EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July 28, 1999
(this "Agreement"), is entered into by and among National Golf Properties, Inc.,
a Maryland corporation (the "Company" or the "REIT"), National Golf Operating
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
and the unit holders whose names are set forth on the signature pages hereto
(each, a "Unit Holder" and collectively, the "Unit Holders").
RECITALS
WHEREAS, in connection with the offering of 1,400,000 9.30%
Series B Cumulative Redeemable Preferred Units of the Operating Partnership (the
"Series B Preferred Units"), Belair Real Estate Corporation and Belcrest Realty
Corporation (the "Contributors") contributed to the Operating Partnership
$35,000,000 in return for 1,400,000 Series B Preferred Units on terms and
conditions set forth in the Contribution Agreement, dated July 28, 1999 (the
"Contribution Agreement") by and among the Company, the Operating Partnership
and the Contributors;
WHEREAS, the Contributors will receive the Series B Preferred
Units in exchange for cash contributed to the Operating Partnership;
WHEREAS, pursuant to the Partnership Agreement (as defined
below), the Series B Preferred Units owned by the Contributors will be
redeemable for cash or exchangeable for shares of the Company's 9.30% Series B
Cumulative Redeemable Preferred Stock (the "Preferred Stock") upon the terms and
subject to the conditions contained therein; and
WHEREAS, in order to induce the Contributors to enter into the
Contribution Agreement, the Company and the Operating Partnership have agreed to
enter into this Agreement and to provide registration rights set forth herein to
the Contributors and any subsequent holder or holders of the Series B Preferred
Units.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. In addition to the definitions set
forth above, the following terms, as used herein, shall have the following
meanings:
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"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Registration Rights Agreement, as it
may be amended, supplemented or restated from time to time.
"Articles of Incorporation" means the Articles of Amendment
and Restatement of the Company, as the same may be amended, modified or restated
from time to time.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York or Los Angeles,
California are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Company" means National Golf Properties, Inc., a Maryland
corporation.
"Contributors" means Belair Real Estate Corporation, a Delaware
corporation and Belcrest Realty Corporation, a Delaware corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchangeable OP Units" means Series B Preferred Units which
may be redeemable for cash pursuant to Section 17.4 of the Partnership Agreement
or exchangeable for Preferred Stock or redeemable for cash pursuant to Section
17.7 of the Partnership Agreement (without regard to any limitations on the
exercise of such exchange rights as a result of the Ownership Limit Provisions,
as defined below).
"General Partner" means the Company or its successors as general
partner of the Operating Partnership.
"Holder" means any Unit Holder who is the record or beneficial
owner of any Registrable Security or any assignee or transferee of such
Registrable Security (including assignments or transfers of Registrable
Securities to such assignees or transferees as a result of
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the foreclosure on any loans secured by such Registrable Securities) unless such
Registrable Security is acquired in a public distribution pursuant to a
registration statement under the Securities Act or pursuant to transactions
exempt from registration under the Securities Act, in each such case where
securities sold in such transaction may be resold without subsequent
registration under the Securities Act.
"Incapacitated" shall have the meaning set forth in the Partnership
Agreement.
"Indemnified Party" shall have the meaning set forth in Section 2.8
hereof.
"Indemnifying Party" shall have the meaning set forth in Section
2.8 hereof.
"Inspectors" shall have the meaning set forth in Section 2.4(g).
"July Contribution Agreement" means the Contribution
Agreement, dated July 28, 1999, by and among the Company, the Operating
Partnership and the Contributors.
"Operating Partnership" means National Golf Operating
Partnership, L.P., a Delaware limited partnership.
"Ownership Limit Provisions" mean the various provisions of
the Articles of Incorporation set forth in Article IV thereof restricting the
ownership of Preferred Stock by certain Persons to specified percentages of the
outstanding Preferred Stock.
"Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of July
28, 1999, as the same may be amended, modified or restated from time to time.
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Piggy-Back Registration" shall have the meaning set forth in
Section 2.2 hereof.
"Primary Registration" shall have the meaning set forth in Section
2.2 hereof.
"Preferred Stock" means the Company's 9.30% Series B
Cumulative Redeemable Preferred Stock.
"REIT" means a real estate investment trust under Section 856
through Section 860 of the Code.
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"Registrable Securities" means shares of Preferred Stock at
any time owned, either of record or beneficially, by any Holder and no matter
how acquired (including, without limitation, shares of Preferred Stock issued or
issuable upon exchange of Exchangeable OP Units or issued or issuable by way of
stock dividend or stock split, or in connection with a merger, consolidation,
combination of shares, recapitalization or other reorganization and any other
securities issued pursuant to any other distribution with respect to the
Preferred Shares or in exchange for or replacement of such Preferred Shares)
until (i) a registration statement covering such securities has been declared
effective by the Commission and such shares have been sold or transferred
pursuant to such effective registration statement, (ii) such shares are
permitted to be distributed in a transaction that would constitute a sale
thereof under the Securities Act pursuant to Rule 144(k) or are otherwise freely
transferable to the public without registration pursuant to Section 4(1) of the
Securities Act (to be confirmed in a written opinion of counsel to the Company
addressed to the Holders) under circumstances in which all of the applicable
conditions of Rule 144 are satisfied or (iii) such shares have been otherwise
transferred pursuant to an applicable exemption under the Securities Act, new
securities for such securities not bearing a legend restricting further transfer
shall have been delivered by the Company and such securities shall be freely
transferable to the public in a transaction that would constitute a sale thereof
without registration under the Securities Act.
"Registration Expenses" shall have the meaning set forth in Section
2.5 hereof.
"Rule 144" means promulgated under the Securities Act, as such
rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of the Company of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the SEC.
"Rule 415" means Rule 415 promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.
"Secondary Registration" shall have the meaning set forth in
Section 2.2 hereof. "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
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"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act
pursuant to this Agreement.
"Series B Preferred Units" means 9.30% Series B Cumulative
Redeemable Preferred Units of the Operating Partnership.
"Shelf Registration" shall have the meaning set forth in Section
2.1 hereof.
"Shelf Registration Statement" means any registration statement
relating to a Shelf Registration that covers any shares of Preferred Stock of
the Company filed with the Commission under the Securities Act, including the
Prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
"Unit Holder(s)" shall have the meaning set forth in the
introductory paragraphs hereto.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Shelf Registration.
The Company shall prepare and file a "shelf" registration
statement (the "Shelf Registration Statement") with respect to the Registrable
Securities covering the resale thereof by the Holders on an appropriate form for
an offering to be made on a continuous or delayed basis pursuant to Rule 415
(the "Shelf Registration") within 60 days after the date the Series B Preferred
Units are exchanged for shares of Preferred Stock and shall use its best efforts
to cause the Shelf Registration Statement to be declared effective within 120
days after the date of such exchange. The Company shall use its best efforts to
keep such Shelf Registration Statement continuously effective until the earliest
of (A) 24 months following the effective date of the Shelf Registration
Statement, (B) such time as all of the Registrable Securities have been sold
pursuant to the Shelf Registration Statement or Rule 144 and (C) the date on
which the Registrable Securities may be sold without volume restrictions in
accordance with Rule 144.
SECTION 2.2. Piggy-Back Registration.
(a) If the Company proposes to file a registration statement
under the Securities Act with respect to an offering by the Company for its own
account (a "Primary
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Registration") or for the account of any of its respective securityholders
(other than (i) any registration statement filed by the Company under the
Securities Act relating to an offering of capital stock for its own account as a
result of the exercise of the exchange rights set forth in Section 8.6 of the
Partnership Agreement, and covering the resale by the Holders of the shares of
capital stock received in such exchange, or (ii) a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the Commission)
or filed in connection with an exchange offer or offering of securities solely
to the Company's existing securityholders) (a "Secondary Registration"), then
the Company shall promptly give written notice of such proposed filing to the
Holders of Registrable Securities, and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as each
such Holder may request (a "Piggy-Back Registration"). The Company shall use its
commercially reasonable efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company
included therein.
(b) Withdrawal from Registration. Any Holder requesting
inclusion of Registrable Securities pursuant to this Section 2.2 may, prior to
the effective date of the registration statement relating to such registration,
revoke such request by delivering written notice of such revocation to the
Company and the managing underwriter, if any, at least two days prior to the
effective date of the registration; provided, however, that if the Company, in
consultation with its financial and legal advisors, determines that such
revocation would materially delay the registration or otherwise require a
recirculation of the prospectus contained in the registration statement, then
such Holder shall have no such right to revoke its request. If the withdrawal of
any Registrable Securities would allow, within the marketing limitations set
forth above, the inclusion in the underwriting of a greater number of shares of
Registrable Securities, then, to the extent practicable and without delaying the
underwriting, the Company shall offer to the Holders an opportunity to include
additional shares of Registrable Securities in the proportions discussed in
Section 2.3 below. Any Registrable Securities excluded or withdrawn from such
underwriting shall also be withdrawn from registration and shall not be
transferred in a public distribution prior to 90 days after the effective date
of the registration statement relating thereto, or such shorter period of time
as the managing underwriter may require.
(c) Termination or Withdrawal by the Company. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 2.2 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
SECTION 2.3. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an offering
described in Section 2.2 hereof are of the opinion that (i) the size of the
offering that the Holders, the Company and/or such other persons intend to make
or (ii) the kind of securities that the Holders, the
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Company and/or any other persons or entities intend to include in such offering
are such that the success of the offering would be materially and adversely
affected by inclusion of the Registrable Securities requested to be included,
then (A) if the size of the offering is the basis of such Underwriter's opinion,
the amount of securities to be offered for the accounts of Holders shall be
reduced pro rata (according to the Registrable Securities proposed for
registration) to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
Underwriter or Underwriters; provided that if securities are being offered for
the account of other persons or entities as well as the Company, then (1) in the
case of a Primary Registration, the reduction in the amount of securities
requested to be offered shall be made first pro rata among securities offered
for the accounts of Holders and such other persons or entities, and (2) in the
case of a Secondary Registration, the reduction in the amount of securities
requested to be offered shall be made in accordance with the terms of the
registration rights agreement pursuant to which such Secondary Registration is
made, provided that if any such registration rights agreement is silent with
respect to reductions in shares being registered thereunder, then with respect
to the Registrable Securities intended to be offered by Holders, the proportion
by which the amount of such class of securities intended to be offered by
Holders is reduced shall not exceed the proportion by which the amount of such
class of securities intended to be offered by such other persons or entities is
reduced and (B) if the combination of securities to be offered is the basis of
such Underwriter's opinion, (x) the Registrable Securities to be included in
such offering shall be reduced as described in clause (A) above (subject to the
proviso in clause (A)) or, (y) if the actions described in clause (x) would, in
the judgment of the managing Underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
SECTION 2.4. Registration Procedures; Filings; Information. In
connection with any Shelf Registration Statement under Section 2.1 hereof, the
Company will use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof as expeditiously as possible (and in any event within the
periods referred to in Section 2.1), and in connection with any such request:
(a) As provided in Section 2.1 hereof, the Company will as
expeditiously as possible prepare and file with the Commission a registration
statement on any form for which the Company then qualifies or which counsel for
the Company shall deem appropriate and which form shall be available for the
sale by the Selling Holders of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution thereof and
which shall comply as to form in all material respects with the requirements of
the applicable form and include or incorporate by reference all financial
statements required by the
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Commission to be filed therewith, and use its best efforts to cause such filed
registration statement to become and remain effective.
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
notify each Holder of Registrable Securities that a Shelf Registration Statement
is being filed and advise such Holder that an offering of Registrable Securities
will be made in accordance with the method elected (which method may also
include an underwritten offering) by the Holders of a majority of the
Registrable Securities, furnish to each Selling Holder and each Underwriter, if
any, of the Registrable Securities covered by such registration statement or
prospectus copies of such registration statement or prospectus or any amendment
or supplement thereto as proposed to be filed, and thereafter furnish to such
Selling Holder and Underwriter, if any, such number of conformed copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Selling Holder or
Underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(c) The Company will notify each Holder of Registrable
Securities and counsel for such Holder promptly and, if requested by such Holder
or counsel, confirm such advice in writing promptly (i) when a registration
statement has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any request by the Commission or
any state securities authority for post-effective amendments and supplements to
a registration statement has become effective, (iii) of the issuance by the
Commission or any state securities authority of any stop order suspending the
effectiveness of a registration statement or the initiation of any proceedings
for that purpose, (iv) if, during the period a registration statement is
effective, the representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar agreement,
if any, relating to such offering cease to be true and correct in all material
respects, (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (vi) of any determination by the Company that a post-effective
amendment to a registration statement would be appropriate.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States (where an exemption is not available)
as any Selling Holder or managing Underwriter or Underwriters, if any,
reasonably (in light of such Selling Holder's intended plan of distribution)
requests by the time the registration statement relating thereto is declared
effective by the Commission and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities,
including the National Association of Securities Dealers ("NASD"), as may be
necessary by virtue of the business and
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operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Selling Holder to consummate
the disposition of the Registrable Securities owned by such Selling Holder;
provided that the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (d), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction except as may be required by the Securities Act.
(e) The Company will immediately notify each Selling Holder or
Underwriter of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus and shall file with the Commission such amendments and
supplements to such prospectus and deliver copies of the same to the Selling
Holders or Underwriters, as the case may be, so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances then existing, not misleading and promptly make
available to each Selling Holder a reasonable number of copies of any such
supplement or amendment.
(f) The Company will enter into customary agreements
(including an underwriting agreement or securities sale agreement, if any, in
customary form) containing such representations and warranties to the Holders of
such Registrable Securities and the Underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar underwritten
offerings as may be reasonably requested by them and take such other actions as
are reasonably required in order to expedite or facilitate the disposition of
such Registrable Securities.
(g) The Company will make available for inspection by any Selling
Holder of such Registrable Securities, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other professional retained by any such Selling Holder or Underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
registration statement or (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction. Each
Selling Holder of such Registrable Securities agrees that information obtained
by it as a result of such inspections shall be deemed confidential and shall
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not be used by it as the basis for any market transactions in the securities of
the company or its Affiliates or otherwise disclosed by it unless and until such
is made generally available to the public. Each Selling Holder of such
Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each Selling Holder and to
each Underwriter, if any, a signed counterpart, addressed to such Selling Holder
or Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii)
a comfort letter or comfort letters from the Company's independent public
accountants (to the extent permitted by the standards of the American Institute
of Certified Public Accountants), each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the
case may be, as the Holders of a majority of the Registrable Securities included
in such offering or the managing Underwriter or Underwriters therefor reasonably
request.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earnings statement
covering a period of twelve (12) months, beginning within three (3) months after
the effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder (or any successor rule or regulation
hereafter adopted by the Commission).
(j) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(k) The Company will use its best efforts to obtain CUSIP
numbers for the Preferred Stock not later than the effective date of the Shelf
Registration Statement.
The Company may require, as a condition precedent to the
obligations of the Company under the Agreement, each Selling Holder of
Registrable Securities to promptly furnish in writing to the Company such
information regarding such Selling Holder, the Registrable Securities held by it
and the intended method of distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
2.4(e) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement and prospectus
covering such Registrable Securities until such Selling Holder's
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receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.4(e) hereof, and, if so directed by the Company, such Selling Holder
will deliver to the Company all copies, other than permanent file copies then in
such Selling Holder's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. Each Selling
Holder of Registrable Securities agrees that it will immediately notify the
Company at any time when a prospectus relating to the registration of such
Registrable securities is required to be delivered under the Securities Act of
the happening of an event as a result of which information previously furnished
by such Selling Holder to the Company in writing for inclusion in such
prospectus contains an 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, in light of the circumstances in which they were made, not misleading.
In the event the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be maintained effective
(including the period referred to in Section 2.4(a) hereof) by the number of
days during the period from and including the date of the giving of notice
pursuant to Section 2.4(e) hereof to the date when the Company shall make
available to the Selling Holders of Registrable Securities covered by such
registration statement a prospectus supplemented or amended to conform with the
requirements of Section 2.4(e) hereof.
SECTION 2.5. Registration Expenses. In connection with any
registration statement required to be filed hereunder, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all Commission, stock exchange,
NASD or other registration and filing fees, (ii) fees and expenses of compliance
with securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of U.S. and local counsel for any
Underwriters and Holders in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses of any persons in preparing and
distributing any Shelf Registration Statement, any prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements,
certificates representing the Preferred Stock and any other document relating to
the performance of, and compliance with, this Agreement, (iv) internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange, (vi) reasonable fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any special
audits or comfort letters or costs associated with compliance with such special
audits or with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 2.4(h) hereof),
(vii) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, and (viii) reasonable fees and
expenses of one counsel (who shall be reasonably acceptable to the Company) for
the Selling Holders. Except as expressly provided in the preceding sentence, the
Company shall have no obligation to pay any underwriting fees,
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discounts or commissions attributable to the sale of Registrable Securities, or
any out-of-pocket expenses of the Holders (or the agents who manage their
accounts) or any transfer taxes relating to the registration or sale of the
Registrable Securities.
SECTION 2.6. Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Selling Holder of Registrable
Securities, its officers, directors and agents, and each Person, if any, who
controls such Selling Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, expenses and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by 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 in which
they were made, not misleading, except insofar as such losses, claims, damages
or liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
Company by such Selling Holder or on such Selling Holder's behalf expressly for
inclusion therein. The Company also agrees to indemnify any Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act on substantially the same basis as that of
the indemnification of the Selling Holders provided in this Section 2.6,
provided that the foregoing indemnity with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter of the Registrable Securities
from whom the person asserting any such losses, claims, damages or liabilities
purchased the Registrable Securities which are the subject thereof if (i) such
person did not receive a copy of the prospectus (or the prospectus as
supplemented) at or prior to the confirmation of the sale of such Registrable
Securities to such person in any case where such delivery is required by the
Securities Act and the untrue statement or omission of a material fact contained
in such preliminary prospectus was corrected in the prospectus (or the
prospectus as supplemented), provided that such Underwriter received prior
notice that such prospectus (or the prospectus as supplemented) corrected such
untrue statement or omission of a material fact; or (ii) such person received a
prospectus at or prior to the confirmation of the sale of such Registrable
Securities to such person during the period when the use of such prospectus has
been suspended in accordance with Section 2.4, provided that such Underwriter
received prior notice of such suspension.
SECTION 2.7. Indemnification by Holders of Registrable
Securities. Each Selling Holder agrees, severally but not jointly, to indemnify
and hold harmless the Company, its officers, directors and agents and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such
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Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by Section 2.6 hereof.
SECTION 2.8. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Sections 2.6 or 2.7 hereof, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (an "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. 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 to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by (i) in the case
of Persons indemnified pursuant to Section 2.6 hereof, by the Selling Holders
which owned a majority of the Registrable Securities sold under the applicable
registration statement and (ii) in the case of Persons indemnified pursuant to
Section 2.7 hereof, the Company. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Party shall have requested an Indemnifying Party
to reimburse the Indemnified Party for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than
thirty (30) Business Days after receipt by such Indemnifying Party of the
aforesaid request and (ii) such Indemnifying Party shall not have reimbursed the
Indemnified Party in accordance with such request prior to the date of such
settlement. No Indemnifying Party
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shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in which any Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
SECTION 2.9. Contribution. If the indemnification provided
for in Sections 2.6 or 2.7 hereof is unavailable to an Indemnified Party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i)
as between the Company and the Selling Holders on the one hand and the
Underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other from the offering of the securities, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Holders on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
the Selling Holders on the one hand and of the Underwriters on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Selling Holder, and the
Company's and the Selling Holder's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 2.9 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the
15
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities referred to in
Sections 2.6 and 2.7 hereof shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 2.9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the securities of such Selling Holder
were offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Selling Holder's obligations to contribute
pursuant to this Section 2.9 are several in the proportion that the proceeds of
the offering received by such Selling Holder bears to the total proceeds of the
offering received by all the Selling Holders and not joint.
SECTION 2.10. Participation in Underwritten Registrations. At
the election of the holders of a majority of the Registrable Securities, any
offering of Preferred Stock pursuant to a Shelf Registration shall be an
underwritten offering. No Person may participate in any underwritten
registration hereunder unless such Person (a) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents in customary form and reasonably required under
the terms of such underwriting arrangements and these registration rights
provided for in this Article II.
SECTION 2.11. Rule 144. The Company covenants that it will
file any reports required to be filed by it under the Securities Act and the
Exchange Act and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 2.12. Holdback Agreements.
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(a) Restrictions on Public Sale by Holder of Registrable
Securities. To the extent not inconsistent with applicable law, upon receipt of
written notice from the Company, each Holder whose securities are included in a
registration statement pursuant to Section 2.2 agrees not to effect any sale or
distribution of the issue being registered or a similar security of the Company,
or any securities convertible into or exchangeable or exercisable for such
securities, including a "broker's transaction" pursuant to Rule 144, but
excluding any private sale made in reliance on Section 4(2) of the Securities
Act, during the 7 days prior to, and during the 90-day period beginning on, the
effective date of such registration statement (except as part of such
registration), if and to the extent requested in writing by the Company in the
case of a non-underwritten public offering or if and to the extent requested in
writing by the managing Underwriter or Underwriters in the case of an
underwritten public offering.
(b) If the Company determines in its good faith judgment that
the filing of the Shelf Registration Statement under Section 2.1 hereof or the
use of any related prospectus would require the disclosure of non-public
material information that the Company has a bona fide business purpose for
preserving as confidential or the disclosure of which would impede the Company's
ability to consummate a material transaction, and that the Company is not
otherwise required by applicable securities laws or regulations to disclose,
upon written notice of such determination by the Company, the rights of the
Holders to offer, sell or distribute any Registrable Securities pursuant to the
Shelf Registration Statement or to require the Company to take action with
respect to the registration or sale of any Registrable Securities pursuant to
the Shelf Registration Statement shall be suspended until the earlier of (i) the
date upon which the Company notifies the Holders in writing that suspension of
such rights for the grounds set forth in this Section 2.12(b) is no longer
necessary and (ii) 180 days. The Company agrees to give such notice as promptly
as practicable following the date that such suspension of rights is no longer
necessary and the period of time for which the Company shall be obligated to
keep a Shelf Registration Statement effective under Section 2.1 shall be
extended one day for each day of such suspension period.
(c) If all reports required to be filed by the Company pursuant
to the Exchange Act have not been filed by the required date without regard to
any extension, or if the consummation of any business combination by the Company
has occurred or is probable for purposes of Rule 3-05 or Article 11 of
Regulation S-X under the Act, upon written notice thereof by the Company to the
Holders, the rights of the Holders to offer, sell or distribute any Registrable
Securities pursuant to the Shelf Registration Statement or to require the
Company to take action with respect to the registration or sale of any
Registrable Securities pursuant to the Shelf Registration Statement shall be
suspended until the date on which the Company has filed such reports or obtained
and filed the financial information required by Rule 3-05 or Article 11 of
Regulation S-X to be included or incorporated by reference, as applicable, in
the Shelf Registration Statement, and the Company shall notify the Holders as
promptly as practicable when such suspension is no longer required and the
period of time for which the
17
Company shall be obligated to keep a Shelf Registration Statement effective
under Section 2.1 shall be extended one day for each day of such suspension
period.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Remedies. In addition to being entitled to
exercise all rights provided herein and granted by law, including recovery of
damages, the Holders shall be entitled to specific performance of the rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
SECTION 3.2. Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the prior written consent of the
Company and the Holders and the holders of Exchangeable OP Units or any such
Holder's or holder's representative if any such Holder or holder is
Incapacitated. No failure or delay by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon any breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
SECTION 3.3. Notices. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to any Unit Holder:
Belcrest Realty Corporation and
Belair Real Estate Corporation
c/o Xxxxx Xxxxx Management
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Facsimile Number: (000) 000-0000
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
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(6544-5)
Facsimile Number: (000) 000-0000
(2) if to the Company or the Operating
Partnership:
National Golf Properties, Inc.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attention: President
Facsimile Number: (000) 000-0000
or to such other address as the Company may hereafter specify in writing.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received if deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 3.4. Successors and Assigns. The rights and
obligations of the Holders under this Agreement shall be assignable by any
Holder to any Person that is a Holder or a holder of Exchangeable OP Units and
to no other Person except as expressly provided in this Agreement. This
Agreement shall be binding upon the parties hereto and their respective
successors and assigns.
SECTION 3.5. Counterparts; Facsimile Signatures. 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. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, which may be an original signature or facsimile
thereof.
SECTION 3.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
California without regard to the choice of law provisions thereof.
SECTION 3.7. Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
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SECTION 3.8. Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
SECTION 3.9. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 3.10. No Third Party Beneficiaries. Nothing express or
implied herein is intended or shall be construed to confer upon any person or
entity, other than the parties hereto and their respective successors and
assigns, any rights, remedies or other benefits under or by reason of this
Agreement.
(Signature Page Follows)
20
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
NATIONAL GOLF PROPERTIES, INC.,
a Maryland corporation
/s/ Xxxxx X. Xxxxxxx
By:____________________________
Name: Xxxxx X. Xxxxxxx
Title:President
NATIONAL GOLF OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership
By: NATIONAL GOLF
PROPERTIES, INC.,
its general partner
/s/ Xxxxx X. Xxxxxxx
By:___________________
Xxxxx X. Xxxxxxx
President
BELCREST REALTY CORPORATION.
a Delaware corporation
/s/ Xxxxxx X. Xxxxx
By: ___________________________
Name:Xxxxxx X. Xxxxx
Title:Executive Vice President
BELAIR REAL ESTATE CORPORATION,
a Delaware corporation
/s/ Xxxxxx X. Xxxxx
By: ___________________________
Name:Xxxxxx X. Xxxxx
Title:Executive Vice President
