Registration Rights Agreement EXHIBIT 4
By and Among
BNP Residential Properties, Inc.
And
The Investor Named Herein
Dated As Of December 28, 2001
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Table of Contents
Background...........................................................1
1. Demand Registration..............................................1
1.1. Obligation to File..........................................1
1.2. Limitation on Obligation to File............................2
1.3. Effective Period............................................2
1.4. Incidental Rights of Other Security Holders.................2
2. Company Registration.............................................2
2.1. Registration.................................................2
2.2. Exclusion....................................................3
2.3. Right to Terminate or Delay Registration.....................3
2.4. Underwriting Cutbacks........................................3
3. Shelf Registration Under the Securities Act......................3
3.1. Filing of Shelf Registration Statement.......................3
3.2. Effective Period; Post Effective Amendments..................4
3.3. Incidental Rights of Other Security Holders..................4
3.4. Unavailability of Rule 415...................................4
4. Provisions Applicable to Demand Registration, Company
Registration, and Shelf Registration..............................5
4.1. Inclusion in Registration Statement..........................5
4.2. Expenses of Registration.....................................5
4.3. Underwritten Offering........................................5
A. Underwriter Selection under a Demand Registration
or a Shelf Registration.....................................5
B. Underwriting Agreement......................................5
C. Cooperation of Holders......................................5
D. Withdrawal from Underwriting................................5
4.4. Suspension or Termination of Obligation to File
Registration Statement......................................6
5. Registration Procedures...........................................7
6. Covenants of Holders..............................................8
6.1. Conversion of Series B Preferred Stock.......................8
6.2. Dispositions Under Registration Statement....................9
6.3. Blackout Periods.............................................9
6.4. Return of Materials..........................................9
6.5. Regulation M................................................10
6.6. Market Standoff Agreement...................................10
7. Preparation; Reasonable Investigation............................10
8. Transfer of Registration Rights..................................11
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9. Indemnification..................................................11
9.1. Indemnification by the Company..............................11
9.2. Indemnification by Holders..................................12
9.3. Conduct of Indemnification..................................12
9.4. Contribution................................................13
10. Covenants Relating to Rule 144..................................14
11. Definitions.....................................................14
12. Miscellaneous...................................................16
12.1. Counterparts...............................................16
12.2. Governing Law..............................................16
12.3. Entire Agreement...........................................16
12.4. Notices....................................................16
12.5. Successors and Assigns.....................................17
12.6. Headings...................................................17
12.7. Amendments and Waivers.....................................17
12.8. Interpretation; Absence of Presumption.....................17
12.9. Severability...............................................18
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This Registration Rights Agreement (this "Agreement"), dated as of December
28, 2001, is entered into by BNP Residential Properties, Inc., a Maryland
corporation (the "Company"), and each Company stockholder that is a signatory
hereto. Capitalized terms not defined in this Agreement have the meanings
ascribed to them in the Investment Agreement (as hereinafter defined).
Background
The Company and Preferred Investment I, LLC, a New Jersey limited liability
company (the "Investor") have entered into an Investment Agreement, dated as of
the date hereof (the "Investment Agreement"). The Investment Agreement provides
for the Investor to purchase and the Company to sell shares of Series B
Cumulative Convertible Preferred Stock (the "Series B Preferred Stock"). To
induce the Investor to enter into the Investment Agreement, the Company has
agreed to provide the registration rights set forth in this Agreement.
Definitions are contained in Section 11 beginning on page 14.
Agreement
Now, Therefore, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which the parties acknowledge, and intending to be
legally bound, the parties agree as follows:
1. Demand Registration.
1.1. Obligation to File. If the Holders of a majority of the Registrable
Securities make a written request (a "Registration Request") that the
Company effect a registration with respect to at least 227,273
Registrable Securities, the Company will:
A. give written notice of the proposed registration to all other
Holders within fifteen (15) days of such initiating Holders'
registration request (the "Holders Notice");
B. receive additional written requests to register Registrable
Securities (each, an "Additional Request") from other Holders
which must be given within twenty (20) days after the Company
sends the Holders Notice;
C. use its best efforts to file with the Securities and Exchange
Commission (the "SEC") a registration statement (the "Demand
Registration Statement") under the Securities Act (the "Demand
Registration") within 90 days after receipt of the Registration
Request of the initiating Holders. The Demand Registration will
be for the offering by the Holders of all of the Registrable
Securities that the initiating Holders request to be registered
and that the Holders providing an Additional Request request to
be registered; and
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D. respond as promptly as practicable to any comments received from
the SEC with respect to such Demand Registration Statement or any
amendment thereto.
1.2. Limitation on Obligation to File. The Company is not obligated to take
any action to effect a registration pursuant to Section 1.1 (but may
do so at its discretion):
A. if fewer than half the outstanding Registrable Securities are
included in the Registration Request and the Additional Requests;
B. after the Company has effected one Demand Registration or after
the Company has effected a Shelf Registration as provided in
Section 3; provided that if the right to a Demand Registration
has not yet been exercised and a Shelf Registration Statement has
been declared effective but has subsequently been rendered
ineffective by virtue of the Company's inability to meet the
Shelf Requirements, the right to a single Demand Registration
pursuant to this Section 1 will then again exist; or
C. if the Company's obligation to do so is excused pursuant to
Section 4.4.
1.3. Effective Period. Upon the request of the participating Holders, the
Company will use its best efforts to keep the Demand Registration
effective for up to 90 days, unless the distribution of securities
registered thereunder has been earlier completed. During the period
during which the Demand Registration is effective, the Company agrees
to supplement or make amendments to the Demand Registration, if
required by the Securities Act or if reasonably requested by the
Holders or an underwriter of Registrable Securities, including to
reflect any specific plan of distribution or method of sale. The
Company will use its best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable
after filing.
1.4. Incidental Rights of Other Security Holders. The Demand Registration
may include, on a pari passu basis, other securities of the Company
that are held by others who, by virtue of agreements with the Company,
are entitled to include their securities in the Demand Registration.
2. Company Registration.
2.1. Registration. If at any time or from time to time, the Company
determines to file a registration statement (a "Company Registration
Statement") for any of its securities, for its own account or the
account of any of its stockholders, the Company will:
A. promptly give to each Holder written notice thereof, but in any
event within thirty (30) days of making such determination; and
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B. include in such registration (and any related qualification under
blue sky laws or other compliance with applicable laws) (a
"Company Registration"), and in any underwriting involved
therein, all the Registrable Securities specified in a written
request or requests, made within twenty (20) days after the
Company sends such written notice, by any Holders. If any Holder
decides not to include any or all of its Registrable Securities
in such registration statement, such Holder shall nevertheless
continue to have the right to include any Registrable Securities
in any subsequent registration statements as may be filed by the
Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
2.2. Exclusion. The preceding Section 2.1 does not apply to the Company's
determination to file a registration statement relating solely to
employee stock option or purchase plans, or a registration statement
on Form S-4 relating solely to an SEC Rule 145 transaction or a
registration statement on any other form (other than Form X-0, X-0, or
S-3 (except for a registration statement relating to a dividend
reinvestment plan), or their successor forms) or any successor to such
forms, which does not include substantially the same information as
would be required to be included in a registration statement covering
the resale of Registrable Securities.
2.3. Right to Terminate or Delay Registration. Notwithstanding anything
else in this Agreement to the contrary, the Company has the right to
terminate, withdraw, or delay the filing of any registration statement
initiated by it under this Section 2 at any time whether or not any
Holder has elected to include securities in such registration
statement.
2.4. Underwriting Cutbacks. If the Company Registration is for a registered
public offering involving an underwriting and the Underwriter
determines that marketing factors require a limitation of the number
of shares to be underwritten, the Underwriter may limit the amount of
securities to be included in the Company Registration and underwriting
by the Holders and other Company stockholders in proportion, as nearly
as practicable, to the respective amounts of securities requested to
be included in such Company Registration that such Holders and other
Company stockholders have requested.
3. Shelf Registration Under the Securities Act.
3.1. Filing of Shelf Registration Statement. In addition to the rights and
obligations set forth in Section 1 above, if the Holders of a majority
of the Registrable Securities make a written request (a "Shelf
Registration Request") that the Company file a registration statement
(a "Shelf Registration Statement") under Rule 415 on Form S-3 or any
successor to Form S-3 that allows the issuer to incorporate future
filings with the SEC by reference ("Form S-3") for a public offering
of all of the Registrable Securities (a "Shelf Registration") and the
Company is then a registrant entitled to use Form S-3 to register the
resale of such
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shares, even if such shares are not yet outstanding, the Company will
use its best efforts to file, within 90 days of the Shelf Registration
Request, a Shelf Registration Statement; provided, however, the
Company will not be required to effect a registration pursuant to this
Section 3.1 after the Company has effected one Shelf Registration or
if the Company's obligation to do so has been terminated or suspended
pursuant to Section 4.4. The Company will respond as promptly as
practicable to any comments received from the SEC with respect to such
Shelf Registration Statement or any amendment thereto.
3.2. Effective Period; Post Effective Amendments. The Company agrees to use
its best efforts to keep the Shelf Registration Statement continually
effective until the earlier of the date on which the shares covered by
such Shelf Registration Statement are no longer Registrable Securities
or until the Company is no longer eligible to maintain an effective
registration statement on Form S-3 for the resale of the Registrable
Securities as contemplated by this Agreement; provided that nothing in
this Agreement will be construed to obligate the Company to effect
more than one post-effective amendment to the Shelf Registration
Statement relating to or on account of a change in the plan of
distribution of the Registrable Securities.
3.3. Incidental Rights of Other Security Holders. The Shelf Registration
may include other securities of the Company that are held by others
who, by virtue of agreements with the Company, are entitled to include
their securities in the Shelf Registration.
3.4. Unavailability of Rule 415 .
A. Notwithstanding anything in this Agreement to the contrary, the
Company has no obligation to effect a Shelf Registration under
Rule 415 if the Company is ineligible or unable under the rules
and regulations of the Securities Act and the positions of the
SEC staff to register the resale of the Registrable Securities as
contemplated by Section 3.1 pursuant to a continuous Shelf
Registration Statement.
B. The parties to this Agreement acknowledge that, due to SEC staff
positions, the Company may be unable to effect a Shelf
Registration for all of the Registrable Securities if such
securities are not yet outstanding and the public float of its
securities is less than $75,000,000 (or such other amount as may
be determined by the SEC staff or under the rules and regulations
of the Securities Act) or as a result of such other rules and
regulations as the SEC may promulgate (the "Shelf Requirements").
The parties further acknowledge that the effectiveness of a Shelf
Registration Statement may cease upon the filing of the Company's
next due annual report on Form 10-K if the Company fails to meet
the Shelf Requirements.
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4. Provisions Applicable to Demand Registration, Company Registration, and
Shelf Registration. Unless otherwise limited, the following provisions
will be applicable to a Demand Registration, a Company Registration, and a
Shelf Registration:
4.1. Inclusion in Registration Statement. The Holders agree to provide as
promptly as practicable, but in any event within 30 days of such
request, the information reasonably requested by the Company in
connection with a registration statement. Any Holder who does not
provide the information reasonably requested by the Company in
connection with a registration statement will not be entitled to have
its Registrable Securities included in the registration statement.
4.2. Expenses of Registration. The Company will pay all Registration
Expenses incurred in connection with any registration pursuant to
Section 1, Section 2, or Section 3, except the Company will not pay
the Registration Expenses related to a registration request under
Section 1 or Section 3 that has been withdrawn by a majority of the
Holders (in which such case, the Holders requesting such withdrawal
will bear such Registration Expenses pro rata).
4.3. Underwritten Offering.
A. Underwriter Selection under a Demand Registration or a Shelf
Registration. If the Holders intend to distribute the Registrable
Securities covered by their Registration Request or their Shelf
Registration Request by means of an underwriting, the Holders of
a majority of the Registrable Shares to be included in such
underwriting will select the proposed underwriter (as that term
is defined in the Securities Act, "Underwriter"). The proposed
Underwriter(s) must be approved by the Company, but such approval
may not be unreasonably withheld. If such Underwriter(s) is (are)
not reasonably acceptable to the Company, the Company must
furnish to the participating Holders, within 30 days of receiving
the Holders' selection of the Underwriter(s), the names of at
least two Underwriters acceptable to the Company who agree to act
as Underwriter(s) for the proposed offering.
B. Underwriting Agreement. The Company must (together with all
Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary
form with the Underwriter(s).
C. Cooperation of Holders. The right of any Holder to registration
pursuant to participate in any underwritten offering is
conditioned upon such Holder's participation in such underwriting
agreements as required by subsection 4.3.B.
D. Withdrawal from Underwriting. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such
Holder may elect to
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withdraw therefrom by written notice to the Company, the
Underwriter and the other Holders.
4.4. Suspension or Termination of Obligation to File Registration
Statement. The Company is not obligated to take any action to effect a
registration pursuant to Section 1.1 or Section 3.1 (but may do so at
its discretion):
A. at any time within 180 days following the effective date of any
other registration statement whereby executive officers and
directors were requested to agree to abstain from selling shares
of the Company's capital stock for a period of at least 90 days;
B. if the Company furnishes to the participating Holders a
certificate signed by the Company's President or Executive Vice
President stating that in the good faith judgment of the Board,
it would be detrimental to the Company and its stockholders for
such registration statement to be filed on or before the date
filing would be required as a result of a planned material
financing, acquisition, disposition, corporate reorganization or
other transaction involving the Company or any of its
subsidiaries or public disclosure thereof would be required in
the Demand Registration Statement or Shelf Registration Statement
prior to the time such disclosure might otherwise be required, or
when the Company is in possession of material information that it
deems advisable not to disclose in a registration statement, and
it is therefore advisable to defer the filing of such
registration statement, in which case the Company shall have the
right to defer such filing for a period of not more than 120 days
after the Registration Request or Shelf Registration Request,
provided that the Company may not defer such filing pursuant to
this subsection 4.4.B more than 120 days in any 12-month period
or more than on two occasions in any calendar year;
C. if the Company, within 20 days of receiving the Registration
Request or Shelf Registration Request, gives notice of its bona
fide intention to effect the filing of a registration statement
with the SEC within 45 days of receiving the Registration Request
or Shelf Registration Request, in which case the Company may
defer such filing until 180 days immediately following the later
of (1) the effective date of any registration statement or
post-effective amendment to a registration statement or (2) the
filing of the final prospectus supplement to a registration
statement, pertaining to the securities of the Company (other
than with respect to a registration statement relating to a Rule
145 Transaction, with respect to an employee benefit plan, or
with respect to a dividend reinvestment plan) (the events
described herein and in Sections 4.4.B and 4.4.C together
"Suspension Events" and each individually a "Suspension Event").
Nothing in this Section 4.4.C is intended to limit or modify the
Holders' rights under Section 2.
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5. Registration Procedures. In connection with any registration statement
including Registrable Securities of a Holder, the Company will use its
best efforts to:
5.1. prepare and file with the SEC the requisite registration statement
(including a prospectus therein) to effect such registration and to
cause such registration statement to become effective;
5.2. prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to maintain the effectiveness of such registration
and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration
statement for the respective periods prescribed in Section 1.3 or
Section 3.2;
5.3. furnish to each Holder of Registrable Securities or its designee,
without charge, as many copies of each 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 Securities;
5.4. register or qualify the Registrable Securities by the time the
registration statement is declared effective by the SEC under all
applicable state securities or blue sky laws of such jurisdictions in
the United States and its territories and possessions as any Holder of
Registrable Securities covered by the registration statement shall
reasonably request in writing, and do any and all other acts that may
reasonably be necessary to enable such Holder to dispose of such
Registrable Securities owned by such Holder in each such jurisdiction;
provided, however, that in connection therewith, the Company will not
be required to:
A. qualify as a foreign corporation to do business or to register as
a broker or dealer in any such jurisdiction where it otherwise
would not be required to qualify or register but for this Section
5.4;
B. subject itself to taxation in any such jurisdiction; or
C. file a general consent to service of process in any such
jurisdiction wherein it is not otherwise required to do so;
5.5. notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm in writing:
A. when the registration statement and any post-effective amendment
thereto have become effective;
B. when any amendment or supplement to the prospectus has been filed
with the SEC;
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C. of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of the registration
statement or any part thereof or the initiation of any
proceedings for that purpose;
D. if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for
offer or sale in any jurisdiction or the initiation of any
proceeding for such purpose;
E. of the existence (but not necessarily the circumstances) of any
Suspension Event; and
F. of the happening of any event during the period the registration
statement is effective as a result of which (1) such registration
statement 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 or (2)
the prospectus, as then amended or supplemented, contains any
untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
5.6. amend the registration statement and prepare and furnish to the Holder
a reasonable number of copies of a supplement to or an amendment of
the registration statement as may be necessary so that, as thereafter
delivered to the purchasers of Registrable Securities, such
registration statement will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
5.7. obtain the withdrawal of any order suspending the effectiveness of the
registration statement, or any part thereof, as promptly as possible;
5.8. comply or continue to comply in all material respects with the
Securities Act and the Exchange Act and with all applicable rules and
regulations of the SEC;
5.9. provide a transfer agent and registrar for all Registrable Securities
covered by such registration statement not later than the effective
date of such registration statement; and
5.10. list all Common Stock covered by such registration statement on the
AMEX or other securities exchange on which any of the Common Stock is
then listed.
6. Covenants of Holders. In connection with and as a condition to the
Company's obligations under Sections 1, 2, 3, 4, and 5, each Holder
covenants and agrees to the following:
6.1. Conversion of Series B Preferred Stock. With respect to any
Registrable Securities to be included on a registration statement
pursuant to Sections 1 or 2, each Holder covenants that, if it has
given notice of its intent to include its
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Registrable Securities in such registration statement, it will convert
its Series B Preferred Stock into Registrable Securities prior to the
anticipated effective date of such registration statement. The Company
will have no obligation to cause to be effective, or to maintain the
effectiveness of, a Company Registration Statement or Demand
Registration Statement, or such portion, relating to Registrable
Securities that will not be issued and outstanding at the time such
registration statement is declared effective;
6.2. Dispositions Under Registration Statement. If, at the time of
disposition of Registrable Securities, a registration statement
covering the resale of such Registrable Securities is effective:
A. such disposition must be effected:
(1) pursuant to such registration statement or
(2) pursuant to Rule 144 under the Securities Act, and
B. notwithstanding anything in Section 8 to the contrary, the
transferee of such Registrable Securities in a transfer pursuant
to Section 6.2.A above will not be entitled to the registration
rights set forth in Sections 1, 2, or 3.
6.3. Blackout Periods. Following the effectiveness of a Demand Registration
Statement, Company Registration Statement, or a Shelf Registration
Statement, each Holder agrees that it will not effect any sales of the
Registrable Securities pursuant to such registration statement at any
time after the Company provides notice to suspend sales as a result of
(each of the following, a "Blackout Event")
A. the occurrence or existence of any Suspension Event, in which
case, the Holder may recommence effecting sales of the
Registrable Securities pursuant to the registration statement
after the earlier of 90 days or receipt of further notice to such
effect from the Company, which notice the Company will provide
not later than five days after the conclusion of a Suspension
Event;
B. an event of the type described in Section 5.5.C or Section 5.5.D,
in which case, the Holder may only recommence effecting sales of
the Registrable Securities upon withdrawal of such suspension or
stop order; and
C. an event of the type described in Section 5.5.F, in which case,
the Holder may recommence effecting sales of the Registrable
Securities pursuant to the registration statement after the
Company corrects or updates the registration statement and the
Holder receives copies of the supplemented or amended prospectus
contemplated by Section 5.6 and receives notice that any
post-effective amendment has become effective.
6.4. Return of Materials. In case of any Blackout Event, if so directed by
the Company, each Holder will deliver to the Company all copies in its
possession,
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other than permanent file copies then in such Holder's possession, of
the prospectus as amended or supplemented to date at the time of
receipt of the notice of the Blackout Event.
6.5. Regulation M. Each Holder and any of its officers, directors or
affiliates, if any, will comply with the provisions of Regulation M
under the Exchange Act as applicable to them in connection with sales
of Registrable Securities pursuant to a registration statement. Each
Holder and any of its officers, directors or affiliates, if any, will
enter into such written agreements as the Company may reasonably
request to ensure compliance with this Section 6.5.
6.6. Market Standoff Agreement. During the period of duration (not to
exceed one hundred eighty (180) days) specified by the Company and an
underwriter of common stock or other securities of the Company
commencing on the effective date of a registration statement of the
Company filed under the Securities Act, each Holder may not, to the
extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase, pledge or
otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any securities of the Company held by it at any time
during such period (except Registrable Securities included for sale in
such registration or Common Stock purchased in such registration or
acquired in the open market after such registration); provided
however, that such agreement shall not be required unless all Named
Executive Officers (as defined in Item 402 of Regulation S-K
promulgated by the SEC), all directors, and all other persons with
registration rights (whether or not pursuant to this Agreement) enter
into similar agreements. In order to enforce this covenant, the
Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Holder (and the shares of securities of
every other person subject to the same or a similar restriction) until
the end of such period.
7. Preparation; Reasonable Investigation. In connection with the preparation
and filing of any registration statement under the Securities Act which
will include Registrable Securities, the Company will give the Holders,
their underwriters, if any, and their respective counsel (but no more than
one counsel for the Holders as a group and one counsel for the underwriters
as a group), the reasonable opportunity to comment on such registration
statement, each prospectus included therein or filed with the SEC, and each
amendment thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss the
business of the Company with its officers, its counsel and the independent
public accountants who have certified its financial statements as shall be
necessary to conduct a reasonable investigation within the meaning of the
Securities Act; provided, however, that the records, documents or
information that the Company determines in good faith to be confidential
will not be disclosed unless (i) such disclosure is necessary to avoid or
correct a material misstatement or omission in a registration statement and
such disclosure is not made during a Suspension Event, (ii) such disclosure
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, or (iii) such records, documents or
57
information become generally available to the public other than through a
breach of this Agreement.
8. Transfer of Registration Rights. Holders' rights to cause the Company to
register their securities and keep information available and related
rights, granted to them by the Company under Sections 1, 2, 3, and 10, may
be assigned to a transferee or assignee in blocks of at least 22,727 shares
of Registrable Securities, provided, that the Holder gives the Company
written notice at the time of or within a reasonable time after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights
are being assigned. Notwithstanding the preceding provisions of this
Section 8, and subject to Section 6.2.B, any Holder may transfer rights to
a transferee if such transferee is (i) a successor entity to such Holder
pursuant to reorganization or recapitalization, (ii) an affiliate (as such
term is defined in Rule 405 promulgated under the Securities Act) of such
Holder, (iii) a partner, retired partner, member or retired member or
family member of such Holder (or the estate or heirs of such a partner or
member or to a trust for the benefit of such a partner or member, his or
her spouse or descendants), or (iv) transferring such Registrable
Securities to another Holder. Notwithstanding the preceding sentence, the
Company may prohibit the transfer of any Holders' rights under this Section
8 if the transferee does not sign this Agreement and agree to be bound by
the terms hereof.
9. Indemnification.
9.1. Indemnification by the Company. In the event of any registration of
any Registrable Securities of the Company under the Securities Act,
the Company will, and hereby does, indemnify and hold harmless (i)
each Holder, (ii) each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) such Holder (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, employees,
representatives and agents of such Holder or any Controlling Person
(any person referred to in clause (i), (ii) or (iii) may hereinafter
be referred to as a "Holder Indemnitee"), against any Losses to which
any Holder Indemnitee may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such
Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, 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
light of the circumstances under which they were made, not misleading.
The Company will reimburse such Holder Indemnitee for the reasonable
legal or any other expenses reasonably incurred by them in connection
with investigating or defending against any such Losses, actions or
proceedings; provided, however, that the Company shall not be liable
in any such case to the extent that any such
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Losses (or action or proceeding in respect thereof) or expense arises
out of or is based upon
A. any untrue statement or alleged untrue statement or omission or
alleged omission made in the registration statement or any
amendment thereto or the prospectus or any amendment or
supplement thereto in reliance upon and in conformity with
written information furnished to the Company by a Holder
Indemnitee; or
B. with respect to any person who participates as an underwriter in
the offering or sale of Registrable Securities or any Controlling
Person thereof, such person's failure to send or give a copy of
the final prospectus or supplement to the persons asserting an
untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the
sale of Registrable Securities to such person if such statement
or omission was corrected in such final prospectus or supplement.
9.2. Indemnification by Holders. Each Holder agrees to indemnify and hold
harmless the Company and the other selling Holders, and each of their
respective directors and officers (including each director and officer
of the Company who signed the Registration Statement), and each
Controlling Person, to the same extent as the indemnity contained in
Section 9.1 hereof, but only insofar as such Losses (or action or
proceeding in respect thereof) or expense arises out of or is based
upon
A. any untrue statement or alleged untrue statement or omission or
alleged omission made in the registration statement or any
amendment thereto or the prospectus or any amendment or
supplement thereto in reliance upon and in conformity with
written information furnished to the Company by such selling
Holder or,
B. with respect to any person who participates as an underwriter in
the offering or sale of Registrable Securities or any Controlling
Person thereof, such person's failure to send or give a copy of
the final prospectus or supplement to the persons asserting an
untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the
sale of Registrable Securities to such person if such statement
or omission was corrected in such final prospectus or supplement.
9.3. Conduct of Indemnification. Each indemnified party must give
reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party will
not relieve it from any liability that it may have under the indemnity
provisions of Sections 9.1 or 9.2 above, unless and to the extent the
lack of notice by the indemnified party materially prejudices the
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indemnifying party or results in the forfeiture by the indemnifying
party of substantial rights and defenses. After receipt of such
notice, the indemnifying party will be entitled to participate in and,
to the extent it wishes, jointly with any other indemnifying party so
notified, assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by such
indemnifying party and approved by the indemnified party, which
approval the indemnified party may not unreasonably withhold;
provided, however, that if the defendants in any such action or
proceeding include both the indemnified party and the indemnifying
party, and the indemnifying party and the indemnified party reasonably
determine, upon advice of counsel, that a conflict of interest exists
or that there may be legal defenses available to the indemnified
parties that are different from or in addition to those available to
the indemnifying party, then the indemnifying party will not be
entitled to assume the defense of such action or proceeding, and the
indemnified party will be entitled to one separate counsel, the
reasonable fees and expenses for which counsel the indemnifying party
will pay. If the indemnifying party does not assume the defense of any
such action or proceeding, after having received the notice referred
to in the first sentence of this Section 9.3, the indemnifying party
will pay the reasonable fees and expenses of counsel (which will be
limited to a single law firm) for the indemnified party. In such
event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying
party. If the indemnifying party assumes the defense of any such
action or proceeding in accordance with this Section 9.3, such
indemnifying party will not be liable for any fees and expenses of
counsel for the indemnified party incurred thereafter in connection
with such action or proceeding, except as set forth in the proviso in
the second sentence of this Section 9.3.
9.4. Contribution. If, for any reason, the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party,
then the indemnifying party must contribute to the amount paid or
payable by the indemnified party as a result of the expense or Losses
(i) in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and the indemnified party on
the other or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in the proportion as is appropriate
to reflect not only the relative fault of the indemnifying party and
the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the
other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) is entitled to
contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9.4, each
Controlling Person of a Holder and directors and officers of a Holder
have the same rights to contribution as such Holder, and each director
of the Company, each officer of the Company who signed the
registration statement and each Controlling Person of the Company has
the same rights to contribution as the Company.
60
10. Covenants Relating to Rule 144. The Company will use its commercially
reasonable efforts to file in a timely manner (taking into account any
extensions granted by the SEC), information, documents and reports required
to be filed by the Company in compliance with the Exchange Act and will, at
its expense, upon the request of a Holder, deliver to such Holder a
certificate, signed by the Company's principal financial officer, stating
(a) the Company's name, address and telephone number (including area code),
(b) the Company's Internal Revenue Service identification number, (c) the
Company's SEC file number, (d) the number of shares of Common Stock and the
number of shares of Preferred Stock outstanding as shown by the most recent
report or statement published by the Company, and (e) whether the Company
has filed the reports required to be filed under the Exchange Act for a
period of at least 90 days prior to the date of such certificate and in
addition has filed the most recent annual report required to be filed
thereunder.
11. Definitions.
11.1. As used herein, the following terms shall have the following
meanings:
A. "Conversion Shares" means the shares of Common Stock issuable
upon conversion of the Series B Preferred Stock pursuant to
Section 6 of the Articles Supplementary.
B. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
thereunder.
C. "Holder" means any person owning or having the right to acquire
Registrable Securities (or any assignee thereof in accordance
with Section 8) solely by virtue of Section 6 of the Articles
Supplementary.
D. "Losses" means any losses, claims, damages or liabilities.
E. "Registrable Securities" means all issued or issuable Conversion
Shares (as adjusted for stock splits, recapitalizations,
recombinations, and the like) and any securities the Company
issues as a dividend or other distribution with respect to, in
exchange for, or in replacement of such Conversion Shares. As to
any particular Registrable Securities, such securities will cease
to be Registrable Securities when:
(1) a registration statement with respect to their sale has
become effective under the Securities Act and they have been
disposed of in accordance with that registration statement;
(2) they have been sold in accordance with Rule 144 (or any
successor provision) under the Securities Act; or
(3) they are eligible to be resold pursuant to Rule 144(k) (or
any successor provision).
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F. "Registration Expenses" means the fees and disbursements of
counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or
compliance with Sections 1, 2, and 3 of this Agreement, any
premiums and other costs of policies of insurance obtained by the
Company against liabilities arising out of the sale of any
securities (which such insurance may be obtained by the Company
at the Company's sole discretion), and all registration, filing
and stock exchange listing fees, all fees and expenses of
complying with securities or blue sky laws, printing expenses,
messenger and delivery expenses, but excluding any fees and
disbursements of underwriters relating to the Registrable
Securities, all underwriting discounts and commissions, all
transfer taxes with respect to the disposition of Registrable
Securities by a Holder, and all fees and disbursements of counsel
for any Holder.
G. "Rule 145 Transaction" means any transaction of the type
described in Rule 145(a) under the Securities Act.
H. "Securities Act" means the Securities Act of 1933, as amended,
and any successor thereto, and the rules and regulations
thereunder.
I. "Underwritten Offering" means a sale of the Company's securities
to an underwriter or underwriters for reoffering to the public or
on behalf of a person other than the Company through an agent for
sale to the public.
11.2. The below terms have the meanings given to them on the referenced
pages:
Additional Request 1
Agreement 1
Blackout Event 9
Company 1
Company Registration 3
Company Registration Statement 2
Controlling Person 11
Demand Registration 1
Demand Registration Statement 1
Form S-3 3
Holder Indemnitee 11
Holders Notice 1
Investment Agreement 1
Investor 1
Registration Request 1
SEC 1
Series B Preferred Stock 1
Shelf Registration 3
Shelf Registration Statement 3
Shelf Requirements 4
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Suspension Event, Suspension Events 6
Underwriter 5
12. Miscellaneous.
12.1. Counterparts. This Agreement may be executed in one or more
counterparts, all of which are one and the same agreement, and will
become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other
electronic transmission service will be considered original executed
counterparts for purposes of this Section 12.1, provided receipt of
copies of such counterparts is confirmed.
12.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina without
reference to the choice of law principles thereof.
12.3. Entire Agreement. This Agreement, the Investment Agreement, and the
Articles Supplementary contain the entire agreement between the
parties with respect to the subject matter hereof and thereof, and
there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein. This Agreement
is not intended to confer upon any person not a party hereto any
rights or remedies hereunder.
12.4. Notices. All notices and other communications hereunder will be
sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service
or, to the extent receipt is confirmed, telecopy, telefax or other
electronic transmission service to the appropriate address or number
as set forth below. Notices to the Company must be addressed to:
BNP Residential Properties, Inc.
0000 Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Bird LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(which copy does not constitute notice)
or at such other address and to the attention of such other
person as the Company
63
may designate by notice to Holders in conformity with this
Section 12.4. Notices to the Investor/Holder shall be addressed to:
Preferred Investment I, LLC
c/o Xxxxx X. Xxxxxxxx
Westminster Management
Pond Road Plaza
0000 Xxxxx 0 Xxxxx
Xxxxxxxx, XX 00000
Telecopy:
with a copy to:
Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(which copy does not constitute notice)
or at such other address and to the attention of such other
person as the Holder may designate by notice to the Company in
conformity with this Section 12.4.
12.5. Successors and Assigns. This Agreement is binding upon and will inure
to the benefit of the parties hereto and their respective successors.
Neither party may assign any of its rights hereunder to any third
party, except that a Holder may, in accordance and compliance with
Section 8, upon a transfer of Registrable Securities not in violation
of the Investment Agreement, assign to such transferee all rights of
such Holder hereunder with respect to such transferred Registrable
Securities.
12.6. Headings. The Section and other headings contained in this Agreement
are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to
Sections or other headings contained in this Agreement mean Sections
or other headings of this Agreement unless otherwise stated.
12.7. Amendments and Waivers. This Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing,
waive compliance by the other party hereto with any term or provision
hereof on the part of such other party hereto to be performed or
complied with. The waiver by any party hereto of a breach of any term
or provision hereof shall not be construed as a waiver of any
subsequent breach.
12.8. Interpretation; Absence of Presumption. For the purposes hereof, (i)
words in the singular shall be held to include the plural and vice
versa and words of one
64
gender shall be held to include the other gender as the context
requires, (ii) the terms "hereof," "herein," and "herewith" and words
of similar import, unless otherwise stated, should be construed to
refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section references are to the Sections of this
Agreement unless otherwise specified, and (iii) the word "including"
and words of similar import when used in this Agreement mean
"including, without limitation," unless the context otherwise requires
or unless otherwise specified. This Agreement should be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to
be drafted.
12.9. Severability. Any provision hereof that is invalid or unenforceable
shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining
provisions hereof.
[Signature Page Follows]
65
In Witness Whereof, this Agreement has been executed and delivered by the
parties hereto
Investor: Preferred Investment I, LLC
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------------------------------
Title: Managing Member
-----------------------------------------------------
Company:
BNP Residential Properties, Inc.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------------------------
Title: Executive Vice President & CFO
-----------------------------------------------------
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