Exhibit 4.2.2
REGISTRATION RIGHTS AGREEMENT
by and between
▇▇▇▇▇▇▇ PACIFIC PROPERTIES, INC.
and
EACH OF THE EXISTING PARTNERS LISTED
ON EXHIBIT A-1 TO THIS AGREEMENT
dated as of
December 31, 1997
TABLE OF CONTENTS
Page
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(a) "Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(b) "Buyer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(c) "Buyer Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(d) "Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(e) "Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(f) "Company Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(g) "Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(h) "Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(i) "Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(j) "Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(k) "Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(l) "Exercise Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(m) "Existing Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(n) "NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(o) "Operating Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(p) "Placed Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(q) "Preferred Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(r) "Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(s) "Registration Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(t) "Registration Suspension Period . . . . . . . . . . . . . . . . . . . . . . . .3
(u) "Required Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(v) "Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(w) "Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(x) "Suspension Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(y) "Tag-Along Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(z) "Tag-Along Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(aa) "Tag-Along Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(bb) "Tag-Along Transaction Shares . . . . . . . . . . . . . . . . . . . . . . . . .4
(cc) "Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(dd) "Underwritten/Placed Offering . . . . . . . . . . . . . . . . . . . . . . . . .4
(ee) "Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2. Shelf Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(a) Obligation to File and Maintain . . . . . . . . . . . . . . . . . . . . . . . .4
(b) Black-Out Periods of the Existing Partners. . . . . . . . . . . . . . . . . . .5
(c) Black-Out Periods of the Company. . . . . . . . . . . . . . . . . . . . . . . .6
(d) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 3. Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(a) The Existing Partners' Rights to Demand Registration. . . . . . . . . . . . . .6
(i)
(b) Special Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . .7
(c) Black-Out Periods of the Existing Partners. . . . . . . . . . . . . . . . . . .7
(d) Black-Out Periods of the Company. . . . . . . . . . . . . . . . . . . . . . . .8
(e) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4. Incidental Registrations. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(a) Notification and Inclusion. . . . . . . . . . . . . . . . . . . . . . . . . . .9
(b) Cut-back Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(c) Duration of Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Certain Underwritten Offerings. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7. Preparation; Reasonable Investigation . . . . . . . . . . . . . . . . . . . . 14
Section 8. Tag-Along Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Rights and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Number of Shares to be Included . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Abandonment of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Terms of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Timing of Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Indemnification by the Company. . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Indemnification by the Existing Partners. . . . . . . . . . . . . . . . . . . 17
(c) Notices of Claims, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Indemnification Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10. Covenants Relating to Rule 144. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Interpretation; Absence of Presumption. . . . . . . . . . . . . . . . . . . . 21
(j) Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(ii)
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December 31,
1997, by and between ▇▇▇▇▇▇▇ Pacific Properties, Inc., a Maryland corporation
(the "Company"), and the parties listed on Schedule 1 hereto (the "Existing
Partners"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Contribution Agreement (as hereinafter defined).
WHEREAS, the Company, together with ▇▇▇▇▇▇▇ Pacific Operating Partnership,
L.P., a Delaware limited partnership (the "Operating Partnership"), and certain
entities that are owned, either directly or indirectly, by the Existing Partners
(the "Contributors") have entered into an Agreement to Contribute, dated as of
December 5, 1997 (the "Contribution Agreement"), pursuant to which the
Contributors will transfer to the Operating Partnership certain properties in
exchange for consideration which will consist, in part, of 0 units of limited
partner interest in the Operating Partnership (the "Units") and 2,000,000 units
of preferred limited partner interest in the Operating Partnership (the
"Preferred Units"); and
WHEREAS, pursuant to the Operating Partnership Agreement and the Operating
Partnership Amendment, the Units and the Preferred Units shall be redeemable or
exchangeable for shares of Series 1997-A Convertible Preferred Stock of the
Company, par value $.01 per share (the "Company Preferred Stock") (the Company
Preferred Stock and the Company's common stock, par value $0.01 per share (the
"Company Common Stock"), together with such stock of such series and class, and
all other series of preferred stock of the Company outstanding from time to time
are sometimes referred to herein as the "Company Stock"), or the cash
equivalent; and
WHEREAS, in order to induce the Existing Partners to enter into the
Contribution Agreement, the Company has agreed to provide the registration
rights set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall have
the following meanings:
(a) "Agreement": shall have the meaning set forth in the first
paragraph hereof.
(b) "Buyer": ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Holdings, L.L.C. and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Co-Holdings, L.L.C.
(c) "Buyer Agreement": the Registration Rights Agreement by and
between the Company and Buyer of even date herewith.
(d) "Company": shall have the meaning set forth in the first
paragraph hereof.
(e) "Company Common Stock": shall have the meaning set forth in the
recitals to this Agreement.
(f) "Company Preferred Stock": shall have the meaning set forth in
the recitals to this Agreement.
(g) "Company Stock": shall have the meaning set forth in the
recitals to this Agreement.
(h) "Commission": the Securities and Exchange Commission, and any
successor thereto.
(i) "Contributors": shall have the meaning set forth in the recitals
to this Agreement.
(j) "Contribution Agreement": shall have the meaning set forth in
the recitals to this Agreement.
(k) "Exchange Act": the Securities Exchange Act of 1934, as amended,
and any successor thereto, and the rules and regulations thereunder.
(l) "Exercise Notice": shall have the meaning set forth in Section
8(a).
(m) "Existing Partners": the Existing Partners listed on Exhibit A-1
to the Contribution Agreement.
(n) "NASD": the National Association of Securities Dealers, Inc.
(o) "Operating Partnership": shall have the meaning set forth in the
recitals to this Agreement.
(p) "Placed Offering": a sale of securities of the Company to a
placement agent or agents for reoffering or through a placement agent or
agents for sale in each case in a transaction not registered under the
Securities Act.
(q) "Preferred Units": shall have the meaning set forth in the
recitals to this Agreement.
(r) "Registrable Securities": (i) any and all shares of Company
Stock and (ii) any securities issued or issuable with respect to any
Company Stock by way of conversion, exchange, stock dividend or stock split
or in connection with a combination
2
of shares, recapitalization, merger, consolidation or
other reorganization or otherwise including, without
limitation, any shares of Company Stock, issuable upon
the redemption or exchange or conversion of the Units and
the Preferred Units issued to the Existing Partners
pursuant to the Contribution Agreement in accordance with
the Operating Partnership Agreement and the Operating
Partnership Amendment. As to any particular Registrable
Securities, once issued, such securities shall cease to
be Registrable Securities when (A) a registration
statement with respect to the sale of such securities
shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance
with such registration statement, or (B) such securities
shall have been sold in accordance with Rule 144 (or any
successor provision) under the Securities Act.
(s) "Registration Expenses": (i) the fees and disbursements of
counsel and independent public accountants for the Company incurred in
connection with the Company's performance of or compliance with this
Agreement, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, and any
premiums and other costs of policies of insurance obtained by the Company
against liabilities arising out of the sale of any securities and (ii) all
registration, filing and stock exchange or NASD fees, all fees and expenses
of complying with securities or blue sky laws, all printing expenses,
messenger and delivery expenses, any fees and disbursements of any common
counsel retained by the Existing Partners and transfer taxes, if any.
(t) "Registration Suspension Period": shall have the meaning set
forth in Section 2(b).
(u) "Required Interest": shall have the meaning set forth in Section
2(c).
(v) "Securities Act": the Securities Act of 1933, as amended, and
any successor thereto, and the rules and regulations thereunder.
(w) "Shelf Registration": shall have the meaning set forth in
Section 2(a).
(x) "Suspension Notice": shall have the meaning set forth in Section
2(b).
(y) "Tag-Along Notice": shall have the meaning set forth in
Section 8(a).
(z) "Tag-Along Shares": shall have the meaning set forth in
Section 8(a).
(aa) "Tag-Along Transaction": any non-public issuance of Company
Stock other than in a distribution registered under the Securities Act for
consideration all, or substantially all, of which consists of cash or cash
equivalents (as determined in accordance with generally accepted accounting
principles).
3
(bb) "Tag-Along Transaction Shares": shall have the meaning set forth
in Section 8(a).
(cc) "Third Party": shall have the meaning set forth in Section 8(a).
(dd) "Underwritten/Placed Offering": a sale of securities of the
Company to an underwriter or underwriters for reoffering to the public or
on behalf of a person other than the Company through an agent for sale to
the public.
(ee) "Units": shall have the meaning set forth in the recitals to
this Agreement.
Section 2. Shelf Registration.
(a) Obligation to File and Maintain. At any time beginning two weeks
prior to and ending two weeks following the date the Preferred Units are first
redeemable for Company Preferred Stock, the Company will use its best efforts to
cause to be filed with the Commission a registration statement under the
Securities Act for the offering on a continuous or delayed basis in the future
of all of the Registrable Securities (the "Shelf Registration") and will use its
best efforts to cause such Shelf Registration to be declared effective by the
Commission as soon as practicable thereafter. The Shelf Registration shall
provide (x) that upon any redemption of the Units and the Preferred Units
pursuant to the Operating Partnership Agreement and the Operating Partnership
Amendment that is satisfied with shares of the Company Common Stock or Company
Preferred Stock, the Existing Partners shall receive shares of Company Common
Stock and Company Preferred Stock that shall be registered under the Securities
Act pursuant to the Shelf Registration and (y) for the offer and sale on a
continuous basis in the future of all of the Registrable Securities. The Shelf
Registration shall be on an appropriate form and the Shelf Registration and any
form of prospectus included therein or prospectus supplement relating thereto
shall reflect such plan of distribution or method of sale as the Existing
Partners may from time to time notify the Company, including the sale of some or
all of the Registrable Securities in a public offering or, if requested by the
Existing Partners, subject to receipt by the Company of such information
(including information relating to purchasers) as the Company reasonably may
require, (i) in a transaction constituting an offering outside the United States
which is exempt from the registration requirements of the Securities Act in
which the Company undertakes to effect registration of such shares as soon as
possible after the completion of such offering in order to permit such shares to
be freely tradeable in the United States, (ii) in a transaction constituting a
private placement under Section 4(2) of the Securities Act in connection with
which the Company undertakes to register such shares after the conclusion of
such placement to permit such shares to be freely tradeable by the purchasers
thereof, or (iii) in a transaction under Rule 144A of the Securities Act in
connection with which the Company undertakes to register such shares after the
conclusion of such transaction to permit such shares to be freely tradeable by
the purchasers thereof. The Company shall use its best efforts to keep the
Shelf Registration continuously effective for the period beginning on the date
on which the Shelf Registration is
4
declared effective and ending on the first date that there are no Registrable
Securities (it being understood that the Existing Partners shall promptly notify
the Company of such sale). During the period during which the Shelf Registration
is effective, the Company shall supplement or make amendments to the Shelf
Registration, if required by the Securities Act or if reasonably requested by
the Existing Partners or an underwriter of Registrable Securities, including to
reflect any specific plan of distribution or method of sale, and shall use its
reasonable best efforts to have such supplements and amendments declared
effective, if required, as soon as practicable after filing. Notwithstanding
the foregoing, the Existing Partners shall be prohibited from utilizing this
Shelf Registration for purposes of reselling any Registrable Securities earlier
than one year following the date hereof.
(b) Black-Out Periods of the Existing Partners. Notwithstanding
anything herein to the contrary, (i) the Company shall have the right,
exercisable on not more than five occasions (including any black-out period
rights the Company may have under Section 3(d) below but not more than two in
any twelve-month period), from time to time to require the Existing Partners not
to sell under the Shelf Registration as provided for in Section 2(a) or to
suspend the effectiveness thereof during the period starting with the date 30
days prior to the Company's good faith estimate, as certified in writing by an
executive officer of the Company to Buyer, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement relating to an
existing shelf registration statement, in either case, pertaining to an
underwritten public offering of equity securities of the Company for the account
of the Company, and ending on the date 75 days following the effective date of
such registration statement or the date of filing of such prospectus supplement,
and (ii) the Company shall be entitled to postpone or suspend (but not for a
period exceeding 90 days) the filing or effectiveness of a registration
statement otherwise required to be prepared and filed by it pursuant to this
Section 2(a) if the Company determines, in its good faith judgment, that such
registration and offering or continued effectiveness would interfere with any
material financing, acquisition, disposition, corporate reorganization or other
material transaction involving the Company or any of its subsidiaries or public
disclosure thereof would be required prior to the time such disclosure might
otherwise be required, or when the Company is in possession of material
information that it deems advisable not to disclose in a registration statement.
Once any registration statement filed pursuant to Section 2(a) or as set
forth below in Section 3 has been declared effective, any period during which
the Company fails to keep such registration statement effective and usable for
resale of Registrable Securities shall be referred to as a "Registration
Suspension Period," which term shall not include any failure solely attributable
to the exercise of the Company's rights under this Section 2(b). A Registration
Suspension Period shall commence on and include the date that the Company gives
written notice to the Existing Partners of its determination that such
registration statement is no longer effective or usable for resale of
Registrable Securities (the "Suspension Notice") to and including the date when
the Company notifies the Existing Partners that the use of the prospectus
included in such registration statement may be resumed for the disposition of
Registrable Securities.
5
(c) Black-Out Periods of the Company. Subject to the conditions of
this Section 2(c), the Existing Partners shall have the right, exercisable on
not more than five occasions (including any black-out period rights the Existing
Partners may have in Section 3(d) below and not more than two in any twelve
month period), to require the Company not to sell any common equity securities
of the Company or any securities convertible into common equity securities of
the Company under any registration statement or prospectus supplement relating
to an existing shelf registration statement or to suspend the effectiveness
thereof, during the period starting with the date 20 days prior to the Existing
Partners' good faith estimate as certified in writing by an authorized
representative of the Existing Partners of the proposed date of filing of a
preliminary prospectus supplement relating to a Shelf Registration filed
pursuant to Section 2(a), pertaining to an underwritten public offering of
Registrable Securities, and ending on the date 75 days following the date of
filing of the final prospectus supplement, but in no event on a date later than
90 days following the date of filing of the preliminary prospectus supplement.
Such right may only be exercised by the Existing Partners holding more than
fifty percent (50%) of the Registrable Securities held by all of the Existing
Partners (the "Required Interest"). The Company's obligations under this
Section 2(c) are subject to the continuing satisfaction of the following
conditions: (i) no black-out period pursuant to Section 2(b)(i) shall be in
effect at the time of the requesting Existing Partners' exercise of their rights
under this Section 2(c); (ii) the Company shall not have suspended sales of
Registrable Securities pursuant to Section 2(b)(ii); and (iii) the Company shall
not have delivered to the Existing Partners a written notice to the effect that
the Board of Directors has determined in good faith that compliance with this
Section 2(c) would reasonably be expected to have a material adverse effect on
the Company. In no event may the Company include in any preliminary prospectus
supplement under which Existing Partners are offering Registrable Securities
covered by this Section 2(c) any equity securities of the Company or any
securities convertible into equity securities of the Company.
(d) Notice. The Company shall give Buyer prompt notice in the event
that the Company has suspended sales of Registrable Securities under Section
2(b).
Section 3. Demand Registration.
(a) The Existing Partners' Rights to Demand Registration. At any
time that a shelf registration statement is not filed and maintained as set
forth in Section 2(a) or there shall have occurred a Registration Suspension
Period in excess of 60 days, promptly upon the written request of the Existing
Partners holding the Required Interest, the Company will file a registration
statement or similar document under the Securities Act with respect to the
Registrable Securities held by the Existing Partners and the sale by the
Existing Partners of Registrable Securities (the "Demand Registration"). The
Company will use its best efforts to cause all Registrable Securities that such
Existing Partners have requested to be registered under the Securities Act to be
so registered within 120 days of such request and maintain the effectiveness of
such Demand Registration until the earlier of (i) the sale of all of the
Registrable Securities registered pursuant thereto (it being understood that the
Existing Partners shall promptly notify the Company of such sale) and (ii) 180
days following the
6
effectiveness of such registration statement. The Demand Registration shall be
on an appropriate form and the Demand Registration and any form of prospectus
included therein or prospectus supplement relating thereto shall reflect such
plan of distribution or method of sale as the Existing Partners may from time to
time notify the Company, including the sale of some or all of the Registrable
Securities in a public offering or, if requested by the Existing Partners,
subject to receipt by the Company of such information (including information
relating to purchasers) as the Company reasonably may require, (i) in a
transaction constituting an offering outside the United States which is exempt
from the registration requirements of the Securities Act in which the Company
undertakes to effect registration of such securities as soon as possible after
the completion of such offering in order to permit such securities to be freely
tradeable in the United States, (ii) in a transaction constituting a private
placement under Section 4(2) of the Securities Act in connection with which the
Company undertakes to register such securities after the conclusion of such
placement to permit such securities to be freely tradeable by the purchasers
thereof, or (iii) in a transaction under Rule 144A of the Securities Act in
connection with which the Company undertakes to register such securities after
the conclusion of such transaction to permit such securities to be freely
tradeable by the purchasers thereof. The Existing Partners holding the Required
Interest may exercise their rights under this Section 3(a) twice during any
twelve-month period; provided, that the Existing Partners' second such demand
registration right shall be conditioned upon Buyer having not exercised its
second demand registration right pursuant to Section 3(a) of the Buyer Agreement
during such twelve month period. Notwithstanding anything to the contrary
provided herein, the Existing Partners' rights pursuant to this Section 3 shall
be effective not earlier than one year following the date hereof.
(b) Special Demand Registration. The Existing Partners may demand in
writing that the Company register and list, not earlier than one year following
the date hereof, the Company Preferred Stock on the principal exchange on which
the Company's securities are then listed if so permitted by applicable law and
the regulations of such exchange. If the Company shall receive a written
request from the Existing Partners holding the Required Interest that the
Company file a registration statement or similar document under the Securities
Act pursuant to this Section 3(b), then the Company shall promptly cause such
registration statement or similar document to be filed with the Commission and
shall use its best efforts to cause all Registrable Securities that the Existing
Partners holding the Required Interest have requested to be registered under the
Securities Act to be so registered within 120 days of such request and maintain
the effectiveness of such registration statement until the earlier of (i) the
sale of all of the Registrable Securities registered pursuant thereto (it being
understood that the Existing Partners shall promptly notify the Company of such
sale) and (ii) 180 days following the effectiveness of such registration
statement. Such registration statement shall provide for the registration under
the Securities Act of the Company Preferred Stock held by the Existing Partners
and shall provide for the sale by the Existing Partners of shares of the Company
Preferred Stock.
(c) Black-Out Periods of the Existing Partners. Notwithstanding
anything herein to contrary, (i) the Company shall have the right, exercisable
on not more than five
7
occasions (but not more than two in any 12 month period), from time to time to
require the Existing Partners not to sell pursuant to a registration statement
or similar document under the Securities Act filed pursuant to Section 3(a) and
(b) or to suspend the effectiveness thereof during the period starting with the
date 20 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Existing Partners, of the proposed
date of filing of a registration statement, or a preliminary prospectus
supplement relating to an existing registration statement in either case,
pertaining to an underwritten public offering of equity securities of the
Company for the account of the Company, and ending on the date 75 days following
the effective date of such registration statement or the date of filing of such
prospectus supplement, and (ii) the Company shall be entitled to postpone or
suspend (but not for a period exceeding 90 days) the filing or effectiveness of
a registration statement otherwise required to be prepared and filed by it
pursuant to Section 3(a) and (b) if the Company determines, in its good faith
judgment, that such registration and offering or continued effectiveness would
interfere with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any of
its subsidiaries or public disclosure thereof would be required prior to the
time such disclosure might otherwise be required, or when the Company is in
possession of material information that it deems advisable not to disclose in a
registration statement.
(d) Black-Out Periods of the Company. Subject to the conditions of
this Section 3(d), the Existing Partners shall have the right, exercisable on
not more than five occasions (including any black-out period rights the Existing
Partners may have in Section 2(c) above, and but not more than two in any 12
month period), to require the Company not to sell any common equity securities
of the Company or any securities convertible into common equity securities of
the Company under any registration statement or prospectus supplement relating
to an existing registration statement or to suspend the effectiveness thereof,
during the period starting with the date 20 days prior to the Existing Partners'
good faith estimate, as certified in writing by the Existing Partners to the
Company, of the proposed date of filing of a preliminary prospectus supplement
relating to a registration statement or similar document under the Securities
Act filed pursuant to Section 3(a) and (b), pertaining to an underwritten public
offering of Registrable Securities, and ending on the date 75 days following the
date of filing of the final prospectus supplement, but in no event on a date
later than 90 days following the date of filing of the preliminary prospectus
supplement. Such right may only be exercised by the Existing Partners holding
the Required Interest. The Company's obligations under this Section 3(d) are
subject to the continuing satisfaction of the following conditions: (i) no
black-out period pursuant to Section 3(c)(i) shall be in effect at the time of
the Existing Partners' exercise of their rights under this Section 3(d); (ii)
the Company shall not have suspended sales of Registrable Securities pursuant to
Section 3(c)(ii); and (iii) the Company shall not have delivered to the Existing
Partners a written notice to the effect that the Board of Directors has
determined in good faith that compliance with this Section 3(d) would reasonably
be expected to have a material adverse effect on the Company. In no event may
the Company include in any preliminary prospectus supplement under which the
Existing Partners are offering Registrable Securities covered by this Section
3(d) any equity securities of the Company or any securities convertible into
equity securities of the Company.
8
(e) Notice. The Company shall give the Existing Partners prompt
notice in the event that the Company has suspended sales of Registrable
Securities under Section 3(c).
Section 4. Incidental Registrations.
(a) Notification and Inclusion. If the Company proposes to register
(x) for its own account or (y) pursuant to a right to registration on request
pursuant to the Buyer Agreement, any common equity securities of the Company or
any securities convertible into common equity securities of the Company under
the Securities Act (other than a registration relating solely to the sale of
securities to participants in a dividend reinvestment plan, a registration on
Form S-4 (or successor form) relating to a business combination or similar
transaction permitted to be registered on such Form S-4, a registration on Form
S-8 (or successor form) relating to the sale of securities to participants in a
stock or employee benefit plan, or a registration permitted under Rule 462 under
the Securities Act registering additional securities of the same class as were
included in a earlier registration statement for the same offering and declared
effective), then the Company shall, at each such time, promptly give written
notice of such registration to the Existing Partners. Upon the written request
of the Existing Partners holding the Required Interest within 10 days (but in
the case of a retail "spot" offering, two Business Days so long as the Company
has advised the Existing Partners that it is considering effecting such an
offering, and the material terms thereof, as promptly as is practical for the
Company to do so and in any event not less than 10 days prior to the beginning
of such two Business Day period) after receipt of such notice by the Existing
Partners, the Company shall seek to include in such proposed registration such
Registrable Securities of the same class as is then being registered by the
Company as the Existing Partners holding the Required Interest shall request be
so included and shall use its best efforts to cause a registration statement
covering all of the Registrable Securities that the Existing Partners have so
requested to be registered to become effective under the Securities Act. The
Company shall be under no obligation to the Existing Partners to complete any
offering of securities it proposes to make under this Section 4 and shall incur
no liability (including under this Section 4 or under Section 5) to the Existing
Partners for its failure to do so. If, at any time after giving written notice
of its intention to register any securities as set forth in this Section 4(a)
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to the Existing Partners
and, thereupon, (i) in the case of a determination not to register, the Company
shall be relieved of its obligation to the Existing Partners to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses incurred in connection therewith)
pursuant to Section 4(a) hereof and (ii) in the case of a determination to delay
registering, the Company shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. Notwithstanding anything to contrary herein, the existing Partners
rights hereunder shall be effective not earlier than one year following the date
hereof.
9
(b) Cut-back Provisions. If a registration pursuant to this Section
4 involves an Underwritten/Placed Offering of the securities so being
registered, whether or not solely for sale for the account of the Company, which
securities are to be distributed by or through one or more underwriters of
recognized standing under underwriting terms customary for such transaction, and
the underwriter or the managing underwriter, as the case may be, of such
Underwritten/Placed Offering shall inform the Company of its belief that the
amount of securities requested to be included in such registration or offering
exceeds the amount which can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of the offering (including the
price per share of the securities to be sold), then the Company will include in
such registration (i) first, all the securities of the Company which the Company
proposes to sell for its own account and (ii) second, to the extent of the
amount which the Company is so advised can be sold in (or during the time of)
such offering, Registrable Securities and other securities requested to be
included in such registration pro rata among the Existing Partners and others
exercising incidental registration rights on the basis of the number of
securities requested to be included by all such persons.
(c) Duration of Effectiveness. At the request of the Existing
Partners holding the Required Interest, the Company shall, subject to Section
2(b), use its best efforts to keep any registration statement for which
Registrable Securities are included under this Section 4 effective and usable
for up to 90 days (subject to extension for the length of any Registration
Suspension Period), unless the distribution of securities registered thereunder
has been earlier completed; provided, however, that in no event will the Company
be required to prepare or file audited financial statements with respect to any
fiscal year by a date prior to the date on which the Company would be so
required to prepare and file such audited financial statements if such
registration statement were no longer effective and usable.
Section 5. Registration Procedures. (a) In connection with the filing
of any registration statement as provided in Sections 2, 3 or, subject to the
terms and conditions of Section 4, the Company shall use its best efforts to, as
expeditiously as reasonably practicable:
(i) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration and
use its best efforts to cause such registration statement to become
effective, provided that before filing such registration statement or any
amendments or supplements thereto, the Company will furnish to the counsel
selected by the Existing Partners holding the Required Interest copies of
all such documents proposed to be filed, which documents will be subject to
the review of such counsel before any such filing is made, and the Company
will comply with any reasonable request made by such counsel to make
changes in any information contained in such documents relating to the
Existing Partners;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered
10
by such registration statement during the period in which such registration
statement is required to be kept effective;
(iii) furnish to each Existing Partner and the underwriter, if
any, of the securities being registered, without charge, such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits) other than
those which are being incorporated into such registration statement by
reference, such number of copies of the prospectus contained in such
registration statements (including each complete prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, including documents incorporated by reference, as
the Existing Partners may reasonably request;
(iv) register or qualify all Registrable Securities under such other
securities or blue sky laws of such jurisdictions as the Existing Partners
and the underwriters, of the securities being registered, if any, shall
reasonably request, to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and take any
other action which may be reasonably necessary or advisable to enable the
Existing Partners to consummate the disposition in such jurisdictions of
the securities owned by the Existing Partners, except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation or register as a broker or dealer in any
jurisdiction wherein it would not but for the requirements of this
paragraph be obligated to be so qualified or registered, or to consent to
general service of process in any such jurisdiction, or to subject the
Company to any material tax in any such jurisdiction where it is not then
so subject;
(v) furnish to the Existing Partners a signed counterpart, addressed
to the Underwriter if any, addressed to each Existing Partner (and the
underwriters, if any), of
(A) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to the Existing Partners, and
(B) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective
date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement,
covering such matters with respect to such registration
11
statement and with respect to events subsequent to the date of such
financial statements,
all as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in connection with underwritten
public offerings of securities;
(vi) immediately notify the Existing Partners at any time when the
Company becomes aware that a prospectus relating thereto 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 not misleading in the light of the circumstances
under which they were made, and, at the request of the Existing Partners,
promptly prepare and furnish to the Existing Partners a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(vii) comply or continue to comply in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission thereunder so as to enable any Existing
Partner to sell its Company Stock pursuant to Rule 144 promulgated under
the Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which the Existing Partners shall
have reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
Securities Act, having been furnished with a copy thereof at least five
Business Days prior to the filing thereof;
(viii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act;
(ix) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement;
(x) cooperate with the Existing Partners to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend; and enable
certificates for such Registrable Securities to be issued for such numbers
of shares of Company Stock and registered in
12
such names as the selling Existing Partners may reasonably request in
writing at least two Business Days prior to any sale of Registrable
Securities;
(xi) list all Company Stock covered by such registration statement on
any securities exchange on which any of the Company Stock is then listed
and cause to be satisfied all requirements and conditions of such
securities exchange to the listing of such securities that are reasonably
within the control of the Company including, without limitation,
registering the applicable class of Company Stock under the Exchange Act,
if appropriate, and using its best efforts to cause such registration to
become effective pursuant to the rules of the Commission;
(xii) in connection with any sale, transfer or other disposition
by any Existing Holder of any Company Stock pursuant to Rule 144
promulgated under the Securities Act, cooperate with such holder to
facilitate the timely preparation and delivery of certificates representing
Company Stock to be sold and not bearing any Securities Act legend, and
enable certificates for such Company Stock to be for such number of shares
and registered in such name as the selling Existing Partners may reasonably
request in writing at least two business days prior to any sale of
Registrable Securities;
(xiii) notify each Existing Partner, promptly after it shall
receive notice thereof, of the time when such registration statement, or
any post-effective amendments to the registration statement, shall have
become effective, or a supplement to any prospectus forming part of such
registration statement has been filed;
(xiv) notify each Existing Partner of any request by the
Commission for the amendment or supplement of such registration statement
or prospectus for additional information; and
(xv) advise each Existing Partner, promptly after it shall receive
notice or obtain knowledge thereof, of (A) the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such
purpose (and use all reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued), and
(B) the suspension of the registration of the subject shares of the Company
Stock in any state jurisdiction.
(b) In connection with the filing of any registration statement covering
Registrable Securities, the selling Existing Partners shall furnish in writing
to the Company such information regarding such Existing Partner (and any of its
affiliates), the Registrable Securities to be sold, the intended method of
distribution of such Registrable Securities, and such other information
requested by the Company as is necessary or advisable for inclusion in the
registration statement relating to such offering pursuant to the Securities Act
and the rules of the Commission thereunder. Such writing shall expressly state
that it is being furnished to the Company for use in the preparation of a
registration statement, preliminary prospectus,
13
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
Each Existing Partner agrees by acquisition of the Registrable Securities
that upon receipt of any notice from the Company of the happening of any event
of the kind described in paragraph (a)(vi) of this Section 5, such Existing
Partner will forthwith discontinue its disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such Existing Partner's receipt of the copies of the supplemented or
amended prospectus contemplated by paragraph (a)(vi) of this Section 5.
Section 6. Certain Underwritten Offerings. If requested by the
underwriters for any underwritten offerings by the Existing Partners, under a
registration requested pursuant to Section 2(a), the Company will enter into a
customary underwriting agreement with such underwriters for such offering, to
contain such representations and warranties by the Company and such other terms
as are customarily contained in agreements of this type, including indemnities
to the effect and to the extent provided in Section 9. Each selling Existing
Partner shall be a party to such underwriting agreement and may, at its option,
require that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Existing Partner. An Existing Partner shall not be required
to make any representations or warranties to or agreement with the Company or
the underwriters other than representations, warranties or agreements regarding
such Existing Partner and such Existing Partner's intended method of
distribution and any other representation or warranty required by law. Other
than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Discover, ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ Brothers, which firms are now designated by the Company as agreeable to
it, the Company may decline (but not more than three times) to retain an
underwriter of the Existing Partners' choice. The Existing Partners shall only
propose underwriters of nationally recognized standing.
Section 7. Preparation; Reasonable Investigation. In connection with
the preparation and filing of the registration statement under the Securities
Act, the Company will give the Existing Partners, their underwriters, if any,
and their respective counsel, the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Existing Partners and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
Section 8. Tag-Along Rights. Each Existing Partner shall be entitled
to the rights set forth in this Section 8.
(a) Rights and Notice. The Company shall not directly or indirectly
sell or otherwise dispose of shares of Company Stock to any person (a "Third
Party") in connection
14
with a Tag-Along Transaction, unless the terms and conditions of such sale or
other disposition shall include an offer to each Existing Partner to include, at
the option of such Existing Partner, in such sale or other disposition that
number of Registrable Securities of the same class of those securities to be so
sold or disposed of by the Company owned by such Existing Partner as of the
Exercise Notice (as defined below) at the time of such sale or other disposition
determined in accordance with Section 8(b) (the "Tag-Along Shares"). The
Company shall send a written notice (the "Tag-Along Notice") to each Existing
Partner setting forth the number of shares proposed to be sold or otherwise
disposed of in the Tag-Along Transaction (the "Tag-Along Transaction Shares"),
and the price at which such shares are proposed to be sold (or the method by
which such price is proposed to be determined). At any time within 15 days
after its receipt of the Tag-Along Notice, the Existing Partners may exercise
their option to sell the Tag-Along Shares by furnishing written notice of such
exercise (the "Exercise Notice") to the Company. Notwithstanding anything to
the contrary provided herein, the Existing Partners' rights pursuant to this
Section 8 shall be effective not earlier than one year following the date
hereof.
(b) Number of Shares to be Included. If the proposed sale or other
disposition by the Company in connection with a Tag-Along Transaction is
consummated, each Existing Partner shall have the right to sell to the Third
Party as part of such proposed sale or other disposition such number of
Registrable Securities owned by such Existing Partner equal to the product of
(i) the ratio of the total number of Registrable Securities owned by such
Existing Partner (assuming, with respect to all such Registrable Securities, the
redemption or exchange for, or the conversion into, shares of Company Common
Stock) at the time that such Existing Partners receives the Tag-Along Notice to
the total number of outstanding shares of Company Common Stock at the time that
such Existing Partner receives the Tag-Along Notice, and (ii) the number of
Tag-Along Transaction Shares; provided, however, that if the number of Tag-Along
Shares is greater than the number of Registrable Securities owned by such
Existing Partner at the time that such Existing Partner receives the Tag-Along
Notice, then such Existing Partner shall have the right to sell to the Third
Party as part of the proposed sale or other disposition to the Third Party by
the Company in connection with a Tag-Along Transaction the total number of
Registrable Securities owned by such Existing Partner at the time that such
Existing Partner receives the Tag-Along Notice. All calculations pursuant to
this paragraph shall exclude and ignore any unissued shares issuable pursuant to
stock options, warrants and other rights to acquire shares and pursuant to
convertible or exchangeable securities; provided, however, that the provisions
of this Section 8 shall not apply to (i) any shares of any class of Company
Stock or convertible securities issuable upon redemption or conversion of the
Company Preferred Stock, (ii) or any shares of Company Stock issued to
employees, consultants or directors as compensation or incentives for services
rendered to the Company, whether under the Company Stock Option and Incentive
Plan or any successor thereto, or (ii) any issuance or sale of not more than
$120,000,000 of Company Common Stock as contemplated in clause (x) of the
parenthentrial of Section 5(e)(v) of the Articles Supplementary of the Company.
15
(c) Abandonment of Sale. Each of the Company and the Third Party
shall have the right, in its sole discretion, at all times prior to consummation
of the proposed sale or other disposition giving rise to the tag-along right
granted by this Section 8 to abandon, rescind, annul, withdraw or otherwise
terminate such sale or other disposition, whereupon all tag-along rights in
respect of such sale or other disposition pursuant to this Section 8 shall
become null and void, and neither the Company nor the Third Party shall have any
liability or obligation to the Existing Partners with respect thereto by virtue
of such abandonment, rescission, annulment, withdrawal or termination.
(d) Terms of Sale. The purchase from the Existing Partners pursuant
to this Section 8 shall be on the same terms and conditions, including the per
share price and the date of sale or other disposition, as are applicable to the
Company, and which shall be consistent with the relevant Tag-Along Notice;
provided, however, that the Existing Partners shall not be required to make any
representations or warranties with respect to the Company.
(e) Timing of Sale. If, with respect to any Tag-Along Notice, an
Existing Partner fails to deliver an Exercise Notice within the requisite time
period, the Company shall have 120 days after the expiration of the time in
which the Exercise Notice is required to be delivered in which to sell or
otherwise dispose of not more than the number of shares of Company Stock
described in the Tag-Along Notice on terms not more favorable to the Company
than were set forth in the Tag-Along Notice. If, at the end of 120 days
following the receipt of the Tag-Along Notice, the Company has not completed the
sale or other disposition in accordance with the terms described in the
Tag-Along Notice, the Company shall again be obligated to comply with the
provisions of this Section 8 with respect to, and provide each Existing Partner
with the opportunity to participate in, any proposed sale or other disposition
of shares in connection with a Tag-Along Transaction.
Section 9. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless each Existing
Partner, its officers and directors and each person who controls such Existing
Partner within the meaning of the Securities Act, each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages, and expenses (including,
without limitation, reasonable attorneys fees) joint or several, to which the
Existing Partners or any such indemnitees may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Registrable Securities were registered
and sold under the Securities Act, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
or arising out of or based upon any omission or alleged omission to state
therein a material fact
16
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and the
Company will reimburse each Existing Partner for any reasonable legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by the Existing Partners or
any other person who participates as an underwriter in the offering or sale of
such securities, in either case, specifically stating that it is for use in the
preparation thereof, and provided, further, that the Company shall not be liable
to the Existing Partners or any person who participates as an underwriter in the
offering or sale of Registrable Securities or any other person, if any, who
controls such underwriter within the meaning of the Securities Act in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such person's failure to
send or give a copy of the final prospectus or supplement to the persons
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such person if such statement or omission was corrected in such
final prospectus or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Existing
Partners or any such underwriter or controlling person and shall survive the
transfer of such securities by the Existing Partners.
(b) Indemnification by the Existing Partners. The Company may
require, as a condition to including any Registrable Securities in any
registration statement pursuant to Section 2 or Section 3, that the Company
shall have received an undertaking satisfactory to it from each Existing Partner
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 9) the Company, each director of the
Company, each officer of the Company and each other person, if any, who controls
the Company within the meaning of the Securities Act, and each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue statement
of a material fact in or omission or alleged omission to state a material fact
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by an Existing Partner specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer, or
controlling person and shall survive the transfer of such securities by any
Existing Partner.
17
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 9, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to assume the defense thereof,
for itself, if applicable, together with any other indemnified party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof.
(d) Indemnification Payments. To the extent that the indemnifying
party does not assume the defense of an action brought against the indemnified
party as provided in Section 9(c), the indemnified party (or parties if there is
more than one) shall be entitled to the reasonable legal expenses of common
counsel for the indemnified party (or parties). In such event, however, the
indemnifying party will not be liable for any settlement expected without the
written consent of such indemnifying party. The indemnification required by
this Section 9 shall be made by periodic payments of the amount thereof during
the course of an investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) Contribution. If, for any reason, the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of the expense, loss, damage or liability, (i) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in the proportion as
is appropriate to reflect not only the relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any indemnifying
party who was not guilty of such fraudulent misrepresentation.
18
Section 10. Covenants Relating to Rule 144. The Company will file in a
timely manner, information, documents and reports in compliance with the
Exchange Act and will, at its expense, forthwith upon the request of the
Existing Partners, deliver to the Existing Partners a certificate, signed by the
Company's principal financial officer, stating (a) the Company's name, address
and telephone number (including area code), (b) the Company's Internal Revenue
Service identification number, (c) the Company's Commission file number, (d) the
number of shares of Company Common Stock and the number of shares of Company
Preferred Stock outstanding as shown by the most recent report or statement
published by the Company, and (e) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least 90 days
prior to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder. If at any time the Company is
not required to file reports in compliance with either Section 13 or Section
15(d) of the Exchange Act, the Company will, at its expense, forthwith upon the
written request of the Existing Partners, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144 of the General Rules and Regulations promulgated under the
Securities Act.
Section 11. Miscellaneous.
(a) Expenses. All Registration Expenses incurred in connection with
any Shelf Registration or other registration which may be requested under
Sections 2, 3 or 4 (including all Registrable Expenses incurred in connection
with any registration of any securities other than those of the Existing
Partners as referred to in the first sentence of Section 4(a)) shall be borne by
the Company.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section 10,
provided receipt of copies of such counterparts is confirmed.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF
(d) Entire Agreement. This Agreement (including agreements
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred to
herein. This Agreement is not intended to confer upon any person not a party
hereto (and their successors and assigns) any rights or remedies hereunder.
(e) Notices. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by
19
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the Company shall be addressed
to:
▇▇▇▇▇▇▇ Pacific Properties, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Loeb & Loeb LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Existing Partners. Notices to
the Existing Partners shall be addressed to:
Highridge Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Blackacre Capital Group, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
20
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
(f) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors.
Each party hereto shall be permitted to assign any of its rights hereunder to
any third party, provided that (i) an Existing Partner shall remain the agent
for all third party assignees with respect to the registration and other rights
as set forth herein, (ii) such transfer is effected in accordance with
applicable federal and state securities laws, (iii) such assignee becomes a
party to this Agreement or agrees in writing to be subject to the terms hereof,
and (iv) the Company is given written notice by the relevant Existing Partner
of said transfer stating the name and address of said assignee and identifying
the securities with respect to which such registration rights are being
assigned.
(g) Headings. The Section and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to Sections or
other headings contained herein mean Sections or other headings of this
Agreement unless otherwise stated.
(h) Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought.
Either party hereto may, only by an instrument in writing, waive compliance by
the other party hereto with any term or provision hereof on the part of such
other party hereto to be performed or complied with. The waiver by any party
hereto of a breach of any term or provision hereof shall not be construed as a
waiver of any subsequent breach.
(i) Interpretation; Absence of Presumption. For the purposes hereof,
(i) words in the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other gender as the context
requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and Section,
paragraph or other references are to the Sections, paragraphs, or other
references to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word
21
"or" shall not be exclusive, and (v) provisions shall apply, when appropriate,
to successive events and transactions.
This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting or causing
any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
[SIGNATURE PAGE FOLLOWS]
22
THE COMPANY:
▇▇▇▇▇▇▇ PACIFIC PROPERTIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
THE EXISTING PARTNERS:
BLACKACRE SMC HOLDINGS, L.P.
By: Blackacre Capital Group, L.P.,
its general partner
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-President
BLACKACRE SMC II HOLDINGS LLC
By: Blackacre Capital Group, L.P.,
its managing member
By: Blackacre Capital Management Corp.,
its managing member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-President
23
MJL ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
By: MJL Investments, Inc., a California
corporation, as general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
SAB ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
By: SAB Investments, Inc., a California
corporation, as general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
24
BLACKACRE SMC MASTER
HOLDINGS, LLC
By: Blackacre SMC Holdings, L.P.,
its managing member
By: Blackacre Capital Group, L.P., its
general partner
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-President
By: Blackacre SMC II Holdings, LLC, its
managing member
By: Blackacre Capital Group, L.P., its
managing member
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Co-President
25
SCHEDULE 1
Blackacre SMC Master Holdings, L.L.C.
MJL ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
SAB ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
26
