REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
____________________,1997, is by and among PHILIPS INTERNATIONAL REALTY CORP., a
Maryland corporation (the "Company"), and the persons and entities listed on
Schedule I attached hereto and made a part hereof (such individuals and
entities, collectively the "Investors" and each individually an "Investor").
W I T N E S S E T H:
WHEREAS, the Company is a general partner of Philips International Realty,
L.P., a Delaware limited partnership (the "Operating Partnership"), which holds
certain properties and assets contributed to it pursuant to the Transaction
Agreements (as hereinafter defined);
WHEREAS, pursuant to the Transaction Agreements, the Operating Partnership
has issued units representing limited partnership interests in the Operating
Partnership (the "Units") to certain of the Investors;
WHEREAS, the Units are redeemable for unregistered shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), in certain
circumstances; and
WHEREAS, the Company has agreed to provide the Investors with certain
registration rights as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Definitions. For purposes of this Agreement, capitalized terms used
herein shall have the meanings set forth in the preambles hereto, and in this
Section 1 and the other sections hereto.
1.1 "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.2 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.3 "Formation Transactions" shall mean the transactions contemplated
by the Transaction Agreements.
1.4 "Holder" shall mean any registered holder, from time to time, of
Regjstrable Securities.
1.5 "Initial Public Offering" shall mean the sale of shares of Common
Stock pursuant to the Company's first effective registration statement for
such shares filed under the Securities Act following the date hereof.
1.6 "Initiating Holders" shall mean any Holder or Holders who, in the
aggregate, are Holders of Registrable Securities representing at least
fifty percent (50%) of the Registrable Securities then outstanding, and who
initiate a request pursuant to Section 2.1 below for the registration of
all or part of such Holder or Holders' Registrable Securities.
1.7 "Lock-up Period" shall mean the period of time, as specified in
the underwriting agreement or related lock-up agreements entered into in
connection with the Initial Public Offering, during which there are
restrictions on transfers of shares of Common Stock by the Company or any
of the Investors.
1.8 "National" shall mean National Properties Investment Trust.
1.9 "Person" shall mean any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
1.10 "Register", "registered" and "registration" shall, except with
respect to Section 1.4 hereof, refer to a registration effected by
preparing and filing a registration statement with the Commission in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement by the Commission.
1.11 "Registrable Securities" shall mean any of the following which
are held by any Holder: (a) shares of Common Stock which are acquired upon
the redemption of Units held by any Holder, (b) shares of Common Stock then
outstanding which were issued as, or upon the conversion or exercise of
other securities issued as, a dividend or other distribution with respect
to or in replacement of Units or other Registrable Securities, (c) shares
of Common Stock then issuable upon the conversion or exercise of other
securities which were issued as a dividend or other distribution with
respect to or in replacement of Units or other Registrable Securities, and
(d) any equity securities of the Company issued or issuable with respect to
the securities referred to in clauses (a) through (c) by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided,
however, that any such Registrable Securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and
such securities have been disposed of in accordance with such registration
statement (ii) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act, (iii) they shall be eligible
for sale pursuant to Rule 144(k) (or any successor provision) under the
Securities Act as confirmed in a written opinion of counsel to the Company
addressed to the Ho1ders, (iv) they shall have been otherwise transferred,
new certificates for them not bearing a legend restricting further transfer
shall have been delivered by
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the Company and subsequent public distribution of them shall not require
registration of them under the Securities Act, or (v) they shall have
ceased to be outstanding. For purposes of this Agreement, a Person will be
deemed to be a holder of Registrable Securities whenever such person has
the unqualified right to acquire such Registrable Securities (by
conversion, redemption or otherwise, but disregarding any legal
restrictions upon the exercise of such right) whether or not such
acquisition has actually been effected.
1.12 "Registration Expenses" shall mean all expenses incurred by the
Company in compliance with this Agreement, exc1uding underwriters'
discounts and commissions but including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, and the fees and expenses of one counsel for all
Holders, all blue sky fees and expenses, and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in
any event by the Company).
1.13 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute enacted hereafter, and the rules
and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
1.14 "Selling Expenses" shall mean all underwriting discounts and
commissions applicable to the sale of Registrable Securities; provided,
however, that if Company Shares, Additional Shares or Other Securities are
sold in the same registration statement as Registrable Securities, the
Selling Expenses shall equal the product of (A) the underwriting discounts
and commissions applicable to the offering pursuant to such registration
statement multiplied by (B), a fraction, the numerator of which is the fair
market value of the Registrable Securities being sold thereunder and the
denominator of which is the fair market value of the Registrable
Securities, Company Shares, Additional Shares and Other Securities being
sold thereunder.
1.15. "Transaction Agreements" shall mean the Contribution and
Exchange Agreement, dated August 11, 1997, by and among the Company, the
Operating Partnership, National, its trustees and the Investors and all
exhibits and schedules attached thereto.
1.16. Certain Other Defined Terms. The following terms shall have the
meanings ascribed to them in the sections indicated below:
Defined Term Section
------------ -------
Additional Shares 2.2
Company Offering 2.1
Company Share 2.2
Demand Registration Notice 2.1
Indemnified Party 6.3
Indemnifying Party 6.3
Defined Term Section
------------ -------
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Other Securities 3.1
Other Shareholders 2.5
2. Requested Registration.
2.1 Request for Registration. At any time commencing one year after
the consummation of the Formation Transactions, so long as no Lock-up
Period is then in effect, upon written notice from Initiating Holders
requesting that the Company effect any registration with respect to all or
part of the Registrable Securities held by such Initiating Holders, the
Company shall (a) promptly give written notice of the proposed registration
to all other Holders (the "Demand Registration Notice") and (b) as soon as
practicable but not later than sixty (60) days after receipt of the request
from the Initiating Holders, use its best efforts and take all appropriate
action to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under the blue sky or other state securities laws requested
by Initiating Holders and appropriate compliance with applicable
regulations issued under the Securities Act) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request given
within thirty (30) days after receipt of the Demand Registration Notice;
provided, however, that:
(i) in no event shall the Company be required to effect, or to
take any action to effect, any such registration pursuant to this
Section 2 after the third such registration pursuant to this Section 2
has been declared or ordered effective;
(ii) if the Company shall have previously effected a registration
with respect to Registrable Securities owned by any Holder pursuant to
this Section 2, the Company shall not be required to effect a
registration pursuant to this Section 2 until a period of six (6)
months shall have elapsed from the effective date of the most recent
such previous registration; provided, however, that no registration of
Registrable Securities under this Section 2 shall relieve the Company
of its obligation (if any) to effect registrations of Registrable
Securities pursuant to Section 3 below;
(iii) if, upon receipt of a registration request pursuant to this
Section 2, the Company is advised in writing by a nationally
recognized independent investment banking firm selected by the Company
to act as lead underwriter in connection with a public offering of
securities by the Company (a "Company Offering") that, in such firm's
opinion, a registration at the time and on the terms requested would
materially adversely affect such Company Offering that had been
contemplated by the Company prior to the notice of the Initiating
Holders, the Company shall not be required to effect a registration
pursuant to this Section 2 until the earliest of (A) three months
after the completion of such Company Offering, (B) the termination of
any "black out" period, if any, required by the underwriters to be
applicable to any Holder who has requested to have any Registrable
Securities registered in connection with such registration, (C)
promptly after
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abandonment of such Company Offering or (D) four months after the date
of written notice from the Initiating Holders demanding registration
pursuant to this Section 2;
(iv) if, while a registration request is pending pursuant to this
Section 2, the Company determines, in the good faith judgment of the
Board of Directors of the Company, with the advice of counsel, that
the filing of a registration statement would require the disclosure of
nonpublic material information the disclosure of which would have a
material adverse effect on the Company or would otherwise adversely
affect a material financing, acquisition, disposition, merger or other
significant transaction, the Company shall deliver a certificate to
such effect signed by its President or any Vice President to the
proposed selling Holders and the Company shall not be required to
effect a registration pursuant to this Section 2 until the earlier of
(A) the date upon which such material information is disclosed to the
public or ceases to be material or (B) 90 days after the Company makes
such good faith determination; and
(v) the provisions of this Section 2.1 shall not be applicable if
a shelf registration under Section 3.6 hereof is then in effect.
2.2 Additional Shares to be Included. The registration statement filed
pursuant to the request of the Initiating Holders may, subject to the
provisions of Section 2.5 below, include (a) other securities of the
Company (the "Additional Shares") which are held by officers or directors
of the Company or which are held by Persons who, by virtue of agreements
with the Company, are entitled to include their securities with the Holders
referred to in Section 2.1 above, and (b) securities of the Company being
sold for the account of the Company (the "Company Shares").
2.3 Withdrawal of Registration. If the Initiating Holders inform the
Company by written notice that they are withdrawing their registration
request made pursuant to Section 2.1 above and the Initiating Holders pay
all of the Company's out-of-pocket expenses with respect to such
registration incurred to the date of such notice, then the registration
statement need not be filed and all efforts pursuant to this Agreement will
not count as a registration (or an exercise of rights) under this Section
2; provided, however, that if the Company decides to go forward with the
registration on its own behalf, or on behalf of any other shareholders,
then the Initiating Holders shall not be required to pay any of the
Company's out-of-pocket expenses and such registration will not count as a
registration (or an exercise of rights) under this Section 2.
2.4 Underwriting.
(a) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 2 and the Company shall include
such information in the Demand Registration Notice, and such Demand
Registration Notice shall also state that inclusion of each Holder's
Registrable Securities in the
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registration to which such Demand Registration Notice applies shall be
conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein and subject to the
limitations provided herein. A Holder may elect to include in such
underwriting all or a part of such Holder's Registrable Securities.
(b) If the Registrable Securities are to be distributed by means
of an underwriting, the Company shall (together with all Holders,
officers, directors and Other Shareholders proposing to distribute
their securities through such underwriting) enter into an underwriting
agreement in customary form with the representative of the underwriter
or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders.
2.5 Limitations on Shares to be Included.
(a) Notwithstanding any other provision of this Section 2, if the
representative of the underwriters advises the Company or the
Initiating Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten or that the
inclusion of Additional Shares or Company Shares may adversely affect
the sale price (of the shares to be registered) that may be obtained,
first the Additional Shares shall be excluded from such registration
to the extent so required by such limitation, then the Company Shares
shall be excluded from such registration to the extent so required by
such limitation, and if a limitation of the number of shares is still
required, the number of shares that may be included in the
registration and underwriting shall be allocated among all Holders in
proportion, as nearly as practicable, to the respective amounts of
Registrable Securities which they have requested to be included in
such registration statement.
(b) If the Company or any Holder of Registrable Securities, or
holder of Additional Shares (collectively, the "Other Shareholders")
who has requested inclusion in such registration as provided above
disapproves of the terms of any such underwriting, such Person may
elect to withdraw such Person's Registrable Securities, Additional
Shares or Company Shares therefrom by written notice to the Company,
the underwriter and the Initiating Holders. If the withdrawal of any
Registrable Securities, Additional Shares or Company Shares would
allow, within the marketing limitations set forth above, the inclusion
in the underwriting of a greater number of shares of Registrable
Securities, Company Shares, or Additional Shares, then, to the extent
practicable and without delaying the underwriting, the Company shall
offer first to the Holders and second to the Other Shareholders an
opportunity to include additional shares of Registrable Securities,
Company Shares, or Additional Shares, as the case may be, in the
proportions discussed above.
3. Company Registration
3.1 If the Company shall determine to register any of its shares of
Common Stock or other securities ("Other Securities") issued by it having
terms substantially similar to the Common Stock, either for its own account
or the account of a security holder or holders exercising any demand
registration rights, other than a registration relating solely to employee
benefit plans or a registration relating solely to a Rule 145 (under the
Securities Act) transaction, the Company will:
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(a) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
(b) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests made by any Holder within fifteen (15)
days after receipt of the written notice from the Company described in
clause (a) above, except as set forth in Section 3.3 below. Such
written request may specify all or a part of a Holder's Registrable
Securities.
Notwithstanding the foregoing the rights under this Section 3.1
shall not apply to any Holder if a shelf registration under Section
3.6 hereof is then in effect.
3.2 Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3.1(a). The right of any Holder to require registration
pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any officers, directors
or Other Shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by the
Company.
3.3 Limitations on Shares to be Included. With respect to Company
registrations, notwithstanding any other provision of this Section 3, if
the representative of the underwriters advises the Company in writing that
marketing factors require a limitation or elimination on the number of
shares to be underwritten, the representative may (subject to the
allocation priority set forth below) limit the number of Registrable
Securities to be included in the registration and underwriting. The Company
shall so advise all Holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated as follows: first, to the
Company for securities being sold for its own account or to the security
holder or holders exercising any demand registration rights on such
security holder or holders' account, second, among all such Holders
requesting registration, and third, among all Other Shareholders requesting
registration pursuant to the exercise of piggyback registration rights, in
each case in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities or Additional Shares which they had
requested to be included in such registration at the time of filing the
registration statement. If any Holder of Registrable Securities or any
Other Shareholder disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the
underwriter.
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3.4 Withdrawal from Registration. Any Holder requesting inclusion of
Registrable Securities pursuant to this Section 3 may, at any time prior to
the effective date of the registration statement relating to such
registration, revoke such request by delivering written notice of such
revocation to the Company; provided, however, that if the Company, in
consultation with its financial and legal advisors, determines that such
revocation would materially delay the registration or otherwise require a
recirculation of the prospectus contained in the registration statement,
then such Holder shall have no such right to revoke its request. If the
withdrawal of any Registrable Securities or Additional Shares would allow,
within the marketing limitations set forth above, the inclusion in the
underwriting of a greater number of shares of Registrable Securities or
Additional Shares, then, to the extent practicable and without delaying the
underwriting, the Company shall offer to the Holders and to the Other
Shareholders an opportunity to include additional shares of Registrable
Securities or Additional Shares, as the case may be, in the proportions
discussed in Section 3.3 above.
3.5 Termination or Withdrawal by Company. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
3.6 Certain Shelf Registrations. The foregoing notwithstanding on
_______, 1998 (the "Anniversary Date"), or as soon thereafter as is
reasonably practicable, the Company shall, at its expense, register the
Registrable Securities through a shelf registration statement pursuant to
Rule 415 under the Securities Act, which shelf registration statement shall
cover only the Registrable Securities. The Company shall, at its expense,
use its best efforts to maintain the effectiveness of such registration
statement until the earlier of (i) such time as when all of the Registrable
Securities have been disposed of or (ii) three (3) years after the
redemption of all of the Units into Common Stock. Notwithstanding anything
in this Section 3.6 to the contrary, if at the Anniversary Date the Company
determines, in the good faith judgment of the Board of Directors of the
Company, with the advice of counsel, that the filing of such shelf
registration statement would require the disclosure of non-public material
information the disclosure of which would have a material adverse effect on
the Company or would otherwise adversely affect a material financing,
acquisition, disposition, merger or other significant transaction, the
Company shall deliver a certificate to such effect signed by its President
or any Vice President to the Holders and the Company shall not be required
to effect a registration pursuant to this Section 3.6 until the earlier of
(A) the date upon which such material information is disclosed to the
public or ceases to be material or (b) 90 days after the Company makes such
good faith determination.
4. Expenses of Registration. All Registration Expenses incurred in
connection with the registration or qualification of, or compliance with, any
registration statement under Sections 2 and 3 of this Agreement shall be borne
by the Company. All Selling Expenses shall be borne pro rata by each Holder in
accordance with the number of shares sold.
5. Registration Procedures.
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5.1 In the case of each registration to be effected by Company
pursuant to this Agreement, the Company will keep each Holder advised in
writing as to the initiation of each registration and all amendments
thereto and as to the completion thereof, advise any such Holder, upon
request, of the progress of such proceedings, use its best efforts to
effect the registration of any Registrable Securities under the Securities
Act, and will, at its expense:
(a) Prepare and file with the Commission a registration statement
covering such Registrable Securities and use its best efforts to cause
such registration statement to be declared effective by the Commission
and to keep such registration effective for a period of three hundred
sixty-five (365) days or until the Holder or Holders have completed
the distribution described in the registration statement relating
thereto, whichever first occurs; provided, however, that the Company
shall keep such registration effective for longer than three hundred
sixty-five (365) days if the costs and expenses associated with such
extended registration are borne entirely by the selling Holders;
(b) 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 keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement until such time as
all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement;
(c) Furnish to each seller of Registrable Securities covered by
such registration statement and each Holder two conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including
each preliminary 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, as such seller or Holder, as the case may be, may
reasonably request;
(d) Promptly notify each seller of Registrable Securities covered
by such registration statement and each Holder at any time when 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 a
material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller,
prepare and furnish to such seller 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 shares,
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 or incomplete
in the light of the circumstances then existing;
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(e) Use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such states of the United States of America where an exemption is not
available and as the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (ii) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect and (iii) to take any other
action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers; provided, however, that the
Company shall not for any such purpose be required to (x) qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this clause (e) be
obligated to be so qualified, (y) subject itself to taxation in any
such jurisdiction or (z) consent to general service of process in any
such jurisdiction; and provided, further, however, that the Company
shall not be required to register or qualify Registrable Securities
covered by a registration statement pursuant to Section 3 hereof in
any jurisdiction that is not included in the list provided as part of
the written notice given pursuant to Section 3.1(a) unless the Company
is registering other securities covered by such registration statement
in such jurisidiction;
(f) Use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the
Company and counsel to the seller or sellers of Registrable Securities
to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(g) Use its best efforts to list all such Registrable Securities
registered in such registration on each securities exchange or
automated quotation system on which the Common Stock of the Company is
then listed;
(h) Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities and a CUSIP number for all
such Registrable Securities, in each case not later than the effective
date of such registration;
(i) Make available for inspection by any seller of Registrable
Securities and each Holder, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney
or accountant retained by any such seller, Holder or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all
information reasonably requested by any such seller, Holder,
underwriter, attorney or accountant in connection with such
registration statement, which information shall be subject to
reasonable restrictions concerning confidentiality and non-disclosure;
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(j) Furnish to each selling Holder upon request a signed
counterpart, addressed to the selling Holder, of
i) an opinion of counsel for the Company, dated the
effective date of the registration statement and in form
reasonably acceptable to the Company and such Holder, and
(ii) "comfort" letters signed by the Company's independent
public accountants who have examined and reported on the
Company's financial statements included in the registration
statement, to the extent permitted by the standards of the
American Institute of Certified Public Accountants,
in the case of (i) and (ii) covering substantially the same
matters with respect to the registration statement (and the
prospectus included therein) and in the case of the accountants'
"comfort" letters with respect to events subsequent to the date
of the financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' "comfort"
letters delivered to the underwriters in underwritten public
offerings of securities;
(k) Furnish to each selling Holder a copy of all correspondence
from or to the Commission in connection with any such offering;
(1) In the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending
or preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such
registration statement for sale in any jurisdiction, the Company will
use its reasonable best efforts promptly to obtain the withdrawal of
such order; and
(m) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and, if required, make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first month
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
5.2 It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this agreement that the Holders
proposing to register Registrable Securities shall furnish to the Company
such information regarding them, the Registrable Securities held by them,
and the intended method of distribution of such Registrable Securities as
the Company shall reasonably request and as shall be required in connection
with the action to be taken by the Company.
5.3 In connection with the preparation and filing of each registration
statement under this Agreement, the Company will give the Holders on whose
behalf such Registrable Securities are to be registered and their
underwriters, if any, and their respective counsel and
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accountants, 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 such Holder such access to the Company's 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 the
Company's financial statements, as shall be necessary, in the opinion of
such Holders or such underwriters or their respective counsel, in order to
conduct a reasonable and diligent investigation within the meaning of the
Securities Act. Without limiting the foregoing, each registration
statement, prospectus, amendment, supplement or any other document filed
with respect to a registration under this Agreement shall be subject to
review and reasonable approval by the Holders registering Registrable
Securities in such registration and by their counsel.
6. Indemnification.
6.1 Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act, the Company will
indemnify and hold harmless each Holder, each of its officers, directors,
partners, employees, agents, attorneys and consultants and each Person
controlling such Holder, and each underwriter, if any, and each Person who
controls any underwriter, against all claims, losses, damages and
liabilities, joint and several (or actions, proceedings or settlements in
respect thereof) arising out of or based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based upon any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation
by the Company of the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of
the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers,
directors and partners, and each Person controlling such Holder, each such
underwriter and each Person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending or settling any such claim, loss, damage,
liability or action; provided, however, that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission
made in reliance upon and based upon written information furnished to the
Company by such Holder or underwriter and expressly stated to be
specifically for use therein.
6.2 Indemnification by the Holders. Each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which
such registration, qualification or compliance is being effected, severally
and not jointly, indemnify the Company, each of its directors and officers
and each underwriter, if any, of the Company's securities covered by such a
registration statement, each Person who controls the Company (other than
such Holder) or such underwriter within the meaning of the Securities Act
and the rules and regulations thereunder, each other such Holder and each
of their officers, directors and partners, and each Person controlling such
Holder or other stockholder, against all claims, losses,
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damages, expenses and liabilities (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse the
Company, each of its directors and officers, each underwriter or control
Person, each other Holder and each of their officers, directors and
partners and each Person controlling such Holder or other shareholder for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder and expressly stated to
be specifically for use therein; provided, however, that the liability of
any such Holder under this Section 6.2 shall be limited to the amount of
proceeds received by such Holder in the offering giving rise to such
liability.
6.3 Notices of Claims, Procedures etc.Each party entitled to
indemnification under this Section 6 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party who shall conduct the defense of such claim or any litigation
resulting therefrom shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at the Indemnified Party's sole expense;
provided, further, that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6 unless such failure is prejudicial to the
ability of the Indemnifying Party to defend such claim or action.
Notwithstanding the foregoing, such Indemnified Party shall have the right
to employ its own counsel in any such litigation, proceeding or other
action if (i) the employment of such counsel has been authorized by the
Indemnifying Party, in its sole and absolute discretion, or (ii) the named
parties in any such claims (including any impleaded parties) include any
such Indemnified Party and the Indemnified Party and the Indemnifying Party
shall have been advised in writing (in suitable detail) by counsel to the
Indemnified Party either (A) that there may be one or more legal defenses
available to such Indemnified Party which are different from or additional
to those available to the Indemnifying Party, or (B) that there is a
conflict of interest by virtue of the Indemnified Party and the
Indemnifying Party having common counsel, in any of which events, the legal
fees and expenses of a single counsel for all Indemnified Parties with
respect to each such claim, defense thereof, or counterclaims thereto,
shall be borne by the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement (x) which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation, or (y) which
requires action other than the payment of money by the Indemnifying Party.
Each Indemnified Party shall cooperate to the extent reasonably required
and furnish such
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information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required
in connection with defense of such claim and litigation resulting
therefrom.
6.4 Contribution. If the indemnification provided for in this Section
6 shall for any reason be held by a court to be unavailable to an
Indemnified Party under Section 6.1 or 6.2 hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu
of the amount paid or payable under Section 6.1 or 6.2, the Indemnified
Party and the Indemnifying Party under Section 6.1 or 6.2 shall contribute
to the aggregate losses, claims, damages and liabilities (including legal
or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative
fault of the Company and the prospective sellers of Registrable Securities
covered by the registration statement which resulted in such loss, claim,
damage or liability, or action or proceeding in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action or proceeding in respect thereof, as well as
any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company and such prospective sellers from the offering of
the securities covered by such registration statement; provided, that for
purposes of this clause (ii), the relative benefits received by the
prospective sellers shall be deemed not to exceed the amount of proceeds
received by such prospective sellers. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Such prospective sellers' obligations
to contribute as provided in this Section 6.4 are several in proportion to
the relative value of their respective Registrable Securities covered by
such registration statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
7. Information by Holder. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
8. Transfer or Assignment of Registration Rights. The rights with respect
to any Registrable Securities to cause the Company to register such securities
granted to a Holder by the Company under this Agreement may be transferred or
assigned by a stockholder, in whole or in part, to a transferee or assignee of
any Registrable Securities and, in such case, the Company shall be given written
notice stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned.
9. Rule 144 and Rule 144A. At such time as the Company becomes subject to
the reporting requirements of the Exchange Act, the Company shall file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted
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by the Commission thereunder, and will take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the provisions of
(a) Rule 144 under the Securities Act, as such Rule may be amended from time to
time, (b) Rule 144A under the Securities Act, as such Rule may be amended from
time to time, if applicable or (c) any similar rules or regulations hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
10. Specific Performance. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
11. No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities which grants, or modify
any existing agreement with respect to its securities to grant, to the holder of
its securities in connection with an incidental registration of such securities
equal or higher priority to the rights granted to the Investors under Section 3
of this Agreement.
12. Benefits of Agreement: Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns, legal representatives and heirs; this
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any other Person.
13. Complete Agreement. This Agreement constitutes the complete
understanding among the parties with respect to its subject matter and
supersedes all existing agreements and understandings whether oral or written,
among them. No alteration or modification of any provisions of this Agreement
shall be valid unless made in writing and signed by a majority in interest of
the Holders.
14. Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this agreement.
15. Notices. All notices, offers, acceptances and other communications
required or permitted to be given or to otherwise be made to any party to this
Agreement shall be deemed to be sufficient if contained in a written instrument
delivered by hand, first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, if to the Corporation, to it at Philips International Realty Corp.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention Xx. Xxxxxx Xxxxxxxx, with
a copy to Pryor, Cashman, Xxxxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxxx X.
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Xxxxxxxxx, Esq., and if to any Holder, to the address of such Holder as set
forth in the stock transfer books of the Corporation.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. Any party may change the address to
which each such notice or communication shall be sent by giving written notice
to the other parties of such new address in the manner provided herein for
giving notice.
16. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to the provisions, policies or principles thereof respecting conflict or
choice of laws.
17. Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which taken
together shall constitute one and the same agreement.
18. Severability. Any provision of this Agreement which is determined to be
illegal, prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such illegality, prohibition or
unenforceability without invalidating the remaining provisions hereof which
shall be severable and enforceable according to their terms and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, as of the date first set the parties have signed this
Agreement forth above.
PHILIPS INTERNATIONAL REALTY CORP.
By:
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Name:
Title:
INVESTORS:
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