Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of August 3, 2004, by and between Provident Senior Living
Trust, a Maryland real estate investment trust (the "Issuer"), and Friedman,
Billings, Xxxxxx & Co., Inc., a Delaware corporation ("FBR "), for the benefit
of the Holders (as defined below).
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. The Issuer, PSLT OP, L.P., a Delaware limited partnership
(the "Operating Partnership"), and FBR entered into that certain
Purchase/Placement Agreement, dated as of August 2, 2004 (the "Purchase
Agreement"), in connection with the offering and sale (the "Offering")
of up to 30,868,634 common shares of beneficial interest, par value
$.001 per share, of the Issuer (the "Common Shares"), including up to
4,026,344 Common Shares that may be issued pursuant to an additional
allotment option granted to FBR and 1,824,377 Class A common units of
limited partnership interest in the Operating Partnership (the "Units")
that may be redeemed, at the Issuer's option, for common shares of
beneficial interest of the Issuer.
B. In order to induce the investors who are purchasing the
Common Shares and Units in the Offering to purchase such Common Shares
and Units, and FBR to enter into the Purchase Agreement, the Issuer has
agreed to provide the registration rights provided for in this Agreement
for the Holders for the Common Shares and any common shares that may be
issued upon redemption of the Units.
C. The execution and delivery of this Agreement is a condition
to the closing of the transactions contemplated by the Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms have the following
meanings:
Additional Shares: Shares or other securities issued in respect of the
Shares by reason of or in connection with any stock dividend, stock
distribution, stock split, or similar issuance.
Agreement: As defined in the preamble hereof.
Affiliate: As to any specified Person, (i) any Person that directly, or
indirectly through one or more intermediaries or relationships, controls or is
controlled by, or is under common control with, the specified Person, (ii) any
executive officer, director, trustee, managing member, general partner or
Person in a similar capacity of the specified Person and (iii) any legal
entity
for which the specified Person acts as an executive officer, director,
trustee, managing member, general partner or Person in a similar capacity. For
purposes of this definition "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly, or indirectly
through one or more intermediaries or relationships, of the power to direct or
cause the direction of the management and policies of such Person, whether by
contract, through the ownership of voting securities, partnership or member
interests or other equity interests or otherwise. An indirect relationship
includes, but is not limited to, circumstances in which a Person's spouse,
children, parents, siblings or mother-, father-, sister- or brother-in-law is
or has been associated with a Person.
Business Day: With respect to any act to be performed hereunder, each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York are authorized or obligated by
applicable law, regulation or executive order to close.
Closing Time: August 3, 2004, or such other time or such other date as
FBR and the Issuer may agree.
Commission: The Securities and Exchange Commission.
Common Shares: As defined in the recitals hereof.
Controlling Person: As defined in Section 6(a) hereof.
End of Suspension Notice: As defined in Section 5(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission thereunder.
FBR: As defined in the preamble hereof, and any successor thereto.
Holder: Each record owner of any Registrable Shares from time to time.
Indemnified Party: As defined in Section 6(c) hereof.
Indemnifying Party: As defined in Section 6(c) hereof.
IPO Registration Statement: As defined in Section 2(b) hereof.
Issuer: As defined in the preamble hereof, and any successor thereto.
Liabilities: As defined in Section 6(a) hereof.
Mandatory Shelf Registration Statement: As defined in Section 2(a)
hereof.
NASD: The National Association of Securities Dealers, Inc.
Offering: As defined in Recital A hereof.
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Operating Partnership: As defined in Recital A hereof.
Person: An individual, partnership, corporation, trust, limited
liability company, unincorporated organization, government or agency or
political subdivision thereof, or any other legal entity.
Proceeding: An action (including a class action), claim, suit, demand,
arbitration or other proceeding (including without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced
or, to the knowledge of the Person subject thereto, threatened.
Prospectus: The prospectus included in any Registration Statement,
including any preliminary prospectus, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any,
in such prospectus.
Purchase Agreement: As defined in Recital A hereof, as amended from time
to time in accordance with the terms thereof.
Purchaser Indemnitee: As defined in Section 6(a) hereof.
Registrable Shares: Each of the Shares, any Additional Shares and any
Unit Shares, upon original issuance thereof, and at all times subsequent
thereto, including upon the transfer thereof by the original holder or any
subsequent holder, until, in the case of any such Shares or Additional Shares,
as applicable, the earliest to occur of:
(i) the date on which such Shares have been sold pursuant to a
Registration Statement or sold, transferred or otherwise disposed of pursuant
to Rule 144;
(ii) the date on which such Shares not held by Affiliates of the Issuer
are eligible for sale without registration under the Securities Act pursuant
to subparagraph (k) of Rule 144;
(iii) the date on which such Shares have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer have
been delivered by the Issuer and subsequent public distribution of such Shares
shall not require registration or qualification of under the Securities Act;
or
(iv) the second anniversary of the initial effective date of the
Mandatory Shelf Registration Statement.
Registration Expenses: Any and all expenses of the Issuer incident to
the performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, securities exchange, NASD or other
registration, listing, inclusion and filing fees, (ii) all fees and expenses
incurred in connection with compliance with international, federal or state
securities or blue sky laws (including, without limitation, any registration,
listing and filing fees and reasonable fees and disbursements of counsel in
connection with blue sky qualification of any of the Registrable Shares and
the preparation of a blue sky memorandum and compliance with the rules of the
NASD), (iii) all expenses incurred in preparing, word processing, duplicating,
printing, delivering and distributing any Registration Statement, any
Prospectus, any amendments or
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supplements thereto, any underwriting agreements, agreements among
underwriters, securities sales agreements, certificates and any other
documents relating to the performance of the Issuer under and compliance by
the Issuer with this Agreement, (iv) all fees and expenses incurred in
connection with the listing or inclusion of any of the Registrable Shares on
any securities exchange or national quotation system pursuant to Section 4(n)
of this Agreement or otherwise, (v) the fees and disbursements of counsel for
the Issuer and of the independent public accountants of the Issuer (including,
without limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), and the reasonable fees
and disbursements (up to a maximum aggregate amount of $25,000) of one counsel
and one accounting firm (as selected by FBR) for the selling Holders to review
any Registration Statement, and (vi) any fees and disbursements customarily
paid or otherwise negotiated for payment by issuers in connection with issues
and sales of securities (including the fees and expenses of any experts
retained by the Issuer in connection with any Registration Statement);
provided, however, that Registration Expenses shall exclude brokers' or
underwriters' discounts and commissions and transfer taxes or transfer fees,
if any, relating to the sale or disposition of Registrable Shares by a Holder
and the fees and disbursements of any counsel to or accounting firm of the
Holders other than as provided for in subparagraph (v) above.
Registration Statement: Any Shelf Registration Statement, any Subsequent
Shelf Registration Statement or the IPO Registration Statement (that covers
the resale of any Registrable Shares), including the Prospectus, amendments
and supplements to such registration statement or Prospectus, including
pre-and post-effective amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference, if any,
in such registration statement.
Rule 144: Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.
Rule 144A: Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.
Rule 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.
Rule 415: Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.
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Rule 429: Rule 429 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.
Shares: As defined in the Purchase Agreement.
Shelf Registration Statement: The Mandatory Shelf Registration Statement
or any Subsequent Shelf Registration Statement.
Subsequent Shelf Registration Statement: As defined in Section 2(c)
hereof.
Suspension Event: As defined in Section 5(b) hereof.
Suspension Notice: As defined in Section 5(b) hereof.
Underwritten Offering: A sale of securities of the Issuer to an
underwriter or underwriters for reoffering to the public.
Units: As defined in the recitals hereof.
Unit Shares: Shares issued upon redemption of Units that were issued to
Fortress Brookdale Acquisition LLC on August 3, 2004.
2. Registration Rights.
(a) Mandatory Shelf Registration. As set forth in Section 4 hereof,
the Issuer agrees to file with the Commission as soon as practicable, but in
no event later than three months from the date hereof, a Shelf Registration
Statement on Form S-11 or such other form under the Securities Act then
available to the Issuer providing for the resale pursuant to Rule 415 from
time to time (including pursuant to an underwritten offering) by the Holders
of all of the Registrable Shares (including for the avoidance of doubt any
Additional Shares that are issued prior to the effectiveness of such shelf
registration statement) (including the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement, the "Mandatory Shelf Registration Statement"). The
Issuer shall use its reasonable best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission as promptly as
practicable following such filing, in each case giving due regard to the need
to prepare current financial statements and complete other actions that are
reasonably necessary to effect a registered public offering. Such reasonable
best efforts shall include, without limitation, responding to any comments
issued by the staff of the Commission with respect to any Registration
Statement and filing any related amendment to such Registration Statement as
soon as reasonably practicable after receipt of such comments. Any Shelf
Registration Statement shall provide for the resale from time to time and
pursuant to any customary method or combination of
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methods legally available (including, without limitation, an Underwritten
Offering) by the Holders of any and all Registrable Shares.
(b) IPO Registration. If, prior to the Mandatory Shelf Registration
Statement being declared effective by the Commission and the Common Shares
being listed on a national securities exchange or quoted on the Nasdaq
National Market or comparable quotation system, the Issuer proposes to file a
registration statement on Form S-11 or such other form under the Securities
Act providing for the initial public offering of Common Shares (including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement, the "IPO Registration
Statement"), the Issuer will notify, in writing, each Holder of the proposed
filing and afford each Holder an opportunity to include in such IPO
Registration Statement all or any part of the Registrable Shares then held by
such Holder. Each Holder desiring to include in any such IPO Registration
Statement all or part of the Registrable Shares held by such Holder shall,
within fifteen (15) Business Days after receipt of the above-described written
notice by the Issuer, so notify the Issuer in writing, and in such notice
shall inform the Issuer of the number of Registrable Shares such Holder wishes
to include in such IPO Registration Statement. Any election by any Holder to
include any Registrable Shares in such IPO Registration Statement will not
affect the inclusion of such Registrable Shares in the Shelf Registration
Statement until such Registrable Shares have been sold under the IPO
Registration Statement; provided, however, that at such time of sale, the
Issuer shall have the right to remove from the Shelf Registration Statement
the Registrable Shares sold pursuant to the IPO Registration Statement. In the
event that Registrable Shares cannot be included in the IPO Registration
Statement as a result of the determination of the managing underwriters as set
forth in Section 2(b)(ii) below, then the Issuer shall only be required to
notify, in writing, each Holder of such determination by the managing
underwriter.
(i) Right to Terminate or Delay IPO Registration. At any time,
the Issuer shall have the right to terminate or withdraw any IPO
Registration Statement referred to in this Section 2(b) whether or not
any Holder has elected to include Registrable Shares in such
registration; provided, however, the Issuer must provide each Holder
that elected to include any Registrable Shares in such IPO Registration
Statement prompt written notice of such termination. Furthermore, in the
event the IPO Registration Statement is not declared effective by the
Commission within ninety (90) Business Days following delivery by the
Issuer of notice to the Holders of their initial opportunity to include
all or any part of the Registrable Shares then held by such Holders in
the IPO Registration Statement, the Issuer shall promptly provide a new
written notice to all Holders giving them another opportunity to elect
to include Registrable Shares in the pending IPO Registration Statement.
Each Holder receiving such notice shall have the same election rights
afforded such Holder as described in clause (b) above.
(ii) Underwriting. The Issuer shall give written notice to the
Holders who elected to be included in the IPO Registration Statement of
the managing underwriters for the Underwritten Offering proposed under
the IPO Registration Statement. The right of any such Holder's
Registrable Shares to be included in any IPO Registration Statement
pursuant to this Section 2(b) shall be conditioned upon such Holder's
participation in
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such Underwritten Offering and the inclusion of such Holder's
Registrable Shares in the Underwritten Offering to the extent provided
herein. All Holders proposing to distribute their Registrable Shares
through such Underwritten Offering shall enter into an underwriting
agreement in customary form with the managing underwriters selected for
such underwriting and complete and execute, as reasonably requested as
to scope and form, any questionnaires, powers of attorney, indemnities,
securities escrow agreements and other documents reasonably required
under the terms of such underwriting, and furnish to the Issuer such
information in writing as the Issuer may reasonably request for
inclusion in the Registration Statement; provided, however, that no
Holder shall be required to make any representations or warranties to or
agreements (including indemnities) with the Issuer or the underwriters
other than representations, warranties or agreements (including
indemnities) as are customary and reasonably requested by the
underwriters with the understanding that the foregoing shall be several,
not joint and several, and no such agreement (including indemnities)
shall require any Holder to be liable for an amount in excess of the net
proceeds received by such Holder through such Underwritten Offering.
Notwithstanding any other provision of this Agreement, if the managing
underwriters determine in their sole discretion that marketing factors
require a limitation on the number of shares to be included, then the
managing underwriters may exclude shares (including Registrable Shares)
from the IPO Registration Statement and the Underwritten Offering and
any Shares included in the IPO Registration Statement and the
Underwritten Offering shall be allocated, first, to the Issuer, for all
Shares proposed to be sold by the Issuer for its own account, and
second, if available, to each of the Holders requesting inclusion of
their Registrable Shares in such IPO Registration Statement on a pro
rata basis based on the total number of Registrable Shares then
requested for inclusion by each such Holder. If any Holder disapproves
of the terms of any Underwritten Offering that is undertaken in
compliance with the terms hereof, such Holder may elect to withdraw
therefrom by written notice to the Issuer and the underwriter, delivered
at least ten (10) Business Days prior to the Issuer's proposed effective
date of the IPO Registration Statement. Any Registrable Shares excluded
or withdrawn from such Underwritten Offering shall be excluded and
withdrawn from the IPO Registration Statement.
(iii) Hold-Back Agreement. By electing to include Registrable
Shares in the IPO Registration Statement, if any, the Holder shall be
deemed to have agreed not to directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the
sale of, or otherwise transfer or dispose of securities of the Issuer of
the same or similar class or classes of the securities included in the
Registration Statement or any securities convertible into or
exchangeable or exercisable for such securities, including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act, during such
periods as reasonably and customarily requested by the managing
underwriter (but in no event for a period longer than sixty (60) days
following the effective date of the IPO Registration Statement, provided
each of the executive officers and trustees of the Issuer that hold
Common Shares of the Issuer or securities convertible into or
exchangeable or exercisable for Common Shares of the Issuer are subject
to the same restriction for the entire time period required of the
Holders hereunder). In order to enforce the foregoing,
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the Issuer shall be entitled to impose stop-transfer instructions with
respect to the Registrable Shares of each Holder until the end of such
period.
(iv) Shelf Registration not Impacted by IPO Registration
Statement. The Issuer's obligation to file and keep effective any Shelf
Registration Statement shall not be affected by the filing or
effectiveness of the IPO Registration Statement unless and to the extent
Registrable Shares are sold pursuant to the IPO Registration Statement.
(c) Subsequent Shelf Registration for Additional Shares Issued after
Effectiveness of the Mandatory Shelf Registration Statement. If any Additional
Shares are issued or distributed to Holders after the effectiveness of the
Mandatory Shelf Registration Statement, or such Additional Shares were
otherwise not included in a prior Shelf Registration Statement, then the
Issuer shall as soon as practicable, but in no event later than sixty (60)
days after the issuance of such Additional Shares, file an additional shelf
registration statement (including the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement, a "Subsequent Shelf Registration Statement") covering
such Additional Shares on behalf of the Holders thereof in the same manner,
and subject to the same provisions in this Agreement as the Mandatory Shelf
Registration Statement, provided that the provisions of the first sentence of
Section 2(a) hereof will not apply to any such Subsequent Shelf Registration
Statement.
(d) Expenses. The Issuer shall pay all Registration Expenses in
connection with the registration of the Registrable Shares pursuant to this
Agreement. Each Holder participating in a registration pursuant to this
Section 2 shall bear such Holder's proportionate share (based on the total
number of Registrable Shares sold in such registration) of all discounts and
commissions payable to underwriters or brokers and all transfer taxes and
transfer fees in connection with a registration of Registrable Shares pursuant
to this Agreement and any other expense of the Holders not allocated to the
Issuer pursuant to this Agreement relating to the sale or disposition of such
Holder's Registrable Shares pursuant to any Registration Statement.
3. Rules 144 and 144A Reporting.
With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Registrable
Shares to the public without registration, the Issuer agrees to, until such
date as no Holder owns any Registrable Shares:
(a) at all times after the effective date of the first Registration
Statement under the Securities Act filed by the Issuer for an offering of its
securities to the general public, make and keep public information available,
as those terms are understood and defined in Rule 144(c) under the Securities
Act;
(b) timely file with the Commission all reports and other documents
required to be filed by the Issuer under the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements);
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(c) if the Issuer is not required to file reports and other documents
under the Securities Act and the Exchange Act, make available other
information as required by, and so long as necessary to permit sales of
Registrable Shares pursuant to, Rule 144A; and
(d) so long as a Holder owns any Registrable Shares, without cost to
any Holder, furnish to any Holder promptly upon request a copy of the most
recent annual or quarterly report(s) of the Issuer, and such other reports and
documents of the Issuer, and take such further actions consistent with this
Section, as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such Registrable
Shares without registration (at all times that the Issuer is not subject to
the reporting requirements of the Exchange Act).
4. Registration Procedures.
In connection with the obligations of the Issuer with respect to any
registration pursuant to this Agreement, the Issuer shall use its reasonable
best efforts to effect or cause to be effected the registration of the
Registrable Shares under the Securities Act to permit the public resale of
such Registrable Shares by the Holder or Holders in accordance with the
Holders' intended method or methods of resale and distribution, and the Issuer
shall, without limitation:
(a) prepare and file with the Commission, as specified in this
Agreement, a Shelf Registration Statement, which Shelf Registration Statement
shall comply as to form with the requirements of the applicable form and
include all financial statements required by the Commission to be filed
therewith, and use its reasonable best efforts to cause such Registration
Statement to become effective as soon as practicable after filing and to
remain effective, subject to Section 5 hereof, until the date on which no
Holders hold Registrable Shares; provided, however, that if the Issuer has an
effective Shelf Registration Statement on Form S-11 under the Securities Act
and becomes eligible to use Form S-3 or such other short-form registration
statement under the Securities Act, the Issuer may, upon twenty (20) Business
Days' prior written notice to all Holders of Registrable Shares, register any
Registrable Shares registered but not yet distributed under the effective
Shelf Registration Statement on such a short-form Shelf Registration Statement
and, once the short-form Shelf Registration Statement is declared effective,
de-register such shares under the previous Registration Statement or transfer
filing fees from the previous Registration Statement (such transfer pursuant
to Rule 429) unless any Holder of Registrable Shares registered under the
initial Shelf Registration Statement notifies the Issuer within fifteen (15)
Business Days of receipt of the Issuer notice that such a registration under a
new Registration Statement and de-registration of the initial Shelf
Registration Statement would materially interfere with its distribution of
Registrable Shares already in progress, in which case the Issuer shall delay
the effectiveness of the short-form Shelf Registration Statement and
de-registration until not later than thirty (30) Business Days from the date
that the Issuer receives the notice from a Holder requesting a delay;
(b) subject to Section 4(i) hereof, (i) prepare and file with the
Commission such amendments and post-effective amendments to each such Shelf
Registration Statement as may be necessary to keep such Shelf Registration
Statement effective for the period described in Section 4(a) hereof, (ii)
cause each Prospectus contained therein to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar
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rule that may be adopted under the Securities Act, and (iii) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by each Shelf Registration Statement during the applicable
period in accordance with applicable law and the method or methods of
distribution described in the Prospectus;
(c) furnish to the Holders, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Shares; the Issuer consents, subject to Section 5, to the lawful
use of such Prospectus, including each preliminary Prospectus, by the Holders,
if any, in connection with the offering and sale of the Registrable Shares
covered by any such Prospectus;
(d) use its reasonable best efforts to (i) register or qualify, or
obtain exemption from registration or qualification for, all Registrable
Shares by the time the applicable Registration Statement is declared effective
by the Commission under all applicable state securities or "blue sky" laws of
such domestic United States jurisdictions as FBR or any Holder covered by a
Registration Statement shall reasonably request in writing, (ii) keep each
such registration or qualification or exemption effective during the period
such Registration Statement is required to be kept effective pursuant to
Section 4(a) and (iii) do any and all other acts and things that may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Shares owned by such
Holder; provided, however, that the Issuer shall not be required to (i)
qualify generally to do business in any jurisdiction or to register as a
broker or dealer in such jurisdiction where it would not otherwise be required
to qualify but for this Section 4(d), (ii) subject itself to taxation in any
such jurisdiction, or (iii) submit to the general service of process in any
such jurisdiction; provided, further, that if the Issuer is unable to list the
Registrable Shares on a national stock exchange or qualify for quotation on an
automatic quotation system at or prior to the time the Registration Statement
is declared effective by the Commission because it fails to meet requirements
for such listing or quotation regarding the number of holders of its Common
Stock, the obligation in this Section 4(d) shall not require the Issuer to
register or qualify the Registrable Shares in any state or foreign
jurisdiction where the Issuer reasonably concludes, based upon the advice of
securities counsel, that such registration or qualification would require
unreasonable efforts (including, without limitation, amendments to the
Issuer's charter or bylaws) or expense;
(e) use its reasonable best efforts to cause all Registrable Shares
covered by such Registration Statement to be registered and approved by such
other domestic state or local governmental agencies or authorities in the
United States, if any, as may be necessary to enable the Holders thereof to
consummate the disposition of such Registrable Shares;
(f) notify FBR and each Holder with Registrable Shares covered by a
Registration Statement promptly and, if requested by FBR or any such Holder,
promptly confirm such advice in writing at the address determined in
accordance with Section 10(c), (i) when such Registration Statement has become
effective and when any post-effective amendments and supplements thereto
become effective, (ii) of the issuance by the Commission or any state
securities authority of any stop order suspending the effectiveness of such
Registration Statement or the initiation of any Proceedings for that purpose,
(iii) of any request by the Commission or any other federal or state
governmental authority for amendments or supplements to such Registration
Statement or
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related Prospectus or for additional information, and (iv) of any reason,
including, but not limited to, the happening of any event during the period
such Registration Statement is effective as a result of which such
Registration Statement or the related Prospectus or any document incorporated
by reference therein contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading (which information shall be accompanied
by an instruction to suspend the use of the Registration Statement and the
Prospectus until the requisite changes have been made);
(g) during the period of time referred to in Section 4(a) above, use
its reasonable best efforts to avoid the issuance of, or if issued, to obtain
the withdrawal of, any order enjoining or suspending the use or effectiveness
of a Shelf Registration Statement or suspending the qualification (or
exemption from qualification) of any of the Registrable Shares for sale in any
jurisdiction, as promptly as practicable;
(h) provide to FBR and its counsel within five (5) Business Days of
receipt by the Issuer or its counsel, copies of any material correspondence
(which FBR may disclose to any other Holder) with or from the Commission or
its staff with respect to a Registration Statement; and upon request, furnish
to each requesting Holder with Registrable Shares covered by a Registration
Statement, without charge, at least one (1) conformed copy of such
Registration Statement and any post-effective amendment or supplement thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested);
(i) except as provided in Section 5, upon the occurrence of any event
contemplated by Section 4(f)(iv) hereof, use its reasonable best efforts to
promptly prepare a supplement or post-effective amendment to a Shelf
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 Shares, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and, upon request and without charge, promptly furnish
to each requesting Holder a reasonable number of copies of each such
supplement or post-effective amendment;
(j) if requested by the representative of the underwriters, if any, or
any Holders of Registrable Shares being sold in connection with an
Underwritten Offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such material information as the representative of
the underwriters, if any, or such Holders indicate in writing relates to them
or otherwise reasonably request in writing be included therein and (ii) make
all required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Issuer has received written
notification of the matters to be incorporated in such prospectus supplement
or post-effective amendment; provided, however, that the Issuer shall not be
required to take any action pursuant to this Section 4(j) that would, in the
opinion of counsel for the Issuer, violate applicable law;
(k) in the case of an Underwritten Offering, use its reasonable best
efforts to furnish or caused to be furnished to the underwriters a signed
counterpart, addressed to the underwriters, of: (i) an opinion of counsel for
the Issuer, dated the date of each closing under the underwriting
11
agreement; and (ii) a "comfort" letter, dated the effective date of such
Registration Statement and the date of each closing under the underwriting
agreement, signed by the independent public accountants who have certified the
Issuer's financial statements included in such Registration Statement,
covering substantially the same matters with respect to such Registration
Statement (and the Prospectus included therein) and with respect to events
subsequent to the date of such financial statements, as are customarily
covered in accountants' letters delivered to underwriters in underwritten
public offerings of securities and such other financial matters as the
underwriters may reasonably request and customarily obtained by underwriters
in underwritten offerings;
(l) enter into customary agreements (including in the case of an
Underwritten Offering, an underwriting agreement in customary form) and take
all other reasonable action in connection therewith in order to expedite or
facilitate the distribution of the Registrable Shares included in such
Registration Statement and, in the case of an Underwritten Offering, make
representations, warranties and agreements (including indemnities) to the
underwriters in such form and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same in writing to the
extent customary if and when requested;
(m) in connection with an Underwritten Offering, make available for
inspection by one representative appointed by the Holders of a majority of the
Registrable Shares and the representative of any underwriters participating in
any disposition pursuant to a Registration Statement and any counsel and
accounting firm retained by the Holders and underwriters, respectively, at
reasonable times and in a reasonable manner, all financial and other records,
pertinent corporate documents and properties of the Issuer and cause the
respective officers, directors, employees and agents of the Issuer to supply
all information reasonably requested by any such representatives, the
representative of the underwriters, counsel thereto or accountants in
connection with a Registration Statement and as may be necessary in connection
with a customary due diligence review of the Issuer; provided, however, that
such records, documents or information that the Issuer determines, in good
faith, to be confidential and notifies such representative of the Holders,
representative of the underwriters, counsel thereto or accountants thereto are
confidential shall not be disclosed by the representatives, representative of
the underwriters, counsel thereto or accountants unless (i) the disclosure of
such records, documents or information is necessary to avoid or correct a
misstatement or omission in a Registration Statement or Prospectus and the
Registrable Shares are not subject to a suspension of sales pursuant to
Section 5 hereof, (ii) the release of such records, documents or information
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, or (iii) such records, documents or information have been
generally made available to the public; provided further, that to the extent
practicable, the foregoing inspection and information gathering shall be
coordinated on behalf of the Holders and the other parties entitled thereto by
one counsel designated by and on behalf of the Holders and the other parties;
(n) provided that the Issuer meets the applicable listing standards,
use its reasonable best efforts to qualify for, and list or include all
Registrable Shares on, the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market as soon as practicable (including,
without limitation, seeking to cure in the Issuer's listing or inclusion
application any deficiencies cited by the exchange or market) and thereafter
use reasonable best efforts to maintain such listing;
12
(o) prepare and timely file all documents, reports and certifications
required by the Securities Act and the Exchange Act at all times beginning
from the date the Issuer is first subject to such filing, reporting or
certification requirements through the date no Holders hold Registrable
Shares;
(p) provide a CUSIP number for all Registrable Shares, not later than
the effective date of the Registration Statement;
(q) (i) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission and, as applicable, the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market
or other listing standard, (ii) use reasonable best efforts to make generally
available to its shareholders, as soon as reasonably practicable, earnings
statements covering at least twelve (12) months beginning after the effective
date of the Registration Statement that satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 (or any similar rule promulgated
under the Securities Act) thereunder, no later than forty-five (45) days after
the end of each fiscal quarter occurring after the first anniversary of the
effective date of the Registration Statement (unless such fiscal quarter is
the last fiscal quarter of the Issuer's fiscal year, in which case such
earnings statement shall be delivered no later than ninety (90) days after
such fiscal quarter occurring after the first anniversary of the effective
date of the Registration Statement) and (iii) delay filing any Registration
Statement or Prospectus or amendment or supplement to such Registration
Statement or Prospectus to which any Holder of Registrable Shares covered by
such Registration Statement shall have, based upon the opinion of counsel,
reasonably objected on the grounds that such Registration Statement or
Prospectus or amendment or supplement does not comply in all material respects
with the requirements of the Securities Act, such Holder having been furnished
with a copy thereof at least three (3) Business Days prior to the filing
thereof, provided that the Issuer may file such Registration Statement or
Prospectus or amendment or supplement following such time as the Issuer shall
have made a good faith effort to resolve any such issue with the objecting
Holder and shall have advised the Holder in writing of its reasonable belief
that such filing complies with the requirements of the Securities Act;
(r) provide and cause to be maintained a registrar and transfer agent
for all Registrable Shares covered by any Registration Statement from and
after a date not later than the effective date of such Registration Statement;
(s) in connection with any sale or transfer of the Registrable Shares
(whether or not pursuant to a Registration Statement) that will result in the
security being delivered no longer being Registrable Shares, cooperate with
the Holders and the representative of the underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the
Registrable Shares to be sold, which certificates shall not bear any transfer
restrictive legends (other than as required by the Issuer's charter) and to
enable such Registrable Shares to be in such denominations and registered in
such names as the representative of the underwriters, if any, or the Holders
may reasonably request at least three (3) Business Days prior to any sale of
the Registrable Shares; and
(t) upon effectiveness of the first Registration Statement filed by
the Issuer, the Issuer will take such actions and make such filings as are
necessary to effect the registration of
13
the Common Stock under the Exchange Act simultaneously with or immediately
following the effectiveness of the Registration Statement.
The Issuer may require the Holders to furnish to the Issuer such
information regarding the proposed distribution by such Holder as the Issuer
may from time to time reasonably request in writing or as shall be required to
effect the registration of the Registrable Shares, and no Holder shall be
entitled to be named as a selling stockholder in any Registration Statement
and no Holder shall be entitled to use the Prospectus forming a part thereof
if such Holder does not provide such reasonable information to the Issuer. Any
Holder that sells Registrable Shares pursuant to a Registration Statement or
as a selling stockholder pursuant to an Underwritten Offering shall be
required to be named as a selling stockholder in the related prospectus and to
deliver a prospectus to purchasers. Each Holder further agrees to furnish
promptly to the Issuer in writing all information required from time to time
to make the information previously furnished by such Holder not misleading and
each Holder shall have a reasonable opportunity to review and comment upon the
Registration Statement with respect to the accuracy of the information
provided by such Holder, which shall include at least five (5) Business Days
after receipt of any Registration Statement to provide comments thereon to the
Issuer or its counsel. The designated counsel, if any, for the Holders shall,
on behalf of the Holders, have the right to review and comment upon the
Registration Statement prior to the time it is filed with the Commission,
which shall include at least five (5) Business Days after receipt of any
Registration Statement to provide comments thereon to the Issuer or its
counsel.
Each Holder agrees that, upon receipt of any notice from the Issuer of
the happening of any event of the kind described in Section 4(f)(ii),
4(f)(iii) or 4(f)(iv) hereof, such Holder will immediately discontinue
disposition of Registrable Shares pursuant to a Registration Statement until
such Holder receives copies of the supplemented or amended Prospectus. If so
directed by the Issuer, such Holder will deliver to the Issuer (at the
reasonable expense of the Issuer) all copies in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Shares current at the time of receipt of such
notice.
5. Black-Out Period.
(a) Subject to the provisions of this Section 5, the Issuer may
suspend effectiveness of a Registration Statement or may direct the Holders to
suspend sales of the Registrable Shares pursuant to a Registration Statement,
in each case by written notice to FBR and the Holders, for such times as the
Issuer reasonably may determine is necessary and advisable (but in no event
for more than an aggregate of ninety (90) days in any rolling twelve
(12)-month period commencing on the Closing Time or more than sixty (60) days
in any rolling ninety (90)-day period, and no more than three (3) separate
times in any rolling 12-month period) if any of the following events shall
occur: (i) the managing underwriter of an Underwritten Offering of primary
Shares by the Issuer has advised the Issuer that the sale of Registrable
Shares pursuant to the Registration Statement would have a material adverse
effect on the Issuer's primary offering; (ii) the majority of the members of
the Board of Trustees of the Issuer in good faith determine that (A) the offer
or sale of any Registrable Shares would materially impede, delay or interfere
with any material proposed financing, offer or sale of securities,
acquisition, merger, tender offer, business combination, corporate
reorganization, consolidation or other similar material transaction involving
the Issuer, (B) after the advice of counsel, sale of Registrable Shares
pursuant to the
14
Registration Statement would require disclosure of non-public material
information not otherwise required to be disclosed under applicable law, and
(C) disclosure would have a material adverse effect on the Issuer or the
Issuer's ability to consummate such transaction, in each case under
circumstances that would make it impractical or inadvisable to cause the
Registration Statement (or such filings) to become effective or to promptly
amend or supplement the Registration Statement on a post-effective basis, as
applicable; or (iii) the majority of the members of the Board of Trustees of
the Issuer shall have determined in good faith, after the advice of counsel,
that it is required by law, rule or regulation to supplement the Registration
Statement or file a post-effective amendment to the Registration Statement in
order to incorporate information into the Registration Statement for the
purpose of (1) including in the Registration Statement any Prospectus required
under Section 10(a)(3) of the Securities Act; (2) reflecting in the Prospectus
included in the Registration Statement any facts or events arising after the
effective date of the Registration Statement (or of the most-recent
post-effective amendment) that individually, or in the aggregate, represents a
fundamental change in the information set forth therein; or (3) including in
the Prospectus included in the Registration Statement any material information
with respect to the plan of distribution not disclosed in the Registration
Statement or any material change to such information. Upon the occurrence of
any suspension described in (ii) and (iii) above, the Issuer shall use its
reasonable best efforts to cause the Registration Statement to become
effective or to promptly amend or supplement the Registration Statement on a
post-effective basis or to take such action as is necessary to permit resumed
use of the Registration Statement as soon as possible.
(b) In the case of an event that causes the Issuer to suspend the use
of a Registration Statement (a "Suspension Event"), the Issuer shall give
written notice (a "Suspension Notice") to the Holders to suspend sales of the
Registrable Shares and such notice shall state generally the basis for the
notice and certify, by an officer of the Issuer, that such suspension shall
continue only for so long as the Suspension Event or its effect is continuing
and the Issuer is using its reasonable best efforts and taking all reasonable
steps to terminate suspension of the use of the Registration Statement as
promptly as possible. The Holders shall not effect any sales of the
Registrable Shares pursuant to such Registration Statement (or such filings)
at any time after receiving a Suspension Notice from the Issuer and prior to
receipt of an End of Suspension Notice (as defined below). If so directed by
the Issuer, each Holder will deliver to the Issuer (at the expense of the
Issuer) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering the Registrable Shares at the time of
receipt of the Suspension Notice. The Holders may recommence effecting sales
of the Registrable Shares pursuant to the Registration Statement (or such
filings) following further notice to such effect (an "End of Suspension
Notice") from the Issuer, which End of Suspension Notice shall be given by the
Issuer to the Holders and FBR promptly following the conclusion of any
Suspension Event and its effect.
6. Indemnification and Contribution.
(a) The Issuer agrees to indemnify and hold harmless (i) FBR and each
Holder, (ii) each Person, if any, who controls (within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act), any of the
foregoing (any of the Persons referred to in this clause (ii) being
hereinafter referred to as a "Controlling Person"), and (iii) the respective
officers, directors, partners, members, managers, employees, representatives
and agents of FBR
15
and each Holder or any Controlling Person (any Person referred to in clause
(i), (ii) or (iii) may hereinafter be referred to as a "Purchaser Indemnitee")
from and against any and all losses, damages, judgments, reasonable
out-of-pocket expenses, and other liabilities (collectively, the
"Liabilities"), including, without limitation and as incurred, reimbursement
of all reasonable costs of investigating, preparing, pursuing or defending any
Proceeding by any governmental agency or body, commenced or threatened,
including to the extent hereinafter provided, the reasonable fees and expenses
of outside counsel to any Purchaser Indemnitee, joint or several, directly or
indirectly related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus (as amended or supplemented if the
Issuer shall have promptly furnished to such Purchaser Indemnitee any
amendments or supplements thereto), or any preliminary Prospectus or any other
document prepared by the Issuer used to sell the Registrable Shares, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent such Liabilities arise out of or are based upon (i) any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Purchaser Indemnitee
furnished to the Issuer or any underwriter in writing by such Purchaser
Indemnitee expressly for use therein, or (ii) any untrue statement contained
in or omission from a preliminary Prospectus if a copy of the Prospectus (as
then amended or supplemented, if the Issuer shall have promptly furnished to
or on behalf of the Holder participating in the distribution relating to the
relevant Registration Statement any amendments or supplements thereto) was not
sent or given by or on behalf of such Holder to the Person asserting any such
Liabilities who purchased Shares, if such Prospectus (or Prospectus as amended
or supplemented) is required by law to be sent or given at or prior to the
written confirmation of the sale of such Shares to such Person and the untrue
statement contained in or omission from such preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented if
the Issuer shall have promptly furnished any amendments or supplements
thereto). The indemnity provided for herein shall remain in full force and
effect regardless of any investigation made by or on behalf of any Purchaser
Indemnitee.
(b) In connection with any Registration Statement in which a Purchaser
Indemnitee is participating and as a condition to such participation, such
Purchaser Indemnitee agrees, severally and not jointly, to indemnify and hold
harmless the Issuer, each Person who controls the Issuer within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act and the
respective partners, trustees, officers, members, representatives, employees
and agents of the Issuer and each such Person to the same extent as the
foregoing indemnity from the Issuer to each Purchaser Indemnitee, but only
with reference to untrue statements or omissions or alleged untrue statements
or omissions made in reliance upon and in strict conformity with information
relating to such Purchaser Indemnitee furnished to the Issuer in writing by
such Purchaser Indemnitee expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary
Prospectus. The liability of any Purchaser Indemnitee pursuant to this
paragraph shall in no event exceed the net proceeds received by such Purchaser
Indemnitee from sales of Registrable Shares giving rise to such obligations.
If the Holder elects to include Registrable Shares in an Underwritten
Offering, the Holder shall be required to agree to such customary
indemnification provisions as may reasonably be required by the underwriter in
connection with such Underwritten Offering.
16
(c) If any Proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any
Person in respect of which indemnity may be sought pursuant to paragraph (a)
or (b) above, such Person (the "Indemnified Party," or if more than one
Indemnified Party, the "Indemnified Parties"), shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party"),
in writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6, except to the extent the Indemnifying Party is actually
and materially prejudiced by the failure to give notice), and the Indemnifying
Party shall assume the defense of such Proceeding and retain counsel chosen by
the Indemnifying Party and approved by the Indemnified Party, which approval
shall not be unreasonably withheld, to represent the Indemnified Party and any
others the Indemnifying Party may reasonably designate in such Proceeding and
shall pay the reasonable fees and expenses actually incurred by such counsel
related to such Proceeding. Notwithstanding the foregoing, in any such
Proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party, unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Party failed within a reasonable time after notice of
commencement of the Proceeding to assume the defense and engage counsel
approved by the Indemnified Party as hereinabove provided or (iii) such
Indemnified Party shall have been reasonably advised by counsel that, either
(x) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party or
such affiliate of the Indemnifying Party or (y) a conflict exists between such
Indemnified Party and the Indemnifying Party or such affiliate of the
Indemnifying Party, then the Indemnifying Party shall not have the right to
assume nor direct the defense of such Proceeding on behalf of such Indemnified
Party, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such Proceeding or separate but substantially similar
or related Proceedings arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one (1)
separate firm of attorneys (in addition to any local counsel), for all such
Indemnified Parties, which firm shall be designated in writing by those
Indemnified Parties who sold a majority of Registrable Shares sold by all such
Indemnified Parties (excluding Registrable Shares sold by the Issuer and its
Affiliates) and any such separate firm for the Issuer, the directors, the
officers and such control Persons of the Issuer as shall be designated in
writing by the Issuer. The Indemnifying Party shall not be liable for any
settlement of any Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify any Indemnified Party from and against
any loss or liability resulting from such settlement or judgment. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened Proceeding in
respect of which any Indemnified Party is a party or the subject thereof and
indemnity could have been sought hereunder by such Indemnified Party, unless
(i) such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
Proceeding in a form satisfactory to the Indemnified Party and (ii) does not
include a statement as to, or an admission of, fault, culpability or a failure
to act by or on behalf of the Indemnified Party.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 6 is for any reason held to be unavailable to an Indemnified
Party in respect of any Liabilities
17
referred to therein (other than by reason of the exceptions provided therein)
or is insufficient to hold harmless a party indemnified thereunder, then each
Indemnifying Party under such paragraphs, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such Liabilities (i) in such
proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Parties on the other
hand in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above, but the
relative fault of the Indemnifying Parties and the Indemnified Party, as well
as any other relevant equitable considerations. The relative fault of the
Issuer, on the one hand, and any Purchaser Indemnitees, 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 Issuer or by such
Purchaser Indemnitees and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if such Indemnified Parties were treated as one entity for such
purpose), or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph 6(d) above. The amount
paid or payable by an Indemnified Party as a result of any Liabilities
referred to paragraph 6(d) shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Party in connection with investigating or
defending any such Proceeding. Notwithstanding the provisions of this Section
6, in no event shall a Purchaser Indemnitee be required to contribute any
amount in excess of the amount by which proceeds (net of any discounts or
commissions) received by such Purchaser Indemnitee from sales of Registrable
Shares exceeds the amount of any damages that such Purchaser Indemnitee has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 6,
each Person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act) FBR or a Holder shall have the same
rights to contribution as FBR or such Holder, as the case may be, and each
Person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) the Issuer, and each officer, trustee,
partner, employee, representative, agent or manager of the Issuer shall have
the same rights to contribution as the Issuer. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
Proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 6 or
otherwise, except to the extent that any party is actually and materially
prejudiced by the failure to give notice. 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.
(f) The indemnity and contribution agreements contained in this
Section 6 will be in addition to any liability which the Indemnifying Parties
may otherwise have to the Indemnified
18
Parties referred to above. The Purchaser Indemnitee's obligations to
contribute pursuant to this Section 6 are several in proportion to the
respective number of Shares sold by each of the Purchaser Indemnitees
hereunder and not joint.
7. Market Stand-off Agreement.
Each Holder hereby agrees that it shall not, to the extent requested in
writing by the Issuer or an underwriter of securities of the Issuer, directly
or indirectly offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchae any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise transfer or dispose of
any Registrable Shares or other Common Shares of the Issuer or any securities
convertible into or exchangeable or exercisable for Common Shares of the
Issuer then owned by such Holder (other than to donees or partners of the
Holder who agree to be similarly bound) within sixty (60) days following
either (x) the effective date of the IPO Registration Statement of the Issuer
filed under the Securities Act or (y) the date of an Underwritten Offering by
the Issuer pursuant to a shelf registration statement of the Issuer filed
under the Securities Act; provided, however, that:
(a) with respect to the up to 60-day restriction that follows the
effective date of the IPO Registration Statement, such agreement shall not be
applicable to Registrable Shares sold pursuant to such IPO Registration
Statement;
(b) all executive officers and directors of the Issuer then holding
Common Shares or securities convertible into or exchangeable or exercisable
for Common Shares of the Issuer shall enter into similar agreements for not
less than the entire time period required of the Holders hereunder; and
(c) subject to a determination in good faith by the underwriters for
an Underwritten Offering, the Holders shall be allowed any concession or
proportionate release allowed to any executive officer or director that
entered into similar agreements.
In order to enforce the foregoing covenant, the Issuer shall have the
right to place restrictive legends on the certificates representing the
securities subject to this Section 7 and to impose stop transfer instructions
with respect to the Registrable Shares and such other securities of each
Holder (and the securities of every other Person subject to the foregoing
restriction) until the end of such period.
8. Termination of the Issuer's Obligations.
The Issuer shall have no further obligations pursuant to this Agreement
at such time as no Registrable Shares are outstanding, provided, however, that
the Issuer's obligations under Sections 6 and 10(a) through and including
10(m) of this Agreement shall remain in full force and effect following such
time.
9. Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Issuer shall not, without
the prior written consent of the Holders (other than Affiliates of the Issuer)
of a majority of the then outstanding Registrable Shares, enter into any
agreement with any holder or prospective holder of any
19
securities of the Issuer that would allow such holder or prospective holder to
include such securities in the IPO Registration Statement, if any, filed
pursuant to the terms hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of his securities will not
reduce the amount of Registrable Shares of the Holders that is included.
10. Miscellaneous.
(a) Remedies. In the event that the Issuer has not filed the Mandatory
Shelf Registration Statement within the three-month period set forth in
Section 2(a) hereof, the Issuer's chief executive officer, chief operating
officer and chief financial officer will forfeit 100% of any bonus earned by
them in 2004 as a result of their performance during 2004, unless there are
circumstances that would give rise to a "blackout period," the Commission is
unable to accept such filing, or there are any other circumstances that are
beyond the control of management as determined in good faith by a majority of
the independent members of the Board of Trustees, in which case the
three-month period will be extended by the duration of such period.
(b) 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 or departures from the provisions
hereof may not be given, without the written consent of the Issuer and Holders
beneficially owning not less than fifty percent (50%) of the then outstanding
Registrable Shares; provided, however, that for purposes of this Agreement,
Registrable Shares that are owned, directly or indirectly, by an Affiliate of
the Issuer shall not be deemed to be outstanding. Notwithstanding the
foregoing, a waiver or consent to or departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of a Holder whose
securities are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect, impair, limit or compromise the rights of
other Holders may be given by such Holder; provided that the provisions of
this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(c) Notices. All notices and other communications, provided for or
permitted hereunder shall be made in writing and delivered by hand-delivery,
facsimile (with receipt confirmed), electronic mail, overnight courier or
first class mail (registered or certified, return receipt requested), or by
telegram:
(i) if to a Holder, at the most current street or e-mail address
or facsimile number given by the transfer agent and registrar of the
Shares to the Issuer; and
(ii) if to the Issuer, at the offices of the Issuer c/o Fortress
Investment Group LLC, 1251 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Xx., Chairman and Chief
Executive Officer, (fax (000) 000-0000)
Except as otherwise provided in this Agreement, all such notices shall be
deemed to have been given (a) at the time delivered by hand, if personally
delivered, (b) when receipt is acknowledged, if sent by facsimile, (c) five
days after being deposited in the mail, postage prepaid, if sent by
first-class mail, and (d) the next day after timely delivery to the courier,
if sent
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by overnight air courier guaranteeing next day delivery. The Issuer shall
cause the transfer agent to use commercially reasonable efforts to maintain
current addresses of the Holders.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties hereto including the Holders. The Issuer agrees that the Holders shall
be parties to the agreements made hereunder by FBR and the Issuer and shall be
entitled to the benefits and subject to the obligations hereof. The Issuer may
assign its rights and obligations hereunder to any successor of the Issuer's
business involving a transaction approved by the Issuer's shareholders in
accordance with applicable law, or with the prior written consent of Holders
(other than Affiliates of the Issuer) of a majority of the then outstanding
Registrable Shares.
(e) Stock Legend. In addition to any other legend that may appear on
the stock certificates evidencing the Registrable Shares, for so long as any
Shares remain Registrable Shares each stock certificate evidencing such
Registrable Shares shall contain a legend to the following effect: "THE SHARES
EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND ENTITLED TO THE BENEFITS OF A
CERTAIN REGISTRATION RIGHTS AGREEMENT, DATED AUGUST 3, 2004."
(f) 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.
(g) GOVERNING LAW; Consent to Jurisdiction; Headings: THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The parties
hereto agree to be subject to, and hereby irrevocably submit to, the
nonexclusive jurisdiction of any United States federal or New York state court
sitting in New York, New York, in respect of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
herein, and irrevocably agree that all claims in respect of any such suit,
action or proceeding may be heard and determined in any such court. Each of
the parties hereto irrevocably waives, to the fullest extent permitted by
applicable law, any objection to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. The
section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
(h) Severabilily. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties hereto that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
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(i) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is 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 and therein.
(j) Registrable Shares Held by the Issuer or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Shares is required hereunder, Registrable Shares held by the Issuer or its
Affiliates shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(k) Survival. This Agreement is intended to survive the consummation
of the transactions contemplated by the Purchase Agreement. The
indemnification and contribution obligations under Section 6 of this Agreement
shall survive the termination of the Issuer's obligations under Section 2 of
this Agreement.
(l) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Agreement. All references made in this Agreement to "Section" refer to such
Section of this Agreement, unless expressly stated otherwise.
(m) Attorneys' Fees. In any Proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, shall be
entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
[Signatures on the Following Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PROVIDENT SENIOR LIVING TRUST
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------------------------
Name:
Title:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------------
Name:
Title:
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