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Exhibit 4.5
RIGHTS
AGREEMENT
THIS RIGHTS AGREEMENT (the
“Agreement”) is executed as of this 16th day of
November, 2001 (the “Effective Date”), by and among
Sabre Investments, Inc., a Delaware corporation
(“Sabre”), BCD Technology S.A., a corporation formed
under the laws of Luxembourg (“BCD”), and TRX, Inc., a
Georgia corporation (the “Corporation”), (Sabre and BCD
are collectively referred to as the “Stakeholders” and
sometimes individually as a “Stakeholder”). Defined
terms not otherwise defined herein are set forth in Article
12.
W I T N E S S E T
H:
WHEREAS, the Corporation
issued that certain Senior Secured Convertible Promissory Note in
favor of Sabre of even date herewith (the “Note”);
and
WHEREAS, Sabre has the right
to purchase shares of the Corporation’s common stock pursuant
to the Warrant Agreement by and between the Corporation and Sabre
of even date herewith (the “Warrant”); and
WHEREAS, the Stakeholders and
the Corporation believe it to be in the best interest of each
Stakeholder and of the Corporation to enumerate each parties rights
and obligations in relation to each other including the provision
for any future disposition of the common stock of the Corporation
owned by the Stakeholders; and
WHEREAS, the Stakeholders and
the Corporation desire to have specified involvement in the
management of the Corporation for their mutual best
interests;
NOW, THEREFORE, in
consideration of the promises and mutual obligations contained
herein, the parties hereto agree as follows:
ARTICLE 1
RESTRICTIONS UPON THE
TRANSFER OF THE STOCK
1.1 No Dispositions
Generally . During the term of this Agreement, neither
Stakeholder shall have the right to make any Disposition, other
than a Permitted Disposition. The Corporation will not cause or
permit the transfer of shares of common stock on the transfer
records of the Corporation for any Disposition, other than a
Permitted Disposition. Any other attempted Disposition shall be
void ab initio and shall have no effect
whatsoever.
1.2 Permitted
Dispositions . A Stakeholder shall have the right to make a
Permitted Disposition. “Permitted Disposition”
means:
1.2.1 Any Disposition
approved by the other Stakeholder;
1.2.2 A Disposition made
pursuant to Section 1.3;
1.2.3 A Disposition made
pursuant to Section 1.4;
1.2.4 A Disposition made
pursuant to Article 6;
1.2.5 A Disposition made
pursuant to Section 11.2; and
1.2.6 A Disposition to an
Affiliate; provided, however, that Sabre may not make a Disposition
to Travelocity.com L.P. or its successors, assigns or direct or
indirect wholly owned subsidiaries.
Provided , however , that
no Disposition shall be a Permitted Disposition unless the person
or entity to whom such shares are transferred (other than an
existing shareholder of the Corporation) shall have agreed to be
bound by and become a party to this Agreement, as it may be amended
from time to time and kept on file with the Corporation.
1.3 First Offer by
Sabre .
1.3.1 In the event that Sabre
desires to sell any or all of its securities of the Corporation
other than the Note (the “Sabre Offered Stock”), unless
a Disposition is permitted pursuant to Section 1.2.1, 1.2.4, 1.2.5
or 1.2.6, Sabre agrees to first give written notice to BCD and Hogg
(the “Sabre First Offer Notice”) of its intent to sell
the Sabre Offered Stock, and to negotiate with BCD and Hogg in good
faith the price and corresponding terms of the pro rata
purchase by BCD and Hogg of the Sabre Offered Stock. BCD and Hogg
shall either jointly or individually provide Sabre with a proposal
as to the final price and terms of such purchase by the forty-fifth
(45) day after the Sabre First Offer Notice. In the event Sabre
accepts a proposal from BCD and/or Hogg (such accepted proposal
shall be the “Final Stakeholder Proposal”), each of BCD
and Hogg shall have the right to participate pro rata in
such purchase regardless of whether it was such party’s
proposal that was accepted. In the event that either BCD or Hogg
does not purchase its entire pro rata portion of the Sabre
Offered Stock, the other of BCD or Hogg shall be notified thereof
and shall have three (3) days to agree and provide notice in
writing to purchase all or part of those remaining shares pursuant
to the terms of the Final Stakeholder Proposal. In the event that
thereafter, BCD and Hogg have not agreed to collectively purchase
the entirety of the Sabre Offered Stock, Sabre shall provide notice
to the Corporation thereof and the Corporation shall have fifteen
(15) days to agree and provide notice in writing to purchase such
remaining shares pursuant to the terms of the Final Stakeholder
Proposal. The transfer of the Sabre Offered Stock to BCD, Hogg and
the Corporation hereunder shall be free and clear of any liens,
claims and encumbrances (other than the terms of this Agreement)
pursuant to such documentation as BCD, Hogg and the Corporation, as
applicable, shall reasonably require.
1.3.2 In the event Sabre does
not accept the joint or individual proposals from BCD and/or Hogg,
Sabre shall notify BCD and Hogg in writing within fifteen (15) days
after receipt of such proposals that their final price and terms
have been rejected. In the event such proposal(s) are rejected,
Sabre agrees to give written notice to the Corporation thereof (the
“Rejection Notice”) and shall negotiate with the
Corporation in good faith the price and corresponding terms of the
purchase by the Corporation of the Sabre Offered Stock. The
Corporation shall provide Sabre with a proposal as to the final
price and terms of such purchase (the “Final Corporation
Proposal”) by the fifteenth (15) day after the Sabre
Rejection Notice (the
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“Sabre Third Party
Date”). In the event Sabre accepts the Final Corporation
Proposal, the transfer of the Sabre Offered Stock to the
Corporation hereunder shall be free and clear of any liens, claims
and encumbrances (other than the terms of this Agreement) pursuant
to such documentation as the Corporation shall reasonably require.
In the event Sabre does not accept the Final Corporation Proposal,
Sabre shall notify the Corporation in writing within a reasonable
time that its final price and terms have been rejected.
1.3.3 In the event Sabre
rejects any and all proposals by BCD, Hogg and the Corporation as
to the final price and terms for the purchase of the Sabre Offered
Stock, Sabre may sell the Sabre Offered Stock to a third party or
parties (the “Sabre Third Party Sale”); provided,
however, that any Sabre Third Party Sale must be evidenced by a
letter of intent which must be signed within six (6) months of the
Sabre Third Party Date and the contemplated transaction must be
completed within one (1) year of the Sabre Third Party Date. The
Sabre Third Party Sale shall be for a price not less than 95% of
the highest proposal as to the final price and terms offered by BCD
and/or Hogg and the Corporation. In addition, the transfer of the
Sabre Offered Stock to the third party or parties may only be made
as long as (i) the Disposition does not have an adverse regulatory
or legal effect on the Corporation or any subsidiary or related
entity, and (ii) each transferee agrees in writing to be bound by
the terms of this Agreement, provided, however, such transferee
will not have the rights granted to Sabre in Articles 1, 4, 2, 3,
4, 6, 1 and 7.
1.3.4 If the consideration
offered by the third party or parties in the Sabre Third Party Sale
involves property other than cash, for purposes of Section 1.3.3,
such property shall be deemed to be cash in an amount equal to the
Equivalent Value of the property. Sabre and the Corporation shall
initially negotiate with each other to agree upon the Equivalent
Value within thirty (30) days of the date of the letter of intent
for such Sabre Third Party Sale. In the event that Sabre and the
Corporation cannot reach an agreement on the Equivalent Value
within such 30 day period, the Equivalent Value will be determined
by two appraisers, one chosen and paid for by Sabre and one chosen
and paid for by the Corporation. If the two appraisal values (the
“Appraisal”) differ by 10% or less (such percentage
difference to be computed by subtracting the lesser of the
Appraisals from the greater of the Appraisals and dividing that
difference by the greater of the Appraisals), then the Equivalent
Value of the property shall equal the average of the two
Appraisals. In the event that the Appraisals vary by more than 10%,
a third appraiser shall be chosen by the initial two appraisers to
conduct an independent appraisal of the property, and on the basis
of that independent appraisal, the third appraiser shall, in the
exercise of its own professional judgment, determine which of the
two Appraisals is the most commercially reasonably, and that
Appraisal shall be the Equivalent Value. The costs of such third
Appraisal shall be borne by the Corporation.
1.4 First Offer by BCD
.
1.4.1 In the event that BCD
desires to sell any or all of its portion of its common stock of
the Corporation (the “BCD Offered Stock”), unless a
Disposition is permitted pursuant to Section 1.2.1, 1.2.4, 1.2.5 or
1.2.6, BCD agrees to first give written notice to Hogg and, subject
to the last sentence of this Section 1.4.1, to Sabre (the
“BCD First Offer Notice”) of its intent to sell the BCD
Offered Stock and to negotiate with Hogg and Sabre, if applicable,
in good faith the price and corresponding terms of the pro
rata purchase by Hogg and Sabre, if
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applicable, of the BCD
Offered Stock. Sabre and Hogg shall either jointly or individually
provide BCD with a proposal as to the final price and terms of such
purchase by the forty-fifth (45) day after the BCD First Offer
Notice (the “BCD Third Party Date”). In the event BCD
accepts a proposal from Sabre and/or Hogg (such accepted proposal
shall be the “Final BCD Offer”), each of Sabre and Hogg
shall have the right to participate pro rata in such
purchase regardless of whether it was such party’s proposal
that was accepted. In the event that either Sabre or Hogg does not
purchase its entire pro rata portion of the BCD Offered
Stock, the other of Sabre or Hogg shall be notified thereof and
shall have three (3) days to agree and provide notice in writing to
purchase all or part of those remaining shares pursuant to the
terms of the Final BCD Offer. In the event that BCD does not accept
Hogg’s and/or Sabre’s final proposed price and
corresponding terms, BCD shall notify Hogg and Sabre in writing
within fifteen (15) days after receipt of such proposals that their
final price and terms have been rejected. Notwithstanding the
foregoing, or anything to the contrary set forth in this Section
1.4, Sabre shall only be entitled to receive the BCD First Offer
Notice and make a proposal under this Section 1.4.1 if the Note is
outstanding or Sabre holds, or has the ability to acquire through a
convertible security (including the Warrant), an aggregate of
966,792.5 shares of the Corporation’s Common Stock (subject
to stock splits and combinations).
1.4.2 In the event BCD does
not accept the final proposed price and corresponding terms offered
by Sabre and/or Hogg, BCD may sell the BCD Offered Stock to a third
party or parties (the “BCD Third Party Sale”);
provided, however, that such Third Party Sale must be evidenced by
a letter of intent which must be signed within six (6) months of
the BCD Third Party Date and the contemplated transaction must be
completed within one (1) year of the BCD Third Party Date. The BCD
Third Party Sale shall be for a price not less than 95% of the
highest proposal as to the final price and terms offered by Sabre
and/or Hogg. In addition, the transfer of the BCD Offered Stock to
the third party or parties may only be made as long as (i) the
Disposition does not have an adverse regulatory or legal effect on
the Corporation or any subsidiary or related entity, and (ii) each
transferee agrees in writing to be bound by the terms of this
Agreement, provided, however, such transferee will not have the
same rights as BCD in reference to Articles 1.3, 2, 3, 4 and 6.2
unless BCD transferred a majority interest in the Corporation to
such transferee.
1.4.3 If the consideration
offered by the third party or parties in the BCD Third Party Sale
involves property other than cash, for purposes of Section 1.4.2,
such property shall be deemed to be cash in an amount equal to the
Equivalent Value of the property. Sabre, Hogg and BCD shall
initially negotiate with each other to agree upon the Equivalent
Value within thirty (30) days of the date of the letter of intent
for such BCD Third Party Sale. In the event that Hogg, Sabre and
BCD cannot reach an agreement on the Equivalent Value within such
30 day period, the Equivalent Value will be determined by two
appraisers, one chosen and paid for by Sabre and Hogg collectively,
and one chosen and paid for by BCD. If the two appraisal values
(the “Appraisal”) differ by 10% or less (such
percentage difference to be computed by subtracting the lesser of
the Appraisals from the greater of the Appraisals and dividing that
difference by the greater of the Appraisals), then the Equivalent
Value of the property shall equal the average of the two
Appraisals. In the event that the Appraisals vary by more than 10%,
a third appraiser shall be chosen by the initial two appraisers to
conduct an independent appraisal of the property, and on the basis
of that independent appraisal, the third appraiser shall, in the
exercise of its own professional judgment, determine which of the
two Appraisals is the most
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commercially reasonably, and
that Appraisal shall be the Equivalent Value. The costs of such
third Appraisal shall be borne by BCD.
ARTICLE 2
MANAGEMENT AND BUSINESS
PLAN
2.1 Board of Directors
. The Stakeholders agree that at all times during the term of this
Agreement, the affairs of the Corporation shall be managed by a
Board of Directors consisting of no more than eight (8) members, at
least five (5) members of which shall be appointed by BCD and, so
long as the Note is outstanding or Sabre holds, or has the ability
to acquire through a convertible security (including the Warrant),
an aggregate of 966,792.5 shares of the Corporation’s Common
Stock (subject to stock splits and combinations), one (1) member of
which shall, at Sabre’s option, be appointed by Sabre. Any
vacancy in office of a director, resulting from any cause, shall be
filled by a candidate selected by the Stakeholder who appointed the
director who previously held the vacated position. BCD shall not
propose or vote for any change in the structure of the Board of
Directors as set forth above without the approval of Sabre. So long
as the Note is outstanding or Sabre holds, or has the ability to
acquire through a convertible security (including the Warrant), an
aggregate of 966,792.5 shares of the Corporation’s Common
Stock (subject to stock splits and combinations), and Sabre does
not elect to appoint a director, Sabre shall have the right to have
a representative attend meetings of the Board of Directors.
Sabre’s representative shall be provided with 10 days actual
notice of any meeting of the Board of Directors along with notice
of the matters to be considered at such meeting; provided, however,
that in the event the Corporation in its reasonable judgment
believes a meeting must be called sooner, Sabre’s
representative shall be given at least forty eight (48) hours
actual notice of the meeting. The Stakeholders acknowledge and
agree that their representatives will be excluded from any
discussions or information that may create a potential conflict
with one of their competitors or shareholders of the
Corporation.
2.2 Day-to-Day
Management . Subject to the restrictions contained in this
Agreement and the direction of the Board of Directors, the
day-to-day management and operation of the Corporation shall be the
responsibility of the President and other officers of the
Corporation.
2.3 Business Plan .
The Stakeholders agree that the Corporation, including for purposes
of this Section 2.3, all subsidiaries, and its finances shall be
managed in accordance with a business plan (“Business
Plan”). The Corporation’s preliminary Business Plan is
attached as Schedule 2.3. Each year, at least thirty (30) days
before the start of the Corporation’s fiscal year, the
Stakeholders shall receive an updated Business Plan.
2.4 Dividend Policy .
Subject to Section 2.5, and only in the event the Note is no longer
outstanding, the Corporation shall distribute all net income (as
determined in accordance with generally accepted accounting
principles) that is not reasonably needed by the Corporation or its
subsidiaries for contingencies and capital expenditures. It is
understood among the parties hereto that it is the intention that
after the first anniversary of this Agreement, the Corporation
shall endeavor to distribute to its shareholders 50% of its net
income.
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2.5 Major Actions .
For as long as the Note is outstanding or Sabre holds, or has the
ability to acquire through a convertible security (including the
Warrant), an aggregate of 966,792.5 shares of the
Corporation’s Common Stock (subject to stock splits and
combinations), without the written consent of Sabre, the
Corporation will not:
2.5.1 Amend, supplement,
repeal, or otherwise change the articles of incorporation or bylaws
of the Corporation in any manner or permit any subsidiary to amend,
supplement, repeal, or otherwise change its articles of certificate
of incorporation, bylaws, articles of organization, operating
agreement, or other governing documents, as applicable, in any
manner which would negatively impact the rights of Sabre granted
pursuant to this Agreement;
2.5.2 Issue any securities of
the Corporation or any Subsidiary except as permitted pursuant to
the terms of Section 2.5.3 or pursuant to an IPO;
2.5.3 Establish, or allow any
subsidiary to establish, any option or other equity based incentive
plan for management, directors, or employees, amend the 2000 TRX
Stock Incentive Plan to increase the number of shares authorized to
be granted thereunder, grant, or allow any subsidiary to grant, any
stock options, or other rights to purchase securities, or authorize
or enter into, or allow any subsidiary to authorize or enter into,
any plan, contract, or arrangement that provides any person with
economic benefits directly or indirectly, in whole or in part,
equivalent to equity security ownership, including but not limited
to, phantom stock option, stock appreciation rights, and similar
plans except for shares subject to the 2000 TRX Stock Incentive
Plan;
2.5.4 Issue any equity,
rights or warrants to any Sabre Restricted Party;
2.5.5 Redeem or repurchase
any security of the Corporation (except for repurchase in
connection with departing employees pursuant to Schedule 2.5.5) or
allow any subsidiary to purchase any security of the Corporation
unless pursuant to the terms of Article 1 or unless the Note is no
longer outstanding and such redemption or repurchase is done on
a pro rata basis with respect to all shareholders of the
Corporation, provided, however, any such pro rata redemption
shall equitably reduce the number of shares Sabre must own to
exercise certain of its rights granted under the
Agreement;
2.5.6 Make distributions or
pay dividends in cash or property with respect to any security of
the Corporation unless the Note is no longer outstanding and such
dividend or distributions are made on a pro rata basis with
respect to all shareholders of the Corporation;
2.5.7 Acquire assets or
securities of any other person or entity or allow any subsidiary to
acquire assets or securities of any other person or entity, except
for acquisitions with an aggregate purchase consideration of less
than $2,000,000 in any one transaction or more than one transaction
in a financial year;
2.5.8 Enter into or allow any
subsidiary to enter into any merger, consolidation, or statutory
share exchange with any other entity, except with a subsidiary or,
in the case of a subsidiary, the Corporation;
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2.5.9 Enter into or allow any
subsidiary to enter into any joint venture, alliance or other
contract outside of the ordinary course of business except for
joint ventures, alliances or other contracts directly related to
ResAssist or a competing product(s) of Sabre or a Sabre
Affiliate;
2.5.10 Sell, exchange, lease,
license, or otherwise dispose or allow any subsidiary to sell,
exchange, lease, license, or otherwise dispose of any material
amount of assets (including intangible property) except in the
ordinary course of business and except for the sale, exchange,
lease, license or other disposition in an arms length transaction
of ResAssist (subject to Section 7.3) or a competing product(s) of
Sabre or a Sabre Affiliate;
2.5.11 Incur any single
expense or capital expenditure of an amount in excess of $100,000
unless such expenditure is provided for in the Business
Plan;
2.5.12 Borrow, or allow any
subsidiary to borrow, money in excess of $500,000 unless such
arrangement is set forth in the Business Plan and except for a
working capital line of up to $5,000,000 which may be secured only
by the Corporation’s and its subsidiaries accounts receivable
pursuant to the terms of the Note and except for capital lease
obligations;
2.5.13 Use the proceeds from
the Note in a manner inconsistent with Schedule 2.4.13 attached
hereto;
2.5.14 Materially amend the
Business Plan;
2.5.15 Enter into any
agreement, commitment or plan regarding liquidation, winding up or
dissolution;
2.5.16 Approve a capital or
operating budget or Business Plan, provided that Sabre will not
unreasonably withhold its consent to such budget or Business
Plan;
2.5.16 Make or allow any
subsidiary to make any loan or advance to any employee of the
Corporation except (i) advances for reasonable travel and other
normal business expenses in connection with the business, (ii) the
acceptance of promissory notes approved in advance by the Board of
Directors given for the purchase of the Corporation’s capital
stock, and (iii) loans not in excess of $10,000 to officers and
employees approved in advance by the Board of Directors;
2.5.17 Enter into or allow
any subsidiary to enter into a material agreement, license,
release, transaction, or other arrangement with any Related Party
(other than a subsidiary), provided that Sabre will not
unreasonably withhold its consent to such agreement, license,
lease, transaction, or other arrangement in which the terms are
equivalent to those in an arms length transaction; or
2.5.18 Authorize, ratify, or
enter into any agreement to undertake any of the matters specified
in items (2.5.1) through (2.5.17), above.
The Corporation shall address all
requests for approval of any of the above listed actions to the
Chief Executive Officer of Sabre at 3150 Sabre Drive, Southlake TX
76092-2129 facsimile
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#682-605-7722, or his successor
indicated in writing by Sabre (the “Sabre
Representative”). The decision regarding such request shall
be delivered by the Sabre Representative to the Corporation within
ten (10) business days of such request.
As in this Section 2.4,
“subsidiary” shall mean an entity controlled by the
Corporation, directly or through one or more
intermediaries.
ARTICLE 3
INITIAL PUBLIC
OFFERING
3.1 Intent of
Corporation . The Corporation desires to engage in an initial
public offering whereby the common stock of the Corporation will be
available for purchase by the public at a valuation of the
Corporation at no less than $150,000,000 and with aggregate cash
proceeds to the Corporation of at least $20 million (the
“IPO”). In the event that the Corporation does engage
in an IPO, the IPO process will be conducted in accordance with
this Article 3.
3.2 Investment Banking
Firm . The Corporation shall retain a nationally recognized
investment banking firm to advise the Corporation in connection
with the IPO and the Corporation shall confer with Sabre regarding
the Corporation’s proposed choices for the underwriting group
for the IPO.
3.3 Registration
Statements . The Corporation agrees that it will provide to
Sabre and its counsel copies of drafts of Form S-1 (the
“Registration Statement”) from time to time as they are
prepared. Within a reasonable time after Sabre’s receipt of
any draft of the Registration Statement, any comments or objections
posed by Sabre or its counsel shall be submitted to the Corporation
in writing and state with specificity the material in question, the
reason for objection or comment, and Sabre’s proposed
alternative (“Comments”). Notwithstanding the
foregoing, during the five (5) business days immediately proceeding
the date scheduled for the filing of the Registration Statement,
the Corporation shall provide Sabre with as much notice as possible
regarding any proposed revisions to the Registration Statement and
Sabre shall provide the Corporation with Comments to such proposed
revisions within twelve (12) hours of the time any such
documentation regarding any proposed revision is received by Sabre
and its counsel.
3.4 Piggy-Back
Registration Rights . If the Corporation allows the inclusion
of any common stock held by a shareholder in a public offering
registered under the Securities Act of 1993, the Stakeholders shall
be entitled to include their shares of common stock in such
offering on a pro rata basis, provided that the aggregate
amount to be included shall be at the discretion of the Corporation
and the managing underwriter. In order to participate in the
offering, each Stakeholder must provide such information and
execute such agreements and other documents as may be required of
selling shareholders in the offering by the Corporation and the
managing underwriter.
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ARTICLE 4
ADDITIONAL
CAPITAL
4.1 Generally .
Capital needs of the Corporation shall be funded by available funds
from operations of the Corporation. Sub
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