REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _____ 1997 (the
"Agreement"), between Travel Services International, Inc., a Delaware
corporation ("TSII") and _______________________________, a Delaware corporation
(the "Company").
WHEREAS, Company has made significant capital contributions to
TSII and currently owns a large portion of the issued and outstanding shares of
common stock, $.01 par value, of TSII (the "Common Stock"); and
WHEREAS, in connection with the proposed initial public
offering (the "Initial Public Offering") of the Common Stock, TSII wishes to
grant to the Company certain registration rights with respect to the shares of
Common Stock that the Company currently owns or may acquire in the future, as
provided further herein.
NOW THEREFORE, in consideration of the capital contributions
made by the Company to TSII and of the promises herein contained, the parties
hereto agree as follows:
1. Definitions.
-----------
As used in this Agreement:
(i) the terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;
(ii) the term "Registrable Securities" means (A) all shares of
Common Stock owned by the Company as of the date hereof, (B) any additional
shares of Common Stock acquired by the Company and (C) any capital stock of TSII
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares of Common Stock referred to in clause (A) or
(B) above;
(iii) the term "Holder" shall mean the Company or any other
holder of Registrable Securities to whom the rights under this Agreement have
been assigned and the term "Holders" shall mean all such Holders collectively;
(iv) the term "Initiating Holders" shall mean any Holder or
Holders who in the aggregate are Holders of a majority of the Registrable
Securities issued to the Founding Stockholders;
(v) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Act;
(vi) "Registration Expenses" shall mean all third-party
expenses incurred by TSII in compliance with Sections 2 and 3 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for TSII and the underwriters, if any, blue sky
fees and expenses and the third-party expenses of any special audits incident to
or required by any such registration (but excluding the compensation of regular
employees of TSII, which shall be paid in any event by TSII);
(vii) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders;
(viii) "Act" shall mean the Securities Act of 1933, as
amended; and
(ix) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2. Requested Registration.
----------------------
(i) Request for Registration. If TSII shall receive from an
Initiating Holder, no sooner that two years following the completion of the
Initial Public Offering, a written request that TSII effect any registration
with respect to all or a part of the Registrable Securities, TSII will:
(A) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(B) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws
and appropriate compliance with applicable regulations issued under the
Act) as may be so requested and as would permit or facilitate the sale
and distribution as soon as is practicable of all or such portion of
such Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request
received by TSII within 10 business days after written notice from TSII
is given under Section 2(i) (A) above; provided that TSII shall not be
obligated to effect, or take any action to effect, any such
registration pursuant to this Section 2:
(x) In any particular jurisdiction in which TSII
would be required to execute a general consent to service
2
of process in effecting such registration, qualification or
compliance, unless TSII is already subject to service in such
jurisdiction and except as may be required by the Act or
applicable rules or regulations thereunder;
(y) After TSII has effected three (3) such
registrations pursuant to this Section 2 and such
registrations have been declared or ordered effective and the
sales of such Registrable Securities shall have closed; or
(z) If the Registrable Securities requested by all
Holders to be registered pursuant to such request do not have
an anticipated aggregate public offering price (before any
underwriting discounts and commissions) of not less than
$[10,000,000].
The registration statement filed pursuant to the request of
the Initiating Holders may, subject to the provisions of Section 2(ii) below,
include other securities of TSII which are held by officers or directors of
TSII, or which are held by persons who, by virtue of agreements with TSII are
entitled to include their securities in any such registration, but TSII shall
have no absolute right to include any of its securities in any such
registration.
The registration rights set forth in this Section 2 shall be
assignable, in whole or in part, to any transferee of Common Stock (who shall be
bound by all obligations of this Section 2).
(ii) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise TSII as a part of their request made pursuant
to Section 2.
If officers or directors of TSII holding other securities of
TSII shall request inclusion in any registration pursuant to Section 2, or if
holders of securities of TSII other than Registrable Securities who are
entitled, by contract with TSII or otherwise, to have securities included in
such a registration (the "Other Stockholders") request such inclusion, the
Holders shall offer to include the securities of such officers, directors and
Other Stockholders in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Section 2. The Holders
whose shares are to be included in such registration and TSII shall (together
with all officers, directors and Other Stockholders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the representative of the underwriter or underwriters
selected for such underwriting by the initiating Holders and reasonably
acceptable to TSII. Notwithstanding any other provision of this Section 2, if
the representative advises
3
the Holders in writing that marketing factors require a limitation on the number
of shares to be underwritten, the securities of TSII held by officers or
directors of TSII and the securities held by Other Stockholders shall be
excluded from such registration to the extent so required by such limitation.
If, after the exclusion of such shares, further reductions are still required,
the number of shares included in the registration by each Holder shall be
reduced on a pro rata basis (based on the number of shares proposed to be sold
by such Holder), by such minimum number of shares as is necessary to comply with
such request. No Registrable Securities or any other securities excluded from
the underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any officer, director or Other Stockholder who
has requested inclusion in such registration as provided above disapproves of
the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to TSII, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration. If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, TSII may include its securities for its own
account in such registration if the representative so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
(iii) Notwithstanding the foregoing, if TSII shall furnish to
Holders requesting the filing of a registration statement pursuant to Section 2
(i), a certificate signed by the president or Chief Executive Officer of TSII
stating that in the good faith judgment of the Board of Directors of TSII, it
would be seriously detrimental to TSII and its stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, then TSII shall have the right to defer
such filing for a period of not more than 60 days after receipt of the request
of the Initiating Holders; provided, however, that TSII may not utilize this
right more than once in any twelve (12) month period.
3. TSII Registration.
-----------------
(i) If TSII shall determine to register any of its equity
securities either for its own account or for the account of a security holder or
holders exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Commission Rule 145 transaction, or a registration on any
registration form which does not permit secondary sales or does not include
substantiallY the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, TSII will:
(A) promptly give to each of the Holders a written
4
notice thereof (which shall include a list of the jurisdictions in
which TSII intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(B) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified
in a written request or requests, made by the Holders within fifteen
(15) days after receipt of the written notice from TSII described in
clause (i) above, except as set forth in section 2(ii) below. Such
written request may specify all or a part of the Holders' Registrable
Securities.
(ii) Underwriting. If the registration of which TSII gives
notice is for a registered public offering involving an underwriting, TSII shall
so advise each of the Holders as a part of the written notice given pursuant to
Section 3(i)(A). In such event, the right of each of the Holders to registration
pursuant to this Section 3 shall be conditioned upon such Holders' participation
in such underwriting and the inclusion of such Holders' Registrable Securities
in the underwriting to the extent provided herein. The Holders whose shares are
to be included in such registration shall (together with TSII and the Other
Stockholders distributing their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by TSII. Notwithstanding
any other provision of this Section 3, if the representative determines that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the allocation priority set
forth below) limit the number of Registrable Securities to be included in the
registration and underwriting. TSII shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner: The securities of TSII held by officers, directors and
Other Stockholders of TSII (other than securities held by holders who by
contractual right initiated the demand for such registration ("Demanding
Holders")) shall be excluded from such registration and underwriting to the
extent required by such limitation, and, if a limitation on the number of shares
is still required, the number of shares that may be included in the registration
and underwriting by each of the Holders and Demanding Holders shall be reduced,
on a pro rata basis (based on the number of shares proposed to be sold by such
Holder or Demanding Holder), by such minimum number of shares as is necessary to
comply with such limitation. If any of the Holders or Demanding Holders or any
officer, director or Other Stockholder disapproves of the terms of any such
underwriting, he may elect to withdraw there from by written notice to TSII and
the underwriter. Any Registrable Securities or other securities excluded or
withdrawn
5
from such underwriting shall be withdrawn from such registration.
(iii) Number and Transferability. Each of the Holders shall be
entitled to have its shares included in an unlimited number of registrations
pursuant to this Section 3. The registration rights granted pursuant to this
Section 3 shall be assignable, in whole or in part, to any transferee of the
Common Stock (who shall be bound by all obligations of this Section 3).
4. Expenses of Registration. All Registration Expenses and
Selling Expenses incurred in connection with any registration, qualification or
compliance pursuant to Section 2 of this Agreement shall be borne by the Holders
of the securities so registered pro rata on the basis of the number of shares so
registered. Without limiting the generality of the foregoing, in the event TSII
includes shares in any registration, qualification or compliance pursuant to
Section 2 of this Agreement, TSII shall pay the Registration Expenses in
proportion to TSII's share of the total number of shares included in such
registration. All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 3 of this
Agreement shall be borne by TSII, and all Selling Expenses incurred in
connection with any such registration, qualification or compliance shall be
borne by the Holders of securities so registered pro rata on the basis of the
number of shares so registered.
5. Registration procedures. In the case of each registration
effected by TSII pursuant to this Agreement, TSII will keep the Holders, as
applicable, advised in writing as to the initiation of each registration and as
to the completion thereof. TSII will:
(i) keep such registration effective for a period of one
hundred eighty (180) days or until the Holders, as applicable, have
completed the distribution described in the registration statement
relating thereto, whichever first occurs; provided, however, that (A)
such 180-day period shall be extended for a period of time equal to the
period during which the Holders, as applicable, refrain from selling
any securities included in such registration in accordance with
provisions in Section 9 hereof; and (B) in the case of any registration
of Registrable Securities on Form S-3 which are intended to be offered
on a continuous or delayed basis, such 180-day period shall be extended
until all such Registrable Securities are sold, provided that Rule 418,
or any successor rule under the Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules
under the Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment which
(y) includes any prospectus required by Section 10(a) of the Act or
reflects facts or events representing a material or fundamental change
in the information set forth in the
6
registration statement, the incorporation by reference of information
required to be included in (y) and (z) above to be contained in
periodic reports filed pursuant to Section 12 or 15(d) of the Exchange
Act in the registration statement; and
(ii) furnish such number of prospectuses and other documents
incident thereto as each of the Holders, as applicable, from time to
time may reasonably request;
provided, however, that the Holders, pro rata on the basis of the number of
their shares so included in such registration, reimburse TSII for expenses
incurred in performing its obligations under this Section 5.
6. Indemnification.
---------------
(i) TSII will indemnify each of the Holders, as applicable,
each of its officers, directors and partners, and each person controlling each
of the Holders, with respect to each registration which has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by TSII of the Act or
any rule or regulation thereunder applicable to TSII and relating to action or
inaction required of TSII in connection with any such registration,
qualification or compliance, and will reimburse each of the Holders, each of its
officers, directors and partners, and each person controlling each of the
Holders, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that TSII will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission based upon written information
furnished to TSII by the Holders or underwriter and stated to be specifically
for use therein.
(ii) Each of the Holders will, if Registrable Securities held
by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify TSII, each of its
directors and officers and each underwriter, if any, of TSII's securities
covered by such a registration statement, each person who controls TSII or such
underwriter within the meaning of the Act and the rules and
7
regulations thereunder, each Other Stockholder and each of their officers,
directors, and partners, and each person controlling such Other Stockholder
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document made by such Holder, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements by such Holder therein not
misleading, and will reimburse TSII and such Other Stockholders, directors,
officers, partners, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to TSII by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder shall be limited to an amount equal
to the net proceeds to such Holder of securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of counsel shall be at the expense of the
Indemnifying Party), and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 6 unless the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably
8
required in connection with the defense of such claim and litigation resulting
therefrom.
(iv) If the indemnification provided for in this Section 6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing provisions,
the provisions in such underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of TSII and Holders is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the Commission at the time the
registration statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Commission Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
underwriter if a copy of the Final Prospectus was furnished to the underwriter
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Act.
7. Information by the Holders. Each of the Holders and each
Other Stockholder holding securities included in any registration, shall furnish
to TSII such information regarding such Holder or Other Stockholder and the
distribution opposed by such Holder or Other Stockholder as TSII may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
9
8. Rule 144 Reporting.
------------------
With a view to making available the benefits of certain rules
and regulations of the Commission which may permit the sale of restricted
securities to the public without registration, TSII agrees to:
(i) make and keep public information available as those terms
are understood and defined in Rule 144, at all times from and after
ninety (90) days following the effective date of the first registration
under the Act filed by TSII for an offering of its securities to the
general public;
(ii) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of TSII under
the Act and the Exchange Act at any time after it has become subject to
such reporting requirements; and
(iii) so long as the Holder owns any Registrable Securities,
furnish to the Holder upon request, a written statement by TSII as to
its compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the
first registration statement filed by TSII for an offering of its
securities to the general public), and of the Act and the Exchange Act
(at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
TSII, and such other reports and documents so filed as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such securities without
registration.
9. "Market Stand-off" Agreement. The Company agrees, if
requested by TSII and an underwriter of Common Stock (or other securities) of
TSII, not to sell or otherwise transfer or dispose of any Common Stock (or other
securities) of TSII held by such Holder during the 180 day period following the
effective date of the initial registration statement of TSII filed under the Act
and during the 90 day period following any subsequent registration statement
filed under the Act, provided that all executive officers and directors of TSII
enter into similar agreements.
If requested by the underwriters, the Holders shall execute a
separate agreement to the foregoing effect. TSII may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such period. The provisions of this Section 9 shall
be binding upon any transferee who acquires Registrable Securities, whether or
not such transferee is entitled to the registration rights provided hereunder.
10
10. Termination. The registration rights set forth in this
Agreement shall not be available to any Holder if, in the opinion of counsel to
TSII, all of the Registrable Securities then owned by such Holder could be sold
in any 90-day period pursuant to Rule 144 under the Act (without giving effect
to the provisions of Rule 144 (k)).
11. Notices. All communications provided for hereunder shall
be sent by first-class mail and (a) if addressed to the Company, addressed to
the Company, at _____________________________, Attention: _____________________,
or at such other address as such party shall have furnished to TSII in writing,
or if addressed to any other Holder of Registrable Securities, at the address
that such Holder shall have furnished to TSII in writing, or, until any such
other Holder so furnishes to the company an address, then to and at the address
of the last Holder of such Registrable Securities who has furnished an address
to TSII, or (c) if addressed to TSII, at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President, or at such other address,
or to the attention of such other officer, as TSII shall have furnished to each
Holder of Registrable Securities at the time outstanding.
12. Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and, with respect to
TSII, its respective successors and assigns and, with respect to the Company,
any Holder of any Registrable Securities, subject to the provisions respecting
the minimum numbers or percentages of shares of Registrable Securities required
in order to be entitled to certain rights, or take certain actions, contained
herein.
13. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
14. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of Delaware.
15. Counterparts. This Agreement may be executed
simultaneously 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.
16. Other Registration Rights. For so long as the Company
holds at least 20% of the Registrable Shares, TSII shall not, without the prior
written consent of the Company, enter into any agreement, understanding or
arrangement pursuant to which TSII grants registration or other similar rights
to any shareholder unless the Holders shall be entitled to have included in any
11
registration effected pursuant to Section 3 hereof all Registrable Shares
requested by them to be so included prior to the inclusion of any securities
requested to be registered by the shareholders entitled to any such other
registration or other similar rights.
IN WITNESS WHEREOF, the parties have caused this agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
TRAVEL SERVICES INTERNATIONAL, INC.
By
--------------------------------
Name:
Title:
[Company]
By
--------------------------------
Name:
Title:
12
