1
EXHIBIT 10(a)
CORPORATE AGREEMENT
THIS CORPORATE AGREEMENT ("Agreement") is entered into as of
_________, 1997 by and between FORD MOTOR COMPANY, a Delaware corporation
("Ford"), and THE HERTZ CORPORATION, a Delaware corporation ("Hertz").
RECITALS
X. Xxxx beneficially owns all of the issued and outstanding
Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of
Hertz and owns all of the issued and outstanding Class B Common Stock, par
value $.01 per share ("Class B Common Stock"), of Hertz, and Hertz is a member
of Ford's "affiliated group" of corporations (the "Ford Group") for federal
income tax purposes.
B. The parties are contemplating the possibility that Hertz
will issue shares of Class A Common Stock in an initial public offering (the
"Initial Public Offering") registered under the Securities Act of 1933, as
amended.
C. The parties desire to enter into this Agreement to set
forth their agreement regarding (i) Ford's rights to purchase additional shares
of Class B Common Stock upon any issuance of certain classes of capital stock
of Hertz to any person to permit Ford to maintain its percentage ownership
interest in Hertz, (ii) Ford's rights to purchase shares of non-voting classes
of capital stock of Hertz to permit Ford to own 80 percent of each class of
such stock outstanding, (iii) certain registration rights with respect to Class
B Common Stock (and any other securities issued in respect thereof or in
exchange therefor) and (iv) certain representations, warranties, covenants and
agreements applicable so long as Hertz is a subsidiary of Ford.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Ford and Hertz, for
themselves, their successors, and assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:
2
2
"Affiliate" means, with respect to a given Person, any Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to vote a
majority of the securities having voting power for the election of directors
(or other Persons acting in similar capacities) of such Person or otherwise to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Agreement" has the meaning ascribed thereto in the preamble
hereto, as such agreement may be amended and supplemented from time to time in
accordance with its terms.
"Applicable Stock" means at any time the (i) shares of Common
Stock owned by the Ford Entities that were owned on the date hereof, plus (ii)
shares of Class B Common Stock purchased by the Ford Entities pursuant to
Article II of this Agreement, plus (iii) shares of Common Stock that were
issued to Ford Entities in respect of shares described in either clause (i) or
clause (ii) in any reclassification, share combination, share subdivision,
share dividend, share exchange, merger, consolidation or similar transaction or
event.
"Class A Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Class B Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Class B Common Stock Option" has the meaning ascribed thereto
in Section 2.1(a).
"Class B Common Stock Option Notice" has the meaning ascribed
thereto in Section 2.2.
"Common Stock" means the Class B Common Stock, the Class A
Common Stock, any other class of Hertz' capital stock representing the right to
vote generally for the election of directors and, for so long as Hertz
continues to be a subsidiary corporation includable in a consolidated federal
income tax return of the Ford Group, any other security of Hertz treated as
stock for purposes of Section 1504 of the Internal Revenue Code of 1986, as
amended.
"Company Securities" has the meaning ascribed thereto in
Section 3.2(b).
"Disadvantageous Condition" has the meaning ascribed thereto
in Section 3.1(a).
3
3
"Ford Entities" means Ford and Subsidiaries of Ford (other
than Subsidiaries that constitute Hertz Entities), and "Ford Entity" shall mean
any of the Ford Entities.
"Ford Ownership Reduction" means any decrease at any time in
the Ownership Percentage to less than 45%.
"Ford Transferee" has the meaning ascribed thereto in Section
3.9.
"Ford" has the meaning ascribed thereto in the preamble
hereto.
"Ford Group" has the meaning ascribed thereto in the recitals
to this Agreement.
"Hertz" has the meaning ascribed thereto in the preamble
hereto.
"Hertz Entities" means Hertz and its Subsidiaries, and "Hertz
Entity" shall mean any of the Hertz Entities.
"Holder" means Ford, the other Ford Entities and any
Transferee.
"Holder Securities" has the meaning ascribed thereto in
Section 3.2(b).
"Initial Public Offering" has the meaning ascribed thereto in
the recitals to this Agreement.
"Initial Public Offering Date" means the date of completion of
the initial sale of Class A Common Stock in the Initial Public Offering.
"Issuance Event" has the meaning ascribed thereto in Section
2.2.
"Issuance Event Date" has the meaning ascribed thereto in
Section 2.2.
"Market Price" of any shares of Class A Common Stock on any
date means (i) the average of the last sale price of such shares on each of the
five trading days immediately preceding such date on the New York Stock
Exchange, Inc. or, if such shares are not listed thereon, on the principal
national securities exchange or automated interdealer quotation system on which
such shares are traded or (ii) if such sale prices are unavailable or such
shares are not so traded, the value of such shares on such date determined in
accordance with agreed-upon procedures reasonably satisfactory to Hertz and
Ford.
4
4
"Nonvoting Stock" means any class of Hertz' capital stock not
representing the right to vote generally for the election of directors.
"Nonvoting Stock Option" has the meaning ascribed thereto in
Section 2.1(c).
"Nonvoting Stock Option Notice" has the meaning ascribed
thereto in Section 2.2.
"Other Holders" has the meaning ascribed thereto in Section
3.2(c).
"Other Securities" has the meaning ascribed thereto in Section
3.2.
"Ownership Percentage" means, at any time, the fraction,
expressed as a percentage and rounded to the next highest thousandth of a
percent, whose numerator is the aggregate Value of the Applicable Stock and
whose denominator is the aggregate Value of the then-outstanding shares of
Common Stock of Hertz; provided, however, that any shares of Common Stock
issued by Hertz in violation of its obligations under Article II of this
Agreement shall not be deemed outstanding for the purpose of determining the
Ownership Percentage. For purposes of this definition, "Value" means, with
respect to any share of stock, the value of such share determined by Ford under
principles applicable for purposes of Section 1504 of the Internal Revenue Code
of 1986, as amended.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.
"Registrable Securities" means shares of Class B Common Stock,
shares of Class A Common Stock and any stock or other securities into which or
for which such Common Stock may hereafter be changed, converted or exchanged
and any other shares or securities issued to Holders of such Common Stock (or
such shares or other securities into which or for which such shares are so
changed, converted or exchanged) upon any reclassification, share combination,
share subdivision, share dividend, share exchange, merger, consolidation or
similar transaction or event or pursuant to the Nonvoting Stock Option. As to
any particular Registrable Securities, such Registrable Securities shall cease
to be Registrable Securities when (i) a registration statement with respect to
the sale by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public in accordance with Rule 144, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been
5
5
delivered by Hertz and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any state
securities or blue sky law then in effect or (iv) they shall have ceased to be
outstanding.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with any registration of securities pursuant to
Article III, including, without limitation, (i) the fees, disbursements and
expenses of Hertz' counsel and accountants and the fees and expenses of counsel
selected by the Holders in accordance with this Agreement in connection with
the registration of the securities to be disposed of, such fees and expenses of
such counsel selected by the Holders to be reasonable in the reasonable
discretion of Hertz; (ii) all expenses, including filing fees, in connection
with the preparation, printing and filing of the registration statement, any
preliminary prospectus or final prospectus, any other offering document and
amendments and supplements thereto and the mailing and delivering of copies
thereof to any underwriters and dealers; (iii) the cost of printing or
producing any underwriting agreements and blue sky or legal investment
memoranda and any other documents in connection with the offering, sale or
delivery of the securities to be disposed of; (iv) all expenses in connection
with the qualification of the securities to be disposed of for offering and
sale under state securities laws, including the fees and disbursements of
counsel for the underwriters or the Holders of securities in connection with
such qualification and in connection with any blue sky and legal investment
surveys; (v) the filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the securities to be disposed of; (vi) transfer agents' and registrars' fees
and expenses and the fees and expenses of any other agent or trustee appointed
in connection with such offering; (vii) all security engraving and security
printing expenses; (viii) all fees and expenses payable in connection with the
listing of the securities on any securities exchange or automated interdealer
quotation system or the rating of such securities, (ix) any other fees and
disbursements of underwriters customarily paid by the sellers of securities,
but excluding underwriting discounts and commissions and transfer taxes, if
any, and (x) other reasonable out-of-pocket expenses of Holders other than
legal fees and expenses referred to in clause (i) above.
"Rule 144" means Rule 144 (or any successor rule to similar
effect) promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
6
6
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute.
"Selling Holder" has the meaning ascribed thereto in Section
3.4(e).
"Subsidiary" means, as to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting capital stock or other voting ownership interests is
owned or controlled, directly or indirectly, by such Person or by one or more
of the Subsidiaries of such Person or by a combination thereof. "Subsidiary,"
when used with respect to Ford or Hertz, shall also include any other entity
affiliated with Ford or Hertz, as the case may be, that Ford and Hertz may
hereafter agree in writing shall be treated as a "Subsidiary" for the purposes
of this Agreement.
"Transferee" has the meaning ascribed thereto in Section 3.9.
1.2. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and
references to the parties shall mean the parties to this Agreement.
ARTICLE II
OPTIONS
2.1. Options. (a) Hertz hereby grants to Ford, on the terms
and conditions set forth herein, a continuing right (the "Class B Common Stock
Option") to purchase from Hertz, at the times set forth herein, such number of
shares of Class B Common Stock as is necessary to allow the Ford Entities to
maintain the percentage of the then-outstanding Common Stock of Hertz that is
equal to the Ownership Percentage. The Class B Common Stock Option shall be
assignable, in whole or in part and from time to time, by Ford to any Ford
Entity. The exercise price for the shares of Class B Common Stock purchased
pursuant to the Class B Common Stock Option shall be the Market Price of the
Class A Common Stock as of the date of first delivery of notice of exercise of
the Class B Common Stock Option by Ford (or its permitted assignee hereunder)
to Hertz.
(b) The provisions of Section 2.1(a) hereof notwithstanding,
the Class B Common Stock Option granted pursuant to Section 2.1(a) shall not
apply and shall not be exercisable in connection with the issuance by Hertz of
any shares of Common Stock pursuant to any stock option or other executive or
employee benefit or compensation plan maintained by Hertz, so long as, from and
after the date hereof and prior to the issuance of such shares, Hertz has
repurchased from shareholders and not subsequently reissued a number of shares
equal or greater to the number of shares to be issued in any such issuance.
7
7
(c) Hertz hereby grants to Ford, on the terms and conditions
set forth herein, a continuing right (the "Nonvoting Stock Option" and,
together with the Class B Common Stock Option, the "Options") to purchase from
Hertz, at the times set forth herein, such number of shares of Nonvoting Stock
as is necessary to allow the Ford Entities to own 80 percent of each class of
outstanding Nonvoting Stock. The Nonvoting Stock Option shall be assignable,
in whole or in part and from time to time, by Ford to any Ford Entity. The
exercise price for the shares of Nonvoting Stock purchased pursuant to the
Nonvoting Stock Option shall be the price at which such Nonvoting Stock is then
being sold to third parties, or, if no Nonvoting Stock is being sold, the fair
market value thereof as determined in good faith by the Board of Directors of
Hertz.
2.2. Notice. At least 20 business days prior to the issuance
of any shares of Common Stock (other than in connection with the Initial Public
Offering, including the full exercise of all underwriters' over-allotment
options granted in connection therewith and other than issuances of Common
Stock to any Ford Entity) or the first date on which any event could occur
that, in the absence of a full or partial exercise of the Class B Common Stock
Option, would result in a reduction in the Ownership Percentage, Hertz will
notify Ford in writing (a "Class B Common Stock Option Notice") of any plans it
has to issue such shares or the date on which such event could first occur. At
least 20 business days prior to the issuance of any shares of Nonvoting Stock
(other than issuances of Nonvoting Stock to any Ford entity) or the first date
on which any event could occur that, in the absence of a full or partial
exercise of the Nonvoting Stock Option, would result in the Ford Entities
owning less than 80 percent of each class of outstanding Nonvoting Stock, Hertz
will notify Ford in writing (a "Nonvoting Stock Option Notice" and, together
with a Class B Common Stock Option Notice, an "Option Notice") of any plans it
has to issue such shares or the date on which such event could first occur.
Each Option Notice must specify the date on which Hertz intends to issue such
additional shares or on which such event could first occur (such issuance or
event being referred to herein as an "Issuance Event" and the date of such
issuance or event as an "Issuance Event Date"), the number of shares Hertz
intends to issue or may issue and the other terms and conditions of such
Issuance Event.
2.3. Option Exercise and Payment. The Class B Common Stock
Option may be exercised by Ford (or any Ford Entity to which all or any part of
the Class B Common Stock Option has been assigned) for a number of shares equal
to or less than the number of shares that are necessary for the Ford Entities
to maintain, in the aggregate, the percentage of the then-outstanding shares of
Common Stock of Hertz that is equal to the then-current Ownership Percentage.
The Nonvoting Stock Option may be exercised by Ford (or any Ford Entity to which
all or any part of the Nonvoting Stock Option has been assigned) for a number
of shares equal to or less than the number of shares that are necessary for the
Ford Entities to own, in the aggregate, 80 percent of each class of outstanding
8
8
Nonvoting Stock. Each Option may be exercised at any time after receipt of an
applicable Option Notice and prior to the applicable Issuance Event Date by the
delivery to Hertz of a written notice to such effect specifying (i) the number
of shares of Class B Common Stock or Nonvoting Stock, as the case may be, to be
purchased by Ford, or any of the Ford Entities and (ii) a calculation of the
exercise price for such shares; provided, however, that if Hertz shall have
issued any shares of Common Stock in violation of its obligations under this
Article II, the Option may be exercised at any time by the delivery to Hertz of
a written notice to such effect specifying the information described in clauses
(i) and (ii) above. Upon any exercise of an Option, Hertz will promptly (and
in any event on or prior to the applicable Issuance Event Date) deliver to Ford
(or any Ford Entity designated by Ford), against payment therefor, certificates
(issued in the name of Ford or its permitted assignee hereunder or as directed
by Ford) representing the shares of Class B Common Stock or Nonvoting Stock, as
the case may be, being purchased upon such exercise. Payment for such shares
shall be made by wire transfer or intrabank transfer of immediately-available
funds to such account as shall be specified by Hertz, for the full purchase
price for such shares.
2.4. Effect of Failure to Exercise. Except as provided in
Section 2.6, any failure by Ford to exercise either Option, or any exercise for
less than all shares purchasable under either Option, in connection with any
particular Issuance Event shall not affect Ford's right to exercise the
relevant Option in connection with any subsequent Issuance Event.
2.5. Initial Public Offering. Notwithstanding the
foregoing, Ford shall not be entitled to exercise the Class B Common Stock
Option in connection with the Initial Public Offering of the Class A Common
Stock if, upon the completion of the Initial Public Offering, including the
full exercise of all underwriters' over-allotment options granted in connection
therewith, the Ownership Percentage would be no less than 80%.
2.6. Termination of Options. The Options shall terminate
upon the occurrence of any Issuance Event that, after considering Ford's
response thereto and to any other Issuance Events, results in the Ownership
Percentage being less than 20%, other than any Issuance Event in violation of
this Agreement. Each Option, or any portion thereof assigned to any Ford
Entity other than Ford, also shall terminate in the event that the Person to
whom such Option, or such portion thereof has been transferred, ceases to be a
Ford Entity for any reason whatsoever.
ARTICLE III
REGISTRATION RIGHTS
3.1. Demand Registration - Registrable Securities.
(a) Upon written notice provided at any time after the Initial Public Offering
Date from any Holder of Registrable Securities requesting that Hertz effect the
registration under the Securities Act of any or all of the Registrable
Securities held by such Holder, which notice shall specify the intended method
or
9
9
methods of disposition of such Registrable Securities, Hertz shall use its best
efforts to effect the registration under the Securities Act and applicable
state securities laws of such Registrable Securities for disposition in
accordance with the intended method or methods of disposition stated in such
request (including in a Rule 415 Offering, if Hertz is then eligible to
register such Registrable Securities on Form S-3 (or a successor form) for such
offering); provided that:
(i) with respect to any registration statement filed,
or to be filed, pursuant to this Section 3.1, if Hertz shall furnish
to the Holders of Registrable Securities that have made such request a
certified resolution of the Board of Directors of Hertz (adopted by
the affirmative vote of a majority of the directors not designated by
the Ford Entities) stating that in the Board of Directors' good faith
judgment it would (because of the existence of, or in anticipation of,
any acquisition or financing activity, or the unavailability for
reasons beyond Hertz's reasonable control of any required financial
statements, or any other event or condition of similar significance to
Hertz) be significantly disadvantageous (a "Disadvantageous
Condition") to Hertz for such a registration statement to be
maintained effective, or to be filed and become effective, and setting
forth the general reasons for such judgment, Hertz shall be entitled
to cause such registration statement to be withdrawn and the
effectiveness of such registration statement terminated, or, in the
event no registration statement has yet been filed, shall be entitled
not to file any such registration statement, until such
Disadvantageous Condition no longer exists (notice of which Hertz
shall promptly deliver to such Holders). Upon receipt of any such
notice of a Disadvantageous Condition, such Holders shall forthwith
discontinue use of the prospectus contained in such registration
statement and, if so directed by Hertz, each such Holder will deliver
to Hertz all copies, other than permanent file copies then in such
Holder's possession, of the prospectus then covering such Registrable
Securities current at the time of receipt of such notice; provided,
that the filing of any such registration statement may not be delayed
for a period in excess of six months due to the occurrence of any
particular Disadvantageous Condition;
(ii) after any Ford Ownership Reduction, the Holders of
Registrable Securities may collectively exercise their rights under
this Section 3.1 (through notice delivered by Holders owning in the
aggregate a majority in economic interest of the Registrable
Securities then held by Holders) on not more than three occasions (it
being acknowledged that prior to any Ford Ownership Reduction, there
shall be no limit to the number of occasions on which such Holders
(other than any Ford Transferees and their Affiliates (other than Ford
Entities)) may exercise such rights);
10
10
(iii) Except as otherwise provided herein, the Holders of
Registrable Securities shall not have the right to exercise
registration rights pursuant to this Section 3.1 within the 180-day
period following the registration and sale of Registrable Securities
effected pursuant to a prior exercise of the registration rights
provided in this Section 3.1; and
(iv) the Holders of Registrable Securities shall not have
the right to exercise registration rights pursuant to this Section 3.1
within the 180-day period following the effective date of the
Registration Statement in connection with the Initial Public Offering.
(b) Notwithstanding any other provision of this Agreement to
the contrary, a registration requested by a Holder of Registrable Securities
pursuant to this Section 3.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of paragraph (a) above), (i) unless it
has become effective, (ii) if after it has become effective such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder and, as a result thereof, the
Registrable Securities requested to be registered cannot be completely
distributed in accordance with the plan of distribution set forth in the
related registration statement or (iii) if the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied or waived other than by reason of some
act or omission by such Holder of Registrable Securities.
(c) In the event that any registration pursuant to this
Section 3.1 shall involve, in whole or in part, an underwritten offering, the
Holders of a majority of the Registrable Securities to be registered shall have
the right to designate an underwriter or underwriters reasonably acceptable to
Hertz as the lead or managing underwriters of such underwritten offering and,
in connection with each registration pursuant to this Section 3.1, such Holders
may select one counsel reasonably acceptable to Hertz to represent all such
Holders.
(d) Hertz shall have the right to cause the registration of
additional equity securities for sale for its account, the account of any Hertz
Entity or any existing or former directors, officers or employees of the Hertz
Entities in any registration of Registrable Securities requested by the Holders
pursuant to paragraph (a) above; provided, however, that if the registration
and sale of such additional equity securities would require Ford or any Ford
Entity to exercise the Options to maintain the then-current Ownership
Percentage or ownership of 80% of each class of outstanding Nonvoting Stock,
then the number of such additional equity securities shall be reduced so that
11
11
exercise of the Options would not be necessary for Ford or any Ford Entity to
maintain such ownership levels and, provided, further, that if such Holders are
advised in writing (with a copy to Hertz) by a nationally recognized investment
banking firm selected by such Holders reasonably acceptable to Hertz (which
shall be the lead underwriter or a managing underwriter in the case of an
underwritten offering) that, in such firm's good faith view, all or a part of
such additional equity securities cannot be sold and the inclusion of such
additional equity securities in such registration would be likely to have an
adverse effect on the price, timing or distribution of the offering and sale of
the Registrable Securities then contemplated by any Holder, the registration of
such additional equity securities or part thereof shall not be permitted. The
Holders of the Registrable Securities to be offered may require that any such
additional equity securities be included in the offering proposed by such
Holders on the same conditions as the Registrable Securities that are included
therein. In the event that the number of Registrable Securities requested to
be included in a registration statement by the Holders thereof exceeds the
number which, in the good faith view of such investment banking firm, can be
sold without adversely affecting the price, timing, distribution or sale of
securities in the offering, the number shall be allocated pro rata among the
requesting Holders on the basis of the relative number of Registrable
Securities then held by each such Holder (provided that any number in excess of
a Holder's request may be reallocated among the remaining requesting Holders in
a like manner).
3.2. Piggyback Registration. In the event that Hertz at any
time after the Initial Public Offering Date proposes to register any of its
Common Stock, any other of its equity securities or securities convertible into
or exchangeable for its equity securities (collectively, including Common
Stock, "Other Securities") under the Securities Act, whether or not for sale
for its own account, in a manner that would permit registration of Registerable
Securities for sale for cash to the public under the Securities Act, it shall
at each such time give prompt written notice to each Holder of Registrable
Securities of its intention to do so and of the rights of such Holder under
this Section 3.2. Subject to the terms and conditions hereof, such notice
shall offer each such Holder the opportunity to include in such registration
statement such number of Registerable Securities as such Holder may request.
Upon the written request of any such Holder made within 15 days after the
receipt of Hertz' notice (which request shall specify the number of Registrable
Securities intended to be disposed of and the intended method of disposition
thereof), Hertz shall use its best efforts to effect, in connection with the
registration of the Other Securities, the registration under the Securities Act
of all Registerable Securities which Hertz has been so requested to register,
to the extent required to permit the disposition (in accordance with such
intended method of disposition thereof) of
12
12
the Registrable Securities so requested to be registered; provided, that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date of
the registration statement filed in connection with such registration, Hertz
shall determine for any reason not to register the Other Securities, Hertz may,
at its election, give written notice of such determination to such Holders and
thereupon Hertz shall be relieved of its obligation to register such
Registrable Securities in connection with the registration of such Other
Securities, without prejudice, however, to the rights of the Holders of
Registrable Securities immediately to request that such registration be
effected as a registration under Section 3.1 to the extent permitted
thereunder;
(b) if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten registration on behalf of Hertz, and
a nationally recognized investment banking firm selected by Hertz advises Hertz
in writing that, in such firm's good faith view, all or a part of such
Registrable Securities cannot be sold and the inclusion of all or a part of
such Registrable Securities in such registration would be likely to have an
adverse effect upon the price, timing or distribution of the offering and sale
of the Other Securities then contemplated, Hertz shall include in such
registration: (i) first, all Other Securities Hertz proposes to sell for its
own account ("Company Securities"), (ii) second, up to the full number of
Registrable Securities held by Holders constituting Ford Entities that are
requested to be included in such registration (Registrable Securities that are
so held being sometimes referred to herein as "Holder Securities") in excess of
the number of Company Securities to be sold in such offering which, in the good
faith view of such investment banking firm, can be sold without adversely
affecting such offering (and (x) if such number is less than the full number of
such Holder Securities, such number shall be allocated by Ford among such Ford
Entities and (y) in the event that such investment banking firm advises that
less than all of such Holder Securities may be included in such offering, such
Ford Entities may withdraw their request for registration of their Registrable
Securities under this Section 3.2 and 90 days subsequent to the effective date
of the registration statement for the registration of such Other Securities
request that such registration be effected as a registration under Section 3.1
to the extent permitted thereunder), (iii) third, up to the full number of
Registrable Securities held by Holders (other than Ford Entities) of
Registrable Securities that are requested to be included in such registration
in excess of the number of Company Securities and Holder Securities to be sold
in such offering which, in the good faith view of such investment banking firm,
can be so sold without so adversely affecting such offering (and (x) if such
number is less than the full number of such Registrable
13
13
Securities, such number shall be allocated pro rata among such Holders on the
basis of the number of Registrable Securities requested to be included therein
by each such Holder and (y) in the event that such investment banking firm
advises that less than all of such Registrable Securities may be included in
such offering, such Holders may withdraw their request for registration of
their Registrable Securities under this Section 3.2 and 90 days subsequent to
the effective date of the registration statement for the registration of such
Other Securities request that such registration be effected as a registration
under Section 3.1 to the extent permitted thereunder) and (iv) fourth, up to
the full number of the Other Securities (other than Company Securities), if
any, in excess of the number of Company Securities and Registrable Securities
to be sold in such offering which, in the good faith view of such investment
banking firm, can be so sold without so adversely affecting such offering (and,
if such number is less than the full number of such Other Securities, such
number shall be allocated pro rata among the holders of such Other Securities
(other than Company Securities) on the basis of the number of securities
requested to be included therein by each such Holder);
(c) if the registration referred to in the first sentence of
this Section 3.2 is to be an underwritten secondary registration on behalf of
holders of Other Securities (the "Other Holders"), and the lead underwriter or
managing underwriter advises Hertz in writing that in their good faith view,
all or a part of such additional securities cannot be sold and the inclusion of
such additional securities in such registration would be likely to have an
adverse effect on the price, timing or distribution of the offering and sale of
the Other Securities then contemplated, Hertz shall include in such
registration the number of securities (including Registrable Securities) that
such underwriters advise can be so sold without adversely affecting such
offering, allocated pro rata among the Other Holders and the Holders of
Registrable Securities on the basis of the number of securities (including
Registrable Securities) requested to be included therein by each Other Holder
and each Holder of Registrable Securities; provided, that if such registration
statement is to be filed at any time after a Ford Ownership Reduction, if such
Other Holders have requested that such registration statement be filed pursuant
to demand registration rights granted to them by Hertz, Hertz shall include in
such registration (i) first, Other Securities sought to be included therein by
the Other Holders pursuant to the exercise of such demand registration rights,
(ii) second, the number of Holder Securities sought to be included in such
registration in excess of the number of Other Securities sought to be included
in such registration by the Other Holders which in the good faith view of such
investment banking firm, can be so sold without so adversely affecting such
offering (and (x) if such number is less than the full number of such Holder
Securities, such number shall be allocated by Ford among such Ford Entities and
(y) in the event that such investment banking firm advises that less than all
of
14
14
such Holder Securities may be included in such offering, such Ford Entities may
withdraw their request for registration of their Registrable Securities under
this Section 3.2 and 90 days subsequent to the effective date of the
registration statement for the registration of such Other Securities request
that such registration be effected as a registration under Section 3.1 to the
extent permitted thereunder) and (iii) third, the number of Registrable
Securities sought to be included in such registration by Holders (other than
Ford Entities) of Registrable Securities in excess of the number of Other
Securities and the number of Holder Securities sought to be included in such
registration which, in the good faith view of such investment banking firm, can
be so sold without so adversely affecting such offering (and (x) if such number
is less than the full number of such Registrable Securities, such number shall
be allocated pro rata among such Holders on the basis of the number of
Registrable Securities requested to be included therein by each such Holder and
(y) in the event that such investment banking firm advises that less than all
of such Registrable Securities may be included in such offering, such Holders
may withdraw their request for registration of their Registrable Securities
under this Section 3.2 and 90 days subsequent to the effective date of the
registration statement for the registration of such Other Securities request
that such registration be effected as a registration under Section 3.1 to the
extent permitted thereunder);
(d) Hertz shall not be required to effect any registration of
Registrable Securities under this Section 3.2 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange
offers, subscription offers, dividend reinvestment plans or stock option or
other executive or employee benefit or compensation plans; and
(e) no registration of Registrable Securities effected under
this Section 3.2 shall relieve Hertz of its obligation to effect a registration
of Registrable Securities pursuant to Section 3.1.
3.3. Expenses. Except as provided herein, Hertz shall pay
all Registration Expenses with respect to a particular offering (or proposed
offering). Notwithstanding the foregoing, each Holder and Hertz shall be
responsible for its own internal administrative and similar costs, which shall
not constitute Registration Expenses.
3.4. Registration and Qualification. If and whenever Hertz
is required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 3.1 or 3.2, Hertz shall as promptly as
practicable:
(a) prepare, file and use its reasonable best efforts to
cause to become effective a registration statement under the
15
15
Securities Act relating to the Registrable Securities to be offered;
(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 keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities until the earlier of (A) such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition set forth in such registration
statement and (B) the expiration of six months after such registration
statement becomes effective; provided, that such six-month period shall be
extended for such number of days that equals the number of days elapsing from
(x) the date the written notice contemplated by paragraph (f) below is given by
Hertz to (y) the date on which Hertz delivers to the Holders of Registrable
Securities the supplement or amendment contemplated by paragraph (f) below;
(c) furnish to the Holders of Registrable Securities and to
any underwriter of such Registrable Securities 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 included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements of
the Securities Act, such documents incorporated by reference in such
registration statement or prospectus, and such other documents, as the Holders
of Registrable Securities or such underwriter may reasonably request, and upon
request a copy of any and all transmittal letters or other correspondence to or
received from, the SEC or any other governmental agency or self-regulatory body
or other body having jurisdiction (including any domestic or foreign securities
exchange) relating to such offering;
(d) use its reasonable best efforts to register or qualify
all Registrable Securities covered by such registration statement under the
securities or blue sky laws of such U.S. jurisdictions as the Holders of such
Registrable Securities or any underwriter to such Registrable Securities shall
request, and use its reasonable best efforts to obtain all appropriate
registrations, permits and consents in connection therewith, and do any and all
other acts and things which may be necessary or advisable to enable the Holders
of Registrable Securities or any such underwriter to consummate the disposition
in such jurisdictions of its Registrable Securities covered by such
registration statement; provided, that Hertz shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
such jurisdiction wherein it is not so qualified or to consent to general
service of process in any such jurisdiction;
16
16
(e) (i) use its best efforts to furnish to each Holder of
Registrable Securities included in such registration (each, a "Selling Holder")
and to any underwriter of such Registrable Securities an opinion of counsel for
Hertz addressed to each Selling Holder and dated the date of the closing under
the underwriting agreement (if any) (or if such offering is not underwritten,
dated the effective date of the registration statement) and (ii) use its best
efforts to furnish to each Selling Holder a "cold comfort" letter addressed to
each Selling Holder and signed by the independent public accountants who have
audited the financial statements of Hertz included in such registration
statement, in each such case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein) as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and such other matters as the Selling Holders may reasonably request
and, in the case of such accountants' letter, with respect to events subsequent
to the date of such financial statements;
(f) as promptly as practicable, notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration pursuant
to Sections 3.1 or 3.2 is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and (ii) of any request by the SEC
or any other regulatory body or other body having jurisdiction for any
amendment of or supplement to any registration statement or other document
relating to such offering, and in either such case, at the request of the
Selling Holders prepare and furnish to the Selling Holders 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
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
(g) if reasonably requested by the lead or managing
underwriters, use its best efforts to list all such Registrable Securities
covered by such registration on each securities exchange and automated
inter-dealer quotation system on which a class of common equity securities of
Hertz is then listed;
(h) to the extent reasonably requested by the lead or
managing underwriters, send appropriate officers of Hertz to attend any "road
shows" scheduled in connection with any such registration, with all
out-of-pocket costs and expense incurred
17
17
by Hertz or such officers in connection with such attendance to be paid by
Hertz; and
(i) furnish for delivery in connection with the closing of
any offering of Registrable Securities pursuant to a registration effected
pursuant to Sections 3.1 or 3.2 unlegended certificates representing ownership
of the Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters.
3.5. Conversion of Other Securities, Etc. In the event that
any Holder offers any options, rights, warrants or other securities issued by
it or any other Person that are offered with, convertible into or exercisable
or exchangeable for any Registrable Securities, the Registrable Securities
underlying such options, rights, warrants or other securities shall continue to
be eligible for registration pursuant to Sections 3.1 and 3.2.
3.6. Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant
to a registration requested under this Article III, Hertz shall enter into an
underwriting agreement with such underwriters for such offering, which
agreement will contain such representations and warranties by Hertz and such
other terms and provisions as are customarily contained in underwriting
agreements of Hertz to the extent relevant and as are customarily contained in
underwriting agreements generally with respect to secondary distributions to
the extent relevant, including, without limitation, indemnification and
contribution provisions substantially to the effect and to the extent provided
in Section 3.7, and agreements as to the provision of opinions of counsel and
accountants' letters to the effect and to the extent provided in Section
3.4(e). The Selling Holders on whose behalf the Registrable Securities are to
be distributed by such underwriters shall be parties to any such underwriting
agreement and the representations and warranties by, and the other agreements
on the part of, Hertz to and for the benefit of such underwriters, shall also
be made to and for the benefit of such Selling Holders. Such underwriting
agreement shall also contain such representations and warranties by such
Selling Holders and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions,
when relevant, including, without limitation, indemnification and contribution
provisions substantially to the effect and to the extent provided in Section
3.7.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article III, Hertz shall give the Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants, such reasonable and customary access to its books and
records and such opportunities to discuss the business of Hertz with its
officers and the independent public accountants
18
18
who have certified the financial statements of Hertz as shall be necessary, in
the opinion of such Holders and such underwriters or their respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
3.7. Indemnification and Contribution. (a) In the case of
each offering of Registrable Securities made pursuant to this Article III,
Hertz agrees to indemnify and hold harmless, to the extent permitted by law,
each Selling Holder, each underwriter of Registrable Securities so offered and
each Person, if any, who controls any of the foregoing Persons within the
meaning of the Securities Act and the officers, directors, affiliates,
employees and agents of each of the foregoing, against any and all losses,
liabilities, costs (including reasonable attorney's fees and disbursements),
claims and damages, joint or several, to which they or any of them may become
subject, under the Securities Act or otherwise, including any amount paid in
settlement of any litigation commenced or threatened, insofar as such losses,
liabilities, costs, claims and damages (or actions or proceedings in respect
thereof, whether or not such indemnified Person is a party thereto) arise out
of or are based upon any untrue statement by Hertz or alleged untrue statement
by Hertz of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or in any offering memorandum
or other offering document relating to the offering and sale of such
Registrable Securities prepared by Hertz or at its direction, or any amendment
thereof or supplement thereto, or in any document incorporated by reference
therein, or any omission by Hertz or alleged omission by Hertz to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however that Hertz shall not be
liable to any Person in any such case to the extent that any such loss,
liability, cost, claim or damage arises out of or relates to any untrue
statement or alleged untrue statement, or any omission, if such statement or
omission shall have been made in reliance upon and in conformity with
information relating to a Selling Holder, another holder of securities included
in such registration statement or underwriter furnished to Hertz by or on
behalf of such Selling Holder, other holder or underwriter specifically for use
in the registration statement (or in any preliminary or final prospectus
included therein), offering memorandum or other offering document, or any
amendment thereof or supplement thereto. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Selling Holder, any other holder or any underwriter and shall survive the
transfer of such securities. The foregoing indemnity agreement is in addition
to any liability that Hertz may otherwise have to each Selling Holder, other
holder or underwriter of the Registrable Securities or any controlling person
of the foregoing and the officers, directors, affiliates, employees and agents
of each of the foregoing; provided, further, that, in the case of an offering
with respect to which a Selling Holder has designated the lead or managing
underwriters (or a
19
19
Selling Holder is offering Registrable Securities directly, without an
underwriter), this indemnity does not apply to any loss, liability, cost, claim
or damage arising out of or relating to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary prospectus or
offering memorandum if a copy of a final prospectus or offering memorandum was
not sent or given by or on behalf of any underwriter (or such Selling Holder or
other holder, as the case may be) to such Person asserting such loss,
liability, cost, claim or damage at or prior to the written confirmation of the
sale of the Registrable Securities as required by the Securities Act and such
untrue statement or omission had been corrected in such final prospectus or
offering memorandum.
(b) In the case of each offering made pursuant to this
Agreement, each Selling Holder, by exercising its registration rights
hereunder, agrees to indemnify and hold harmless, and to cause each underwriter
of Registrable Securities included in such offering (in the same manner and to
the same extent as set forth in Section 3.7(a)) to agree to indemnify and hold
harmless, Hertz, each other underwriter who participates in such offering, each
other Selling Holder or other holder with securities included in such offering
and in the case of an underwriter, such Selling Holder or other holder, and
each Person, if any, who controls any of the foregoing within the meaning of
the Securities Act and the officers, directors, affiliates, employees and
agents of each of the foregoing, against any and all losses, liabilities, costs
(including reasonable attorney's fees and disbursements), claims and damages to
which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, insofar as such losses, liabilities, costs, claims and damages
(or actions or proceedings in respect thereof, whether or not such indemnified
Person is a party thereto) arise out of or are based upon any untrue statement
or alleged untrue statement by such Selling Holder or underwriter, as the case
may be, of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or in any offering memorandum
or other offering document relating to the offering and sale of such
Registrable Securities prepared by Hertz or at its direction, or any amendment
thereof or supplement thereto, or any omission by such Selling Holder or
underwriter, as the case may be, or alleged omission by such Selling Holder or
underwriter, as the case may be, of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that such untrue statement of a material fact is
contained in, or such material fact is omitted from information relating to
such Selling Holder or underwriter, as the case may be, furnished to Hertz by
or on behalf of such Selling Holder or underwriter, as the case may be,
specifically for use in such registration statement (or in any preliminary or
final prospectus included therein), offering memorandum or other offering
document, or any amendment thereof or supplement
20
20
thereto. The foregoing indemnity is in addition to any liability which such
Selling Holder or underwriter, as the case may be, may otherwise have to Hertz,
or controlling persons and the officers, directors, affiliates, employees, and
agents of each of the foregoing; provided, however, that, in the case of an
offering made pursuant to this Agreement with respect to which Hertz has
designated the lead or managing underwriters (or Hertz is offering securities
directly, without an underwriter), this indemnity does not apply to any loss,
liability, cost, claim, or damage arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary prospectus or offering memorandum if a copy of a final prospectus
or offering memorandum was not sent or given by or on behalf of any underwriter
(or Hertz, as the case may be) to such Person asserting such loss, liability,
cost, claim or damage at or prior to the written confirmation of the sale of
the Registrable Securities as required by the Securities Act and such untrue
statement or omission had been corrected in such final prospectus or offering
memorandum.
(c) Each party indemnified under paragraph (a) or
(b) above shall, promptly after receipt of notice of a claim or action against
such indemnified party in respect of which indemnity may be sought hereunder,
notify the indemnifying party in writing of the claim or action; provided, that
the failure to notify the indemnifying party shall not relieve it from any
liability that it may have to an indemnified party on account of the indemnity
agreement contained in paragraph (a) or (b) above otherwise than under such
subsection. If any such claim or action shall be brought against an
indemnified party, and it shall have notified the indemnifying party thereof,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified party and indemnifying parties may exist in respect of
such claim, the indemnifying party shall be entitled to participate therein,
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel satisfactory to
the indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party). After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 3.7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation. If the indemnifying
party does not assume the defense of such claim or action, it is understood
that the indemnifying party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to one separate firm of local attorneys in each
such jurisdiction) at any time for all such indemnified parties. Any
indemnifying
21
21
party against whom indemnity may be sought under this Section 3.7 shall not be
liable to indemnify an indemnified party if such indemnified party settles such
claim or action without the consent of the indemnifying party, which consent
shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 3.7
shall for any reason be unavailable (other than in accordance with its terms)
to an indemnified party in respect of any loss, liability, cost, claim or
damage referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, cost, claim or
damage in such proportion as shall be appropriate to reflect (i) the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law or if the indemnified party failed to give
the notice required under paragraph (c) above, the relative benefits and the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other with respect to the statements or omissions which resulted
in such loss, liability, cost, claim or damage as well as any other relevant
equitable considerations. The relative benefits received by the indemnifying
party and the indemnified party shall be deemed to be in the same respective
proportion as the net proceeds (before deducting expenses) of the offering
received by such party (or, in the case of an underwriter, such underwriter's
discounts and commissions) bear to the aggregate offering price of the
Registrable Securities or Other Securities. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the indemnifying party on the one hand or the
indemnified party on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission, but not by reference to any indemnified party's stock
ownership in Hertz. The amount paid or payable by an indemnified party as a
result of the loss, cost, claim, damage or liability, or action in respect
thereof, referred to above in this paragraph (d) shall be deemed to include,
for purposes of this paragraph (d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. 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.
(e) Indemnification and contribution similar to that
specified in the preceding paragraphs of this Section 3.7 (with appropriate
modifications) shall be given by Hertz, the Selling Holders and underwriters
with respect to any required
22
22
registration or other qualification of securities under any state law or
regulation or governmental authority.
(f) The obligations of the parties under this Section 3.7
shall be in addition to any liability which any party may otherwise have to any
other party.
3.8. Rule 144 and Form S-3. Commencing 90 days after the
Initial Public Offering Date, Hertz shall use its best efforts to ensure that
the conditions to the availability of Rule 144 set forth in paragraph (c)
thereof shall be satisfied. Upon the request of any Holder of Registrable
Securities, Hertz will deliver to such Holder a written statement as to whether
it has complied with such requirements. Hertz further agrees to use its
reasonable efforts to cause all conditions to the availability of Form S-3 (or
any successor form) under the Securities Act of the filing of registration
statements under this Agreement to be met as soon as practicable after the
Initial Public offering Date. Notwithstanding anything contained in this
Section 3.8, Hertz may deregister under Section 12 of the Securities Exchange
Act of 1934, as amended, if it then is permitted to do so pursuant to said Act
and the rules and regulations thereunder.
3.9. Transfer of Registration Rights. Any Holder may
transfer all or any portion of its rights under Article III to any transferee
of a number of Registrable Securities owned by such Holder exceeding three
percent (3%) of the outstanding class or series of such securities at the time
of transfer (each transferee that receives such minimum number of Registrable
Securities, a "Transferee"); provided, that each Transferee of Registrable
Securities (other than Ford Entities) to which Registrable Securities are
transferred, sold or assigned directly by a Ford Entity (such Transferee, a
"Ford Transferee"), together with any Affiliate of such Ford Transferee (and
any subsequent direct or indirect Transferees of Registrable Securities from
such Ford Transferee and any Affiliates thereof) shall be entitled to request
the registration of Registrable Securities pursuant to this Section 3.9 only
once prior to a Ford Ownership Reduction and thereafter shall only be entitled
to request the registration of Registrable Securities pursuant to Section
3.1(a)(ii) and, provided, further, that no Transferee shall be entitled to
request registration pursuant to this Section 3.9 for an amount of Registrable
Securities equal to less than $50,000,000. Any transfer of registration rights
pursuant to this Section 3.9 shall be effective upon receipt by Hertz of (i)
written notice from such Holder stating the name and address of any Transferee
and identifying the number of Registrable Securities with respect to which the
rights under this Agreement are being transferred and the nature of the rights
so transferred and (ii) a written agreement from such Transferee to be bound by
the terms of this Article III and Sections 5.3, 5.4, 5.9, 5.10, and 5.12 of
this Agreement. The Holders may exercise their rights hereunder in such
priority as they shall agree upon among themselves.
23
23
3.10. Holdback Agreement. If any registration pursuant to
this Article III shall be in connection with an underwritten public offering of
Registrable Securities, each Selling Holder agrees not to effect any public
sale or distribution, including any sale under Rule 144, of any equity security
of Hertz or any security convertible into or exchangeable or exercisable for
any equity security of Hertz, in the case of Registrable Securities (otherwise
than through the registered public offering then being made), within 7 days
prior to or 90 days (or such lesser period as the lead or managing underwriters
may permit) after the effective date of the registration statement (or the
commencement of the offering to the public of such Registrable Securities in
the case of Rule 415 offerings). Hertz hereby also so agrees; provided, that,
subject to Section 3.6(a) hereof, Hertz shall not be so restricted from
effecting any public sale or distribution of any security in connection with
any merger, acquisition, exchange offer, subscription offer, dividend
reinvestment plan or stock option or other executive or employee benefit or
compensation plan.
3.11. Registration of Preferred Stock. Hertz agrees that it
shall from time to time enter into one or more agreements with Ford and/or the
Class B Transferee, if any, in form and substance reasonably satisfactory to
the parties thereto, granting to Ford or the Class B Transferee, as the case
may be, registration rights for the registration of any shares of preferred
stock of Hertz that may hereafter be owned, directly or indirectly, by Ford or
the Class B Transferee, as the case may be, substantially upon the same terms
and conditions as those contained in Article III for the benefit of Ford.
ARTICLE IV
CERTAIN COVENANT AND AGREEMENTS
4.1. No Violations. (a) For so long as the Ownership
Percentage is equal to or greater than 50%, Hertz covenants and agrees that it
will not take any action or enter into any commitment or agreement which may
reasonably be anticipated to result, with or without notice and with or without
lapse of time or otherwise, in a contravention or event of default by any Ford
Entity of (i) any provisions of applicable law or regulation, including but not
limited to provisions pertaining to the Internal Revenue Code of 1986, as
amended, or the Employee Retirement Income Security Act of 1974, as amended,
(ii) any provision of Ford's or Ford Holdings, Inc.'s certificate of
incorporation or bylaws, (iii) any credit agreement or other material
instrument binding upon Ford or Ford Holdings, Inc. or (iv) any judgment, order
or decree of any governmental body, agency or court having jurisdiction over
Ford or Ford Holdings, Inc. or any of their respective assets.
(b) Hertz and Ford agree to provide to the other any
information and documentation requested by the other for the
24
24
purpose of evaluating and ensuring compliance with Section 4.1(a) hereof.
(c) Notwithstanding the foregoing Sections 4.1(a) and 4.1(b),
nothing in this Agreement is intended to limit or restrict in any way Ford's
rights as a shareholder of Hertz.
4.2. Confidentiality. Except as required by law, regulation
or legal or judicial process, Ford agrees that neither it nor any Ford Entity
nor any of their respective directors, officers or employees will without the
prior written consent of Hertz disclose to any Person any material, non-public
information concerning the business or affairs of Hertz acquired from any
director, officer or employee of Hertz (including any director, officer or
employee of Hertz who is also a director, officer or employee of Ford).
ARTICLE V
MISCELLANEOUS
5.1. Limitation of Liability. Neither Ford nor Hertz shall
be liable to the other for any special, indirect, incidental or consequential
damages of the other arising in connection with this Agreement.
5.2. Subsidiaries. Ford agrees and acknowledges that Ford
shall be responsible for the performance by each Ford Entity of the obligations
hereunder applicable to such Ford Entity.
5.3. Amendments. This Agreement may not be amended or
terminated orally, but only by a writing duly executed by or on behalf of the
parties hereto. Any such amendment shall be validly and sufficiently
authorized for purposes of this Agreement if it is signed on behalf of Ford and
Hertz by any of their respective presidents or vice presidents.
5.4. Term. This Agreement shall remain in effect until all
Registrable Securities held by Holders have been transferred by them to Persons
other than Transferees; provided, that the provisions of Section 3.7 shall
survive any such expiration.
5.5. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement or such provision
of the application of such provision to such party or circumstances, other than
those to which it is so determined to be invalid, illegal or unenforceable,
shall remain in full force and effect to the fullest extent permitted by law
and shall not be affected thereby, unless such a construction would be
unreasonable.
25
25
5.6. Notices. All notices and other communications required
or permitted hereunder shall be in writing, shall be deemed duly given upon
actual receipt, and shall be delivered (a) in person, (b) by registered or
certified mail, postage prepaid, return receipt requested or (c) by facsimile
or other generally accepted means of electronic transmission (provided that a
copy of any notice delivered pursuant to this clause (c) shall also be sent
pursuant to clause (b)), addressed as follows:
(a) if to Hertz, to:
The Hertz Corporation
000 Xxxx Xxxxxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy No.: 000-000-0000
(b) If to Ford, to:
Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Telecopy No.: 000-000-0000
or to such other addresses or telecopy numbers as may
be specified by like notice to the other parties.
5.7. Further Assurances. Ford and Hertz shall execute,
acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments and take such
other action as may be necessary or advisable to carry out
their obligations under this Agreement and under any exhibit,
document or other instrument delivered pursuant hereto.
5.8. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be
deemed an original instrument, but all of which together shall
constitute but one and the same agreement.
5.9. Governing Law. This Agreement and the
transactions contemplated hereby shall be construed in
accordance with, and governed by, the laws of the State of
Delaware.
5.10. Entire Agreement. This Agreement constitutes
the entire understanding of the parties hereto with
respect to the subject matter hereof.
5.11. Class B Transferee. Hertz agrees that it shall
enter into an agreement with the Class B Transferee (as
defined in Hertz' Restated Certificate
26
26
of Incorporation), if any, in form and substance reasonably
satisfactory to the Class B Transferee and Hertz (i) granting
to the Class B Transferee options for the purchase of
Class B Common Stock and Nonvoting Stock substantially upon the
same terms and conditions as those contained in Article II,
(ii) granting to the Class B Transferee registration rights for
the registration of Registrable Securities substantially upon
the same terms and conditions as those contained in Article III
for the benefit of Ford and (iii) containing other covenants
and agreement for the benefit of the Class B Transferee that
are substantially similar to the other covenants and agreements
contained in this Agreement for the benefit of Ford; provided,
that such agreement shall contain terms (including covenants
and agreements of the Class B Transferee) for the benefit of
Hertz that are substantially similar to the terms (including
the covenants and agreements of Ford) for the benefit of Hertz
contained herein.
5.12. Successors. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties
hereto and their respective successors and assigns. Nothing
contained in this Agreement, express or implied, is intended to
confer upon any other person or entity any benefits, rights or
remedies.
5.13. Specific Performance. The parties hereto
acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they
shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of
competent jurisdiction in the United States or any state
thereof, in addition to any other remedy to which they may be
entitled at law or equity.
27
27
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
Ford Motor Company
By:
-----------------------
Name:
Title:
The Hertz Corporation
By:
-----------------------
Name:
Title:
