REGISTRATION RIGHTS AGREEMENT
among
UNITED AUTO GROUP, INC.,
INTERNATIONAL MOTOR CARS GROUP I, L.L.C.
and
INTERNATIONAL MOTOR CARS GROUP II, L.L.C.
May 3, 1999
REGISTRATION RIGHTS AGREEMENT, dated as of May 3, 1999 among
United Auto Group, Inc., a Delaware corporation (the "Company") International
Motor Cars Group I, L.L.C. ("IMCG-I") and International Motor Cars Group II,
L.L.C. ("IMCG-II"), each a Delaware limited liability company (IMCG-I and
IMCG-II collectively, "IMCG").
The Company and IMCG are entering into a Securities Purchase
Agreement (the "Purchase Agreement") pursuant to which, among other things,
IMCG is purchasing (i) shares of Series A Convertible Preferred Stock, par
value $0.0001 per share, of the Company (the "Series A Preferred Stock"), which
Series A Preferred Stock is convertible into shares of Common Stock, (ii)
shares of Series B Convertible Preferred Stock, par value $0.0001 per share, of
the Company (the "Series B Preferred Stock", and together with the Series A
Preferred Stock, the "Preferred Stock"), which Series B Preferred Stock is
convertible into shares of Non-Voting Common Stock and (iii) warrants (the
"Warrants") to purchase shares of Common Stock and Non-Voting Common Stock.
If IMCG, after conversion of the Preferred Stock or exercise
of the Warrants, desires to sell shares of Common Stock, it may be desirable to
register such shares under the Securities Act (as defined below).
As part of, and as consideration for, the acquisition of
shares of the Preferred Stock and the Warrants by IMCG from the Company on the
date hereof and from time to time hereafter, the Company hereby grants to IMCG
certain registration and other rights with respect to its shares of Common
Stock and Non-Voting Common Stock as more fully set forth herein.
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as it may be amended or restated hereafter from
time to time.
"Commission" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Common Stock" means any shares of voting common stock, par
value $0.0001 per share, of the Company, now or hereafter authorized to be
issued, and, any and all securities of any kind whatsoever of the Company which
may be issued on or after the date hereof in respect of, in exchange for, or
upon conversion of shares of Common Stock pursuant to a merger, consolidation,
stock split, stock dividend, recapitalization of the Company or otherwise.
Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be obligated to register any Preferred Stock,
Warrants or Non-Voting Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a reference
to the comparable section, if any, of any such similar Federal statute.
"Non-Voting Common Stock" means any shares of non-voting
common stock, par value $0.0001 per share, of the Company, now or hereafter
authorized to be issued, and any and all securities of any kind whatsoever of
the Company which may be exchanged for or converted into Non-Voting Common
Stock, any and all securities of any kind whatsoever of the Company which may
be issued on or after the date hereof in respect of, in exchange for, or upon
conversion of shares of Non-Voting Common Stock pursuant to a merger,
consolidation, stock split, stock dividend, recapitalization of the Company or
otherwise.
"Person" means a corporation, an association, a partnership,
an organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Securities" means (i) any shares of Common Stock
owned by IMCG, (ii) any shares of Common Stock issued or issuable upon the
conversion, exercise or exchange of any shares of Preferred Stock, Warrants or
any other Common Stock equivalents held by IMCG, and (iii) any shares of Common
Stock issued with respect to the Common Stock referred to in clauses (i), (ii)
or (iii) by way of a stock dividend, stock split or reverse stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or otherwise. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities (a) when a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities
shall have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the Company
and subsequent public distribution of them shall not require registration of
them under the Securities Act, or (c) when such securities shall have been sold
as permitted by, and in compliance with, the Securities Act. Any certificate
evidencing the Registrable Securities shall bear a legend stating that the
securities have not been registered under the Securities Act and setting forth
or referring to the restrictions on transferability and sale of the securities.
"Registration Expenses" means all expenses incident to the
registration and disposition of the Registrable Securities pursuant to Section
2 hereof, including, without
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limitation, all registration, filing and applicable national securities
exchange fees, all fees and expenses of complying with state securities or blue
sky laws (including fees and disbursements of counsel to the underwriters or
IMCG in connection with "blue sky" qualification of the Registrable Securities
and determination of their eligibility for investment under the laws of the
various jurisdictions), all word processing, duplicating and printing expenses,
all messenger and delivery expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants, including the expenses
of "cold comfort" letters or any special audits required by, or incident to,
such registration, all fees and disbursements of underwriters (other than
underwriting discounts and commissions), all transfer taxes, and all fees and
expenses of counsel to IMCG up to a maximum of $50,000 per registration;
provided, however, that Registration Expenses shall exclude, and IMCG shall
pay, underwriting discounts and commissions in respect of the Registrable
Securities being registered.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
2. Registration Under Securities Act, etc.
2.1 Registration on Request.
(a) Request. IMCG shall have the right to
require the Company to effect the registration under the Securities Act of all
or part of the Registrable Securities, by delivering a written request therefor
to the Company specifying the number of shares of Registrable Securities and
the intended method of distribution. The Company shall (i) use its reasonable
best efforts to effect the registration under the Securities Act (including by
means of a shelf registration pursuant to Rule 415 under the Securities Act if
so requested in such request and if the Company is then eligible to use such a
registration) of the Registrable Securities which the Company has been so
requested to register by IMCG, for distribution in accordance with the intended
method of distribution set forth in the written request delivered by IMCG, such
registration to be effected as expeditiously as possible, and (ii) if requested
by IMCG, use its reasonable best efforts to obtain acceleration of the
effective date of the registration statement relating to such registration.
(b) Registration of Other Securities. Whenever
the Company shall effect a registration pursuant to this Section 2.1, the
Company may include other securities of the Company or which are held by
Persons who, by virtue of agreements with the Company, are entitled to include
their securities in any such registration. In the case of an underwritten
offering pursuant to Section 2.1, if holders of
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securities of the Company other than Registrable Securities who are entitled,
by contract with the Company, to have securities included in such a
registration (the "Other Stockholders") request such inclusion, the Company
shall offer to include the securities of such Other Stockholders in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Agreement. The Company and the Other Stockholders
shall enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected pursuant to Section
2.1(f). Notwithstanding any other provision of this Section 2, if the
representative advises IMCG in writing that marketing factors require a
limitation on the number of shares to be underwritten, the securities of the
Company held by Other Stockholders shall be excluded from such registration to
the extent so required by such limitation.
(c) Registration Statement Form. Registrations
under this Section 2.1 shall be on such appropriate registration form of the
Commission as, subject to clause (a)(i) above, shall be selected by the Company
and as shall be reasonably acceptable to IMCG.
(d) Expenses. The Company shall pay all
Registration Expenses in connection with any registration requested pursuant to
this Section 2.1.
(e) Effective Registration Statement. A
registration requested pursuant to this Section 2.1 shall not be deemed to have
been effected (including for purposes of paragraph (h) of this Section 2.1) (i)
unless a registration statement with respect thereto has become effective and
has been kept continuously effective for a period of at least 180 days (or such
shorter period which shall terminate when all the Registrable Securities
covered by such registration statement have been sold pursuant thereto), (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to IMCG and has
not thereafter become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived.
(f) Selection of Underwriters. The
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by IMCG and shall be subject to the approval of
the Company, not to be unreasonably withheld or delayed.
(g) Right to Withdraw. If the managing
underwriter of any underwritten offering shall advise IMCG that the Registrable
Securities covered by the registration statement cannot be sold in such
offering within a price range acceptable to IMCG, then IMCG shall have the
right to notify the Company in writing that they have determined that the
registration statement be abandoned or withdrawn, in which event the
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Company shall abandon or withdraw such registration statement. In the event of
such abandonment or withdrawal, such request shall not be counted for purposes
of the requests for registration to which IMCG is entitled pursuant to this
Section 2.1.
(h) Limitations on Registration on Request.
IMCG shall be entitled to require the Company to effect, and the Company shall
be required to effect, three registrations in the aggregate pursuant to this
Section 2.1, provided, however, that the aggregate offering value of the shares
to be registered pursuant to any such registration shall be at least
$10,000,000 unless IMCG then owns shares with an aggregate value less than
$10,000,000 (in which case such lesser number of shares may be registered).
(i) Postponement. The Company shall be
entitled once in any six-month period to postpone for a reasonable period of
time (but not exceeding 90 days) (the "Postponement Period") the filing of any
registration statement required to be prepared and filed by it pursuant to this
Section 2.1 if the Company determines, in its reasonable judgment, that such
registration and offering would materially interfere with any material
financing, corporate reorganization or other material transaction involving the
Company or any subsidiary, or would require premature disclosure thereof, and
promptly gives IMCG written notice of such determination, containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. If the Company shall so postpone the filing of a
registration statement, (i) the Company shall use its reasonable best efforts
to limit the delay to as short a period as is practicable and (ii) IMCG shall
have the right to withdraw the request for registration by giving written
notice to the Company at any time and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which IMCG is entitled pursuant to this Section 2.1.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities.
If the Company at any time proposes to register any of its securities under the
Securities Act by registration on Form X-0, X-0 or S-3 or any successor or
similar form(s) (except registrations on any such Form or similar form(s)
solely for registration of securities in connection with an employee benefit
plan or dividend reinvestment plan or a merger or consolidation), whether or
not for sale for its own account, it will each such time give prompt written
notice to IMCG of its intention to do so and of IMCG's rights under this
Section 2.2. Upon the written request of IMCG (which request shall specify the
maximum number of Registrable Securities intended to be disposed of by IMCG),
made as promptly as practicable and in any event within 30 days after the
receipt of any such notice (15 days if the Company states in such written
notice or gives telephonic notice to IMCG, with written confirmation to follow
promptly thereafter, stating that (i) such registration will be on Form S-3 and
(ii) such shorter period of time is required because of
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a planned filing date), the Company shall use its reasonable best efforts to
include in such registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by IMCG.
Notwithstanding anything to the contrary contained in this Agreement, the
Company may in its discretion withdraw any registration commenced pursuant to
this Section 2.2 without liability to the holders of Registrable Securities. No
registration effected under this Section 2.2 shall relieve the Company of its
obligation to effect any registration upon request under Section 2.1. The
Company will pay all Registration Expenses in connection with any registration
of Registrable Securities requested pursuant to this Section 2.2.
(b) Right to Withdraw. IMCG shall have the
right to withdraw its request for inclusion of its Registrable Securities in
any registration statement pursuant to this Section 2.2 at any time prior to
the execution of an underwriting agreement with respect thereto by giving
written notice to the Company of its request to withdraw.
(c) Priority in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform the Company
by letter of its belief that the number of Registrable Securities requested to
be included in such registration, when added to the number of other securities
to be offered in such registration, would materially adversely affect such
offering, then the Company shall include in such registration, to the extent of
the number and type which the Company is so advised can be sold in (or during
the time of) such offering without so materially adversely affecting such
offering (the "Section 2.2 Sale Amount"), (i) all of the securities proposed by
the Company to be sold for its own account or by an Other Stockholder
exercising "demand" registration rights; and (ii) thereafter, to the extent the
Section 2.2 Sale Amount is not exceeded, the Registrable Securities requested
by IMCG to be included in such registration pursuant to Section 2.2(a) and any
other securities of the Company requested to be included in such registration
by any Other Stockholder having the right to include securities on a pro rata
basis, with the amount of securities of IMCG and each such Other Stockholder to
be included based on the pro rata amount of shares of Common Stock held, or
obtainable by exercise or conversion of other securities of the Company, by
IMCG or such Other Stockholder.
(d) Plan of Distribution. Any participation by
holders of Registrable Securities in a registration by the Company shall be in
accordance with the Company's plan of distribution.
2.3 Registration Procedures. If and whenever the
Company is required to use its reasonable best efforts to effect the
registration of any Registrable Securities under the Securities Act as provided
in Sections 2.1 and 2.2 hereof, the Company shall as expeditiously as possible:
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(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect
such registration (and shall include all financial statements
required by the Commission to be filed therewith) and
thereafter use its reasonable best efforts to cause such
registration statement to become effective; provided,
however, that before filing such registration statement
(including all exhibits) or any amendment or supplement
thereto or comparable statements under securities or blue sky
laws of any jurisdiction, the Company shall as promptly as
practicable furnish such documents to IMCG and each
underwriter, if any, participating in the offering of the
Registrable Securities and their respective counsel, which
documents will be subject to the reasonable review and
comments of IMCG, each underwriter and their respective
counsel; and provided, further, however, that the Company may
discontinue any registration of its securities pursuant to
Section 2.2 or which are not Registrable Securities at any
time prior to the effective date of the registration
statement relating thereto;
(b) notify IMCG of the Commission's requests for
amending or supplementing the registration statement and the
prospectus, and prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities
covered by such registration statement for such period as
shall be required for the disposition of all of such
Registrable Securities in accordance with the intended method
of distribution thereof; provided, that except with respect
to any such registration statement filed pursuant to Rule 415
under the Securities Act, such period need not exceed 180
days;
(c) furnish, without charge, to IMCG and each
underwriter such number of conformed copies of such
registration statement and of each such amendment and
supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with
the requirements of the Securities Act, and such other
documents, as IMCG and such underwriters may reasonably
request;
(d) use its reasonable best efforts (i) to register or
qualify all Registrable Securities and other securities
covered by such registration
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statement under such securities or blue sky laws of such
States of the United States of America where an exemption is
not available and as IMCG or any managing underwriter shall
reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and (iii) to take any other
action which may be reasonably necessary or advisable to
enable IMCG to consummate the disposition in such
jurisdictions of the securities to be sold by IMCG, except
that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so
qualified or to consent to general service of process in any
such jurisdiction;
(e) furnish to IMCG and each underwriter, if any,
participating in the offering of the securities covered by
such registration statement, a signed counterpart of (i) an
opinion of counsel for the Company, and (ii) a "comfort"
letter signed by the independent public accountants who have
certified the Company's or any other entity's financial
statements included or incorporated by reference in such
registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the
dates such opinions and comfort letters are customarily
dated) and, in the case of the legal opinion, such other
legal matters, and, in the case of the accountants' comfort
letter, such other financial matters, as the underwriters,
may reasonably request;
(f) promptly notify IMCG and each managing underwriter, if
any, participating in the offering of the securities covered
by such registration statement (i) when such registration
statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto or post-effective
amendment to such registration statement has been filed, and,
with respect to such registration statement or any
post-effective amendment, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus
related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the
initiation of any proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to
the
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suspension of the qualification of any of the Registrable
Securities for sale under the securities or blue sky laws of
any jurisdiction or the initiation of any proceeding for such
purpose; (v) at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, in the light of the circumstances
under which they were made, and in the case of this clause
(v), at the request of IMCG promptly prepare and furnish to
IMCG and each managing underwriter, if any, participating in
the offering of the Registrable Securities, 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 the statements therein
not misleading in the light of the circumstances under which
they were made; and (vi) at any time when the representations
and warranties of the Company contemplated by Section 2.4(a)
or (b) hereof cease to be true and correct;
(g) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder, and
promptly furnish to IMCG a copy of any amendment or
supplement to such registration statement or prospectus;
(h) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by such registration
statement from and after a date not later than the effective
date of such registration;
(i) (i) use its reasonable best efforts to cause all
Registrable Securities covered by such registration statement
to be listed on the principal securities exchange on which
similar securities issued by the Company are then listed (if
any), if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) if no
similar securities are then so listed, use its reasonable
best efforts to (x) cause all such Registrable Securities to
be listed on a national securities exchange or
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(y) failing that, secure designation of all such Registrable
Securities as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 of the Commission or (z)
failing that, to secure NASDAQ authorization for such shares
and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such
with respect to such shares with the National Association of
Securities Dealers, Inc.;
(j) deliver promptly to counsel to IMCG and each
underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between
the Commission and the Company, its counsel or auditors;
(k) use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement;
(l) provide a CUSIP number for all Registrable
Securities, no later than the effective date of the
registration statement; and
(m) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Company's business) in
their marketing of Registrable Securities.
The Company may require IMCG to furnish the Company such information regarding
IMCG and the distribution of the Registrable Securities as the Company may from
time to time reasonably request in writing. The Company shall be released from
any obligation to IMCG hereunder for so long as IMCG has not delivered such
information to the extent required for purposes of the registrations.
IMCG agrees that upon receipt of any notice from the Company
of the happening of any event of the kind described in paragraph (f) (iii),
(iv) or (v) of this Section 2.3, IMCG will, to the extent appropriate,
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until, in the
case of paragraph (f)(v) of this Section 2.3, its receipt of the copies of the
supplemented or amended prospectus contemplated by paragraph (f)(v) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
its possession, of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice. If the disposition by IMCG of
its securities is discontinued pursuant to the foregoing sentence, the Company
shall extend the period of effectiveness of the registration statement required
pursuant to Section 2.1(e) by the number of days during the period from and
including the date of the giving of notice to and including the date
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when IMCG shall have received copies of the supplemented or
amended prospectus contemplated by paragraph (f)(v) of this
Section 2.3; and, if the Company shall not so extend such
period, IMCG's request pursuant to which such registration
statement was filed shall not be counted for purposes of the
requests for registration to which IMCG is entitled pursuant
to Section 2.1 hereof.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering by IMCG pursuant to
a registration requested under Section 2.1, the Company shall enter into a
customary underwriting agreement (in the form of underwriting agreement used at
such time by the managing underwriter(s)) with a managing underwriter or
underwriters selected pursuant to Section 2.1(f) which shall contain such terms
as are generally prevailing in agreements of the managing underwriter(s),
including, without limitation, their customary provisions relating to
indemnification and contribution (the "Customary Terms"). IMCG shall be party
to such underwriting agreement and may, at its option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of IMCG and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of IMCG. IMCG shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
IMCG, its ownership of and title to the Registrable Securities, and its
intended method of distribution and other representations that constitute
Customary Terms, and any liability of IMCG to any underwriter or other person
under such underwriting agreement shall be limited to liability arising from
breach of its representations and warranties and shall be limited to an amount
equal to the proceeds (net of expenses and underwriting discounts and
commissions) that it derives from such registration.
(b) Incidental Underwritten Offerings. In the
case of a registration pursuant to Section 2.2 hereof, if the Company shall
have determined to enter into any underwriting agreements in connection
therewith, all of the Registrable Securities to be included in such
registration shall be subject to such underwriting agreements.
2.5 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement under
the Securities Act pursuant to this Agreement, the Company will give IMCG, its
underwriters, if any, and its respective counsel, accountants and other
representatives and agents the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and give each
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of them such reasonable access to its books and records and such reasonable
opportunities to discuss the business of the Company with its officers and
employees and the independent public accountants who have certified its
financial statements, and supply all other information reasonably requested by
each of them, as shall be necessary or appropriate, in the opinion of IMCG and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 Indemnification.
(a) Indemnification by the Company. The
Company agrees that in the event of any registration of any securities of the
Company under the Securities Act, the Company shall indemnify and hold harmless
IMCG, its respective directors, officers, members, partners, agents and
affiliates and each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
IMCG or any such underwriter within the meaning of the Securities Act, against
any losses, claims, damages, or liabilities, joint or several, to which IMCG or
any such director, officer, member, partner, agent or affiliate or underwriter
or controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities, joint or several (or
actions or proceedings, whether commenced or threatened, in respect thereof),
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they were
made not misleading, and the Company shall reimburse IMCG and each such
director, officer, member, partner, agent or affiliate, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to IMCG or any such director, officer, member, partner, agent,
affiliate, or controlling person to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of IMCG, specifically stating that it
is for use in the preparation thereof; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any person from whom the person asserting any such losses,
claims, damages or liabilities (the "Claimant") purchased securities, or any
person controlling such person, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished
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any amendment or supplement thereto) was not sent or given by or on behalf of
such person to such Claimant, if required by law to have been so delivered, at
or prior to the written confirmation of the sale of the securities sold to such
Claimant, and if the prospectus (as so amended and supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities.
Such indemnity shall remain in full force regardless of any investigation made
by or on behalf of IMCG or any such director, officer, member, partner, agent,
affiliate, underwriter or controlling Person and shall survive the transfer of
such securities by IMCG.
(b) Indemnification by IMCG. As a condition to
including any Registrable Securities in any registration statement, IMCG shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 2.6) the Company, and each director of
the Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, but only
to the extent such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of IMCG specifically stating that it
is for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that the liability of such indemnifying party under this
Section 2.6(b) shall be limited to the amount of proceeds (net of expenses and
underwriting discounts and commissions) received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling Person and shall survive
the transfer of such securities by IMCG.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subsections of this
Section 2.6, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the latter of the
commencement of such action or proceeding; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the preceding subsections of
this Section 2.6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified
party otherwise than under this Section 2.6. In case any such action or
proceeding is brought against an indemnified party, the indemnifying party
shall be entitled to participate therein and, unless in the opinion of outside
counsel to the indemnified party a conflict of interest between such
indemnified and indemnifying
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parties may exist in respect of such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent that
it may wish, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action or proceeding
include both the indemnified party and the indemnifying party and if in the
opinion of outside counsel to the indemnified party there may be legal defenses
available to such indemnified party and/or other indemnified parties which are
in conflict with or in addition to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to defend such action or proceeding on behalf of such indemnified party
or parties, provided, however, that the indemnifying party shall be obligated
to pay for only one counsel and one local counsel for all indemnified parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by the indemnified party
of such counsel, the indemnifying party shall not be liable to such indemnified
party for any legal expenses subsequently incurred by the latter in connection
with the defense thereof (unless the first proviso in the preceding sentence
shall be applicable). No indemnifying party shall be liable for any settlement
of any action or proceeding effected without its written consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. If the indemnification
provided for in this Section 2.6 shall for any reason be held by a court to be
unavailable to an indemnified party under subsection (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subsection (a) or
(b) hereof, the indemnified party and the indemnifying party under subsection
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand, and the indemnified party on the other, which resulted in such loss,
claim, damage or liability, or action in respect thereof, with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as shall be
appropriate to reflect not only the relative fault but also the relative
benefits received by the indemnifying party and the indemnified party from the
offering of the securities covered by such registration statement as well as
any other relevant equitable considerations. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section
2.6(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the preceding sentence of this Section 2.6(d). No
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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. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld. Notwithstanding anything in this
subsection (d) to the contrary, no indemnifying party (other than the Company)
shall be required to contribute any amount in excess of the proceeds (net of
expenses and underwriting discounts and commissions) received by such party
from the sale of the Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 2.6 (with appropriate modifications) shall be given by the Company and
IMCG with respect to any required registration or other qualification of
securities under any federal, state or blue sky law or regulation of any
governmental authority other than the Securities Act. The indemnification
agreements contained in this Section 2.6 shall be in addition to any other
rights to indemnification or contribution which any indemnified party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the transfer of any of the Registrable Securities by
IMCG.
(f) Indemnification Payments. The
indemnification and contribution required by this Section 2.6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2.7 Unlegended Certificates. In connection with the
offering of any Registrable Securities registered pursuant to this Section 2,
the Company shall promptly after the sale of such Registrable Securities (i)
facilitate the timely preparation and delivery to IMCG and the underwriters, if
any, participating in such offering, of unlegended certificates representing
ownership of such Registrable Securities being sold in such denominations and
registered in such names as requested by IMCG or such underwriters and (ii)
instruct any transfer agent and registrar of such Registrable Securities to
release any stop transfer orders with respect to any such Registrable
Securities.
2.8 Limitation on Sale of Securities. The Company
hereby agrees that if it shall previously have received a request for
registration pursuant to Section 2.1 hereof, and if such previous registration
shall not have been withdrawn or abandoned, (i) the Company shall not effect
any public or private offer, sale or distribution of its securities or effect
any registration of any of its equity securities under the Securities Act
(other than a registration on Form S-8 or any successor or similar form which
is then in
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effect), for sale for its own account, until a period of 120 days (or such
shorter period as the Company shall be advised by the managing underwriter)
shall have elapsed from the effective date of such previous registration, and
the Company shall so provide in any registration rights agreements hereafter
entered into with respect to any of its securities; and (ii) the Company shall
use its reasonable best efforts to cause each holder of its equity securities
purchased from the Company other than as part of a public offering at any time
after the date of this Agreement to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 under the Securities Act.
2.9 No Required Sale. Nothing in this Agreement
shall be deemed to create an independent obligation on the part of IMCG to sell
any Registrable Securities pursuant to any effective registration statement.
3. Rule 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144, or (ii) any similar rule or regulation
hereafter adopted by the Commission including, without limiting the generality
of the foregoing, filing on a timely basis all reports required to be filed by
the Exchange Act. Upon the request of IMCG, the Company will deliver to such
holder a written statement as to whether it has complied with such
requirements.
4. Amendments and Waivers. This Agreement may be amended,
modified or supplemented only by written agreement of the party against whom
enforcement of such amendment, modification or supplement is sought.
5. Adjustments. In the event of any change in the
capitalization of the Company as a result of any stock split, stock dividend,
reverse split, combination, recapitalization, merger, consolidation, or
otherwise, the provisions of this Agreement shall be appropriately adjusted.
6. Notice. All notices and other communications hereunder
shall be in writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is to be given
at its address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:
(a) If to IMCG, to:
x/x Xxxxxx Xxxxxxx Xxxxxxxx, X.X.X.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
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With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx Jacob, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
(b) If to the Company, to it at:
United Auto Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
7. Assignment; Third Party Beneficiaries; Majority Controls.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Company, without the prior
written consent of IMCG. IMCG may, at its election, at any time or from time to
time, assign its rights under this Agreement, in whole or in part, to any
purchaser or other transferee of Registrable Securities held by it; provided,
however, that any rights to withdraw shares from inclusion in a registration
statement pursuant to Section 2 shall be made only by IMCG for itself and all
such purchasers and transferees; and provided, further, that any decision
hereunder made by the holders of the majority of the Registrable Securities
shall be binding on all other holders of Registrable Securities.
8. Remedies. The parties hereto agree that money damages or
other remedy at law would not be sufficient or adequate remedy for any breach
or violation of, or a default under, this Agreement by them and that, in
addition to all other remedies available to them, each of them shall be
entitled to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including without limitation specific performance, without bond or other
security being required. In any action or proceeding brought to enforce any
provision of this Agreement (including the indemnification provisions thereof),
the successful party shall
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be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
9. No Inconsistent Agreements. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to IMCG in this
Agreement or otherwise conflicts with the provisions hereof. The Company
represents and warrants to IMCG that it has not previously entered into any
agreement with respect to its securities granting any registration rights to
any Person except as set forth on Schedule 9.
10. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not control or otherwise affect the meaning hereof.
11. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights and obligations of the parties
hereto shall be governed by, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and the United States of
America located in the County of New York for any action or proceeding arising
out of or relating to this Agreement and the transactions contemplated hereby
(and agrees not to commence any action or proceeding relating thereto except in
such courts), and further agrees that service of any process, summons, notice
or document by U.S. registered mail to its respective address set forth in
Section 6 hereof shall be effective service of process for any action or
proceeding brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action or proceeding arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of New York or the
United States of America located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13. Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement,
including that provision, in any other jurisdiction. If any restriction or
provision of this Agreement is held unreasonable, unlawful or unenforceable in
any respect, such restriction or provision shall be interpreted, revised or
- 18 -
applied in a manner that renders it lawful and enforceable to the fullest
extent possible under law.
14. Further Assurances. Each party hereto shall do and
perform or cause to be done and performed all further acts and things and shall
execute and deliver all other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
15. Entire Agreement; Effectiveness. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized.
UNITED AUTO GROUP, INC.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President
INTERNATIONAL MOTOR CARS
GROUP I, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
INTERNATIONAL MOTOR CARS
GROUP II, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
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