agrees to furnish to the Company in writing
information regarding the Holders, as applicable, and their proposed
distribution of Shares as the Company may from time to time reasonably request
in connection with the preparation of the Shelf Registration Statement or the
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registration or qualification of the Shares under state securities or blue sky
laws, and if requested by the Company, report to the Company within ten (10)
days after the end of each month all sales or other dispositions of Shares made
by them during that month.
(b) To the extent timely notified in writing by the Company or the
managing underwriters and to the extent the directors and executive officers of
the Company are bound by similar provisions, each of the Holders agrees, if
requested by the Company in the case of a Company initiated non-underwritten
offering or if requested by the managing underwriter or underwriters in an
underwritten offering initiated by the Company or by a shareholder of the
Company pursuant to demand registration rights, not to effect any public sale or
distribution of any Shares (including a sale pursuant to Rule 144 under the
Securities Act) during the ten (10) day period prior to, and during the one
hundred twenty (120) day period beginning on, the date of effectiveness of each
Company initiated offering made pursuant to a registration statement, provided
that the Holders shall be entitled to participate in an underwritten offering
pro rata with all other holders of shares of Common Stock to be included in any
such registration, if, in the reasonable opinion of the managing underwriter of
any such underwritten registration such shares may be included in such
registration without having an adverse effect on the marketability or the price
of any shares of the FINOVA Common Stock proposed to be offered in such
underwritten registration and each of the Holders, as applicable, agrees to
enter into an underwriting agreement with such underwriters containing such
representations and warranties by the Holders, as applicable, and such terms and
provisions, including without limitation, provisions with respect to
indemnification and contribution, as are customarily contained in underwriting
agreements and deliver customary opinions of counsel and closing certificates.
(c) Holders agree that they will comply with applicable requirements
of SEC Rule 145, which may include restrictions on when and how they may sell or
otherwise dispose of their Shares, to the extent a Holder is subject to that
rule.
5. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Holders as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to which the Holders may become subject under
the Securities Act, other federal or state laws or otherwise (A) that arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement or any amendments,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made not misleading, (B)
that arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus or any amendment or
supplement, or the omission or alleged omission to state therein a material fact
necessary to make the statements made, in the light of the circumstances under
which they were made, not misleading or (C) that arise out of or are based upon
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law, which
violation or alleged violation arises out of the Shelf Registration Statement or
Prospectuses;
(ii) against any loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or alleged untrue statement, any omission or alleged
omission, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld; and
(iii) subject to the limitations set forth in Section 5(c),
against any expense (including reasonable fees and disbursements of counsel)
reasonably incurred in investigating, preparing or defending against any
litigation, investigation or proceeding by any governmental agency or body,
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commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or alleged untrue statement,
omission or alleged omission that relates to the sale by the Holders under a
Shelf Registration Statement, to the extent that any such expense is not paid
under subparagraph (i) or (ii) above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this Section 5(a)(i),
(ii) and (iii) shall not apply to the Holders with respect to any loss,
liability, claim, damage or expense that arises out of or is based upon (1) any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information furnished to the
Company by the Holders for use in the Shelf Registration Statement or any
amendment or a Prospectus or any amendment or supplement thereto, or (2) trades
made by the Holders in violation of Section 6 below.
(b) INDEMNIFICATION BY THE HOLDERS. The Holders, jointly and
severally, agree to indemnify and hold harmless the Company and its directors
and officers, including each director of the Company and each officer of the
Company who signed the Shelf Registration Statement, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act,
to the same extent as the indemnity contained in Section 5(a) hereof, to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon (i) any untrue statement or alleged untrue statement or omission
or alleged omission made in the Shelf Registration Statement or any amendment or
a Prospectus or any amendment or supplement in reliance upon and in conformity
with information prepared and furnished to the Company by the Holder for use
therein or (ii) trades made by the Holder in violation of Section 6(a) below.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Each indemnified party
shall give reasonably prompt written notice to each indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party (i) shall not
relieve it from any liability that it may have under the indemnity agreement
provided in Section 5(a) or (b) above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
materially prejudices the indemnifying party or results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) shall not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided under Section 5(a) and
(b) above. After receipt of such notice, the indemnifying party shall be
entitled to participate in and, at its option, jointly with any other
indemnifying party so notified, to assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by such
indemnifying party and approved by the indemnified party or parties, which
approval shall not be unreasonably withheld; PROVIDED, HOWEVER, that, if the
defendants in any such action or proceeding include both an indemnified party
and an indemnifying party and the indemnified party reasonably determines, upon
advice of counsel, that a conflict of interest exists or that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying parties, then the indemnified
parties shall be entitled to counsel (which shall be limited to a single law
firm, selected by Holder if the Company is the indemnifying party, for all
indemnified parties) the reasonable fees and expenses of which shall be paid by
the indemnifying parties. If none of the indemnifying parties assumes the
defense of any such action or proceeding, after having received the notice
referred to in the first sentence of this paragraph, the indemnifying parties
will pay the reasonable fees and expenses of counsel (which shall be limited to
a single law firm for all indemnified parties) for the indemnified parties. In
that event, however, no indemnifying party will be liable for any settlement
effected without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld. If one or more of the indemnifying parties
assumes the defense of any action or proceeding in accordance with this
paragraph, the indemnifying party shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
that action or proceeding except as set forth in the proviso in the second
sentence of this Section 5(f).
6. SUSPENSION OF SHELF REGISTRATION REQUIREMENT.
(a) Each Holder agrees that he, she or it will not effect any sales
of Shares pursuant to any Shelf Registration Statement after he or it has
received notice from the Company to suspend sales as a result of the occurrence
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or existence of any Suspension Event (as defined in Section 6(b) below) until
such time as the Company provides notice to the Holder that all Suspension
Events have ceased to exist. All such information relating to a Suspension Event
obtained by Holders shall be kept confidential by the Holders and shall not be
used by the Holders for any other purpose. The Company shall notify the Holders
promptly after any Suspension Event occurs or ceases to exist to the extent he
or it continues to hold Shares and with respect to the cessation of a Suspension
Event, to the extent he or it has been provided notice of a Suspension Event. In
addition, each Holder agrees that he or it will not effect any sales of Shares
pursuant to the Shelf Registration Statement after he or it has received notice
from the Company to suspend sales because the Shelf Registration Statement, any
Prospectus or any supplement thereto contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements made, in
the light of the circumstances under which they were made, not misleading, until
the Company notifies that Holder that the misstatement or omission has been
corrected.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Holders' rights to sell Shares under a Shelf Registration
Statement and the Company's obligation to (i) file the Shelf Registration
Statement (ii) make any filings with any state securities authority, (iii) use
its commercially reasonable efforts to cause the Shelf Registration Statement or
any state securities filings to become effective, or (iv) amend or supplement
the Shelf Registration Statement or any state securities filings, shall be
temporarily suspended in the event of and during any Suspension Event. A
"Suspension Event" shall exist at such times (A) that the Company is not
eligible to use Form S-3 for the registration contemplated by Section 2(a)
hereof, (B) as circumstances exist that the Company determines make it
impractical or inadvisable for the Company to file, amend or supplement a Shelf
Registration Statement or such filings or to cause the Shelf Registration
Statement or such filings to become or remain effective (such circumstances to
include, without limitation, (Y) the Company conducting an underwritten primary
offering and being advised by the underwriters that sale of Shares under the
Shelf Registration Statement would have a material adverse effect on the
Company's offering or (Z) pending negotiations relating to, or consummation of,
a transaction material to the Company or the occurrence of some other event (p)
where any of the foregoing would require disclosure under applicable securities
laws of material information in the Shelf Registration Statement (or any other
document incorporated into a Shelf Registration Statement by reference) or such
state securities filings and (q) as to which the Company has a bona fide
business purpose for preserving confidentiality or which renders the Company
unable to comply with SEC requirements), or (C) as the Company may be engaged in
a share repurchase program and that program requires the Holders to refrain from
selling shares during that program, in the Company's opinion. Suspension of the
Company's obligations pursuant to this Section 6(b) shall continue as long as a
Suspension Event or its effect is continuing, in the Company's reasonable
discretion. The Company has no duty to avoid the creation of any Suspension
Event, which may run in succession.
7. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified,
supplemented or waived, nor may consent to departures therefrom be given,
without the written consent of the Company and the Holders to be directly
effected by that change.
(b) NOTICES. Unless otherwise provided, all notices or other
communications required or permitted to be given to the parties hereto shall be
in writing and shall be deemed to have been given if personally delivered,
including personal delivery by facsimile, provided that the sender receives
telephonic or electronic confirmation that the facsimile was received by the
recipient and that such facsimile is followed the same day by mailing by
certified or registered mail, return receipt requested, first class postage
prepaid (a "Mailing"), upon receipt of courier delivery or the third day
following a Mailing, addressed as follows (or at such other address as the
addressed party may have substituted by notice pursuant to this Section 7(b):
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(i) If to the Company:
The FINOVA Group Inc.
X.X. Xxx 0000, #0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
(ii) If to the Holders, to the addresses for them set forth in the
attached schedule to this agreement;
or to such other address as any party may have furnished in writing to the other
parties in the manner provided above. Unless otherwise advised in writing by the
Holders, the Representative shall be Xx. Xxxxxx Xxxxx. Holders shall not have
more than one Representative without consent of the Company.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and the respective successors and
permitted assigns of the Company. This Agreement shall not be assignable by the
Holders without the prior written consent of the Company, which consent may be
withheld at the Company's sole discretion. Any approved assignee of the Holders'
Shares shall be required to agree to be bound by the terms of this Agreement and
shall be entitled to participate in the Shelf Registration Statement only as of
such time after the assignment that the Company is otherwise amending the Shelf
Registration Statement and such amended Shelf Registration Statement becomes
effective. A purchaser of Shares shall not be deemed to be a successor or
permitted assign for purposes of this Agreement.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Any party may execute this
Agreement by facsimile signature, and shall provide promptly to all other
parties an originally executed Agreement.
(e) HEADINGS AND INTERPRETATION. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. In construing the meaning of this Agreement, no party hereto
shall be deemed the drafter of this Agreement and this Agreement shall be
construed according to its fair meaning and not strictly against any person as
the drafter hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona without giving effect to the
conflicts of law provisions thereof.
(g) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior oral
and written agreements and understandings and all contemporaneous written
agreements and understandings between the parties with respect to such subject
matter.
(h) ATTORNEYS' FEES. In the event of any suit or other proceeding to
construe or enforce any provision of this Agreement, or otherwise in connection
with this Agreement, the prevailing party's or parties' reasonable attorneys',
accountants' and experts' fees, costs and disbursements (in addition to all
other amounts and relief to which such party or parties may be entitled) shall
be paid by the other party or parties to such suit or proceeding.
(i) DEFAULT. If, because of the Company's breach or default, the
registration of the Shares is not completed pursuant to the provisions hereof,
the Holders shall not be entitled to receive consequential or punitive damages
arising out of such breach or default.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
The FINOVA Group Inc.
By: /s/ Xxxxx X Xxxx
Vice President
MOTIA Family TRUST
By: /s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx, Trustee
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Trustee
/s/ Xxxxxxxxx Xxx
Xxxxxxxxx Xxx
/s/ Xxxx Xxx Xxx
Xxxx Xxx Xxx
/s/Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
/s/ Aracieli Xxxxxx
Aracieli Xxxxxx
/s/ Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
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