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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 22, 1997
THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 1-7541 13-1938568
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
225 BRAE BOULEVARD 07656-0713
PARK RIDGE, NEW JERSEY (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code (201) 307-2000
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ITEM 5. OTHER EVENTS
The Board of Directors of The Hertz Corporation (the "Company")
adopted new By-laws of the Company, effective April 22, 1997. A copy of the
By-laws is attached as Exhibit 3(b) hereto and incorporated herein by
reference.
On April 25, 1997, the Company and Ford Motor Company entered into a
Corporate Agreement. A copy of the Corporate Agreement is attached as Exhibit
10(a) hereto and incorporated herein by reference.
On April 25, 1997, the Board of Directors of the Company adopted The
Hertz Corporation Long-Term Equity Compensation Plan. A copy of the plan is
attached as Exhibit 10(b) hereto and incorporated herein by reference.
On April 30, 1997, the Company filed with the Secretary of State of
the State of Delaware a Restated Certificate of Incorporation of the Company.
A copy of the Restated Certificate of Incorporation is attached as Exhibit 3(a)
hereto and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following Exhibits are filed as part of this Report.
3(a) Restated Certificate of Incorporation of the Company,
effective April 30, 1997
3(b) By-laws of the Company, effective April 22, 1997
10(a) Corporate Agreement between the Company and Ford
Motor Company, dated April 25, 1997
10(b) The Hertz Corporation Long-Term Equity Compensation Plan
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereto duly authorized.
THE HERTZ CORPORATION
By: /s/ Leo A. Massad, Jr.
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Leo A. Massad, Jr.
Staff Vice President and Controller
(Principal Accounting Officer)
Date: May 1, 1997
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER
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3(a) Restated Certificate of Incorporation of the Company, effective April 30, 1997
3(b) By-laws of the Company, effective April 22, 1997
10(a) Corporate Agreement between the Company and Ford Motor Company, dated April 25, 1997
10(b) The Hertz Corporation Long-Term Equity Compensation Plan
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EXHIBIT 3(a)
RESTATED
CERTIFICATE OF INCORPORATION
OF
THE HERTZ CORPORATION
* * * * *
The Hertz Corporation, a Delaware corporation, the original
Certificate of Incorporation of which was filed with the Secretary of State of
the State of Delaware on April 19, 1967 under the name New Aitch, Inc., HEREBY
CERTIFIES that this Restated Certificate of Incorporation restating, integrating
and amending its Restated Certificate of Incorporation, as amended, was duly
adopted by its Board of Directors and its stockholders in accordance with
Sections 242 and 245 of the General Corporation Law of the State of Delaware
(the "Delaware General Corporation Law").
1. NAME OF CORPORATION. The name of the corporation is THE HERTZ
CORPORATION (the "Corporation").
2. REGISTERED OFFICE AND REGISTERED AGENT. The address of the
Corporation's registered office in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, City of Wilmington, County of New Castle. The name
of the Corporation's registered agent at such address is The Corporation Trust
Company.
3. PURPOSE. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
Delaware General Corporation Law as the same exists or may hereafter be amended.
4. CAPITAL STOCK. (a) The total number of shares of stock that the
Corporation shall have authority to issue is 620,000,000 of which (i) 40,000,000
shares shall be shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), (ii) 440,000,000 shares shall be shares of Class A Common
Stock, par value $.01 per share ("Class A Common Stock") and (iii) 140,000,000
shares shall be shares of Class B Common Stock, par value $.01 per share ("Class
B Common Stock", and together with the Class A Common Stock, "Common Stock").
(b) The number of authorized shares of any class or classes of stock
may be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the votes
entitled to be cast by the holders of the Common Stock of the Corporation,
voting together as a single class, irrespective of the provisions of Section
242(b)(2) of the Delaware General Corporation Law or any corresponding provision
hereinafter enacted.
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(c) The following is a statement of the relative powers, preferences
and participating, optional or other special rights, and the qualifications,
limitations and restrictions of the Class A Common Stock and Class B Common
Stock of the Corporation:
(1) Except as otherwise set forth below in this Article 4, the
relative powers, preferences and participating, optional or other special
rights, and the qualifications, limitations or restrictions of the Class A
Common Stock and Class B Common Stock shall be identical in all respects.
(2) Subject to the rights of the holders of any outstanding preferred
stock and subject to any other provisions of this Restated Certificate of
Incorporation, holders of Class A Common Stock and Class B Common Stock
shall be entitled to receive such dividends and other distributions in
cash, stock of any corporation (other than Common Stock) or property of the
Corporation as may be declared thereon by the Board of Directors from time
to time out of assets or funds of the Corporation legally available
therefor and shall share equally on a per share basis in all such dividends
and other distributions. In the case of dividends or other distributions
payable in Common Stock, including distributions pursuant to stock splits
or divisions of Common Stock, only shares of Class A Common Stock shall be
paid or distributed with respect to Class A Common Stock and only shares of
Class B Common Stock shall be paid or distributed with respect to Class B
Common Stock. The number of shares of Class A Common Stock and Class B
Common Stock so distributed shall be equal in number on a per share basis.
Neither the shares of Class A Common Stock nor the shares of Class B Common
Stock may be reclassified, subdivided or combined unless such
reclassification, subdivision or combination occurs simultaneously and in
the same proportion for each class.
(3)(A) At every meeting of the stockholders of the Corporation every
holder of Class A Common Stock shall be entitled to one vote in person or
by proxy for each share of Class A Common Stock standing in his or her name
on the transfer books of the Corporation, and every holder of Class B
Common Stock shall be entitled to five votes in person or by proxy for each
share of Class B Common Stock standing in his or her name on the transfer
books of the Corporation in connection with the election of directors and
all other matters submitted to a vote of stockholders, subject to the right
of Ford Motor Company (together with its successors, "Ford") or the Class B
Transferee (as defined in paragraph (c)(6)(B) below), as the case may be,
which at the time shall own beneficially all of the outstanding shares of
Class B Common Stock, to reduce from time to time the number of votes per
share to which the holders of Class B Common Stock are entitled to any
number of votes per share of Class B Common Stock less than five (but not
fewer than one) by written notice to the Corporation, which notice shall
(i) specify the reduced number of votes per share, (ii) be included with
the records of the Corporation maintained by the Secretary and (iii), for
so long thereafter as there shall be shares of Class B Common Stock
outstanding, be referred to or reflected in any proxy or information
statement provided to holders of the Common Stock in connection with any
matter to be voted upon by such holders; provided, however, that with
respect to any proposed conversion of the shares of Class B Common Stock
into shares of Class A Common Stock pursuant to paragraph
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(c)(6)(B) below, every holder of a share of Common Stock, irrespective of
class, shall have one vote in person or by proxy for each share of Common
Stock standing in his or her name on the transfer books of the Corporation.
Except as may be otherwise required by law or by this Article 4, the
holders of Class A Common Stock and Class B Common Stock shall vote
together as a single class, subject to any voting rights which may be
granted to holders of Preferred Stock, on all matters submitted to a vote
of stockholders of the Corporation.
(B) Except as otherwise provided by law, and subject to any rights
of the holders of any outstanding preferred stock, the provisions of this
Restated Certificate of Incorporation shall not be modified, revised,
altered or amended, repealed or rescinded in whole or in part, without the
approval of a majority of the votes entitled to be cast by the holders of
the Class A Common Stock and the Class B Common Stock, voting together as a
single class; provided, however, that with respect to any proposed
amendment of this Restated Certificate of Incorporation which would alter
or change the powers, preferences or special rights of the shares of Class
A Common Stock or Class B Common Stock so as to affect them adversely, the
approval of a majority of the votes entitled to be cast by the holders of
the shares affected by the proposed amendment, voting separately as a
class, shall be obtained in addition to the approval of a majority of the
votes entitled to be cast by the holders of the Class A Common Stock and
the Class B Common Stock voting together as a single class as hereinbefore
provided. Any increase or decrease (but not below the number of shares
thereof then outstanding) in the authorized number of shares of any class
or classes of stock of the Corporation or creation, authorization or
issuance of any securities convertible into, or warrants, options or
similar rights to purchase, acquire or receive, shares of any such class or
classes of stock shall be deemed not to affect adversely the powers,
preferences or special rights of the shares of Class A Common Stock or
Class B Common Stock.
(C) Every reference in this Restated Certificate of Incorporation to
a majority or other proportion of shares of Common Stock, Class A Common
Stock or Class B Common Stock shall refer to such majority or other
proportion of the votes to which such shares of Common Stock, Class A
Common Stock or Class B Common Stock are entitled.
(4) In the event of any dissolution, liquidation or winding up of the
affairs of the Corporation, whether voluntary or involuntary, after payment
in full of the amounts required to be paid to the holders of any
outstanding preferred stock, the remaining assets and funds of the
Corporation shall be distributed pro rata to the holders of Class A Common
Stock and Class B Common Stock. For purposes of this paragraph (c)(4), the
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially all of
the assets of the Corporation or a consolidation or merger of the
Corporation with one or more other corporations (whether or not the
Corporation is the corporation surviving such consolidation or merger)
shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary.
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(5) In case of any reorganization or any consolidation of the
Corporation with one or more other corporations or a merger of the
Corporation with another corporation, each holder of a share of Class A
Common Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reorganization, consolidation or
merger by a holder of a share of Class B Common Stock and each holder of a
share of Class B Common Stock shall be entitled to receive with respect to
such share the same kind and amount of shares of stock and other securities
and property (including cash) receivable upon such reorganization,
consolidation or merger by a holder of a share of Class A Common Stock.
(6)(A) Prior to the date on which shares of Class B Common Stock are
issued to stockholders of Ford, or the Class B Transferee in a Tax-Free
Spin-Off (as defined in paragraph (c)(6)(B) below), each record holder of
shares of Class B Common Stock may convert such shares into an equal number
of shares of Class A Common Stock by surrendering the certificates for such
shares, accompanied by any required tax transfer stamps and by a written
notice by such record holder to the Corporation stating that such record
holder desires to convert such shares of Class B Common Stock into the same
number of shares of Class A Common Stock and requesting that the
Corporation issue all of such shares of Class A Common Stock to persons
named therein, setting forth the number of shares of Class A Common Stock
to be issued to each such person and the denominations in which the
certificates therefor are to be issued. To the extent permitted by law,
such voluntary conversion shall be deemed to have been effected at the
close of business on the date of such surrender. Following a Tax-Free
Spin-Off, shares of Class B Common Stock shall no longer be convertible
into shares of Class A Common Stock except as set forth in paragraph
(c)(6)(B) below.
(B) Prior to a Tax-Free Spin-Off, each share of Class B Common Stock
shall automatically convert into one share of Class A Common Stock upon the
transfer of such share if, after such transfer, such share is not
beneficially owned by Ford or any subsidiary of Ford or, as set forth below
in this paragraph (c)(6)(B), the Class B Transferee or any subsidiary of
the Class B Transferee. Shares of Class B Common Stock shall not convert
into shares of Class A Common Stock (i) in any transfer effected in
connection with a distribution of Class B Common Stock to stockholders of
Ford or of the Class B Transferee in a transaction intended to be tax-free
under Section 355 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), (a "Tax-Free Spin-Off") or (ii) except as
otherwise set forth below in this paragraph (c)(6)(B), in any transfer
after a Tax-Free Spin-Off. For purposes of this paragraph (c)(6), a
Tax-Free Spin-Off shall be deemed to have occurred at the time shares are
first transferred to stockholders of Ford or to stockholders of the Class B
Transferee, as the case may be, following receipt of an affidavit described
in clauses (vi) or (vii) of the first sentence of paragraph (c)(6)(D)
below. For purposes of this paragraph (c)(6), the term "beneficially
owned" with respect to shares of Class B Common Stock means ownership by a
person or entity who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise controls the voting
power (which includes the power to vote or to direct the voting) of such
Class B Common Stock and the term "subsidiary" means as to any person or
entity, all
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corporations, partnerships, joint ventures, associations and other entities
in which such person or entity beneficially owns (directly or indirectly)
50% or more of the outstanding voting stock, voting power, partnership
interests or similar voting interests. Prior to a Tax-Free Spin-Off,
shares of Class B Common Stock representing more than a 50% economic
interest in the then outstanding Common Stock taken as a whole transferred
by Ford or any of its subsidiaries in a single transaction to one unrelated
person (together with its successors, the "Class B Transferee") or any
subsidiary of the Class B Transferee shall not automatically convert to
Class A Common Stock upon the transfer of such shares. Any shares of Class
B Common Stock retained by Ford or any of its subsidiaries following any
such transfer of shares of Class B Common Stock to the Class B Transferee
shall automatically convert into shares of Class A Common Stock upon such
transfer. For purposes of this paragraph (c)(6), each reference to a
"person" shall be deemed to include not only a natural person, but also a
corporation, partnership, joint venture, association, or legal entity of
any kind; each reference to a "natural person" (or to a "record holder" of
shares, if a natural person) shall be deemed to include in his or her
representative capacity a guardian, committee, executor, administrator or
other legal representative of such natural person or record holder.
In the event of a Tax-Free Spin-Off, shares of Class B Common Stock
shall automatically convert into shares of Class A Common Stock on the
fifth anniversary of the date on which shares of Class B Common Stock are
first transferred to stockholders of Ford or of the Class B Transferee, as
the case may be, in a Tax-Free Spin-Off unless, prior to such Tax-Free
Spin-Off, Ford or the Class B Transferee, as the case may be, delivers to
the Corporation an opinion of counsel reasonably satisfactory to the
Corporation (which, in the case of Ford, shall include Ford's Chief Tax
Officer) to the effect that such conversion would preclude Ford or the
Class B Transferee, as the case may be, from obtaining a favorable ruling
from the Internal Revenue Service that the distribution would be a Tax-Free
Spin-Off under the Code. If such an opinion is received, approval of such
conversion shall be submitted to a vote of the holders of the Common Stock
as soon as practicable after the fifth anniversary of the Tax-Free Spin-Off
unless Ford or the Class B Transferee, as the case may be, delivers to the
Corporation an opinion of counsel reasonably satisfactory to the
Corporation (which, in the case of Ford, shall include Ford's Chief Tax
Officer) prior to such anniversary to the effect that such vote would
adversely affect the status of the Tax-Free Spin-Off. At the meeting of
stockholders called for such purpose, every holder of Common Stock shall be
entitled to one vote in person or by proxy for each share of Common Stock
standing in his or her name on the transfer books of the Corporation.
Approval of such conversion shall require the approval of a majority of the
votes entitled to be cast by the holders of the Class A Common Stock and
Class B Common Stock present and voting, voting together as a single class,
and the holders of the Class B Common Stock shall not be entitled to a
separate class vote. Such conversion shall be effective on the date on
which such approval is given at a meeting of stockholders called for such
purpose.
Each share of Class B Common Stock shall automatically convert into
one share of Class A Common Stock if at any time prior to a Tax-Free
Spin-Off the
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number of outstanding shares of Class B Common Stock owned by Ford or any
of its subsidiaries or the Class B Transferee or any of its subsidiaries,
as the case may be, is less than 20% of the aggregate number of shares of
Common Stock then outstanding.
The Corporation will provide notice of any automatic conversion of all
outstanding shares of Class B Common Stock to holders of record of the
Common Stock as soon as practicable following such conversion, provided,
however, that the Corporation may satisfy such notice requirement by
providing such notice prior to such conversion. Such notice shall be
provided by mailing notice of such conversion first class postage prepaid,
to each holder of record of the Common Stock, at such holder's address as
it appears on the transfer books of the Corporation; provided, however,
that no failure to give such notice nor any defect therein shall affect the
validity of the automatic conversion of any shares of Class B Common Stock.
Each such notice shall state, as appropriate, the following:
(a) the automatic conversion date;
(b) that all outstanding shares of Class B Common Stock are
automatically converted;
(c) the place or places where certificates for such shares are
to be surrendered for conversion; and
(d) that no dividends will be declared on the shares of Class B
Common Stock converted after such conversion date.
Immediately upon such conversion, the rights of the holders of
shares of Class B Common Stock as such shall cease and such holders shall
be treated for all purposes as having become the record owners of the
shares of Class A Common Stock issuable upon such conversion; provided,
however, that such persons shall be entitled to receive when paid any
dividends declared on the Class B Common Stock as of a record date
preceding the time of such conversion and unpaid as of the time of such
conversion, subject to paragraph (c)(6)(F) below.
(C) Prior to a Tax-Free Spin-Off, holders of shares of Class B Common
Stock may (i) sell or otherwise dispose of or transfer any or all of such
shares held by them, respectively, only in connection with a transfer which
meets the qualifications of paragraph (c)(6)(D) below, and under no other
circumstances, or (ii) convert any or all of such shares into shares of
Class A Common Stock as provided in paragraph (c)(6)(A) above. Prior to a
Tax-Free Spin-Off, no one other than those persons in whose names shares of
Class B Common Stock become registered on the original stock ledger of the
Corporation by reason of their record ownership of shares of common stock
of the Corporation which are reclassified into shares of Class B Common
Stock, or transferees or successive transferees who receive shares of Class
B Common Stock in connection with a transfer which meets the qualifications
set forth in paragraph (c)(6)(D) below, shall by virtue of the acquisition
of a certificate for shares of Class B Common Stock have the status of an
owner or holder of shares of
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Class B Common Stock or be recognized as such by the Corporation or be
otherwise entitled to enjoy for his or her own benefit the special rights
and powers of a holder of shares of Class B Common Stock.
Holders of shares of Class B Common Stock may at any and all times
transfer to any person the shares of Class A Common Stock issuable upon
conversion of such shares of Class B Common Stock.
(D) Prior to a Tax-Free Spin-Off, shares of Class B Common Stock
shall be transferred on the books of the Corporation and a new certificate
therefor issued, upon presentation at the office of the Secretary of the
Corporation (or at such additional place or places as may from time to time
be designated by the Secretary or any Assistant Secretary of the
Corporation) of the certificate for such shares, in proper form for
transfer and accompanied by all requisite stock transfer tax stamps, only
if such certificate when so presented shall also be accompanied by any one
of the following:
(i) an affidavit from Ford stating that such certificate is
being presented to effect a transfer by Ford of such shares to a
subsidiary of Ford; or
(ii) an affidavit from Ford stating that such certificate is
being presented to effect a transfer by any subsidiary of Ford of such
shares to Ford or another subsidiary of Ford; or
(iii) an affidavit from Ford stating that such certificate is
being presented to effect a transfer by Ford or any of its
subsidiaries of such shares to the Class B Transferee or a subsidiary
of the Class B Transferee as contemplated by paragraph (c)(6)(B); or
(iv) an affidavit from the Class B Transferee stating that
such certificate is being presented to effect a transfer by the Class
B Transferee of such shares to a subsidiary of the Class B Transferee;
or
(v) an affidavit from the Class B Transferee stating that such
certificate is being presented to effect a transfer by any subsidiary
of the Class B Transferee of such shares to the Class B Transferee or
another subsidiary of the Class B Transferee; or
(vi) an affidavit from Ford stating that such certificate is
being presented to effect a transfer by Ford of such shares to the
stockholders of Ford in connection with a Tax-Free Spin-Off; or
(vii) an affidavit from the Class B Transferee stating that
such certificate is being presented to effect a transfer by the Class
B Transferee of such shares to the stockholders of the Class B
Transferee in connection with a Tax-Free Spin-Off.
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Each affidavit of a record holder furnished pursuant to this paragraph
(c)(6)(D) shall be verified as of a date not earlier than five days prior
to the date of delivery thereof, and, where such record holder is a
corporation or partnership, shall be verified by an officer of the
corporation or by a general partner of the partnership, as the case may be.
If a record holder of shares of Class B Common Stock shall deliver a
certificate for such shares, endorsed by him or her for transfer or
accompanied by an instrument of transfer signed by him or her, to a person
who receives such shares in connection with a transfer which does not meet
the qualifications set forth in this paragraph (c)(6)(D), then such person
or any successive transferee of such certificate may treat such endorsement
or instrument as authorizing him or her on behalf of such record holder to
convert such shares in the manner above provided for the purpose of the
transfer to himself or herself of the shares of Class A Common Stock
issuable upon such conversion, and to give on behalf of such record holder
the written notice of conversion above required, and may convert such
shares of Class B Common Stock accordingly.
If such shares of Class B Common Stock shall improperly have been
registered in the name of such a person (or in the name of any successive
transferee of such certificate) and a new certificate therefor issued, such
person or transferee shall surrender such new certificate for cancellation,
accompanied by the written notice of conversion above required, in which
case (A) such person or transferee shall be deemed to have elected to treat
the endorsement on (or instrument of transfer accompanying) the certificate
so delivered by such former record holder as authorizing such person or
transferee on behalf of such former record holder so to convert such shares
and so to give such notice, (B) the shares of Class B Common Stock
registered in the name of such former record holder shall be deemed to have
been surrendered for conversion for the purpose of the transfer to such
person or transferee of the shares of Class A Common Stock issuable upon
conversion, and (C) the appropriate entries shall be made on the books of
the Corporation to reflect such action.
In the event that the Board of Directors of the Corporation (or any
committee of the Board of Directors, or any officer of the Corporation,
designated for the purpose by the Board of Directors) shall determine, upon
the basis of facts not disclosed in any affidavit or other document
accompanying the certificate for shares of Class B Common Stock when
presented for transfer, that such shares of Class B Common Stock have been
registered in violation of the provisions of paragraph (c)(6), or shall
determine that a person is enjoying for his or her own benefit the special
rights and powers of shares of Class B Common Stock in violation of such
provisions, then the Corporation shall take such action at law or in equity
as is appropriate under the circumstances. An unforeclosed pledge made to
secure a bona fide obligation shall not be deemed to violate such
provisions.
(E) Prior to the occurrence of a Tax-Free Spin-Off, every certificate
for shares of Class B Common Stock shall bear a legend on the face thereof
reading as follows:
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"The shares of Class B Common Stock represented by this
certificate may not be transferred to any person in connection with a
transfer that does not meet the qualifications set forth in paragraph
(c)(6)(D) of Article 4 of the Restated Certificate of Incorporation of
this corporation as amended and no person who receives such shares in
connection with a transfer which does not meet the qualifications
prescribed by paragraph (c)(6)(D) of said Article 4 is entitled to own
or to be registered as the record holder of such shares of Class B
Common Stock, but the record holder of this certificate may at any
time convert such shares of Class B Common Stock into the same number
of shares of Class A Common Stock. Each holder of this certificate,
by accepting the same, accepts and agrees to all of the foregoing."
Upon and after the transfer of shares in a Tax-Free Spin-Off, shares
of Class B Common Stock shall no longer bear the legend set forth above in
this paragraph (c)(6)(E).
(F) Upon any conversion of shares of Class B Common Stock into shares
of Class A Common Stock pursuant to the provisions of this paragraph
(c)(6), any dividend, for which the record date or payment date shall be
subsequent to such conversion, which may have been declared on the shares
of Class B Common Stock so converted shall be deemed to have been declared,
and shall be payable, with respect to the shares of Class A Common Stock
into or for which such shares of Class B Common Stock shall have been so
converted, and any such dividend which shall have been declared on such
shares payable in shares of Class B Common Stock shall be deemed to have
been declared, and shall be payable, in shares of Class A Common Stock.
(G) The Corporation shall not reissue or resell any shares of Class B
Common Stock which shall have been converted into shares of Class A Common
Stock pursuant to or as permitted by the provisions of this paragraph
(c)(6), or any shares of Class B Common Stock which shall have been
acquired by the Corporation in any other manner. The Corporation shall,
from time to time, take such appropriate action as may be necessary to
retire such shares and to reduce the authorized amount of Class B Common
Stock accordingly.
The Corporation shall at all times reserve and keep available, out of
its authorized but unissued Common Stock, such number of shares of Class A
Common Stock as would become issuable upon the conversion of all shares of
Class B Common Stock then outstanding.
(H) In connection with any transfer or conversion of any stock of the
Corporation pursuant to or as permitted by the provisions of this paragraph
(c)(6), or in connection with the making of any determination referred to
in this paragraph (c)(6):
(i) the Corporation shall be under no obligation to make any
investigation of facts unless an officer, employee or agent of the
Corporation
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responsible for making such transfer or determination or issuing
Class A Common Stock pursuant to such conversion has substantial
reason to believe, or unless the Board of Directors (or a
committee of the Board of Directors designated for the purpose)
determines that there is substantial reason to believe, that any
affidavit or other document is incomplete or incorrect in a
material respect or that an investigation would disclose facts
upon which any determination referred to in paragraph (c)(6)(F)
above should be made, in either of which events the Corporation
shall make or cause to be made such investigation as it may deem
necessary or desirable in the circumstances and have a reasonable
time to complete such investigation; and
(ii) neither the Corporation nor any director, officer,
employee or agent of the Corporation shall be liable in any
manner for any action taken or omitted in good faith.
(I) The Corporation will not be required to pay any documentary,
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Class A Common Stock on the conversion of shares of
Class B Common Stock pursuant to this paragraph (c)(6), and no such issue
or delivery shall be made unless and until the person requesting such issue
has paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid.
(d) All rights to vote and all voting power (including, without
limitation thereto, the right to elect directors) shall be vested exclusively,
in accordance with paragraph (c)(3) and paragraphs (d) through (g), inclusive,
in the holders of Common Stock, voting together as a single class, except as
otherwise expressly provided by the Board of Directors pursuant to Article 5 of
this Restated Certificate of Incorporation or as otherwise expressly required by
the law of the State of Delaware.
(e) No stockholder shall be entitled to exercise any right of
cumulative voting. If, however, any stockholder should at any time become
entitled to exercise a right of cumulative voting, whether by express
requirement of the law of the State of Delaware or otherwise, then at all
elections of directors each holder of Class A Common Stock shall be entitled to
cast one vote for each share of Class A Common Stock held by him or her, each
holder of Class B Common Stock shall be entitled to cast the number of votes to
which each share of Class B Common Stock is then entitled pursuant to paragraph
(c)(3)(A) above for each share of Class B Common Stock held by him or her and
each holder of Full Voting Preferred Stock (as defined in Article 5, paragraph
(b)), if any, of any series shall be entitled to cast the number of votes (which
may be one vote or more or less than one vote) for each share of Full Voting
Preferred Stock held by him or her which the Board of Directors shall have
determined pursuant to Article 5 in establishing voting rights with respect to
such series, in each case multiplied by the number of directors to be elected,
and each such holder shall be entitled to cast all of his or her votes for a
single director or to distribute them among the number of directors to be voted
for, or to cast his or her votes for any two or more of them as he or she may
see fit.
<PAGE> 11
11
(f) At any meeting of stockholders, the presence in person or by
proxy of the holders of shares entitled to cast a majority of all the votes
which could be cast at such meeting by the holders of all of the outstanding
shares of stock of the Corporation entitled to vote on every matter that is to
be voted on without regard to class at such meeting shall constitute a quorum.
(g) At every meeting of stockholders, the holders of Class A Common
Stock, the holders of Class B Common Stock and the holders of Full Voting
Preferred Stock, if any, shall vote together as a class, and their votes shall
be counted and totalled together; and at any meeting of stockholders duly called
and held at which a quorum (determined in accordance with the provisions of
paragraph (f)) is present, (i) in all matters other than the election of
directors, a majority of the votes which could be cast at such meeting upon a
given question and (ii) in the case of the election of directors, a plurality of
the votes which could be cast at such meeting upon such election, by such
holders who are present in person or by proxy, shall be necessary, in addition
to any vote or other action that may be expressly required by the provisions of
this Restated Certificate of Incorporation or by the law of the State of
Delaware, to decide such question or election, and shall decide such question or
election if no such additional vote or other action is so required.
(h) Each holder of Preferred Stock shall be entitled to vote to the
extent, if any, provided by the Board of Directors pursuant to Article 5.
5. PREFERRED STOCK. (a) Shares of Preferred Stock may be issued
from time to time in one or more series. Subject to the limitations set forth
in this Restated Certificate of Incorporation and any limitations prescribed by
the law of the State of Delaware, the Board of Directors is expressly
authorized, prior to issuance of any series of Preferred Stock, to fix by
resolution or resolutions providing for the issue of any series, the number of
shares included in such series and the designation, relative powers, preferences
and participating, optional or other special rights, and the qualifications,
limitations or restrictions of such series. Pursuant to the foregoing general
authority vested in the Board of Directors, but (except as provided in the
proviso to clause (v) of this Article 5) not in limitation of the powers
conferred on the Board of Directors thereby and by the law of the State of
Delaware, the Board of Directors is expressly authorized to determine with
respect to each series of Preferred Stock:
(i) the distinctive designation of such series and the number
of shares (which number from time to time may be decreased by the Board of
Directors, but not below the number of such shares then outstanding, or may
be increased by the Board of Directors unless otherwise provided in
creating such series) constituting such series;
(ii) the rate and time at which, and the preferences and
conditions under which, dividends shall be payable on shares of such
series, the status of such dividends as cumulative, or non-cumulative, the
date or dates from which dividends, if cumulative, shall accumulate, and
the status of such shares as participating or non-participating after the
payment of dividends as to which such shares are entitled to any
preference;
<PAGE> 12
12
(iii) the right, if any, of holders of shares of such series to
convert such shares into, or to exchange such shares for, shares of any
other class or classes (other than Class B Common Stock) or of any other
series of the same class, the prices or rates of conversion or exchange,
and adjustments thereto, and any other terms and conditions applicable to
such conversion or exchange;
(iv) the rights and preferences, if any, of the holders of shares of
such series upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the assets of, the Corporation, which
amount may vary depending upon whether such liquidation, dissolution, or
winding up is voluntary or involuntary, and, if voluntary, may vary at
different dates, and the status of the shares of such series as
participating or non-participating after the satisfaction of any such
rights and preferences;
(v) the voting powers, if any, of the holders of shares of such
series which may, without limiting the generality of the foregoing, include
(A) the general right to one vote (or more or less than one vote) per share
on every matter (including, without limitation, the election of directors)
voted on by the stockholders without regard to class and (B) the limited
right to vote, as a series by itself or together with other series of
Preferred Stock or together with all series of Preferred Stock as a class,
upon such matters, under such circumstances and upon such conditions as the
Board of Directors may fix, including, without limitation, the right,
voting as a series by itself or together with other series of Preferred
Stock or together with all series of Preferred Stock as a class, to elect
one or more directors of the Corporation in the event there shall have been
a default in the payment of dividends on any one or more series of
Preferred Stock; provided, however, that notwithstanding the provisions of
the preceding subclause (B) or any other provisions of this paragraph (a)
to the contrary, the holders of Preferred Stock, considered in the
aggregate (whether voting by individual series or together with other
series of Preferred Stock or together with all series of Preferred Stock as
a class), shall not have the right to a separate class vote for the
election of one or more directors of the Corporation except in the event
there shall have been a default in the payment of dividends on any one or
more series of Preferred Stock and, in such event, shall not have the right
to a separate class vote for more than a total of two directors;
(vi) the times, terms and conditions, if any, upon which shares of
such series shall be subject to redemption, including the amount which the
holders of shares of such series shall be entitled to receive upon
redemption (which amount may vary under different conditions or at
different redemption dates) and the amount, terms, conditions and manner of
operation of any purchase, retirement or sinking fund to be provided for
the shares of such series;
(vii) the limitations, if any, applicable while shares of such
series are outstanding on the payment of dividends or making of
distributions on, or the acquisition or redemption of, Class A Common Stock
or Class B Common Stock or any other class of shares ranking junior, either
as to dividends or upon liquidation, to the shares of such series;
<PAGE> 13
13
(viii) the conditions or restrictions, if any, upon the issue of
any additional shares (including additional shares of such series or any
other class) ranking on a parity with or prior to the shares of such series
either as to dividends or upon liquidation; and
(ix) any other relative powers, preferences and participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of shares of such series;
in each case, so far as not inconsistent with the provisions of this
Restated Certificate of Incorporation or the Delaware General Corporation
Law. Unless otherwise provided by the Board of Directors, all shares of
Preferred Stock shall be identical and of equal rank and, unless otherwise
provided by the Board of Directors, all shares of each series of Preferred
Stock shall be identical and of equal rank except as to the dates from
which cumulative dividends, if any, thereon shall be cumulative.
(b) As used in this Restated Certificate of Incorporation, the
term "Full Voting Preferred Stock" shall mean Preferred Stock of any one or more
series the holders of which shall be entitled to vote on every matter
(including, without limitation, the election of directors) voted on by the
stockholders without regard to class.
6. COMPUTATION; USE OF TERMS. (a) In determining the number or
the record holders of outstanding shares of any class of stock of the
Corporation for the purpose of computing or determining the method of computing
the vote or determining the right to vote at any meeting of stockholders or of a
class of stockholders, the original stock ledger of the Corporation as at the
close of business on the record date fixed for such meeting or, if the stock
transfer books of the Corporation shall have been closed for a period
immediately preceding the date of such meeting, then as at the close of business
on the date as of which such stock transfer books were so closed, shall be
conclusive for all purposes, and in determining the number or the record holders
of outstanding shares of any class of stock of the Corporation for any other
purpose, the original stock ledger of the Corporation as at the close of
business on the date as of which the determination is being made, shall be
conclusive for all purposes; all notwithstanding any other provision of this
Restated Certificate of Incorporation.
(b) Wherever a term shall be used in the singular in this
Restated Certificate of Incorporation, it shall be deemed in all appropriate
circumstances to include also the plural, and wherever a term shall be so used
in the plural, it shall similarly be deemed to include also the singular.
7. DURATION. The Corporation is to have perpetual existence.
8. PROPERTY OF STOCKHOLDERS NOT SUBJECT TO CORPORATE DEBTS. The
private property of the stockholders shall not be subject to the payment of
corporate debts to any extent whatever.
<PAGE> 14
14
9. POWERS OF THE BOARD OF DIRECTORS. (a) In
furtherance, and not in limitation, of the powers conferred by statute, the
Board of Directors is expressly authorized:
To make, alter or repeal the By-laws of the Corporation; to set apart
out of any funds of the Corporation available for dividends a reserve or
reserves for any proper purpose and to abolish the same in the manner in
which it was created, and to fix and determine and to vary the amount of
the working capital of the Corporation; to determine the use and
disposition of the working capital and of any surplus or net profits over
and above the capital of the Corporation determined as provided by law, and
to fix the times for the declaration and payment of dividends; to authorize
and cause to be executed mortgages and liens, without limit as to amount,
upon the real and personal property of the Corporation; and to fix and
determine the fees and other compensation to be paid by the Corporation to
its directors;
To determine from time to time whether and to what extent, and at what
times and places, and under what conditions and regulations, the accounts
and books of the Corporation (other than the stock ledger), or any of them,
shall be open to inspection of the stockholders; and no stockholder shall
have any right to inspect any account, book or document of the Corporation
except as conferred by statute, unless authorized by a resolution of the
stockholders or directors; and
To make donations for the public welfare or for charitable, scientific
or educational purposes; and to cause the Corporation to cooperate with
other corporations or with natural persons, or to act alone, in the
creation and maintenance of community funds or charitable, scientific, or
educational instrumentalities, and to make donations for the public welfare
or for charitable, scientific, or educational purposes.
As used in this Restated Certificate of Incorporation, the term "entire
Board of Directors" means the total number of directors which the Corporation
would have if there were no vacancies.
(b) The Corporation may in its By-laws confer powers upon its
directors in addition to the foregoing, and in addition to the powers and
authorities expressly conferred upon them by the laws of the State of Delaware.
10. BOARD OF DIRECTORS - NUMBER AND VACANCIES. (a) Subject to any
rights of holders of any outstanding preferred stock to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be not more than twelve (12) nor less than three (3), with the
exact number to be fixed from time to time as provided in the By-laws of the
Corporation.
(b) Subject to any rights of holders of Preferred Stock, and unless
the Corporation's Board of Directors otherwise determines, any vacancy occurring
in the Board of Directors caused by death, resignation, increase in number of
directors or otherwise may be filled by the affirmative vote of a majority of
the remaining members of the Board of
<PAGE> 15
15
Directors, though less than a quorum, or by a sole remaining director. Except
as otherwise provided by law, any such vacancy may not be filled by the
stockholders of the Corporation.
(c) Notwithstanding anything contained in this Restated Certificate
of Incorporation to the contrary, the affirmative vote of the holders of at
least 75% of the total voting power of all classes of outstanding capital stock,
voting together as a single class, shall be required to amend, repeal or adopt
any provision inconsistent with this Article 10.
11. CONDUCT OF CERTAIN AFFAIRS OF THE CORPORATION. (a) In
anticipation that the Corporation will cease to be a wholly-owned subsidiary of
Ford, but that Ford will remain a substantial stockholder of the Corporation,
and in anticipation that the Corporation and Ford may engage in the same or
similar activities or lines of business and have an interest in the same areas
of corporate opportunities, and in recognition of the benefits to be derived by
the Corporation through its continued contractual, corporate and business
relations with Ford (including possible service of officers and directors of
Ford as officers and directors of the Corporation), the provisions of this
Article 11 are set forth to regulate and define the conduct of certain affairs
of the Corporation as they may involve Ford and its officers and directors, and
the powers, rights, duties and liabilities of the Corporation and its officers,
directors and stockholders in connection therewith.
(b) Ford shall have no duty to refrain from engaging in the same or
similar activities or lines of business as the Corporation, and neither Ford nor
any officer or director thereof (except as provided in paragraph (c) below)
shall be liable to the Corporation or its stockholders for breach of any
fiduciary duty by reason of any such activities of Ford. In the event that Ford
acquires knowledge of a potential transaction or matter which may be a corporate
opportunity for both Ford and the Corporation, Ford shall have no duty to
communicate or offer such corporate opportunity to the Corporation and shall not
be liable to the Corporation or its stockholders for breach of any fiduciary
duty as a stockholder of the Corporation by reason of the fact that Ford pursues
or acquires such corporate opportunity for itself, directs such corporate
opportunity to another person, or does not communicate information regarding
such corporate opportunity to the Corporation.
(c) In the event that a director or officer of the Corporation who is
also a director or officer of Ford acquires knowledge of a potential transaction
or matter which may be a corporate opportunity for both the Corporation and
Ford, such director or officer of the Corporation shall have fully satisfied and
fulfilled the fiduciary duty of such director or officer to the Corporation and
its stockholders with respect to such corporate opportunity, if such director or
officer acts in a manner consistent with the following policy:
(i) A corporate opportunity offered to any person who is an
officer of the Corporation, and who is also a director but not an officer
of Ford, shall belong to the Corporation; (ii) a corporate opportunity
offered to any person who is a director but not an officer of the
Corporation, and who is also a director or officer of Ford shall belong to
the Corporation if such opportunity is expressly offered to such person in
writing solely in his or her capacity as a director of the Corporation, and
otherwise shall belong to Ford; and (iii) a corporate opportunity offered
to any person who is an officer of both the Corporation and Ford shall
belong to the Corporation if such
<PAGE> 16
16
opportunity is expressly offered to such person in writing solely in his or
her capacity as an officer of the Corporation, and otherwise shall belong
to Ford.
(d) Any person purchasing or otherwise acquiring any interest in
shares of the capital stock of the Corporation shall be deemed to have notice of
and to have consented to the provisions of this Article 11.
(e) For purposes of this Article 11 only:
(1) A director of the Corporation who is Chairman of the Board of
Directors of the Corporation or of a committee thereof shall not be deemed
to be an officer of the Corporation by reason of holding such position
(without regard to whether such position is deemed an office of the
Corporation under the By-Laws of the Corporation), unless such person is a
full-time employee of the Corporation; and
(2) (A) The term "Corporation" shall mean the Corporation and all
corporations, partnerships, joint ventures, associations and other entities
in which the Corporation beneficially owns (directly or indirectly) 50% or
more of the outstanding voting stock, voting power, partnership interests
or similar voting interests and (B) the term "Ford" shall mean Ford and all
corporations, partnerships, joint ventures, associations and other entities
(other than the Corporation, defined in accordance with clause (A) of this
paragraph (e)(2)) in which Ford beneficially owns (directly or indirectly)
50% or more of the outstanding voting stock, voting power, partnership
interests or similar voting interests.
(f) Notwithstanding anything in this Restated Certificate of
Incorporation to the contrary, (i) the foregoing provisions of this Article 11
shall expire on the date that Ford ceases to own beneficially Common Stock
representing at least 20% of the total voting power of all classes of
outstanding Common Stock of the Corporation and no person who is a director or
officer of the Corporation is also a director or officer of Ford; and (ii) in
addition to any vote of the stockholders required by this Restated Certificate
of Incorporation, until the time that Ford ceases to own beneficially Common
Stock representing at least 20% of the total voting power of all classes of
outstanding Common Stock of the Corporation, the affirmative vote of the holders
of more than 80% of the total voting power of all classes of outstanding Common
Stock of the Corporation shall be required to alter, amend or repeal in a manner
adverse to the interests of Ford, or adopt any provision adverse to the
interests of Ford and inconsistent with, any provision of this Article 11.
Neither the alteration, amendment or repeal of this Article 11 nor the adoption
of any provision of this Restated Certificate of Incorporation inconsistent with
this Article 11 shall eliminate or reduce the effect of this Article 11 in
respect of any matter occurring, or any cause of action, suit or claim that, but
for this Article 11, would accrue or arise, prior to such alteration, amendment,
repeal or adoption.
12. MEETINGS. (a) If the By-Laws so provide, the stockholders and
the directors may hold their meetings, and the Corporation may have one or more
offices, either inside or outside of the State of Delaware. The books and
records of the Corporation (subject to the provisions of the laws of the State
of Delaware) may be kept either inside or outside of
<PAGE> 17
17
the State of Delaware at such places as from time to time may be determined by
the Board of Directors.
(b) Any corporate action required to be taken at any annual or
special meeting of stockholders of the Corporation, or any corporate action
which may be taken at any annual or special meeting of the stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the corporate action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
Delaware (either by hand or by certified or registered mail, return receipt
requested), its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded; provided, however, that on and after the date on
which neither Ford nor the Class B Transferee continues to beneficially own 50%
or more of the total voting power of all classes of outstanding Common Stock,
any corporate action required to be taken at any annual or special meeting of
the stockholders, or any corporate action which may be taken at any annual or
special meeting of the stockholders, may be taken only at a duly called annual
or special meeting of stockholders and may not be taken by written consent of
the stockholders in lieu of such meeting.
So long as stockholders are entitled to consent to corporate
action in writing without a meeting in accordance with this paragraph (b), every
written consent shall bear the date of signature of each stockholder who signs
the consent and no written consent shall be effective to take the corporate
action referred to therein unless, within sixty (60) days of the date the
earliest dated consent is delivered to the Corporation, a written consent or
consents signed by a sufficient number of holders to take action are delivered
to the Corporation in the manner prescribed in this paragraph (b).
(c) Unless otherwise prescribed by law or this Restated Certificate
of Incorporation, special meetings of stockholders may be held at any time on
call of the Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, the President or, at the request in writing of a majority of the
Board of Directors, any officer.
(d) Notwithstanding anything contained in this Restated Certificate
of Incorporation to the contrary, the affirmative vote of the holders of at
least 75% of the total voting power of all classes of outstanding capital stock,
voting together as a single class, shall be required to amend, repeal or adopt
any provision inconsistent with this Article 12.
13. LIMITATION ON LIABILITY OF DIRECTORS. (a) A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders,
<PAGE> 18
18
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law
or
(iv) for any transaction from which the director derived an
improper personal benefit.
(b) If the Delaware General Corporation Law is amended after approval
by the stockholders of this Article 13 to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
(c) Any repeal or modification of this Article 13 by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
14. INDEMNIFICATION AND INSURANCE. (a) Each person who was or
is made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise (hereinafter a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is or
was a director, officer or employee of the Corporation or is or was serving at
the request of the Corporation as a director, officer or employee of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director, officer
or employee or in any other capacity while serving as a director, officer or
employee, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
penalties, fines, judgments, attorney's fees, amounts paid or to be paid in
settlement and excise taxes or penalties imposed on fiduciaries with respect to
(i) employee benefit plans, (ii) charitable organizations or (iii) similar
matters) reasonably incurred or suffered by such person in connection therewith
and such indemnification shall continue as to a person who has ceased to be a
director, officer or employee and shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person (other than pursuant to
paragraph (b) of this Article 14) only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this paragraph (a) of Article 14 shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director
<PAGE> 19
19
or officer, including without limitation, service to an employee benefit plan)
in advance of the final disposition of a proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under this paragraph (a) of Article 14 or otherwise.
(b) If a claim which the Corporation is obligated to pay under
paragraph (a) of this Article 14 is not paid in full by the Corporation within
60 days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) The provisions of this Article 14 shall cover claims,
actions, suits and proceedings, civil or criminal, whether now pending or
hereafter commenced, and shall be retroactive to cover acts or omissions or
alleged acts or omissions which heretofore have taken place. If any part of
this Article 14 should be found to be invalid or ineffective in any proceeding,
the validity and effect of the remaining provisions shall not be affected.
(d) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition conferred
in this Article 14 shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, provision of this Restated
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterred directors or otherwise.
(e) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
(f) The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification, and rights to
be paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any
<PAGE> 20
20
agent of the Corporation to the fullest extent of the provisions of this
Article 14 with respect to the indemnification and advancement of expenses of
directors, officers and employees of the Corporation.
15. LIMITATION OF ACTIONS. Every asserted right of action
by or on behalf of the Corporation or by or on behalf of any stockholder against
any past, present or future member of the Board of Directors, or any committee
thereof, or against any officer or employee of the Corporation or any subsidiary
thereof, arising out of or in connection with any bonus, supplemental
compensation, stock investment, stock option or other plan or plans for the
benefit of any employee, irrespective of the place where such right of action
may arise or be asserted and irrespective of the place of residence of any such
director, member, officer or employee, shall cease and be barred upon the
expiration of three years from the later of the following dates: (a) the date of
any alleged act or omission in respect of which such right of action may be
asserted to have arisen, or (b) the date upon which the Corporation shall have
made generally available to its stockholders information with respect to, as the
case may be, the aggregate amount credited for a fiscal year to a bonus or
supplemental compensation reserve, or the aggregate amount of awards in a fiscal
year of bonuses or supplemental compensation, or the aggregate amount of stock
optioned or made available for purchase during a fiscal year, or the aggregate
amount expended by the Corporation during a fiscal year in connection with any
other plan for the benefit of such employees, to all or any part of which such
asserted right of action may relate; and every asserted right of action by or on
behalf of any employee, past, present or future, or any spouse, child, or legal
representative thereof, against the Corporation or any subsidiary thereof
arising out of or in connection with any such plan, irrespective of the place
where such asserted right of action may arise or be asserted, shall cease and be
barred by the expiration of three years from the date of the alleged act or
omission in respect of which such right of action shall be asserted to have
arisen.
16. BY-LAWS AMENDMENTS. The By-Laws of the Corporation may
be altered, amended or repealed at any meeting of the Board of Directors or of
the stockholders, provided that notice of such alteration, amendment or repeal
be contained in the notice of such meeting of the Board of Directors or
stockholders (subject, in the case of meetings of stockholders, to the
provisions of Article II of the By-laws), as the case may be. All such
amendments must be approved by the affirmative vote of the holders of at least
75% of the total voting power of all classes of outstanding capital stock,
voting together as a single class (if effected by action of the stockholders),
or by the affirmative vote of directors constituting not less than a majority of
the entire Board of Directors (if effected by action of the Board of Directors).
<PAGE> 21
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17. AMENDMENTS. The Corporation reserves the right to
amend, alter, change or repeal any provision contained in this Restated
Certificate of Incorporation, in the manner now or hereafter prescribed by the
law of the State of Delaware, and all rights of the stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, The Hertz Corporation has caused this
Restated Certificate of Incorporation to be signed on this 30th day of April,
1997.
THE HERTZ CORPORATION
By: /s/ Frank A. Olson
--------------------------------------
Name: Frank A. Olson
Title: Chairman of the Board &
Chief Executive Officer
<PAGE> 1
EXHIBIT 3(b)
BY-LAWS
OF
THE HERTZ CORPORATION
(THE "COMPANY")
EFFECTIVE APRIL 22, 1997
ARTICLE I.
OFFICES
The registered office of the Company shall be in the City of Wilmington,
County of New Castle, State of Delaware. The Company may also have one or more
offices at such other places, either inside or outside of the State of Delaware,
as the Board of Directors may from time to time determine or as the business of
the Company may require. The books and records of the Company may be kept
(subject to the provisions of the laws of the State of Delaware) at any place,
either inside or outside of the State of Delaware, as from time to time may be
determined by the Board of Directors.
ARTICLE II.
STOCKHOLDERS
SECTION 1. PLACE OF MEETING.
Meetings of stockholders (whether annual or special) shall be held at such
place, either inside or outside of the State of Delaware, as the Board of
Directors shall from time to time determine.
SECTION 2. ANNUAL MEETING.
The annual meeting of stockholders shall be held on the last Thursday of
May of each year or at such other time as shall be determined by the Board of
Directors. Should said day be a legal holiday, such annual meeting shall be
held on the preceding regular business day. If, for any reason, the annual
meeting be not held at the time aforesaid, the directors shall fix another date
for such meeting.
SECTION 3. SPECIAL MEETINGS.
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Unless otherwise prescribed by law or by the Company's certificate of
incorporation, as amended from time to time (the "Charter"), special meetings of
stockholders may be held at any time on call of the Chairman of the Board of
Directors, a Vice Chairman of the Board of Directors, the President, or, at the
request in writing of a majority of the Board of Directors, any officer. Such
request shall state the purpose or purposes of the proposed meeting.
SECTION 4. NOTICE OF MEETINGS.
Except as otherwise provided by law, at least twenty (20) days' notice of
stockholders' meetings stating the time and place and the objects thereof shall
be given by the Chairman of the Board of Directors, a Vice Chairman of the Board
of Directors, the President, the Secretary or an Assistant Secretary to each
stockholder of record having voting power in respect of the business to be
transacted thereat. Subject to Section 5 of this Article II, no business other
than that stated in the notice shall be transacted at any meeting.
SECTION 5. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) Annual Meetings of Stockholders. (1) Nominations of persons for
election to the Board of Directors and the proposal of business to be considered
by the stockholders may be made at an annual meeting of stockholders (a)
pursuant to the Company's notice of meeting delivered pursuant to Section 4 of
this Article II, (b) by or at the direction of the Board of Directors or (c) by
any stockholder of the Company who is entitled to vote at the meeting, who
complied with the notice procedures set forth in paragraphs (A)(2) and (A)(3) of
this Section 5 and who was a stockholder of record at the time such notice is
delivered to the Secretary of the Company.
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Section 5, the stockholder must have given timely notice thereof in writing
to the Secretary of the Company and such business must be a proper subject for
stockholder action under the General Corporation Law of the State of Delaware.
To be timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Company not less than sixty (60) days nor
more than ninety (90) days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than thirty (30) days or delayed by more than
sixty (60) days from such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the later of the
sixtieth day prior to such annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected); (b)
as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the
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business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Company's books, and of such
beneficial owner and (ii) the class and number of shares of the Company which
are owned beneficially and of record by such stockholder and such beneficial
owner. If the stockholder or beneficial owner intends to solicit proxies in
support of any such nomination or proposal, such stockholder's notice shall also
include a representation to that effect.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2)
of this Section 5 to the contrary, in the event that the number of directors to
be elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Company at least seventy (70) days
prior to the first anniversary of the preceding year's annual meeting, a
stockholders's notice required by this Section 5 shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the tenth day
following the day on which such public announcement is first made by the
Company.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Company's notice of meeting pursuant to Section 4 of
this Article II. Nominations of persons for election to the Board of Directors
may be made at a special meeting of stockholders at which directors are to be
elected pursuant to the Company's notice of meeting (a) by or at the direction
of the Board of Directors or (b) by any stockholder of the Company who is
entitled to vote at the meeting, who complies with the notice procedures set
forth in this Section 5 and who is a stockholder of record at the time such
notice is delivered to the Secretary of the Company. Nominations by
stockholders of persons for election to the Board of Directors may be made at
such a special meeting of stockholders if the stockholder's notice required by
paragraph (A)(2) of this Section 5 shall be delivered to the Secretary at the
principal executive offices of the Company not earlier than the ninetieth day
prior to such special meeting and not later than the close of business on the
later of the sixtieth day prior to such special meeting or the tenth day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
(C) General. (1) Only persons who are nominated in accordance with
the procedures set forth in this Section 5 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 5. Except as otherwise provided by law, the Charter
or these By-Laws, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with this Section 5 and, if any proposed
nomination or business is not in compliance with this Section 5, or if a
stockholder or beneficial owner solicits proxies in support of a nomination or
proposal without having made
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the representation required in paragraph (A)(2) of this Section 5, to declare
that such proposal or nomination shall be disregarded.
(2) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Company with the Securities and Exchange Commission pursuant to Section 13, 14
or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 5, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 5. Nothing in this Section 5 shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the Company's
proxy statement pursuant to Rule 14a- 8 under the Exchange Act.
SECTION 6. QUORUM.
At any meeting of stockholders, the number of shares the holders of which
shall be present or represented by proxy in order to constitute a quorum for,
and the votes that shall be necessary for, the transaction of any business shall
be as expressly provided in Article 4 of the Charter. At any meeting of
stockholders at which a quorum is not present, the person serving as chairman of
the meeting or the holders of shares entitled to cast a majority of all of the
votes which could be cast at such meeting by the holders of outstanding shares
of stock of the Company who are present in person or by proxy and who are
entitled to vote on every matter that is to be voted on without regard to class
at such meeting may adjourn the meeting from time to time.
SECTION 7. ORGANIZATION AND CONDUCT OF BUSINESS.
The Chairman of the Board of Directors shall act as chairman of meetings of
the stockholders. The Board of Directors may designate any other officer or
director of the Company to act as chairman of any meeting in the absence of the
Chairman of the Board of Directors, and the Board of Directors may further
provide for determining who shall act as chairman of any stockholders' meeting
in the absence of the Chairman of the Board of Directors and such designee. The
person serving as chairman of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as seem to him or her in
order.
The Secretary of the Company shall act as secretary of all meetings of the
stockholders, but in the absence of the Secretary the presiding officer may
appoint any other person to act as secretary of any meeting.
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SECTION 8. PROXIES AND VOTING.
At any meeting of stockholders, every stockholder entitled to vote may vote
in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this paragraph
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
All voting, including on the election of directors but excepting where
otherwise required by law, may be a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or by his or her proxy, a
stock vote shall be taken. Every stock vote shall be taken by ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
SECTION 9. STOCK LISTS.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
SECTION 10. RATIFICATION.
Any transaction questioned in any stockholders' derivative suit, or any
other suit to enforce alleged rights of the Company or any of its stockholders,
on the ground of lack of authority, defective or irregular execution, adverse
interest of any director, officer or stockholder, nondisclosure, miscomputation
or the application of improper principles or practices of accounting may be
approved, ratified and confirmed before or after judgment by the Board of
Directors or by the holders of the Company's Class A Common Stock, par value
$.01 per share ("Class A Common Stock") and the holders of the Company's Class B
Common Stock, par value $.01 per share ("Class B Common Stock") voting as
provided in paragraph (g) of Article 4 of the Charter, and, if so approved,
ratified or confirmed, shall have the same force and effect as if the questioned
transaction had been originally duly authorized, and said approval, ratification
or confirmation shall be binding upon the Company
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and all of its stockholders and shall constitute a bar to any claim or execution
of any judgment in respect of such questioned transaction.
SECTION 11. INSPECTORS OF ELECTION.
The Board of Directors may, and to the extent required by law, shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting, decide upon the qualification of voters, count the votes, decide
the results and make a written report thereof in accordance with the General
Corporation Law of the State of Delaware. The Board of Directors may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting may, and to the extent
required by law, shall, appoint one or more inspectors to act at the meeting.
Each inspector, before entering upon the discharge of his or her duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. Every vote taken
by ballots shall be counted by an inspector or inspectors appointed by the Board
of Directors or the person presiding at the meeting, as the case may be.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. NUMBER, TERM OF OFFICE AND ELIGIBILITY.
Subject to any rights of holders of preferred stock to elect additional
directors under specified circumstances, the number of directors of the Company
shall be fixed from time to time exclusively by resolution of the Board of
Directors adopted by the affirmative vote of directors constituting not less
than a majority of the total number of directors that the Company would have if
there were no vacancies on the Company's Board of Directors, but shall consist
of not more than twelve (12) nor less than three (3) directors. Each director
shall be elected annually by ballot by the holders of Class A Common Stock and
the holders of Class B Common Stock voting as provided in paragraph (g) of
Article 4 of the Charter at the annual meeting of stockholders, to serve until
his or her successor shall have been elected and shall have qualified, except as
provided in this Section 1. No person may be elected or re-elected a director
of the Company if at the time of his or her election or re-election he or she
shall have attained the age of seventy years, and the term of any director who
shall have attained such age while serving as a director shall terminate as of
the time of the first annual meeting of stockholders following his or her
seventieth birthday; provided, however, that the Board of Directors by
resolution may waive such age limitation in any year and from year to year with
respect to any director or directors. Subject to any rights of holders of
preferred stock, and unless the Board of Directors otherwise determines, any
vacancy occurring in the Board of Directors caused by death, resignation,
increase in number of directors or otherwise may be filled by the affirmative
vote of a majority of the remaining members of the Board of Directors, though
less than a quorum, or by a sole remaining director, and except as otherwise
provided by law, any such vacancy may not be filled by the stockholders of the
Company, and any director so elected shall hold office until the next election
of directors and until his
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or her successor is duly elected and qualified, or until his or her earlier
death, resignation or removal.
SECTION 2. MEETINGS.
Meetings of the Board of Directors may be held at such place, either inside
or outside of the State of Delaware, as may from time to time be designated by
the Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, the President or resolution of the Board of Directors or as may be
specified in the call of any meeting. In the absence of any such designation,
the meetings shall be held at the principal executive office of the Company in
Park Ridge, New Jersey.
An annual meeting of the Board of Directors shall be held on the same day
as, and as soon as practicable following the annual meeting of stockholders or
at such other time or place as shall be determined by the Board of Directors at
its regular meeting next preceding said annual meeting of stockholders. Regular
meetings of the Board of Directors shall be held on the last Thursday of
February, May, August and November of each year or at such other time as shall
be determined by the Board of Directors. Should said day be a legal holiday,
such regular meeting shall be held on the next Thursday that is not a legal
holiday.
Special meetings of the Board of Directors may be held at any time on the
call of the Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, the President or the Board of Directors. Meetings may be held at any
time or place without notice if all the directors are present or if those not
present waive notice of the meeting in writing.
SECTION 3. NOTICE OF MEETINGS.
The Secretary or an Assistant Secretary shall give notice of the time and
place of meetings of the Board of Directors (excepting the annual meeting of
directors) by (i) mailing or sending via courier such notice not later than
during the second day preceding the day on which such meeting is to be held, or
(ii) by (a) sending a facsimile transmission or other form of electronic
communication containing such notice or (b) delivering such notice personally or
by telephone, in each case, not later than during the first day preceding the
day on which such meeting is to be held to each director. Unless otherwise
stated in the notice thereof any and all business may be transacted at any
meeting.
SECTION 4. QUORUM AND ORGANIZATION OF MEETINGS.
One-third of the total number of members of the Board of Directors as
constituted from time to time, but in no event less than three, shall constitute
a quorum for the transaction of business; but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time, and the meeting may be held as
adjourned without further notice or waiver. Except as otherwise provided by law
or by the Charter or these By-Laws, a majority of the directors present at any
duly constituted meeting may decide any question brought before such meeting.
Meetings shall be presided over by the Chairman of the Board of Directors or, in
his or her
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absence, by such other person as the Board of Directors may designate or the
members present may select.
SECTION 5. POWERS.
In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the Board of Directors shall have and may exercise all such
powers of the Company and do all such lawful acts and things that are not by
statute, the Charter or these By-Laws directed or required to be exercised or
done by the stockholders. Without prejudice to or limitation of such general
powers and any other powers conferred by statute, the Charter or these By-Laws,
the Board of Directors shall have the following powers:
(1) To determine, subject to the requirements of law and of
paragraph (c)(2) of Article 4 of the Charter, what, if any, dividends shall
be declared and paid to the stockholders out of net profits, current or
accumulated, or out of surplus or other assets of the Company available for
dividends.
(2) To fix, and from time to time to vary, the amount of working
capital of the Company, and to set aside from time to time out of net
profits, current or accumulated, or surplus of the Company such amount or
amounts as they in their discretion may deem necessary and proper as, or as
a safeguard to the maintenance of, working capital, as a reserve for
contingencies, as a reserve for repairs, maintenance, or rehabilitation, as
a reserve for revaluation of profits of the Company or for such other
proper purpose as may in the opinion of the directors be in the best
interests of the Company; and in their sole discretion to abolish or modify
any such provision for working capital or any such reserve, and to credit
the amount thereof to net profits, current or accumulated, or to the
surplus of the Company.
(3) To purchase, or otherwise acquire for the Company, any
business, property, rights or privileges which the Company may at the time
be authorized to acquire, at such price or consideration and generally on
such terms and conditions as they think fit; and at their discretion to pay
therefor either wholly or partly in money, stock, bonds, debentures or
other securities of the Company.
(4) To create, make and issue mortgages, bonds, deeds of trust,
trust agreements or negotiable or transferable instruments or securities,
secured by mortgage or otherwise, and to do every other act and thing
necessary to effect the same.
(5) To appoint any person or corporation to accept and hold in
trust for the Company any property belonging to the Company, or in which it
is interested, or for any other purpose, and to execute such deeds and do
all things requisite in relation to any such trust.
(6) To remove any officer of the Company with or without cause,
and from time to time to devolve the powers and duties of any officer upon
any other person for the time being.
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(7) To confer upon any officer of the Company the power to
appoint, remove and suspend subordinate officers, agents and employees.
(8) To determine who shall be authorized on the Company's behalf,
either generally or specifically, to make and sign bills, notes,
acceptances, endorsements, checks, releases, receipts, contracts,
conveyances and all other written instruments executed on behalf of the
Company.
(9) To make and change regulations, not inconsistent with these
By-Laws, for the management of the Company's business and affairs.
(10) To adopt and, unless otherwise provided therein, to amend and
repeal, from time to time, bonus and supplemental compensation plans for
employees (including employees who are officers or directors) of the
Company or any subsidiary. Power to construe, interpret, administer,
modify or suspend any such plan shall be vested in the Board of Directors
or a committee thereof.
(11) To adopt a retirement plan, or plans, for the purpose of
making retirement payments to employees (including employees who are
officers or directors) of the Company or of any subsidiary thereof; and to
adopt a group insurance plan, or plans, for the purpose of enabling
employees (including employees who are officers or directors) of the
Company or of any subsidiary thereof to acquire insurance protection; any
such retirement plan or insurance plan, unless otherwise provided therein,
shall be subject to amendment or revocation by the Board of Directors.
(12) To delegate any of the powers of the Board of Directors in
the course of the business of the Company to any officer, employee or
agent, and to appoint any person the agent of the Company, with such powers
(including the power to subdelegate) and upon such terms as the Board of
Directors may think fit.
SECTION 6. RELIANCE UPON BOOKS, REPORTS AND RECORDS.
Each director, each member of any committee designated by the Board of
Directors and each officer, in the performance of his or her duties, shall be
fully protected in relying in good faith upon such information, opinions,
reports or statements presented to the Company by any of its officers or
employees, or by committees of the Board of Directors, or by any other person,
as to matters such director, member or officer, as the case may be, reasonably
believes are within such person's professional or expert competence and who has
been selected with reasonable care by the Board of Directors or by any such
committee, or in relying in good faith upon other records of the Company.
SECTION 7. COMPENSATION OF DIRECTORS.
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, services as members of committees of the Board of
Directors; provided, however, that nothing
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herein contained shall be construed to preclude any director from serving the
Company in any other capacity and receiving compensation therefor.
SECTION 8. MEETINGS BY MEANS OF CONFERENCE TELEPHONE.
Unless otherwise provided by the Charter or these By-Laws, members of the
Board of Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee by means of
a conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 8 shall constitute presence in person at such
meeting.
ARTICLE IV.
COMMITTEES
SECTION 1. COMMITTEES OF THE BOARD OF DIRECTORS.
There are hereby established as committees of the Board of Directors an
Audit Committee, a Compensation Committee and a Nominating Committee, each of
which shall have the powers and functions set forth in Sections 2, 3 and 4
hereof, respectively, and such additional powers as may be delegated to it by
the Board of Directors. The Board of Directors may from time to time establish
additional standing committees or special committees of the Board of Directors,
each of which shall have such powers and functions as may be delegated to it by
the Board of Directors. The Board of Directors may abolish any committee
established by or pursuant to this Section 1 as it may deem advisable. Each
such committee shall consist of two or more directors, the exact number being
determined from time to time by the Board of Directors. Designations of the
chairman and members of each such committee, and, if desired, a vice chairman
and alternates for members, shall be made by the Board of Directors. In the
absence or disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at
the meeting and not disqualified from voting whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member. Each committee shall have a secretary who shall be designated by its
chairman. A vice chairman of a committee shall act as the chairman of the
committee in the absence or disability of the chairman.
SECTION 2. AUDIT COMMITTEE.
The Audit Committee shall select and engage, on behalf of the Company,
independent public accountants to (1) audit the books of account and other
corporate records of the Company and (2) perform such other duties as the Audit
Committee may from time to time prescribe. The Audit Committee shall transmit
financial statements certified by such independent public accountants to the
Board of Directors after the close of each fiscal year. The selection of
independent public accountants for each fiscal year shall be made in advance
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of the annual meeting of stockholders in such fiscal year and shall be submitted
for ratification or rejection at such meeting. The Audit Committee shall confer
with such accountants and review and approve the scope of the audit of the books
of account and other corporate records of the Company. The Audit Committee
shall have the power to confer with and direct the officers of the Company to
the extent necessary to review the internal controls, accounting practices,
financial structure and financial reporting of the Company. From time to time
the Audit Committee shall report to and advise the Board of Directors concerning
the results of its consultation and review and such other matters relating to
the internal controls, accounting practices, financial structure and financial
reporting of the Company as the Audit Committee believes merit review by the
Board of Directors. The Audit Committee also shall perform such other functions
and exercise such other powers as may be delegated to it from time to time by
the Board of Directors.
SECTION 3. COMPENSATION COMMITTEE.
The Compensation Committee shall fix from time to time the salaries of (i)
members of the Board of Directors who are officers or employees of the Company,
(ii) the President, all Executive Vice Presidents and all Senior Vice Presidents
of the Company and (iii) Vice Presidents of the Company who are elected officers
of the Company. It also shall perform such functions as may be delegated to it
under the provisions of any bonus, supplemental compensation, special
compensation or stock option plan of the Company.
SECTION 4. NOMINATING COMMITTEE.
The Nominating Committee from time to time shall consider and make
recommendations to the Board of Directors with respect to nominations or
elections of directors and officers of the Company and the appointments of such
other employees of the Company as shall be referred to the Nominating Committee.
The Nominating Committee from time to time shall consider the size and
composition of the Board of Directors and make recommendations to the Board of
Directors with respect to such matters. Prior to the annual meeting of
stockholders each year, and prior to any special meeting of stockholders at
which a director is to be elected, the Nominating Committee shall recommend to
the Board of Directors persons proposed to constitute the nominees whose
election at such meeting will be recommended by the Board of Directors.
The authority vested in the Nominating Committee by this Section 4 shall
not derogate from the power of individual members of the Board of Directors to
recommend or place in nomination persons other than those recommended by the
Nominating Committee.
The Nominating Committee also shall perform such other functions and
exercise such other powers as may be delegated to it from time to time by the
Board of Directors.
SECTION 5. OTHER COMMITTEES.
The Board of Directors, or any committee, officer or employee of the
Company, may establish additional standing committees or special committees to
serve in an advisory
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capacity or in such other capacities as may be permitted by law, the Charter and
these By-Laws. The members of any such committee need not be members of the
Board of Directors. Any committee established pursuant to this Section 5 may be
abolished by the Board of Directors or by the person or body by whom it was
established as he, she or it may deem advisable. Each such committee shall
consist of two or more members, the exact number being determined from time to
time by such person or body. Designations of members of each such committee
and, if desired, alternates for members, shall be made by such person or body,
at whose will all such members and alternates shall serve. The chairman of each
such committee shall be designated by such person or body. Each such committee
shall have a secretary who shall be designated by the chairman.
SECTION 6. RULES AND PROCEDURES.
Each committee may fix its own rules and procedures and shall meet at such
times and places as may be provided by such rules, by resolution of the
committee or by call of the chairman or vice chairman. Notice of meeting of
each committee, other than of regular meetings provided for by its rules or
resolutions, shall be given to committee members. The presence of one-third of
its members, but not less than two, shall constitute a quorum of any committee,
and all questions shall be decided by a majority vote of the members present at
the meeting. All action taken at each committee meeting shall be recorded in
minutes of the meeting.
SECTION 7. APPLICATION OF ARTICLE.
Whenever any provision of any other document relating to any committee of
the Company named therein shall be in conflict with any provision of this
Article IV, the provisions of this Article IV shall govern, except that if such
other document shall have been approved by the stockholders, voting as provided
in the Charter, or by the Board of Directors, the provisions of such other
document shall govern.
ARTICLE V.
OFFICERS
SECTION 1. OFFICERS.
The Officers of the Company shall include a Chairman of the Board of
Directors and may include one or more Vice Chairmen of the Board of Directors,
each of whom shall be chosen from among the directors, and a President, one or
more Executive Vice Presidents, one or more Senior Vice Presidents, one or more
Vice Presidents, a Treasurer, a Controller, a General Counsel and a Secretary,
each of whom shall be elected by the Board of Directors to hold office until his
or her successor shall have been chosen and shall have qualified. The Board of
Directors, the Chairman of the Board of Directors and the President may elect or
appoint one or more Assistant Vice Presidents, one or more Assistant Treasurers,
one or more Assistant Controllers, one or more Assistant General Counsels, one
or more Assistant Secretaries, and the Board of Directors may elect or appoint
such other officers as it may deem necessary, or desirable, each of whom shall
have such authority, shall perform such duties and shall hold office for such
term as may be prescribed by the Board of Directors
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from time to time. Any person may hold at one time more than one office,
excepting that the duties of the President and Secretary shall not be performed
by one person.
SECTION 2. CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors shall be the Chief Executive Officer
of the Company. Subject to the provisions of these By-Laws and to the direction
of the Board of Directors, he or she shall have ultimate authority for decisions
relating to the general management and control of the affairs and business of
the Company and shall perform all other duties and exercise all other powers
commonly incident to the position of Chief Executive Officer or which are or
from time to time may be delegated to him or her by the Board of Directors, or
which are or may at any time be authorized or required by law. He or she shall
preside at all meetings of the Board of Directors. He or she may redelegate
from time to time and to the full extent permitted by law, in writing, to
officers or employees of the Company any or all of such duties and powers, and
any such redelegation may be either general or specific. Whenever he or she so
shall delegate any of his or her authority, he or she shall file a copy of the
redelegation with the Secretary of the Company.
SECTION 3. VICE CHAIRMEN OF THE BOARD OF DIRECTORS.
Subject to the provisions of these By-Laws and to the direction of the
Board of Directors and of the Chief Executive Officer, the Vice Chairmen of the
Board of Directors shall have such powers and shall perform such duties as from
time to time may be delegated to them by the Board of Directors or by the Chief
Executive Officer, or which are or may at any time be authorized or required by
law.
SECTION 4. PRESIDENT.
Subject to the provisions of these By-Laws and to the direction of the
Board of Directors and of the Chief Executive Officer, the President shall have
such powers and shall perform such duties as from time to time may be delegated
to him or her by the Board of Directors or by the Chief Executive Officer, or
which are or may at any time be authorized or required by law.
SECTION 5. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND VICE
PRESIDENTS.
Each of the Executive Vice Presidents, each of the Senior Vice Presidents
and each of the other Vice Presidents shall have such powers and shall perform
such duties as may be delegated to him or her by the Board of Directors, the
Chairman of the Board of Directors, the President or such other officer or
officers to whom he or she is directly responsible.
SECTION 6. TREASURER AND ASSISTANT TREASURER.
The Treasurer, subject to the direction of the Board of Directors, shall
have the care and custody of all funds and securities of the Company which may
come into his or her hands. When necessary or proper he or she shall endorse on
behalf of the Company, for collection, checks, notes and other obligations, and
shall deposit all funds of the Company in
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such banks or other depositaries as may be designated by the Board of Directors
or by such officers or employees as may be authorized by the Board of Directors
so to designate. He or she shall perform all acts incident to the office of
Treasurer, subject to the control of the Board of Directors and such other
officer or officers to whom he or she is directly responsible. He or she may be
required to give a bond for the faithful discharge of his or her duties, in such
sum and upon such conditions as the Board of Directors may require.
At the request and direction of the Treasurer or, in the case of his or her
absence or inability to act, any Assistant Treasurer may act in his or her
place. In the case of the death of the Treasurer, or in the case of his or her
absence or inability to act without having designated an Assistant Treasurer to
act temporarily in his or her place, the Assistant Treasurer so to perform the
duties of the Treasurer shall be designated by the Board of Directors, the
Chairman of the Board of Directors or the President.
SECTION 7. SECRETARY AND ASSISTANT SECRETARY.
The Secretary shall keep full and accurate minutes of the meetings of the
stockholders and of the Board of Directors in the proper record book of the
Company provided therefor, and, when required, the minutes of meetings of the
committees, and shall be responsible for the custody of all such minutes.
Subject to the direction of the Board of Directors, the Secretary shall have
custody of the stock ledgers and documents of the Company. He or she shall have
custody of the corporate seal of the Company and shall affix and attest such
seal to any instrument whose execution under seal shall have been duly
authorized. He or she shall give due notice of meetings and, subject to the
direction of the Board of Directors, shall perform all other duties commonly
incident to his or her office or as properly required of him or her by the
Chairman of the Board of Directors and such other officer or officers to whom he
or she is directly responsible and shall enjoy all other powers commonly
incident to his or her office.
At the request and direction of the Secretary or, in the case of his or her
absence or inability to act, any Assistant Secretary may act in his or her
place. In the case of the death of the Secretary, or in the case of his or her
absence or inability to act without having designated an Assistant Secretary to
act temporarily in his or her place, the Assistant Secretary or other person so
to perform the duties of the Secretary shall be designated by the Board of
Directors, the Chairman of the Board of Directors or the President.
SECTION 8. ASSISTANT VICE PRESIDENTS AND OTHER OFFICERS.
Each Assistant Vice President and other officers shall perform such duties
commonly incident to his or her office or as properly required of him or her by
the Chairman of the Board of Directors and such other officer or officers to
whom he or she is directly responsible.
SECTION 9. GENERAL COUNSEL.
The General Counsel shall have general supervision of all matters of a
legal nature concerning the Company. He or she shall perform all such duties
commonly incident to his
<PAGE> 15
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or her office or as properly required of him or her by the Chairman of the Board
of Directors and such other officer or officers to whom he or she is directly
responsible.
SECTION 10. CONTROLLER.
The Controller shall keep and maintain the books of account of the Company
in such manner that they fairly present the financial condition of the Company
and its subsidiaries. The Controller shall have such powers and shall perform
such duties as may be delegated to him or her by the Board of Directors, the
Chairman of the Board of Directors, the President or the appropriate Executive
Vice President, Senior Vice President or Vice President or such other officer or
officers to whom he or she is directly responsible.
SECTION 11. SALARIES.
Salaries of officers, agents or employees shall be fixed from time to time
by the Board of Directors or by such committee or committees, or person or
persons, if any, to whom such power shall have been delegated by the Board of
Directors. An employment contract, whether with an officer, agent or employee,
if expressly approved or specifically authorized by the Board of Directors, may
fix a term of employment thereunder; and such contract, if so approved or
authorized, shall be valid and binding upon the Company in accordance with the
terms thereof, provided that this provision shall not limit or restrict in any
way the right of the Company at any time to remove from office, discharge or
terminate the employment of any such officer, agent or employee prior to the
expiration of the term of employment under any such contract.
SECTION 12. VACANCIES.
A vacancy in any office filled by election of the Board of Directors may be
filled by the Board of Directors by the election of a new officer who shall hold
office, subject to the provisions of this Article V, until the regular meeting
of the directors following the next annual meeting of the stockholders and until
his or her successor is elected.
SECTION 13. REMOVAL OR DISCHARGE.
Any officer may be removed or discharged by the Chairman of the Board of
Directors at any time excepting an officer who is also a director. Any officer
who also is a director may be discharged at any time by the Board of Directors.
ARTICLE VI.
RESIGNATIONS
Any director, officer or agent of the Company, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the Chairman of the Board of Directors, a Vice Chairman of the Board
of Directors, the President or the Secretary of the Company. Any such
resignation shall take effect at the time specified therein, or if the
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time be not specified therein, then upon receipt thereof. The acceptance of
such resignation shall not be necessary to make it effective.
ARTICLE VII.
CAPITAL STOCK - DIVIDENDS - SEAL
SECTION 1. CERTIFICATES OF SHARES.
The certificates for shares of the capital stock of the Company shall be in
such form, not inconsistent with the Charter, as shall be approved by the Board
of Directors. The certificates shall be numbered and signed by the Chairman of
the Board of Directors, a Vice Chairman of the Board of Directors, the
President, an Executive Vice President, a Senior Vice President or a Vice
President, and also by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary. Any and all signatures may be facsimiles.
All certificates shall bear the name of the persons owning the shares
represented thereby, shall state the number of shares represented by such
certificate and the date of issue; and such information shall be entered in the
Company's original stock ledger.
SECTION 2. ADDRESSES OF STOCKHOLDERS.
It shall be the duty of every stockholder to notify the Company of such
stockholder's post office address and of any change therein. The latest address
furnished by each stockholder shall be entered on the original stock ledger of
the Company and the latest address appearing on such original stock ledger shall
be deemed conclusively to be the post office address and the last-known post
office address of such stockholder. If any stockholder shall fail to notify the
Company of such stockholder's post office address, it shall be sufficient to
send corporate notices to such stockholder at the address, if any, understood by
the Secretary to be such stockholder's post office address, or in the absence of
such address, to such stockholder, at the General Post Office in the City of
Wilmington, State of Delaware.
SECTION 3. LOST, DESTROYED OR STOLEN CERTIFICATE.
Any person claiming a stock certificate in lieu of one lost, destroyed or
stolen, shall give the Company an affidavit as to his, her or its ownership of
the certificate and of the facts which go to prove that it has been lost,
destroyed or stolen. If required by the Board of Directors, he, she or it also
shall give the Company a bond, in such form as may be approved by the Board of
Directors, sufficient to indemnify the Company against any claim that may be
made against it on account of the alleged loss of the certificate or the
issuance of a new certificate. A new certificate shall be issued upon receipt
of such an affidavit and, if required, upon the giving of such a bond.
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SECTION 4. RECORD OF HOLDER OF SHARES.
The Company shall be entitled to treat the holder of record of any share or
shares as the holder in fact thereof, and accordingly shall not be bound to
recognize any equitable or other claims to or interest in such shares on the
part of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the General Corporation Law of the State
of Delaware. The Company shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends and
to vote as such owner.
SECTION 5. RECORD DATE.
In order that the Company may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders, or to receive payment of any
dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock (other than
conversions or exchanges pursuant to Article 4 of the Charter) or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock (other than
conversions or exchanges pursuant to Article 4 of the Charter) or for any other
purpose, the record date shall be at the close of business on the day on which
the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
If stockholders are entitled to consent to corporate action in writing
without a meeting in accordance with the General Corporation Law of the State of
Delaware and the Charter, in order that the Company may determine the
stockholders entitled to so consent, the Board of Directors may fix a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall be
not more than ten (10) days after the date upon which the resolution fixing the
record date is adopted and if no record date has been fixed by the Board of
Directors and if no prior action by the Board of Directors is required by the
General Corporation Law of the State of Delaware, the record date shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Company in the manner prescribed by
Article 13 of the Charter. If stockholders are entitled to consent to corporate
action in writing without a meeting in accordance with the General Corporation
Law of the
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State of Delaware and the Charter, and no record date has been fixed by the
Board of Directors and prior action by the Board of Directors is required by the
General Corporation Law of the State of Delaware with respect to the proposed
action by written consent of the stockholders, the record date for determining
stockholders entitled to consent to corporate action in writing shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
SECTION 6. REGULATIONS.
The Board of Directors shall have power and authority to make all such
rules and regulations not inconsistent with any of the provisions of Article 4
of the Charter, as it may deem expedient, concerning the issue, transfer and
registration of certificates for shares of the stock of the Company.
SECTION 7. CORPORATE SEAL.
The corporate seal shall be in such form as shall from time to time be
approved by the Board of Directors. If and when so authorized by the Board of
Directors, a duplicate of the seal may be kept and used by the Secretary or
Treasurer or by any Assistant Secretary or Assistant Treasurer.
ARTICLE VIII.
EXECUTION OF CONTRACTS AND OTHER DOCUMENTS
SECTION 1. CONTRACTS, ETC.
Except as otherwise prescribed in these By-Laws, such officers, employees
or agents of the Company as shall be specified by the Board of Directors shall
sign, in the name and on behalf of the Company, all deeds, bonds, contracts,
mortgages and other instruments or documents, the execution of which shall be
authorized by the Board of Directors; and such authority may be general or
confined to specific instances. Except as otherwise provided herein or as so
authorized by the Board of Directors, no officer, agent or employee of the
Company shall have power or authority to bind the Company by any contract or
engagement or to pledge, mortgage, sell or otherwise dispose of its credit or
any of its property or to render it pecuniarily liable for any purpose or in any
amount.
SECTION 2. CHECKS, DRAFTS, ETC.
Except as otherwise provided in these By-Laws, all checks, drafts, notes,
bonds, bills of exchange or other orders, instruments or obligations for the
payment of money shall be signed by such officer or officers, employee or
employees, or agent or agents, as the Board of Directors shall by resolution
direct. The Board of Directors may, in its discretion, also provide by
resolution for the countersignature or registration of any or all such orders,
instruments or obligations for the payment of money.
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ARTICLE IX.
FISCAL YEAR
The fiscal year of the Company shall begin the first day of January in each
year.
ARTICLE X.
MISCELLANEOUS
SECTION 1. ORIGINAL STOCK LEDGER.
As used in these By-Laws and in the Charter, the words "original stock
ledger" shall mean the record maintained by the Secretary of the Company of the
name and address of each of the holders of shares of any class of stock of the
Company, and the number of shares and the numbers of the certificates for such
shares held by each of them, taking into account transfers at the time made by
and recorded on the transfer sheets of each of the Transfer Agents of the
Company although such transfers may not have been posted in the record
maintained by the Secretary.
SECTION 2. NOTICES AND WAIVERS THEREOF.
Whenever any notice whatever is required by these By-Laws, the Charter or
any of the laws of the State of Delaware to be given to any stockholder,
director or officer, such notice, except as otherwise provided by the laws of
the State of Delaware, may be given personally or by telephone or be given by
facsimile transmission or other form of electronic communication, addressed to
such stockholder at the address set forth as provided in Section 2 of Article
VII of these By-Laws, or to such director or officer at his or her Company
location, if any, or at such address as appears on the books of the Company, or
the notice may be given in writing by depositing the same in a post office, or
in a regularly maintained letter box, or by sending it via courier in a
postpaid, sealed wrapper addressed to such stockholder at the address set forth
in Section 2 of Article VII of these By-Laws, or to such director or officer at
his or her Company location, if any, or such address as appears on the books of
the Company.
Any notice given by facsimile transmission or other form of electronic
communication shall be deemed to have been given when it shall have been
transmitted. Any notice given by mail or courier shall be deemed to have been
given when it shall have been mailed or delivered to the courier.
A waiver of any such notice in writing, including by facsimile
transmission, signed or dispatched by the person entitled to such notice or by
his or her duly authorized attorney, whether before or after the time stated
therein, shall be deemed equivalent to the notice required to be given, and the
presence at any meeting of any person entitled to notice thereof shall be deemed
a waiver of such notice as to such person.
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SECTION 3. VOTING UPON STOCKS.
The Board of Directors (whose authorization in this connection shall be
necessary in all cases) may from time to time appoint an attorney or attorneys
or agent or agents of the Company, or may at any time or from time to time
authorize the Chairman of the Board of Directors, any Vice Chairman of the Board
of Directors, the President, any Executive Vice President, any Senior Vice
President, any Vice President, the Treasurer or the Secretary to appoint an
attorney or attorneys or agent or agents of the Company, in the name and on
behalf of the Company, to cast the votes which the Company may be entitled to
cast as a stockholder or otherwise in any other corporation or association, any
of the stock or securities of which may be held by the Company, at meetings of
the holders of the stock or other securities of such other corporation or
association, or to consent in writing to any action by any such other
corporation or association and the Board of Directors or any aforesaid officer
so authorized may instruct the person or persons so appointed as to the manner
of casting such votes or giving such consent, and the Board of Directors or any
aforesaid officer so authorized may from time to time authorize the execution
and delivery, on behalf of the Company and under its corporate seal, or
otherwise, of such written proxies, consents, waivers or other instruments as
may be deemed necessary or proper in the premises.
ARTICLE XI.
AMENDMENTS
These By-Laws may be altered, amended or repealed at any meeting of the
Board of Directors or of the stockholders, provided that notice of such
alteration, amendment or repeal be contained in the notice of such meeting of
the Board of Directors or stockholders (subject, in the case of meetings of
stockholders, to the provisions of Article II of these By-Laws), as the case may
be. All such amendments must be approved by the affirmative vote of the holders
of at least 75% of the total voting power of all classes of outstanding capital
stock, voting together as a single class (if effected by action of the
stockholders), or by the affirmative vote of directors constituting not less
than a majority of the total number of directors that the Company would have if
there were no vacancies on the Company's Board of Directors (if effected by
action of the Board of Directors).
<PAGE> 1
EXHIBIT 10(a)
CORPORATE AGREEMENT
THIS CORPORATE AGREEMENT ("Agreement") is entered into as of April 25,
1997 by and between FORD MOTOR COMPANY, a Delaware corporation ("Ford"), and THE
HERTZ CORPORATION, a Delaware corporation ("Hertz").
RECITALS
A. Ford 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:
"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"
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(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).
"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%.
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"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.
"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.
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"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 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
<PAGE> 5
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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.
"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
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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.
(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.
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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
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
<PAGE> 8
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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 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
<PAGE> 9
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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);
(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.
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(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 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
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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 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
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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 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);
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(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 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
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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 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
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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;
(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
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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 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
<PAGE> 17
17
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 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
<PAGE> 18
18
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 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
<PAGE> 19
19
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 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
<PAGE> 20
20
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 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,
<PAGE> 21
21
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 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
<PAGE> 22
22
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.
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
<PAGE> 23
23
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 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
<PAGE> 24
24
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.
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
225 Brae Boulevard
Park Ridge, New Jersey 07656
Attention: General Counsel
Telecopy No.: 201-307-2748
(b) If to Ford, to:
Ford Motor Company
The American Road
Dearborn, Michigan 48121
Attention: Secretary
Telecopy No.: 313-337-9591
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.
<PAGE> 25
25
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 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.
<PAGE> 26
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
Ford Motor Company
By: /s/ E.S. Acton
----------------------------
Name: E.S. Acton
Title: Assistant Treasurer
The Hertz Corporation
By: /s/ William Sider
----------------------------
Name: William Sider
Title: Executive Vice President &
Chief Financial Officer
<PAGE> 1
EXHIBIT 10(b)
THE HERTZ CORPORATION
LONG-TERM EQUITY COMPENSATION PLAN
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Article 1. Establishment, Objectives, and Duration 1
Article 2. Definitions 1
Article 3. Administration 4
Article 4. Shares Subject to the Plan and Maximum Awards 4
Article 5. Eligibility and Participation 5
Article 6. Stock Options 6
Article 7. Stock Appreciation Rights 7
Article 8. Restricted Stock 9
Article 9. Performance Units and Performance Shares 10
Article 10. Performance Measures 11
Article 11. Beneficiary Designation 12
Article 12. Deferrals 12
Article 13. Rights of Employees 12
Article 14. Modification, Termination, and Adjustments 12
Article 15. Payment of Plan Awards and Conditions Thereon 13
Article 16. Withholding 14
Article 17. Indemnification 14
Article 18. Successors 14
Article 19. Legal Construction 15
</TABLE>
(i)
<PAGE> 3
THE HERTZ CORPORATION
LONG-TERM EQUITY COMPENSATION PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. The Hertz Corporation, a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "The Hertz Corporation Long-Term
Equity Compensation Plan" (hereinafter referred to as the "Plan"), as set forth
in this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares, and Performance Units.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 25, 1997 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 hereof.
1.2. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize
the profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal interests of
Participants to those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3. DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect, subject to
the right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 14 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after April 25, 2007.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1. "AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.
2.2. "AWARD" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares, or Performance Units.
2.3. "AWARD AGREEMENT" means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
<PAGE> 4
2
2.4. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.5. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.6. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
2.7. "COMMITTEE" means any committee appointed by the Board to
administer the Plan, as specified in Article 3 herein.
2.8. "COMPANY" means The Hertz Corporation, a Delaware corporation,
including any and all Subsidiaries and Affiliates, and any successor thereto as
provided in Article 18 herein.
2.9. "COVERED EMPLOYEE" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
2.10. "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company or any Subsidiary or Affiliates.
2.11. "DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan, or if no such plan exists, at
the discretion of the Committee.
2.12. "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13. "EMPLOYEE" means any full-time, active employee of the Company or
its Subsidiaries or Affiliates. Directors who are not employed by the Company
shall not be considered Employees under this Plan.
2.14. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.15. "FAIR MARKET VALUE" shall be determined on the basis of the closing
sale price at which Shares have been sold regular way on the principal
securities exchange on which the Shares are traded or, if there is no such sale
on the relevant date, then on the last previous day on which there was such a
sale, provided that Fair Market Value for any initial grants made under the Plan
concurrent with or contingent upon the consummation of the initial public
offering of Shares in 1997 will be at a price equal to the initial public
offering price of Shares covered by such initial public offering.
2.16. "FREESTANDING SAR" means an SAR that is granted independently of
any Options, as described in Article 7 herein.
2.17. "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as an Incentive
Stock Option and which is intended to meet the requirements of Code Section 422.
<PAGE> 5
3
2.18. "INSIDER" shall mean an individual who is, on the relevant date, an
officer, director, or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.19. "NONEMPLOYEE DIRECTOR" shall mean a Director who is not also an
Employee.
2.20. "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.21. "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.22. "OPTION PRICE" means the price at which a Share may be purchased by
a Participant pursuant to an Option.
2.23. "PARTICIPANT" means an Employee who has been selected to receive an
Award or who has outstanding an Award granted under the Plan.
2.24. "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.25. "PERFORMANCE SHARE" means an Award granted to a Participant, as
described in Article 9 herein.
2.26. "PERFORMANCE UNIT" means an Award granted to a Participant, as
described in Article 9 herein.
2.27. "PERIOD OF RESTRICTION" means the period during which the transfer
of Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.
2.28. "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.29. "RESTRICTED STOCK" means an Award granted to a Participant pursuant
to Article 8 herein.
2.30. "RETIREMENT" shall have the meaning ascribed to such term in the
Company's tax-qualified retirement plan.
2.31. "SHARES" means the shares of Class A common stock of the Company.
2.32. "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone
or in connection with a related Option, designated as an SAR, pursuant to the
terms of Article 7 herein.
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2.33. "SUBSIDIARY" means any corporation, partnership, joint venture, or
other entity in which the Company has a majority voting interest (including all
divisions, affiliates, and related entities).
2.34. "TANDEM SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
ARTICLE 3. ADMINISTRATION
3.1. THE COMMITTEE. The Plan shall be administered by a committee
appointed by the Board. After the initial public offering of Shares in 1997, the
Plan shall be administered by the Compensation Committee of the Board consisting
of not less than two (2) Directors who meet the "outside director" requirements
of Code Section 162(m), or by any other committee appointed by the Board,
provided the members of such committee meet such requirements.
3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 15 herein)
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law,
the Committee may delegate its authority as identified herein.
3.3. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive, and binding on all persons,
including the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to Sections 4.2 and
4.3 herein, the maximum number of Shares with respect to which Awards may be
granted to Participants under the Plan shall be seven and one-half percent
(7.5%) of the Company's total outstanding shares of all classes of common stock
of the Company as of the tenth (10th) day following the first day that the
Company issues Shares pursuant to its initial public offering. Shares issued
under the Plan may be either authorized but unissued Shares (subject to a
maximum of 701,025 Shares), treasury Shares, or any combination thereof.
Unless and until the Committee determines that an Award to a Covered
Employee shall not be designed to comply with the Performance- Based Exception,
the following rules shall apply to grants of such Awards under the Plan, subject
to Sections 4.2 and 4.3.
(a) STOCK OPTIONS AND SARS: The maximum aggregate number of Shares
that may be subject to Stock Options, with or without Tandem
SARs, or
<PAGE> 7
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Freestanding SARs, granted in any one fiscal year to any one
Participant shall be five hundred thousand (500,000).
(b) RESTRICTED STOCK: The maximum aggregate grant with respect to
Awards of Restricted Stock which are intended to qualify for
the Performance-Based Exception, and which are granted in any
one fiscal year to any one Participant shall be three hundred
thousand (300,000) Shares.
(c) PERFORMANCE SHARES/PERFORMANCE UNITS: The maximum aggregate
payout (determined as of the end of the applicable performance
period) with respect to Awards of Performance Shares or
Performance Units which are intended to comply with the
Performance- Based Exception, and which are granted in any one
fiscal year to any one Participant shall be equal to the Fair
Market Value of three hundred thousand (300,000) Shares.
4.2. LAPSED AWARDS. If any Award granted under this Plan is
canceled, terminates, expires, or lapses for any reason (with the exception of
the termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3. ADJUSTMENTS. In the event of any change in corporate
capitalization such as a stock split, or a corporate transaction such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered under Section
4.1, in the number and class of and/or price of Shares subject to outstanding
Awards granted under the Plan, and in the Award limits set forth in subsections
4.1(a), 4.1(b), and 4.1(c), as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1. ELIGIBILITY. Persons eligible to participate in this Plan
include officers and certain key salaried Employees of the Company with
potential to contribute to the success of the Company or its Subsidiaries,
including Employees who are members of the Board.
5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
the Committee may, from time to time, select from all eligible Employees those
to whom Awards shall be granted, and shall determine the nature and amount of
each Award.
ARTICLE 6. STOCK OPTIONS
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the
Plan, Options may be granted to Participants in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee.
6.2. AWARD AGREEMENT. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the
Option, the number of Shares to which the Option pertains, and such other
provisions as the Committee shall
<PAGE> 8
6
determine. The Award Agreement also shall specify whether the Option is
intended to be an ISO within the meaning of Code Section 422, or an NQSO, whose
grant is intended not to fall under the provisions of Code Section 422.
6.3. OPTION PRICE. The Option Price for each grant of an Option under
this Plan shall be at least equal to one hundred percent (100%) of the Fair
Market Value of a Share on the date the Option is granted.
6.4. DURATION OF OPTIONS. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of grant;
provided, however, that no Option shall be exercisable later than the tenth
(10th) anniversary date of its grant.
6.5. EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6. PAYMENT. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent; or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price); or (c) by a combination of
(a) and (b).
The Committee may also allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).
6.7. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8. TERMINATION OF EMPLOYMENT. Each Participant's Option Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment with the Company. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination of employment.
<PAGE> 9
7
6.9. NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent
and distribution. Further, all ISOs granted to a Participant
under the Plan shall be exercisable during his or her lifetime
only by such Participant or the Participant's legal
representative (to the extent permitted under Code Section
422).
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this
Article 6 may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all
NQSOs granted to a Participant under this Article 6 shall be
exercisable during his or her lifetime only by such
Participant or the Participant's legal representative.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. GRANT OF SARS. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time as shall
be determined by the Committee. The Committee may grant Freestanding SARs,
Tandem SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2. EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Priceof the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3. EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.4. AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
<PAGE> 10
8
7.5. TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6. PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof. The
Committee's determination regarding the form of SAR payout shall be set forth in
the Award Agreement pertaining to the grant of the SAR.
7.7. TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and/or
its subsidiaries. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
7.7. NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or the Participant's legal representative.
ARTICLE 8. RESTRICTED STOCK
8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
8.3. TRANSFERABILITY. Except as provided in this Article 8, the Shares
of Restricted Stock granted under the Plan may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in
the Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant or the Participant's legal
representative.
<PAGE> 11
9
8.4. OTHER RESTRICTIONS. Subject to Article 11 herein, the Committee
shall impose such other conditions and/or restrictions on any Shares of
Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional, and/or
individual), time-based restrictions on vesting following the attainment of the
performance goals, and/or restrictions under applicable federal or state
securities laws.
The Company may retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5. VOTING RIGHTS. Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction.
8.6. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may be credited with regular cash dividends paid with respect to the underlying
Shares while they are so held. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate. Without limiting the generality
of the preceding sentence, if the grant or vesting of Restricted Shares granted
to a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Restricted
Shares, such that the dividends and/or the Restricted Shares maintain
eligibility for the Performance-Based Exception.
8.7. TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement
shall set forth the extent to which the Participant shall have the right to
receive unvested Restricted Shares following termination of the Participant's
employment with the Company. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Shares of Restricted
Stock issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of employment; provided, however, that except in the
cases of terminations by reason of death or Disability, the vesting of Shares of
Restricted Stock which qualify for the Performance-Based Exception and which are
held by Covered Employees shall occur at the time they otherwise would have, but
for the employment termination.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the
Plan, Performance Units and/or Performance Shares may be granted to Participants
in such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
9.2. VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance
<PAGE> 12
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Share shall have an initial value equal to the Fair Market Value of a Share on
the date of grant. The Committee shall set performance goals in its discretion
which, depending on the extent to which they are met, will determine the number
and/or value of Performance Units/Shares that will be paid out to the
Participant. For purposes of this Article 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
9.3. EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance goals have been achieved.
9.4. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made in a single lump sum following the
close of the applicable Performance Period. Subject to the terms of this Plan,
the Committee, in its sole discretion, may pay earned Performance Units/Shares
in the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may
be granted subject to any restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.
At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares, but not
yet distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 8.6 herein). In
addition, Participants may, at the discretion of the Committee, be entitled to
exercise their voting rights with respect to such Shares.
9.5. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
Unless determined otherwise by the Committee and set forth in the Participant's
Award Agreement, in the event the employment of a Participant is terminated by
reason of death, Disability, or Retirement during a Performance Period, the
Participant shall receive a payout of the Performance Units/Shares which is
prorated, as specified by the Committee in its discretion.
Payment of earned Performance Units/Shares shall be made at a time
specified by the Committee in its sole discretion and set forth in the
Participant's Award Agreement. Notwithstanding the foregoing, with respect to
Covered Employees who retire during a Performance Period, payments shall be made
at the same time as payments are made to Participants who did not terminate
employment during the applicable Performance Period.
9.6. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited by
the Participant to the Company unless determined otherwise by the Committee, as
set forth in the Participant's Award Agreement.
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11
9.7. NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's legal representative.
ARTICLE 10. PERFORMANCE MEASURES
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be chosen from among net income either
before or after taxes, market share, customer satisfaction, profits, share
price, earnings per share, total shareholder return, return on assets, return on
equity, operating income, return on capital or investments, or economic value
added (including, but not limited to, any or all of such measures in comparison
to the Company's competitors, the industry, or some other comparator group).
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
and which are held by Covered Employees, may not be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
ARTICLE 11. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, the Participant's beneficiary shall be
deemed to be the Person or Persons who receive(s) the Participant's life
insurance proceeds under the Company-paid life insurance plan. In the absence
of any such designation, or deemed designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of
<PAGE> 14
12
restrictions with respect to Restricted Stock, or the satisfaction of any
requirements or goals with respect to Performance Units/Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 13. RIGHTS OF EMPLOYEES
13.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
13.2. PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 14. AMENDMENT, MODIFICATION, TERMINATION, AND ADJUSTMENTS
14.1. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms of
the Plan, the Board, upon recommendation of the Committee, may at any time and
from time to time, alter, amend, suspend or terminate the Plan in whole or in
part.
14.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan; provided that unless the Committee
determines otherwise, no such adjustment shall be authorized to the extent that
such authority would be inconsistent with the Plan or Awards meeting the
requirements of Section 162(m) of the Code, as from time to time amended.
14.3. AWARDS PREVIOUSLY GRANTED. Notwithstanding any other provision of
the Plan to the contrary (but subject to Section 14.3 hereof), no termination,
amendment, or modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan without the written consent of
the Participant holding such Award.
14.4. COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article 14, make any adjustments it deems appropriate.
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ARTICLE 15. PAYMENT OF PLAN AWARDS AND CONDITIONS THEREON
15.1. EFFECT OF COMPETITIVE ACTIVITY. Anything contained in the Plan to
the contrary notwithstanding, if the employment of any Participant shall
terminate, for any reason other than death, while any Award to such Participant
is outstanding hereunder, and such Participant has not yet received the Shares
covered by such Award or otherwise received the full benefit of such Award, such
Participant, if otherwise entitled thereto, shall receive such Shares or benefit
only if, during the entire period from the date of such Participant's
termination to the date of such receipt, such Participant shall have earned out
such Award by (i) making himself or herself available, upon request, at
reasonable times and upon a reasonable basis, to consult with, supply
information to, and otherwise cooperate with the Company or any Subsidiary or
Affiliate thereof with respect to any matter that shall have been handled by him
or her or under his or her supervision while he or she was in the employ of the
Company or of any Subsidiary or Affiliate thereof; and (ii) refraining from
engaging in any activity that is directly or indirectly in competition with any
activity of the Company or any Subsidiary or Affiliate thereof.
15.2. NONFULFILLMENT OF COMPETITIVE ACTIVITY CONDITIONS; WAIVERS UNDER
THE PLAN. In the event of a Participant's nonfulfillment of any condition set
forth in Section 15.1 hereof, such Participant's rights under any Award shall be
forfeited and canceled forthwith; provided, however, that the nonfulfillment of
such condition may at any time (whether before, at the time of, or subsequent to
termination of employment) be waived by the Committee upon its determination
that in its sole judgment there shall not have been and will not be any
substantial adverse effect upon the Company or any Subsidiary or Affiliate
thereof by reason of the nonfulfillment of such condition.
15.3. EFFECT OF INIMICAL CONDUCT. Anything contained in the Plan to the
contrary notwithstanding, all rights of a Participant under any Award shall
cease on and as of the date on which it has been determined by the Committee
that such Participant at any time (whether before or subsequent to termination
of such Participant's employment) acted in manner inimical to the best interests
of the Company or any Subsidiary or Affiliate thereof.
ARTICLE 16. WITHHOLDING
16.1. TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
16.2. SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, and signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
ARTICLE 17. INDEMNIFICATION
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Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 18. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 19. LEGAL CONSTRUCTION
19.1. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
19.2. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3. REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
19.4. SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
19.5. GOVERNING LAW. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of New Jersey.
