REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of the 22nd day of March, 1998 by and among CNC Holding Corp.,
("Crown"), ContiWest Corporation ("Xxxxx"), MarRay Investment, L.L.C., an
affiliate of Xxxxxxx Management Corporation ("Xxxxxxx") and Strategic Realty
Capital Corp. (the "Company").
WHEREAS, concurrently with the execution of this Agreement, the
Company is entering into separate Stock Purchase Agreements with each of Crown,
Xxxxx and Xxxxxxx (each a "Holder" and, collectively, the "Holders") and the
shares of stock purchased by them pursuant to the Stock Purchase Agreement
executed on the date hereof, are the "Sponsor Shares."
NOW, THEREFORE, in consideration of the mutual representatives,
warranties and covenants hereinafter set forth, the parties to this Agreement
hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. As used in this agreement, the
following definitions apply:
"Act" means the Securities Act of 1933, as amended, or any similar
federal statute and the rules and regulations of the Commission thereunder, as
shall be in effect from time to time.
"Agreement" means this Registration Rights agreement, dated as of
March 22, 1998, among Crown, Xxxxx, Xxxxxxx and the Company (as such agreement
may be amended, restated, supplemented or otherwise modified, from time to
time).
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Xxxxx Holder" means Xxxxx, so long as it holds the Sponsor Shares,
and any holder of the Sponsor Shares to whom the registration rights conferred
by this agreement have been transferred pursuant to Section 3.2 hereof.
"Xxxxx Shares" means the shares of the capital stock of the Company
purchased by Xxxxx from the Company pursuant to the Xxxxx Stock Purchase
Agreement.
"Xxxxx Stock Purchase Agreement" means the Stock Purchase Agreement,
dated the date hereof, between Xxxxx and the Company.
"Crown Holder" means Crown, so long as it holds the Sponsor Shares,
and any holder of the Sponsor Shares to whom the registration rights conferred
by this Agreement have been transferred pursuant to Section 3.2 hereof.
"Crown Shares" means the shares of the capital stock of the Company
purchased by Crown from the Company pursuant to the Crown Stock Purchase
Agreement.
"Crown Stock Purchase Agreement" means the Stock Purchase Agreement,
dated the date hereof, between CNC Holding Corp. and the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"Xxxxxxx Xxxxxx" means Xxxxxxx, so long as it holds the Sponsor
Shares, and any holder of the Sponsor Shares to whom the registration rights
conferred by this Agreement have been transferred pursuant to Section 3.2
hereof.
"Xxxxxxx Shares" means the shares of the capital stock of the Company
purchased by Xxxxxxx from the Company pursuant to the Xxxxxxx Stock Purchase
Agreement.
"Xxxxxxx Stock Purchase Agreement" means the Stock Purchase Agreement,
dated as of the date hereof, between MarRay Investment, L.L.C. and the Company.
"Ipo" shall mean a firm commitment underwritten initial public
offering pursuant to an effective registration statement under the Act covering
the offer and sale of common stock for the account of the Company.
"Stock Purchase Agreements" means collectively, each of the Xxxxx
Stock Purchase Agreement, the Xxxxxxx Stock Purchase Agreement and the Crown
Stock Purchase Agreement. The foregoing agreements are sometimes individually
referred to as a Stock Purchase Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 DEMAND REGISTRATION. (a) Upon written request of the
Xxxxx Holder(s) at any time within the period commencing six months and ending
five years after the closing date of the IPO, the Company shall file within a
reasonable period of time and, in any event, within the time period provided in
Section 2.3 (a) below after receipt of such written request, at its sole
expense, on no more than one occasion, a registration statement under the
Securities Act registering the Xxxxx Shares for sale to the public; PROVIDED,
HOWEVER, that the Company shall not be required to effect such a registration
unless the reasonably anticipated price to the public of the Xxxxx Shares
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proposed to be registered is at least $7,000,000. Notwithstanding anything in
this Agreement to the contrary, the Xxxxx Holders shall not request and the
Company shall not be required to effect a registration statement under this
Section 2.1(a) within 180 days of the completion of any offering pursuant to
Section 2.1(b) or (c) hereof. Within 15 days after receiving any such notice,
the Company shall give notice to the other Holders of the Sponsor Shares
advising that the Company is proceeding with such registration statement, and
offering to include therein the Sponsor Shares of such other Holders. The
Company shall not be obligated to include the Sponsor Shares of any such other
Holder in such registration unless such other Holder shall accept such offer by
notice in writing to the Company within 15 days after receipt of such notice
from the Company. In addition, if the managing underwriter in its good faith
judgment determines that marketing factors require a limitation of the number of
shares of Sponsor Shares to be underwritten, the managing underwriter may limit
the Sponsor Shares to be included in such registration. The Company shall so
advise the Holders and the number of Sponsor Shares that may be included in the
registration shall be allocated among the Holders as follows: First, to the
Xxxxx Holders, the total number of Xxxxx Shares requested to be registered
pursuant to this Section 2.1(a); second to the other Holders in proportion to
the respective amounts to Sponsor Shares held by each of such Holders at the
time of filing of the registration statement. Any Sponsor Shares or other
securities that are so excluded from the underwriting shall be excluded from the
registration.
The Company shall use its reasonable best efforts, through its
officers, directors, auditors and counsel in all matters necessary or advisable,
to file and cause such registration statement to become effective as promptly as
practicable and to remain effective for the period of time provided in Section
2.3 below, to reflect in the registration statement financial statements that
are prepared in accordance with Section 10 (a)(3) of the Securities Act, and to
amend or supplement such registration statement to reflect any facts or events
arising that, individually or in the aggregate, represent a material change in
the information set forth in the registration statement to enable any Xxxxx
Holders and, if applicable, other Holders of Sponsor Shares to sell their shares
during such time period provided in Section 2.3 below. If any registration
pursuant to this Section 2.1(a) is an underwritten offering, the Holders of a
majority of the Xxxxx Shares to be included in such registration will select an
underwriter (or managing underwriter if such offering should be syndicated)
approved by the Company, with such approval not to be unreasonably withheld.
Notwithstanding anything in this Agreement to the contrary, the Company shall be
entitled, by written notice to the Xxxxx Holders, to postpone for a reasonable
period of time (not exceeding 90 days in any twelve month period, it being
understood that such postponement shall not be cumulative with the correlative
provisions of Sections 2.1(b) and (c) below) the filing or effectiveness of any
registration statement otherwise required to be prepared and filed by it
pursuant to this Section 2.1(a) if the Company's Board of Directors determines,
in its sole discretion, that such postponement is in the Company's best
interests. If the Company shall so postpone the filing of a registration
statement, a majority-in-interest of the requesting Xxxxx Holders shall have the
right to withdraw the request for demand registration by giving written notice
to the company within 30 days after receipt of the notice of postponement. No
registration shall be counted as the demand registration to which the Xxxxx
Holders are
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entitled pursuant to this Section 2.1(a) unless the Xxxxx Holders are able to
register and sell at least 80% of the Xxxxx Shares requested to be included
therein.
(b) Upon written request of the Xxxxxxx Xxxxxx(s) at any time within
the period commencing six months and ending five years after the closing date of
the IPO, the Company shall file within a reasonable period of time and, in any
event, within the time period provided in Section 2.3 (a) below after receipt of
such written request, at its sole expense, on no more than one occasion, a
registration statement under the Securities Act registering the Xxxxxxx Shares
for sale to the public; PROVIDED, HOWEVER, that the Company shall not be
required to effect such a registration unless the reasonably anticipated price
to the public of the Xxxxxxx Shares proposed to be registered is at least
$7,000,000. Notwithstanding anything in this Agreement to the contrary, the
Xxxxxxx Holders shall not request and the Company shall not be required to
effect a registration statement under this Section 2.1(b) within 180 days of the
completion of any offering pursuant to Section 2.1(a) or (c) hereof. Within 15
days after receiving any such notice, the Company shall give notice to the other
Holders of the Sponsor Shares advising that the Company is proceeding with such
registration statement, and offering to include therein the Sponsor Shares of
such other Holders. The Company shall not be obligated to include the Sponsor
Shares of any such other Holder in such registration unless such other Holder
shall accept such offer by notice in writing to the Company within 15 days after
receipt of such notice from the Company. In addition, if the managing
underwriter in its good faith judgment determines that marketing factors require
a limitation of the number of shares of Sponsor Shares to be underwritten, the
managing underwriter may limit the Sponsor Shares to be included in such
registration. The Company shall so advise the Holders and the number of shares
of Sponsor Shares that may be included in the registration shall be allocated
among the Holders as follows: First, to the Xxxxxxx Holders, the total number
of Xxxxxxx Shares requested to be registered pursuant to this Section 2.1(b);
second to the other Holders in proportion to the respective amounts to Sponsor
Shares held by each of such Holders at the time of filing of the registration
statement. Any Sponsor Shares or other securities that are so excluded from the
underwriting shall be excluded from the registration.
The Company shall use its reasonable best efforts, through its
officers, directors, auditors and counsel in all matters necessary or advisable,
to file and cause such registration statement to become effective as promptly as
practicable and to remain effective for the period of time provided in Section
2.3 below, to reflect in the registration statement financial statements that
are prepared in accordance with Section 10 (a)(3) of the Securities Act, and to
amend or supplement such registration statement to reflect any facts or events
arising that, individually or in the aggregate, represent a material change in
the information set forth in the registration statement to enable any Xxxxxxx
Holders and, if applicable, other Holders of Sponsor Shares to sell these Shares
during such time period provided in Section 2.3 below. If any registration
pursuant to this Section 2.1(b) is an underwritten offering, the Holders of a
majority of the Xxxxxxx Shares to be included in such registration will select
an underwriter (or managing underwriter if such offering should be syndicated)
approved by the Company, such approval not to be unreasonably withheld.
Notwithstanding anything in this Agreement to the contrary, the Company shall be
entitled, by written notice to the Xxxxxxx Holders, to postpone for a reasonable
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period of time (not exceeding 90 days in any twelve month period, it being
understood that such postponement shall not be cumulative with the correlative
provisions of Section 2.1(a) above and (c) below) the filing or effectiveness of
any registration statement otherwise required to be prepared and filed by it
pursuant to this Section 2.1(b) if the Company's Board of Directors determines,
in its sole discretion, that such postponement is in the Company's best
interests. If the Company shall so postpone the filing of a registration
statement, a majority-in-interest of the requesting Xxxxxxx Holders shall have
the right to withdraw the request for demand registration by giving written
notice to the company within 30 days after receipt of the notice of
postponement. No registration shall be counted as the demand registration to
which the Xxxxxxx Holders are entitled pursuant to this Section 2.1(b) unless
the Xxxxxxx Holders are able to register and sell at least 80% of the Xxxxxxx
Shares requested to be included therein.
(c) In the event either the Xxxxx Holders or the Xxxxxxx Holders
shall have completed a demand registration pursuant to Section 2.1(a) or (b)
above, then upon the written request of the holders of a majority of the then
outstanding Sponsor Shares (the "Majority Holders") within the period commencing
180 days following the completion of such demand registration pursuant to
Section 2.1(a) or (b) above and ending five years after the closing date of the
IPO, the Company shall file within a reasonable period of time and, in any
event, within the time period provided in Section 2.3 (a) below after receipt of
such written request, at its sole expense, on no more than one occasion, a
registration statement under the Securities Act registering the requested
Sponsor Shares for sale to the public; PROVIDED, HOWEVER, that the Company shall
not be required to effect such a registration unless the reasonably anticipated
price to the public of the requested Sponsor Shares proposed to be registered in
such registration (including Sponsor Shares included in such registration
pursuant to the further provisions of this Section 2.1(c)) is at least
$5,000,000. Notwithstanding anything in this Agreement to the contrary, in the
event the Majority Holders wish to exercise their demand registration right
under this Section 2.1(c) before either the Xxxxx Holders or the Xxxxxxx Holders
shall have completed their demand registration pursuant to Section 2.1(a) or (b)
above, the Majority Holders shall first give 15 days written notice to each of
the other Sponsors of the Majority Holders intent to exercise their rights under
this Section 2.1(c) so that the Sponsors to which notice is given shall have the
opportunity during such 15-day period to (i) request a demand registration of
their Sponsor Shares in priority to the Majority Holders if they have a demand
right remaining under 2.1(a) or 2.1(b) above or (ii) determine to participate in
the registration pursuant to this 2.1(c) as set forth below. The Company
further agrees not to honor any notice from the Majority Holders to exercise
their demand rights under this Section 2.1(c) during such 15-day period. The
Company shall not be obligated to include the Sponsor Shares of any such other
Holder in such registration unless such other Holder shall accept such offer by
notice in writing to the Company within 15 days after receipt of such notice
from the Company. In addition, if the managing underwriter in its good faith
judgment determines that marketing factors require a limitation of the number of
shares of Sponsor Shares to be underwritten, the managing underwriter may limit
the Sponsor Shares to be included in such registration. The Company shall so
advise the Holders and the number of shares of Sponsor Shares that may be
included in the registration shall be allocated among the Holders in proportion
to the respective amounts of Sponsor Shares held by each of such Holders at
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the time of filing of the registration statement. Any Sponsor Shares or other
securities that are so excluded from the underwriting shall be excluded from the
registration.
The Company shall use its reasonable best efforts, through its
officers, directors, auditors and counsel in all matters necessary or advisable,
to file and cause such registration statement to become effective as promptly as
practicable and to remain effective for the period of time provided in Section
2.3 below, to reflect in the registration statement financial statements that
are prepared in accordance with Section 10 (a)(3) of the Securities Act, and to
amend or supplement such registration statement to reflect any facts or events
arising that, individually or in the aggregate, represent a material change in
the information set forth in the registration statement to enable any Holders of
Sponsor Shares to sell the Sponsor Shares during such time period provided in
Section 2.3 below. If any registration pursuant to this Section 2.1(c) is an
underwritten offering, the Holders of a majority of the shares to be included in
such registration will select an underwriter (or managing underwriter if such
offering should be syndicated) approved by the Company, such approval not to be
unreasonably withheld. Notwithstanding anything in this Agreement to the
contrary, the Company shall be entitled to postpone for a reasonable period of
time (not exceeding 90 days in any twelve month period, it being understood that
such postponement shall not be cumulative with the correlative provisions of
Sections 2.1(a) and (b) above) the filing or effectiveness of any registration
statement otherwise required to be prepared and filed by it pursuant to this
Section 2.1(c) if the Company's Board of Directors determines, in its sole
discretion, that such postponement is in the Company's best interests. If the
Company shall so postpone the filing of a registration statement, the Majority
Holders shall have the right to withdraw the request for demand registration by
giving written notice to the company within 30 days after receipt of the notice
of postponement. No registration shall be counted as the demand registration to
which the olders are entitled pursuant to this Section 2.1(c) unless the Holders
are able to register and sell at least 80% of the Sponsor Shares requested to be
included therein.
Section 2.2 PIGGYBACK REGISTRATION. If, at any time within the
period commencing six months and ending seven years after the closing date of
the IPO, the Company proposes to register any voting equity securities under the
Securities Act in a primary registration on behalf of the Company and/or in a
secondary registration on behalf of holders of such securities, and the
registration form to be used may be used for registration of the Sponsor Shares,
the Company shall give prompt written notice (which, in the case of a
registration pursuant to the exercise of demand registration rights other than
those provided in Section 2.1 above, shall be within 10 business days after the
Company's receipt of notice of such exercise and, in any event, shall be at
least 30 days prior to the date of such filing) to the Holders of Sponsor Shares
(regardless of whether some of the Holders shall have theretofore availed
themselves of the demand right provided in Section 2.1 hereof) at the
address(es) appearing on the records of the Company of the intention to effect
registration and shall offer to include in such registration such number of
Sponsor Shares with respect to which the Company has received written requests
for inclusion therein within 10 business days after receipt of such notice from
the Company upon generally the same terms and conditions as the person or
persons for whom such registration is being effected has agreed to. This
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Section 2.2 is not applicable to any registration statement to be filed by the
Company on Forms S-4 or S-8 or any successor forms. The Company shall not be
obligated to cause to be effective any registration statement as to which it has
given notice to the Holders of Sponsor Shares and shall have discretion to
withdraw any such registration without liability to Holders of Sponsor Shares.
Notwithstanding the foregoing, if the managing underwriter of the
offering shall determine in good faith and advise the Company in writing that
the inclusion of the Sponsor Shares and other securities being offered in such
registration would materially and adversely affect the marketability of the
offering, then the Company and the managing underwriter may reduce the number of
Sponsor Shares to be registered on a pro rata basis proportionate to the
reduction of all holder of securities participating in such registration
pursuant to the exercise of piggyback registration rights. In such event, the
Company may reduce the number of Sponsor Shares to be registered but shall not
limit such Sponsor Shares to fewer than 20% of the securities sold in the
offering. The Company shall so advise all Holders and the number of Sponsor
Shares that may be included in the registration and underwriting shall be
allocated among the Company and the Holders as follows: first, to the Company
so as to permit the Company to include all securities that the Company desires
to sell; second to the Holders pro rata in proportion to the respective amount
of Sponsor Shares or other securities held by the Holders at the time of the
filing of the registration statement.
Section 2.3 REGISTRATION PROCEDURES. If and whenever the Company
is required by the provisions of this Article II to use its reasonable best
efforts to effect the registration of any Sponsor Shares under the Securities
Act, the Company will, as expeditiously as possible:
(a) in connection with any registration pursuant to Section 2.1,
prepare and file with the Commission a registration statement (which shall
be filed as soon as practicable after receipt of requisite requests from
Holders of Sponsor Shares for registration, but not more than 90 days in
the case of a registration statement on Form S-11, or 45 days in the case
of any other form) with respect to the Sponsor Shares and use its
reasonable best efforts to cause such registration statement to become and
remain effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);
(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 for the period specified in paragraph (a) above and
comply with the provisions of the Securities Act with respect to the
disposition of all Sponsor Shares covered by such registration statement in
accordance with the Holders' intended method of disposition set forth in
such registration statement for such period (so long as such registration
statement was filed pursuant to Section 2.1).
(c) furnish to each seller of Sponsor Shares and to each
underwriter such number of copies of the registration statement and the
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prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or
other disposition of the Sponsor Shares covered by such registration
statement;
(d) use its best efforts to register or qualify the Sponsor
Shares covered by such registration statement under such securities or blue
sky laws of such jurisdictions as each seller shall request, and do any and
all other acts and things which may be necessary under such securities or
blue sky laws to enable such seller to consummate the public sale or other
disposition in such jurisdictions of the securities to be sold by such
seller, except that the Company shall not for any such purpose be required
to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not qualified or to file any general consent to service of
process;
(e) use its reasonable best efforts to list the Sponsor Shares
covered by such registration statement with any securities exchange or
automated quotation system on which the common Stock of the Company is then
listed;
(f) immediately notify each seller of Sponsor Shares and each
underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, included any 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 in light
of the circumstances then existing;
(g) enter into such agreements (including an underwriting
agreement, if applicable) and take all such other actions reasonably
necessary in connection therewith in order to expedite and facilitate the
disposition of the Sponsor Shares to be registered;
(h) whether or not the offering is underwritten and at the
request of any seller of Sponsor Shares, furnish: (i) such representations
and warranties to such seller and the underwriters, if any, as are
customary in primary underwritten offerings, (ii) an opinion of counsel
reasonably acceptable to the Holders representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and
to such seller of Sponsor Shares in form and substance as is customarily
given to underwriters in an underwritten public offering and to such other
effects as reasonably may be requested by counsel for the underwriters or
by such seller of Sponsor Shares and its counsel and (iii) a letter dated
such date from the nationally recognized independent public accountants
retained by the Company, addressed to the underwriters, if any, and to such
seller of Sponsor Shares, in form and substance as is customarily given by
nationally recognized independent certified public accountants to
underwriters in an underwritten public offering, and such letter shall
additionally cover such other financial matters (including information as
to the period ending no more than five business days
8
prior to the date of such letter) with respect to such registration as such
underwriters reasonably may request;
(i) make available upon reasonable notice for inspection by each
seller of Sponsor Shares, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or
other agent retained by such seller of Sponsor Shares, all financial and
other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; and
(j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the commission, and make available to
its securityholders, as soon as reasonably practicable, but not later than
18 months after the effective date of the registration statement, an
earnings statement covering the period of at least 12 months beginning with
the first full month after the effective date of such registration
statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act.
For purposes of paragraphs (a) and (b) above, the period of
distribution of Sponsor Shares in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the distribution
of all securities purchased by it, and the period of distribution of Sponsor
Shares in any other registration shall be deemed to extend until the earlier of
the sale of all Sponsor Shares covered thereby and 120 days after the effective
date thereof.
In connection with each registration hereunder the sellers of Sponsor
Shares will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary and shall be requested by the Company in order to comply with federal
and applicable state securities laws.
In connection with each registration pursuant to this Article II
covering an underwritten public offering, the Company and each seller of Sponsor
Shares agree to enter into a written agreement with the managing underwriter
(unless the Holder is the managing underwriter) in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
Section 2.4 EXPENSES. All expenses incurred by the Company in
complying with Sections 2.1, 2.2, and 2.3, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and nationally recognized independent public accountants for the
Company, fees and expenses (including counsel fees) incurred in connection with
complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, costs of insurance and reasonable fees and
9
disbursements of one counsel for the sellers of Sponsors Shares, but excluding
any Selling Expenses, are herein referred to as "Registration Expenses."
"Selling Expenses" as used herein mean all underwriting discounts and selling
commissions applicable to the sale of Sponsor Shares.
The Company will pay or cause to be paid all Registration Expenses of
the Holders in connection with each registration statement under Sections 2.1
and 2.2. All Selling Expenses in connection with each registration statement
under Sections 2.1 and 2.2 shall be borne by the participating sellers of
Sponsors Shares in proportion to the number of shares sold by each, or by such
participating sellers of Sponsors Shares other than the Company (except to the
extent the Company shall be a seller of Common Stock) as they may agree.
Section 2.5 NO CONFLICTS. The Company will not enter into any
agreement granting registration rights to any person or entity on terms which
conflict with the provisions of this Article II.
Section 2.6 INDEMNIFICATION AND CONTRIBUTION. In the event of a
registration of any Sponsor Shares under the Securities Act pursuant to this
Article II, the Company will indemnify and hold harmless, to the fullest extent
permitted by law, each Holder selling Sponsor Shares thereunder, each
underwriter of such Common Stock thereunder and each other person, if any, who
controls such selling Holder of Sponsor Shares or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages, liabilities and expenses,
joint or several, to which such selling Holder, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, or liabilities, (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Sponsor Shares
were registered under the Securities Act pursuant to Article II, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the 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 pay or reimburse each such
selling Holder, each such underwriter and each such controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Company (i) will not be liable in any such case if
and to the extent that (A) any such loss, claim, damage, liability or action
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by any such selling Holder, any such underwriter or any such controlling person,
as the case may be, in writing specifically for use in such registration
statement, prospectus, amendment or supplement or (B) in respect to such
statement, alleged statement, omission or alleged omission with respect to which
such loss, claim, damage, liability or action directly relates, the final
prospectus for such registration statement corrected in all material respects
such statement, alleged statement, omission or alleged omission and a copy of
such final prospectus was not sent or given by or on behalf of such Holder (or
otherwise delivered
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in accordance with applicable law or regulation) at or prior to the confirmation
of the sale of Sponsor Shares of such Holder and (ii) will not be liable for
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company, such consent
not to be unreasonably withheld or delayed.
(b) In the event of a registration of any Sponsor Shares under the
Securities Act pursuant to this Article II, each Holder selling Sponsor Shares
thereunder, severally and not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, but only to the extent that such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) an untrue statement or alleged untrue statement or omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, made in
reliance upon and in conformity with information pertaining to such selling
Holder, as such, furnished in writing to the Company by such selling Holder
specifically for use in such registration statement under which such Sponsors
Shares was registered under the Securities Act pursuant to this Article II, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, and will pay or reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action or (ii) any
statement, alleged statement, omission or alleged omission made by the Company
with respect to which such loss, claim, damage or liability directly relates, if
the final prospectus for such registration statement corrected in all material
respects such statement, alleged statement, omision or alleged omission and a
copy of such final prospectus was not sent or given by or on behalf of such
Holder (or otherwise delivered in accordance with applicable law or regulation)
at or prior to the confirmation of the sale of Sponsor Shares of such Holder;
PROVIDED, HOWEVER, that (A) the liability of each selling Holder hereunder shall
be limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the public offering price of the
shares of Sponsor Shares sold by such selling Holder under such registration
statement bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the net proceeds received by such
selling Holder from the sale of Sponsor Shares covered by such registration
statement and (B) no selling Holder shall be liable for amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such selling Holder, such consent
not to be unreasonably withheld or delayed.
(c) Promptly after receipt by an indemnified party hereunder of
written notice of any claim or the commencement of any action or proceeding,
such indemnified party shall, if a claim in respect thereof is to made against
the indemnifying party hereunder, notify the indemnifying party in writing
thereof, but the omission so to
11
notify the indemnifying party shall not relieve it from any liability which it
may have to such indemnified party, except to the extent the indemnifying party
is materially prejudiced by such omission. In case any such action shall be
brought against any indemnified party and the indemnified party shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof 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 and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this paragraph (c) for any legal or other professional expenses
subsequently incurred by such indemnified party in connection with the defense
thereof. No indemnifying party, in the defense of any such claim or litigation
against an indemnified party, shall consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or litigation, unless such indemnified
party shall otherwise consent in writing. An indemnifying party who elects not
to assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless any indemnified party
reasonably concludes that there may be legal defenses available to such
indemnified party with respect to sch claim which are different from or
additional to those available to any other of such indemnified parties or that a
conflict of interest may exist between such indemnified party and other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and expenses of such
additional counsel or counsels.
(d) In order to provide for just and equitable contribution in any
case in which either (i) any Holder exercising registration rights under this
Article II, or any controlling person of any such Holder, makes a claim for
indemnification pursuant to this Section 2.6, but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and following the expiration of time to appeal or the denial of the last right
of appeal) that such indemnification may not be enforced in such case,
notwithstanding the fact that Section 2.6 provides for indemnification in such
case or (ii) contribution under the Securities Act may be required on the part
of any such Holder or any such controlling person in circumstances for which
indemnification is provided under this Section 2.6, then, and in each such case,
the Company and such Holder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect both the relative
benefit received by such Holder and the relative fault of the Company and such
Holder; PROVIDED, HOWEVER, that, in any such case, (A) no Holder will be
required to contribute any amount in excess of the public offering price of all
such Sponsor Shares offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation. For purposes of the preceding sentence, the relative benefit
received by the Holder of Sponsor Shares shall be deemed to be in the same
proportion as the public offering price of its Sponsor Shares offered by the
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registration statement bears to the public offering price of all securities
offered by such registration statement; and the relative fault of the Company
and such Holder shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or omission of a
material fact relates to information supplied by the Company or by the Holder
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Section 2.7 SECURITIES LAW COMPLIANCE. The Company covenants that
it will timely file all reports required to be filed by it under the Act and
Exchange Act. So long as the Company is subject to the periodic reporting
requirements of the Exchange Act, the Company covenants to make publicly
available such information as may be necessary to permit the sale of Sponsor
Shares without registration under the Act pursuant to the exemption provided by
Rule 144 under the Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Securities and Exchange
Commission. Upon the request of any Holder of Sponsor Shares at any time, if
applicable, the Company will deliver to such Holder or such Holder's prospective
transferee such information as may be necessary to permit the sale of Sponsor
Shares pursuant to Rule 144A under the Act, as such rule may be amended from
time to time. Upon request of any Holder of Sponsor Shares, the Company will
deliver to such Holder a written statement as to whether it has complied with
such information requirements.
ARTICLE III
MISCELLANEOUS PROVISIONS
Section 3.1 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
sent by facsimile transmission, sent by overnight express mail or mailed by
registered or certified mail, return receipt requested, postage pre-paid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of any change of
address shall be effective only upon receipt thereof):
If to the Company: Strategic Realty Capital Corp.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Fax No.: (000) 000-0000
If to Xxxxx: Contiwest Corporation.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Fax No.: (000) 000-0000
If to Harbert: MarRay Investment, L.L.C.
c/o Harbert Management Corporation
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
13
Fax No.: (000) 000-0000
If to Crown: CNC Holding Corp.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Fax No.: (000) 000-0000
A notice shall be deemed given when received by the addressee.
Section 3.2 SUCCESSORS AND ASSIGNS. Each of the parties hereto
hereby acknowledges that in entering into this Agreement it has not relied upon
any representation or warranty except as expressly set forth herein. Subject to
the exceptions specifically set forth in this Agreement, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective executors, administrators, heirs, successors and permitted
assigns of the parties. This agreement cannot be assigned by the parties other
than to "Affiliates" of the parties hereto, as such term is defined in Section
405 of the General Rules and Regulation promulgated under the Securities Act.
Any assignee of this Agreement will agree in writing to be bound by the terms
hereof prior to such assignment becoming effective.
Section 3.3 GOVERNING LAW; JURISDICTION; SERVICE. This Agreement
has been negotiated, executed and delivered at and shall be deemed to have been
made in New York, New York. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of laws rules therein. The parties hereto hereby consent and agree
that the Supreme Court of New York County, New York and the United Stated
District court for the Southern District of New York, shall have exclusive
jurisdiction to hear and determine any claims or disputes between the parties
hereto pertaining to this Agreement or to any matter arising out of or related
to this Agreement. The parties hereto expressly submit and consent in advance
to such jurisdiction in any action or suit commenced in any such court, and
hereby waive any objection which it may have been based upon lack of personal
jurisdiction, improper venue or forum non conveniens and hereby consent to the
granting for such legal or equitable relief as is deemed appropriate by such
court. Each party hereto irrevocably consents to the service of process by
registered or certified mail, postage prepaid, its address given pursuant to
Section 3.1 hereof. Subject to the foregoing, nothing in this Agreement shall
be deemed to operate to affect the right of any party hereto to serve legal
process in any other manner permitted by law, to preclude the enforcement by any
party hereto of any judgement or order obtained in such forum or the taking of
any action under this Agreement to enforce same in any other appropriate forum
or jurisdiction.
Section 3.4 IMMUNITY; WAIVER OF TRIAL BY JURY. To the extent that
a party has or may hereafter acquire any immunity from the jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgement, attachment in aid of execution, execution or otherwise) with
respect to such party or such party's property, such Party hereby irrevocably
waives such immunity in respect of its obligations under this Agreement.
SUBJECT TO SECTION 3.7 HEREIN, EACH
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PARTY HERETO WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT. In
the event of litigation, this Agreement may be filed as a written consent to a
trial by the court. To the extent permitted by applicable law, each party
hereto irrevocably waives any right such party may have to punitive damages.
Section 3.5 COUNTERPARTS. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 3.6 CROSS-REFERENCES; SCHEDULES; TITLES AND SUBTITLES.
Unless expressly indicated to the contrary, all references in this Agreement to
enumerated Sections are to the respective Sections of this Agreement. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
Section 3.7 DISPUTE RESOLUTION. The parties agree that each will
attempt in good faith to resolve through negotiation any dispute, claim or
controversy arising out of or relating to this Agreement prior to filing any
claim by suit in a court. Any party may initiate negotiations by providing
written notice in letter form to the other party, setting forth the subject of
the dispute and the relief requested. The recipient of such notice will respond
in writing within five days with a statement of its position on and recommended
solution to the dispute. If the dispute is not resolved by this exchange of
correspondence, then representatives of each party with full settlement
authority will meet at a mutually agreeable time and place within ten days of
the date of the initial notice in order to exchange relevant information and
perspectives, and to attempt to resolve the dispute. If the dispute is not
resolved by these negotiations, the matter will be submitted to
J.A.M.S/ENDISPUTE, or its successor, for mediation. If the matter is not
resolved by such mediation within 180 days of the initiation of negotiations,
then either party may file a suit in court. If the matter is resolved by
litigation, the prevailing party's litigation expenses, including but not
limited to all filing fees, attorney's fees and fees paid to other consultants
in the course of litigation will be paid by the other party; PROVIDED THAT, each
party shall bear its own costs of mediation and the mediator's fee shall be
borne pro rata by the parties hereto which are subject to such mediation.
Section 3.8 WAIVER; SEVERABILITY. The waiver by one party hereto
of any breach by the other (the "BREACHING PARTY") of any provision of this
Agreement shall not operate or be considered as a waiver of any other (prior or
subsequent) breach by the Breaching Party, and waiver of a breach of a provision
in one instance shall not be deemed a waiver of such provision in any other
circumstance. If any term or provision of this Agreement or the application
thereof to any person, property or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement, or the application of such
term or provision to persons, property or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby.
15
Section 3.9 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements or understandings, written or oral,
between the parties with respect to the subject matter hereof.
16
IN WITNESS WHEREOF, the PARTIES hereto have executed this Agreement as
of the date first written above.
CONTIWEST CORPORATION STRATEGIC REALTY CAPITAL
CORP.
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
--------------------------- -------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxx X. Xxxxx
Title: President Title: President and Chief
Executive Officer
By: /s/Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
CNC HOLDING CORP. MARRAY INVESTMENT, L.L.C.
By: Xxxxxxx Management Corp.
Its: Managing Member
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------- -------------------------------
Name:Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxxx
Title:Chairman and Title: Chairman
Chief Executive Officer
17
