REGISTRATION RIGHTS AGREEMENT
Dated as of March 31, 1998
by and among
Excel Legacy Corporation
and
the Purchasers Listed on the Signature
Pages of the Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of March 31, 1998, by and among Excel Legacy Corporation, a
Delaware corporation (the "Company"), and the purchasers (herein referred to
collectively as the "Purchasers" and individually as a "Purchaser") whose names
are set forth on the signature pages of the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreements between the
Company and the Purchasers (collectively and individually, the "Purchase
Agreement"). In order to induce the Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution of this Agreement is a condition to the
Closing under the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
AGENT: Any Person authorized to act and who acts on behalf of any of
the Purchasers with respect to the transactions contemplated by this Agreement.
COMMON STOCK: The common stock, $.01 par value, of the Company.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
NASD: National Association of Securities Dealers, Inc.
NMS: NASDAQ National Market System.
NOTICE OF ACCEPTANCE: See Section 9(b) hereof.
OFFER: See Section 9(a) hereof.
OFFERED SECURITIES: See Section 9(a) hereof.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
PIGGYBACK NOTICE: See Section 4(a) hereof.
PREFERRED SHARES: The Series A Liquidating Preference Convertible
Preferred Stock due 2005, $.01 par value, of the Company being issued and sold
pursuant to the Purchase Agreement.
PROSPECTUS: The prospectus included in the Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
REFUSED SECURITIES: See Section 9(b) hereof.
REGISTRATION EXPENSES: See Section 7(a) hereof.
REGISTRABLE SECURITIES: (i) The Preferred Shares, (ii) the shares of
Common Stock issued or issuable upon conversion of the Preferred Shares, (iii)
the Warrant Shares, (iv) the shares of Common Stock into which the Warrant
Shares may be convertible, and (v) any securities issued or issuable with
respect to the Common Stock referred to in clause (ii) or (iv) by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided that a
security ceases to be a Registrable Security when it is no longer a Transfer
Restricted Security.
REGISTRATION STATEMENT: Any registration statement of the Company
which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time.
SEC: The Securities and Exchange Commission.
TRANSFER RESTRICTED SECURITIES: Securities acquired by the holder
thereof other than pursuant to an effective registration under Section 5 of the
Securities Act or pursuant to Rule 144; provided that a Security that has ceased
to be a Transfer Restricted Security cannot thereafter become a Transfer
Restricted Security.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
WARRANT SHARES: The shares of Series A Preferred Stock deliverable
upon the exercise of (i) that certain Warrant to Purchase 241,000 shares of
Series A Preferred Stock issued concurrently herewith to BancBoston Capital Inc.
and (ii) that certain Warrant to Purchase 4,256,000 shares of Series A Preferred
Stock issued concurrently herewith to Southeastern Asset Management, Inc., for
and on behalf of its assignee, Longleaf Partners Realty Fund, a Series of
Longleaf Partners Funds Trust.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) REGISTRABLE SECURITIES. The securities entitled to the benefits of
this Agreement are the Registrable Securities.
(b) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a holder
of Registrable Securities whenever such Person owns Registrable Securities or
has the right to acquire such Registrable Securities, whether or not such
acquisition has actually been effected and disregarding any legal restrictions
upon the exercise of such right.
3. SHELF REGISTRATION.
(a) TIMING OF FILING, EFFECTIVENESS AND PERIOD OF USABILITY. As promptly
as practicable and in any event within 60 days following the date of initial
issuance of the Preferred Shares, the Company
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shall file a "shelf" Registration Statement on any appropriate form pursuant to
Rule 415 (or similar rule that may be adopted by the SEC) under the Securities
Act for all the Registrable Securities, which form shall be available for the
sale of the Registrable Securities in accordance with the intended method or
methods of distribution thereof. The Company agrees to use its best efforts to
cause the Registration Statement to become effective within 60 days following
the date of filing with the SEC.
The Company agrees to use its best efforts to keep the Registration
Statement continuously effective and usable for resale of Registrable
Securities, for a period of two years from the date on which the SEC declares
such Registration Statement effective, or in the event that a holder which
beneficially owns not less than five percent (5.0%) of any class of equity
securities of the Company so requests in writing not less than 30 days prior to
the termination of such two-year period, for a period of five years from such
effective date, or such shorter period which will terminate when all the
Registrable Securities covered by such Registration Statement have been sold
pursuant to such Registration Statement.
The Company agrees to apply to have the Registrable Securities listed
on NMS promptly following the qualification of such securities (i.e., in terms
of share price, market value, public float, etc.) to be so listed, and to use
its best efforts to cause the listing to become effective. If after 150 days
following the date on which the SEC declares the Registration Statement
effective, the Registrable Securities still do not qualify for listing on NMS,
the Company will seek a waiver from NMS of any applicable provisions then
preventing listing. If the waiver is not granted, the Company agrees to pursue
all reasonable options to have the Registrable Securities qualify for listing
which are not detrimental to stockholders of the Company, including the
possibility of obtaining a listing on another national stock exchange.
(b) SELECTION OF UNDERWRITERS. If at any time or from time to time any of
the holders of the Registrable Securities covered by the Registration Statement
desire to sell Registrable Securities in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the holders of a majority of the
Registrable Securities included in such offering; PROVIDED that such investment
bankers and managers must be reasonably satisfactory to the Company.
4. PIGGYBACK REGISTRATIONS.
(a) PARTICIPATION. Subject to Section 4(b) hereof, if at any time after
the date hereof the Company files a registration statement under the Securities
Act with respect to an offering of any equity securities by the Company for its
own account or for the account of any of its equity holders (other than (i) a
registration on Form S-4 or S-8 or any successor form to such Forms, or (ii) any
registration of securities as it relates to an offering and sale to management
of the Company pursuant to any employee stock plan or other employee benefit
plan arrangement) with respect to an offering that includes any shares of Common
Stock, then the Company shall give prompt notice (the "Piggyback Notice") to the
holders of the Registrable Securities and such holders shall be entitled to
include in such registration statement the Registrable Securities held by them.
The Piggyback Notice shall offer the holders of the Registrable Securities the
opportunity to register such number of shares of Registrable Securities as each
such holder may request and shall set forth (1) the anticipated filing date of
such registration statement and (2) the number of shares of Common Stock that is
proposed to be included in such registration statement. The Company shall
include in such registration statement such shares of Registrable Securities for
which it has received written requests to register such shares within ten
business days after the Piggyback Notice has been given.
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(b) UNDERWRITER'S CUTBACK. Notwithstanding the foregoing, if a
registration pursuant to this Section 4 involves an underwritten offering and
the managing underwriters of such proposed underwritten offering deliver an
opinion to the holders of the Registrable Securities that the total or kind of
securities that such holders and any other Person intend to include in such
offering would be reasonably likely to adversely affect the price, timing or
distribution of the securities offered in such offering, then the Company shall
include in such registration (i) 100% of the securities that the Person (which
may be the Company) initiating such registration proposes to sell, and (ii)
second, to the extent of the amount of securities that all other holders have
requested to be included in such registration, which, in the opinion of the
managing underwriters, can be sold without such adverse effect referred to
above, such amount to be allocated pro rata among all other holders based upon
the relative aggregate amount of gross proceeds to be received by any other
holders in the offering.
(c) COMPANY CONTROL. The Company may decline to file a registration
statement after giving the Piggyback Notice, or withdraw a registration
statement after filing and after such Piggyback Notice, but prior to the
effectiveness of the registration statement, provided that the Company shall
promptly notify each holder of the Registrable Securities in writing of any such
action and provided further that the Company shall bear all reasonable expenses
incurred by each such holder or otherwise in connection with such withdrawn
registration statement.
5. HOLD-BACK AGREEMENTS
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES. Each
holder of Registrable Securities whose Registrable Securities are covered by a
Registration Statement filed pursuant to Section 3 or 4 hereof agrees, if
requested by the managing underwriters in an underwritten offering, not to
effect any public sale or distribution of Registrable Securities, including a
sale pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration), during the 10-day period prior to, and during the
90-day period beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or the managing underwriters.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering any such agreement; PROVIDED that any such holder shall undertake, in
its request to participate in any such underwritten offering, not to effect any
public sale or distribution of Registrable Securities commencing on the date of
sale of Registrable Securities unless it has provided 45 days' prior written
notice of such sale or distribution to the underwriter or underwriters.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The Company
agrees:
(1) not to effect any public or private sale or distribution of its
equity securities, including a sale pursuant to Regulation D under the
Securities Act, during the 10-day period prior to, and during the 90-day
period beginning on, the closing date of any underwritten offering made
pursuant to a Registration Statement filed under Section 3 or 4 hereof, to
the extent timely requested in writing by the managing underwriters (except
(i) as part of such underwritten registration, (ii) pursuant to a
registration on Form S-4 or S-8 or any successor form to such Forms, or
(iii) pursuant to any registration of securities as it relates to an
offering and sale to management of the Company pursuant to any employee
stock plan or other employee benefit plan arrangement), and
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(2) to cause each holder of privately placed equity securities issued
by the Company at any time on or after the date of this Agreement to agree
not to effect any public sale or distribution of any such securities during
such period, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration, if permitted).
6. REGISTRATION PROCEDURES
In connection with the Company's obligations to file a Registration
Statement pursuant to Section 3 or 4 hereof, the Company will use its best
efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, including sales pursuant to Rule 144 under the Securities Act, and
pursuant thereto the Company will as promptly as practicable:
(a) before filing the Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be filed,
which documents will be subject to the review of such holders and
underwriters, and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which the
holders of a majority of the Registrable Securities covered by such
Registration Statement or the underwriters, if any, shall reasonably
object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the
Securities Act or rules and regulations thereunder for shelf registration
or otherwise necessary to keep the Registration Statement effective for the
applicable period and cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(c) notify the holders of the Registrable Securities covered by such
Registration Statement and the managing underwriters, if any, at least 24
hours in advance of the proposed effective date of the Registration
Statement;
(d) notify the holders of the Registrable Securities covered by such
Registration Statement and the managing underwriters, if any, IMMEDIATELY
(i.e., on the same day and, if effectiveness has been declared prior to
such time, before the close of the New York Stock Exchange on such day), of
the effectiveness of the Registration Statement or any post-effective
amendment thereto;
(e) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly,
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed,
5
(2) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information,
(3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose,
(4) if at any time the representations and warranties of the
Company contemplated by paragraph (k) below cease to be true and
correct, of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and
(5) of the existence of any fact which results in the
Registration Statement, the Prospectus or any document incorporated
therein by reference containing an untrue statement of material fact
or omitting to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(f) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(g) upon request, furnish to each selling holder of Registrable
Securities and each managing underwriter, without charge, at least one
signed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(h) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request; the Company consents to the
use of the Prospectus or any amendment or supplement thereto by each of the
selling holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto;
(i) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable Securities,
the underwriters, if any, and their respective counsel in connection with
the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing and do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the Registration Statement; PROVIDED that the Company will not be required
to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so
subject;
(j) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the managing
6
underwriters may request at least two business days prior to any sale of
Registrable Securities to the underwriters;
(k) if any fact contemplated by paragraph (c)(5) above shall exist,
prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(l) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed if requested by the
holders of a majority of such Registrable Securities or the managing
underwriters, if any;
(m) upon the effectiveness of the Registration Statement, and again
upon each sale of any Registrable Securities in an underwritten offering,
enter into agreements (including underwriting agreements) and take all
other appropriate actions in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection:
(1) make such representations and warranties to the underwriters
or the selling holders, as applicable, in form, substance and scope as
are customarily made by issuers to underwriters in primary
underwritten offerings;
(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, substance and scope)
shall be reasonably satisfactory to the managing underwriters or the
selling holders, as applicable) addressed to the underwriters or the
selling holders, as applicable, covering the matters customarily
covered in opinions requested in underwritten offerings;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
underwriters or the selling holders (PROVIDED that such letters are
delivered by the accountants to Persons such as the selling holders,
and PROVIDED FURTHER that the selling holders deliver to the
accountants all information and documentation requested by the
accountants in connection therewith), as applicable, such letters to
be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in connection with
primary underwritten offerings;
(4) if an underwriting agreement is entered into, cause the same
to set forth in full the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be indemnified
pursuant to said Section; and
(5) deliver such documents and certificates as may be reasonably
requested by the managing underwriters or the selling holders, as
applicable, to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered
into by the Company.
7
(n) make available for inspection by a representative of the holders
of a majority of the Registrable Securities, any underwriter participating
in any disposition pursuant to such Registration Statement, and any
attorney or accountant retained by the sellers or underwriter, all
pertinent financial and other records, 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 representative,
underwriter, attorney or accountant in connection with the registration;
PROVIDED that any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by such
Persons unless disclosure of such records, information or documents is
required by court or administrative order; and
(o) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(i) hereof, such holder
will forthwith discontinue disposition of Registrable Securities until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(i) hereof, or until it is advised in writing by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
the Prospectus, and, if so directed by the Company, such holder will deliver to
the Company all copies of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods mentioned in Section 3(a) hereof shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement either receives
the copies of the supplemented or amended prospectus contemplated by Section
6(i) hereof or is advised in writing by the Company that the use of the
Prospectus may be resumed; provided that nothing herein shall relieve the
Company from its obligation pursuant to Section 3(a) hereof to file a
Registration Statement within 60 days following the date of initial issuance of
the Preferred Shares; and provided further that the aggregate length of all
discontinuances pursuant to this paragraph in any 12-month period shall not
exceed 120 days.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be paid by the Company, regardless whether the
Registration Statement becomes effective, including without limitation:
(1) all registration and filing fees (including with respect to
filings required to be made with the NASD);
(2) fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters or
selling holders in connection with blue sky qualifications of the
Registrable Securities and determination of their eligibility for
investment
8
under the laws of such jurisdictions as the managing underwriters or
holders of a majority of the Registrable Securities being sold may
designate);
(3) printing (including expenses of printing certificates for the
Registrable Securities in a form eligible for deposit with Depositary Trust
Company and of printing prospectuses), messenger, telephone and delivery
expenses;
(4) fees and disbursements of counsel for the Company, the
underwriters and for the sellers of the Registrable Securities (subject to
the provisions of Section 7(b) hereof);
(5) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance);
(6) fees and disbursements of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of
the Registrable Securities or legal expenses of any Person other than the
Company, the underwriters and the selling holders); and
(7) fees and expenses of other Persons retained by the Company (all
such expenses being herein called "Registration Expenses").
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which similar securities issued by
the Company are then listed, rating agency fees and the fees and expenses of any
Person, including special experts, retained by the Company.
(b) In connection with the Registration Statement required hereunder, the
Company will reimburse the holders of Registrable Securities being registered
pursuant to such Registration Statement for the reasonable fees and
disbursements of not more than one counsel (or more than one counsel if a
conflict exists among such selling holders in the exercise of the reasonable
judgment of counsel for the selling holders and counsel for the Company) chosen
by the holders of a majority of such Registrable Securities.
8. INDEMNIFICATION
(a) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify and hold
harmless each holder of Registrable Securities, its officers, directors,
trustees, representatives, employees and Agents and each Person who controls or
is controlled by such holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each such person being
sometimes hereinafter referred to as an "Indemnified Holder") from and against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and legal expenses) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of 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, except
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or
9
allegation thereof based upon information furnished in writing to the Company by
such holder expressly for use therein; PROVIDED, HOWEVER, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if (i) such holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale of Registrable
Securities and (ii) the Prospectus would have completely corrected such untrue
statement or omission; and PROVIDED FURTHER, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is completely corrected in an amendment or supplement to the Prospectus and if,
having previously been furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, such holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or concurrently
with the sale of a Registrable Security to the person asserting such loss,
claim, damage, liability or expense who purchased such Registrable Security
which is the subject thereof from such holder. This indemnity will be in
addition to any liability which the Company may otherwise have. The Company
will also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent as provided above with respect to the indemnification of the
Indemnified Holders of Registrable Securities.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Holder in
respect of which indemnity may be sought from the Company, such Indemnified
Holder shall promptly notify the Company in writing, and the Company shall
assume the defense thereof, including the employment of counsel satisfactory to
such Indemnified Holder and the payment of all expenses. Such Indemnified
Holder shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnified Holder unless (a) the Company has
agreed to pay such fees and expenses or (b) the Company shall have failed to
assume the defense of such action or proceeding and has failed to employ counsel
satisfactory to such Indemnified Holder in any such action or proceeding or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both such Indemnified Holder and the Company, and such
Indemnified Holder shall have been advised by counsel that there may be one or
more legal defenses available to such Indemnified holder which are different
from or additional to those available to the Company (in which case, if such
Indemnified Holder notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Holder, it being understood, however, that the Company shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
such Indemnified Holder and any other Indemnified Holders, which firm shall be
designated in writing by such Indemnified Holders). The Company shall not be
liable for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
to indemnify and hold harmless such Indemnified Holders from and against any
loss or liability by reason of such settlement or judgment. The Company will
not agree to any settlement or consent judgment requiring any action other than
the payment of cash without the written consent of the Indemnified Holders.
10
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each holder of
Registrable Securities agrees to indemnify and hold harmless the Company, its
directors and officers and each Person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such holder, but only with respect to information relating to such holder
furnished in writing by such holder expressly for use in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person,
in respect of which indemnity may be sought against a holder of Registrable
Securities, such holder shall have the rights and duties given the Company and
the Company or its directors or officers or such controlling person shall have
the rights and duties given to each holder by the preceding paragraph. In no
event shall the liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds received
by such holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement or any
amendment or supplement thereto, or any preliminary prospectus.
(c) CONTRIBUTION. If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and of the Indemnified Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of the Indemnified Holder
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 8(a), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
The Company and each holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 8(c)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
8(c), an Indemnified Holder shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities sold by
such Indemnified Holder or its affiliated Indemnified Holders and distributed to
the public were offered to the public exceeds the amount of any damages which
such Indemnified Holder, or its affiliated Indemnified Holder, has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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.
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9. PREEMPTIVE RIGHTS
(a) For so long as any of the Preferred Shares remain outstanding, the
Company shall not issue or sell, agree to issue or sell, or reserve or set aside
for issuance or sale, any Preferred Shares or any other equity securities of the
Company ranking on a parity with the Preferred Shares which have substantially
similar preferences, rights and privileges as the Preferred Shares
(collectively, the "Offered Securities"), unless the Company shall have first
offered (each such offer, an "Offer") to sell to each holder of then outstanding
Preferred Shares such shares of the Offered Securities in proportion to its then
existing holdings of outstanding Preferred Shares, on the same terms and
conditions and for the same consideration as the Company proposes to issue the
Offered Securities to Persons other than such holders.
(b) Notice of each holder's intention to accept, in whole or in part, an
Offer shall be evidenced by a writing signed by such holder and delivered to the
Company within ten business days following receipt of such Offer, setting forth
such portion of the Offered Securities as such holder elects to purchase (each
such writing, a "Notice of Acceptance"). In the event that Notices of
Acceptance are not given by the holders of outstanding Preferred Shares in
respect of all of the Offered Securities, the Company shall have 120 days from
the expiration of the foregoing ten-day period to sell all or any part of such
Offered Securities as to which Notices of Acceptance have not been given by the
holders (the "Refused Securities") to any other Person or Persons, but only upon
terms and conditions which are no more favorable, in the aggregate, to such
other Person or Persons than those set forth in the Offer. Upon the closing of
the sale of the Refused Securities, the holders shall purchase from the Company,
and the Company shall sell to the holders, the Offered Securities in respect of
which Notices of Acceptance were delivered to the Company, on the terms
specified in the Offer.
10. RULE 144
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available such information as is necessary to permit
sales pursuant to Rule 144 under the Securities Act), and it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
12. MISCELLANEOUS
(a) REMEDIES. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights provided herein, in the Purchase Agreement and
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that
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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.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the date
of this Agreement 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 or otherwise conflicts with the provisions hereof. The
Company has not previously entered into any agreement with respect to its
securities granting any registration rights to any Person.
(c) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not
take any action, or permit any change to occur, with respect to the Registrable
Securities which would (i) adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement, or (ii) adversely affect the
marketability of such Registrable Securities in any such registration.
(d) TRANSFER AGENT. The Company will establish and maintain a transfer
agent for the Registrable Securities for so long as such securities are
outstanding.
(e) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of holders of at least
a majority of the outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other holders of Registrable
Securities may be given by the holders of a majority of the Registrable
Securities being sold.
(f) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company in accordance with the
provisions of this Section 12(f), which address initially is, with respect
to each Purchaser, the address set forth on such Purchaser's signature page
of the Purchase Agreement; and
(ii) if to the Company, initially at its address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 12(f), with a copy
to Xxxxxx & Xxxxxxx, 000 "X" Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx X. Xxxxx, Esq.
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 on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for
13
an express assignment, subsequent holders of Registrable Securities; provided,
however, that after the Closing this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a holder of Preferred Shares unless
and to the extent such successor or assign acquired Registrable Securities from
such holder.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(k) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(l) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
The Company: EXCEL LEGACY CORPORATION
By: /s/ Xxxx X. Xxxxx
------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
Purchaser: SOUTHEASTERN ASSET MANAGEMENT,
INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: Vice President and General Counsel
----------------------------------
Purchaser: ALLSTATE INSURANCE COMPANY
By: /s/ Authorized Signatory
------------------------
Title: Authorized Signatory
--------------------
Purchaser: BANCBOSTON CAPITAL INC.
By: /s/ BancBoston Capital Inc.
---------------------------
Title: BancBoston Capital Inc.
-----------------------
Purchaser: THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------
Title: Vice President
--------------
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