REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made and entered into as of May
28, 1999 by and between Wellsford Real Properties, Inc., a Maryland corporation
(together with its successors and permitted assigns, the "Company"), and W/W
Group Holdings, L.L.C., a Delaware limited liability company (the "Initial
Holder").
R E C I T A L S
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WHEREAS, the Company and United States Trust Company of New York are
parties to that certain Warrant Agreement dated as of August 28, 1997, as
amended by Amendment No. 1 to Warrant Agreement dated as of July 16, 1998, and
as further amended by Amendment No. 2 to Warrant Agreement dated as of May ___,
1999 (as so amended, the "Warrant Agreement"), pursuant to which the Company has
issued to five million (5,000,000) warrants to purchase shares of the Company's
common stock currently held by the Initial Holder;
WHEREAS, the Company and the Warrant Agent are parties to that certain
Warrant Agreement dated as of May ___, 1999 (the "New Warrant Agreement"),
pursuant to which the Company has issued to the Initial Holder one hundred fifty
thousand (150,000) warrants to purchase shares of the Company's common stock;
WHEREAS, the Company and the Initial Holder desire that the
registration rights and procedures set forth in this Agreement supercede those
granted under the Warrant Agreement and to set forth their respective rights and
obligations regarding the registration of the Company's shares that are issuable
in respect of warrants exercised by the Initial Holder pursuant to the New
Warrant Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
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voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Registration Rights Agreement, as it may be
amended or modified from time to time.
"Articles of Incorporation" shall mean the Company's Articles of
Amendment and Restatement, as amended from time to time.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banks in New York are authorized or required to close.
"Closing Price" shall mean the last reported sale price regular way on
the day in question or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way of the Common
Stock, in each case on the American Stock Exchange ("AMEX"), or, if the Common
Stock is not listed or admitted to trading on the AMEX, on the principal
national securities exchange or quotation system on which the Common Stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any AMEX member
firm selected from time to time by the board of directors of the Company for the
purpose. In the case of a closing price of Common Stock on the AMEX, such price
shall mean the closing price reported in the AMEX composite transactions
reporting system (as reported in the New York City edition of The Wall Street
Journal or, if not so reported, another authoritative source).
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company and any other stock of the Company into which such common stock
may be converted or reclassified (other than stock of the Company into which
unissued Common Stock has been reclassified) or that may be issued in respect
of, in exchange for, or in substitution of, such common stock by reason of any
stock splits, stock dividends, distributions, mergers, consolidations,
recapitalizations or other like events.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company Shares" shall have the meaning set forth in Section 2.1(g).
"Demand Registration" shall mean a registration of Eligible Securities
pursuant to Section 2.1 hereof.
"Eligible Common Stock" shall mean all shares of Underlying Common
Stock that are Eligible Securities.
"Eligible Securities" shall mean (x) all shares of Underlying Common
Stock and unless otherwise provided herein, any related Warrants and (y) any
other securities of the Company or any other entity issued or issuable with
respect to the Underlying Common Stock or Warrants by
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way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise; provided, however, that particular shares of Underlying Common Stock
or particular Warrants shall cease to be Eligible Securities when (i) such
shares or Warrants, as the case may be, shall have been disposed of in
accordance with an effective registration statement covering the sale of such
shares or Warrants; (ii) such shares or Warrants, as the case may be, have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act; or (iii) in the case of a Warrant only, such Warrant
has been transferred by the Initial Holder to another Person (other than an
Affiliate of the Initial Holder).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Favorable Term" shall have the meaning set forth in Section 2.5.
"Holder" shall mean the holder of any Eligible Security.
"Initial Holder" shall have the meaning set forth in the first
paragraph of this Agreement.
"New Warrant Agreement" shall have the meaning set forth in the third
paragraph of this Agreement.
"New Warrants" shall mean the warrants issued by the Company pursuant
to the New Warrant Agreement, and any additional warrants issued in accordance
with the New Warrant Agreement.
"Old Warrants" shall mean the warrants issued by the Company pursuant
to the Warrant Agreement, and any additional warrants issued in accordance with
the Warrant Agreement.
"Original Term" shall have the meaning set forth in Section 2.5.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Piggyback Registration" shall have the meaning set forth in Section
2.2(a).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any of the Eligible Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registration Demand" shall have the meaning set forth in Section
2.1(a).
"Registration Rights" shall mean the rights of Holders set forth in
Sections 2.1 and 2.2 to have Eligible Securities registered under the Securities
Act for sale under one or more effective Registration Statements.
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"Registration Statement" shall mean any registration statement filed by
the Company under the Securities Act that covers any of the Eligible Securities,
including the Prospectus, any amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such registration statement.
"Representative" shall have the meaning set forth in Section 3.6(a),
and "Representative(s)" shall mean one or more Representatives.
"Saracen Members" shall have the meaning set forth in the
Wellsford/Whitehall Group LLC Agreement.
"Saracen Registration Rights Agreement" shall mean that certain
Registration Rights Agreement dated as of July 16, 1998, by and among Wellsford
Commercial Properties Trust, a Maryland real estate investment trust, and the
Saracen Members, as amended by that certain Amendment No. 1 to the Registration
Rights Agreement dated as of May ___, 1999, and as such agreement may be further
amended or modified from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean the annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"selling holder" shall have the meaning set forth in Section 3.1.
"Shelf Registration" shall have the meaning set forth in Section
2.1(c).
"Shelf Registration Statement" shall have the meaning set forth in
Section 2.1(c).
"Takedown" shall have the meaning set forth in Section 2.1(c)(ii).
"Underlying Common Stock" shall mean all shares of Common Stock either
issuable upon the exercise of the Warrants or previously issued upon the prior
exercise of the Warrants.
"underwriter" shall have the meaning set forth in Section 3.1.
"underwriting or agency agreement" shall have the meaning set forth in
Section 3.1.
"Warrant Agreement" shall have the meaning set forth in the second
paragraph of this Agreement.
"Warrants" shall mean any Old Warrants and any New Warrants and the
term "Warrant" shall mean any Old Warrant or any New Warrant.
"WCPT" shall have the meaning set forth in the Recitals to this
Agreement.
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Certain terms used principally in Articles 2 and 3 are defined in those
Sections.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1. Demand Registration.
(a) At any time, each Holder shall have the right to request (each such
request, a "Registration Demand") that the Company file a registration statement
under the Securities Act in respect of all or any portion of such Holder's
Eligible Securities; provided that if any Holder shall request that a portion,
but not all, of its Eligible Securities be registered in accordance with this
Section 2.1 (including a requested Takedown pursuant to subsection (c)(ii)
below), such portion shall include not less than two hundred and fifty thousand
(250,000) shares of Eligible Common Stock (or such lesser number of such shares
having a market valuation of at least $5,000,000 as of the date the Registration
Demand is made, based on the Closing Price on such date). A Registration Demand
shall specify the number of shares of Eligible Common Stock (and, in the case of
a Registration Demand by the Initial Holder, the number of Warrants) that each
such Holder proposes to sell in the offering. If no Shelf Registration Statement
shall be effective as of the date of the Registration Demand, the demanding
Holders may elect to register such Eligible Securities in accordance with either
Section 2.1(c)(i) or Section 2.1(d). If a Shelf Registration Statement shall be
effective as of the date of the Registration Demand, then all demanding Holders
shall be deemed to have elected to register their Eligible Securities pursuant
to Section 2.1(c)(ii). The Holders may make in the aggregate two (2)
Registration Demands pursuant to Sections 2.1(c)(i) and 2.1(d) and four (4)
Registration Demands per year pursuant to an existing Shelf Registration
Statement pursuant to Section 2.1(c)(ii) for which the Company will pay and bear
all costs and expenses in accordance with Section 3.3 and thereafter the Holders
may make an unlimited number of Registration Demands for which such requesting
Holders shall pay and bear all costs and expenses.
(b) Upon receipt of a Registration Demand (other than a Takedown), the
Company shall give written notice thereof to all of the other Holders at least
thirty (30) days prior to the initial filing of a Registration Statement
relating to such Registration Demand. Each of the other Holders shall have the
right, within twenty (20) days after the delivery of such notice, to request
that the Company include all or a portion of such Holder's Eligible Securities
in such Registration Statement. Upon receipt of a Registration Demand that is a
Takedown, a representative of the selling holders shall give written notice
thereof to all of the other Holders at least three (3) Business Days prior to
the initial filing of a prospectus relating to such Registration Demand. Each of
the other Holders shall have the right, within one (1) Business Day after the
delivery of such notice, to request that the Company include all or a portion of
such Holder's Eligible Securities in such Registration Statement.
(c) (i) As promptly as practicable and in no event later than sixty
(60) days after the Company receives a Registration Demand electing to register
Eligible Securities pursuant to this paragraph (c), the Company shall file under
the Securities Act a "shelf" registration statement (the "Shelf Registration
Statement") providing for the registration and the sale on a continuous or
delayed basis of all the Eligible Securities, pursuant to Rule 415 under the
Securities Act and/or any similar
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rule that may be adopted by the SEC (the "Shelf Registration"). The Company
agrees to use its reasonable best efforts to cause such Shelf Registration
Statement to become or be declared effective as soon as practicable but no later
than 75 calendar days after the filing (the "75 Day Effective Date") and to keep
such Shelf Registration continuously effective for a period ending on the
occurrence of the earlier of: (x) the third anniversary of such Registration
Demand and (y) notification by all of the requesting Holders that such Holders
have sold all of the Eligible Securities owned by them. The Company further
agrees to supplement or make amendments to the Shelf Registration Statement and
the prospectus included therein (x) as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the period set forth
in the previous sentence and (y) as may be required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration or by the Securities Act or rules and regulations thereunder
for shelf registration. The Company agrees to furnish to the Holders of the
securities registered thereby copies of any such supplement or amendment (but
excluding any periodic reports required to be filed with the SEC under the
Exchange Act of 1934) so that the Initial Holder, or if the Initial Holder is no
longer a Holder, the Holders, through the Representative(s), have a reasonable
opportunity to comment thereon prior to its being used and/or filed with the
SEC.
(ii) As promptly as practicable after the Company receives a
Registration Demand from a Holder or Holders pursuant to which a Holder is
deemed to have elected to register Eligible Securities pursuant to an existing
Shelf Registration Statement (a "Takedown"), the Company shall, subject to the
Takedown Blackout Period described below, file a Prospectus with the SEC and
otherwise comply with the Securities Act and all rules, regulations and
instructions thereunder applicable to such Takedown. In the event that no
Prospectus or other filing is required nor any other action necessitating the
Company's participation is required to effect a sale of Eligible Securities
pursuant to an effective Shelf Registration Statement filed pursuant to Section
2.1(c)(i), each selling Holder agrees to provide the Company with at least three
(3) Business Days' notice of the proposed sale (which may or may not include the
amount of Eligible Securities to be registered) pursuant to the effective Shelf
Registration Statement; provided, however, that the Company shall, subject to
Section 2.3(g), have the right to postpone any such sale whether before or after
the filing of the applicable Prospectus or Shelf Registration Statement for a
reasonable period of time not to exceed ninety (90) days (a "Takedown Blackout
Period") if: (i) the Company determines in its good faith judgment that it
would, in connection with such sale, be required to disclose in such
Registration Statement (or any prospectus supplement to be used in connection
therewith) information not otherwise then required by law to be publicly
disclosed and (ii) either (x) in the good faith judgment of the Board of
Directors of the Company, such disclosure would adversely affect any material
corporate development or business transaction contemplated by the Company or (y)
the Company has a bona fide purpose for preserving as confidential such
information; provided further that the Takedown Blackout Period shall earlier
terminate upon the completion or abandonment of the relevant corporate
development or business transaction or upon public disclosure by the Company or
public disclosure by the Company or public admission by the Company of such
information specified in (i) above.
(d) As promptly as practicable and in no event later than sixty (60)
days after the Company receives a Registration Demand electing to register
Eligible Securities pursuant to this Section 2.1(d), the Company shall file with
the SEC a Registration Statement, on any form that shall be available and
appropriate for the sale of the Eligible Securities in accordance with the
intended method of distribution thereof. The Company shall include in such
Registration Statement all of the
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Eligible Securities of such requesting Holders that such Holders have requested
to be included therein pursuant to Sections 2.1(a) and 2.1(b); provided,
however, that, if the requested registration involves an underwritten offering,
the Eligible Securities to be registered may be reduced if the managing
underwriter delivers a notice (a "Cutback Notice") pursuant to Section 2.1(g).
The Company shall use its reasonable best efforts to cause each such
Registration Statement to be declared effective (and to obtain acceleration of
such effectiveness) as soon as practicable but no later than 75 days after
filing such Registration Statement and to keep such Registration Statement
continuously effective and usable for resale of such Eligible Securities, for a
period of one hundred eighty (180) days from the date on which the SEC declares
such Registration Statement effective or such shorter period as is necessary to
complete the distribution of the securities registered thereunder.
(e) The Initial Holder or, if the Initial Holder is not a selling
holder, the Representative(s) shall determine the method of distribution of
Eligible Securities pursuant to a Registration Demand.
(f) If a Registration Demand involves an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer such offering will be selected by the Initial Holder or, if the
Initial Holder is not a selling holder, the Representative(s); provided that the
Persons so selected shall be reasonably satisfactory to the Company.
(g) In the event that the proposed offering is an underwritten offering
and includes securities to be offered for the account of the Company (the
"Company Shares"), the provisions of this Section 2.1(g) shall be applicable if
the managing underwriter delivers a Cutback Notice stating that, in its opinion,
the aggregate number of shares of Eligible Common Stock, plus the Company Shares
proposed to be sold therein, exceeds the maximum number of shares specified by
the managing underwriter in such Cutback Notice that may be distributed without
adversely affecting the price, timing or distribution of the Common Stock being
distributed. If the managing underwriter delivers such Cutback Notice, the
number of shares of Eligible Common Stock requested to be registered and Company
Shares shall be reduced in the following order until the number of shares to be
offered has been reduced to the maximum number of shares specified by the
managing underwriter in the Cutback Notice: first, the Company Shares and
second, the Eligible Common Stock in proportion to the respective number of
shares of Eligible Common Stock that each Holder has requested to be registered.
(h) The Company will pay all Registration Expenses (as set forth in
Section 3.3) in connection with a registration under this Section 2.1.
(i) No Registration Demand (other than a Takedown) may be made until
the expiration of six (6) months following the completion of the distribution of
the securities registered under any Registration Statement that has been filed
and has become effective pursuant to a prior Registration Demand.
(j) A Registration Demand will not be deemed satisfied (and will not
count for purposes of the limitations in Section 2.1(a)) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 180 days (or such shorter
period which shall terminate when all Eligible Securities covered by such
registration
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statement have been sold), (ii) if, after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason not
attributable to the selling holders participating in such registration and has
not thereafter become effective, or (iii) if the conditions to closing specified
in the relevant underwriting or agency agreement entered into in connection with
such offering are not satisfied or waived, other than by reason of a breach of
such agreement by the selling holders participating in such offering or wilful
failure on the part of the selling holders participating in such offering.
Section 2.2. Piggyback Registration Rights.
(a) If, at any time, the Company proposes to file a Registration
Statement with the SEC respecting an offering, whether primary, secondary or
combined, of any equity securities of the Company, the Company shall give
written notice to all Holders at least thirty (30) days prior to the initial
filing of the Registration Statement relating to each such offering. Such notice
shall specify, at a minimum, the number and the type of equity securities so
proposed to be registered, the proposed date of filing of such registration
statement, any proposed means of distribution of such securities, any proposed
managing underwriter or underwriters of such securities and a good faith
estimate by the Company of the proposed maximum offering price thereof, as such
price is proposed to appear on the facing page of such registration statement.
Each Holder shall have the right, within twenty (20) days after delivery of such
notice, to request in writing that the Company include not less than 50,000
shares of Eligible Common Stock (or such lesser amount as is then owned by such
Holder) in such Registration Statement (a "Piggyback Registration").
(b) In the event that the proposed offering is an underwritten offering
covering Company Shares, the provisions of this paragraph (b) shall be
applicable if the managing underwriter delivers a Cutback Notice stating that,
in its opinion, the aggregate number of shares of Eligible Common Stock and the
Company Shares that the Holders have requested to be registered, exceeds the
maximum number of shares specified by the managing underwriter in such Cutback
Notice that may be distributed without adversely affecting the price, timing or
distribution of the Common Stock being distributed. If the managing underwriter
delivers such Cutback Notice, the number of shares of Eligible Common Stock and
Company Shares requested to be included in such offering shall be reduced in the
following order until the number of shares to be offered has been reduced to the
maximum number of shares specified by the managing underwriter in the Cutback
Notice: first, the Eligible Common Stock in proportion to the respective number
of shares of Eligible Common Stock that each Holder has requested to be
registered and second, the Company Shares.
(c) No Piggy-Back Registration effected under this Section 2.2 shall be
deemed to have been effected pursuant to Section 2.1 hereof or shall release the
Company of its obligations to effect any Demand Registration upon request as
provided in Section 2.1.
(d) The Company will pay all Registration Expenses (as set forth in
Section 3.3) in connection with a registration under this Section 2.2.
(e) The provisions of this Section 2.2 shall not be applicable in
connection with a transaction in which a registration statement is filed by the
Company on Form S-4 or S-8 or any
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successor or similar form or a registration statement is filed by the Company
that registers securities issued pursuant to a DRIP.
Section 2.3. Company's Ability to Postpone Registration Rights.
(a) The Company shall have the right to postpone the filing of any
Registration Statement relating to a Demand Registration for a reasonable period
of time not to exceed ninety (90) days (the "Blackout Period") if: (i) the
Company determines in its good faith judgment that it would be required to
disclose in such Registration Statement information not otherwise then required
by law to be publicly disclosed and (ii) either (x) in the good faith judgment
of the Board of Directors of the Company, such disclosure would adversely affect
any material corporate development or business transaction contemplated by the
Company or otherwise would be materially harmful to the Company and its
stockholders or (y) the Company has a bona fide purpose for preserving as
confidential such information or; provided, however, that the Blackout Period
shall earlier terminate upon the completion or abandonment of the relevant
corporate development or business transaction or upon public disclosure by the
Company or public admission by the Company of such information specified in (i)
above.
(b) If at any time after the Company notifies the Holders of its
intention to file a Registration Statement that would trigger Piggyback
Registration Rights, the Board of Directors of the Company in good faith shall
determine for any reason not to effect such registration or to postpone such
registration, the Company shall (i) in the case of a determination not to effect
such registration, be relieved of its obligation to register any Eligible
Securities of Holders requesting inclusion in such registration, and (ii) in the
case of a determination to postpone such registration, be permitted to postpone
registering the Eligible Securities of Holders requesting inclusion in such
registration.
(c) After the expiration of any Blackout Period and without further
request from any Holder, the Company shall effect the filing of the relevant
Demand Registration and shall use its reasonable best efforts to cause any such
Demand Registration to be declared effective as promptly as practicable unless
the requesting Holder or Holders shall have, prior to the effective date of such
Demand Registration withdrawn in writing its initial request, in which case,
such withdrawn request shall not constitute a Registration Demand or reduce the
number of Registration Demands available under Section 2.1(a).
(d) Any request by a Holder for a Demand Registration which is
subsequently withdrawn prior to such Demand Registration becoming effective
shall not constitute a Registration Demand or reduce the number of Registration
Demands available under Section 2.1(a); provided, however, that other than with
respect to a withdrawal which is made as a result of or after the expiration of
any Blackout Period as specified in subsection (c) above, the Holder or Holders,
as appropriate, shall reimburse the Company for all expenses relating to the
preparation of such withdrawn Demand Registration.
(e) The Company shall as promptly as practicable notify the Holders of
any postponement pursuant to this Section 2.3 or Section 2.1(c)(ii), specifying
the reasons therefor.
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(f) If the Company exercises its right to postpone the filing of any
Registration Statement pursuant to Section 2.3 or if the Company exercises its
right to postpone any Takedown pursuant to Section 2.1(c)(ii) and the Company
notifies any Holder of such postponement or if the Company gives the notice
described in Section 3.7(a), such Holder agrees to keep confidential the
exercise by the Company of its postponement right and any information related
thereto which is given to such Holder by the Company.
(g) Notwithstanding the provisions of this Section 2.3 or Section
2.1(c)(ii), the aggregate number of days (whether or not consecutive) during
which the Company may delay the effectiveness of the Registration Statement or
prevent offerings, sales or distributions by the Holders pursuant to this
Section 2.3 or Section 2.1(c)(ii) shall in no event exceed 120 days during any
12-month period. In addition, no such delay shall exceed such number of days
that the Company determines in good faith to be reasonably necessary.
Section 2.4. Holder Withdrawal Rights. The Company shall withdraw from
registration any Eligible Securities on request of a Holder. The Company shall
not be obligated to maintain the effectiveness of any Registration Statement if,
after any withdrawal of Eligible Securities by a Holder, the number of Eligible
Securities remaining subject to such Registration Statement represents less than
5% of the shares of Eligible Common Stock deemed outstanding, unless the Company
is also registering securities on such Registration Statement for its own
account.
Section 2.5. Other Registration Rights. In the event WCPT shall grant
to any of the Saracen Members the right to request that WCPT register any common
share of beneficial interest, par value $0.01, of WCPT pursuant to the terms and
provisions of the Saracen Registration Rights Agreement, and any registration
right granted therein (the "Favorable Term") is more advantageous to such
Saracen Member than the analogous term contained in this Agreement (the
"Original Term"), then any Holder of Eligible Securities entitled to exercise
any or all of the Registration Rights may elect, upon exercise thereof, that the
Favorable Term be applicable to such exercise in place of the Original Term.
ARTICLE 3
REGISTRATION PROCEDURES
Section 3.1. Covenants of the Company Applicable to All Registration
Statements. This Section 3.1 applies to all Registration Statements filed by the
Company and referred to in Section 2.1 and 2.2. The securities covered by each
such Registration Statement are referred to as the "Registered Securities". Each
underwriter (including any qualified independent underwriter), agent, selling
broker, dealer manager or similar securities industry professional participating
in any offering of the Registered Securities is referred to as an "underwriter"
or "agent" and any agreement entered into with an underwriter or agent is
referred to as an "underwriting or agency agreement". In connection with each
such registration, the Company covenants with each Holder participating in such
offering (each, a "selling holder") and each underwriter or agent participating
therein as follows:
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(a) The Company will notify the selling holders and the managing
underwriter or agent, immediately, and confirm the notice in writing, (i) when
the Registration Statement or any pre-effective amendment, post-effective
amendment, prospectus or prospectus supplement is filed or when the Registration
Statement, or any post-effective amendment to the Registration Statement, shall
have become effective, (ii) of the receipt of any comments from the SEC, (iii)
of any request by the SEC or any state securities authority for additional
information or to amend the Registration Statement or amend or supplement the
Prospectus or any notification of an intention to proceed for that purpose, (iv)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Registered Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for any of such purposes, (v) if
at any time when a prospectus is required by the Securities Act to be delivered
in connection with sales of the Registered Securities the representations and
warranties of the Company contemplated by Section 3.1(i) cease to be true and
correct and (vi) of the existence of any fact that results or may result in the
Registration Statement, the Prospectus or any document incorporated therein by
reference containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make any statement
therein not misleading in light of the circumstances then existing.
(b) The Company will use its best efforts to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
moment.
(c) The Company will afford the Representative(s) and the managing
underwriters a reasonable opportunity, prior to its being filed with the SEC, to
comment on any Registration Statement, any amendment thereto, or any amendment
of or supplement to the Prospectus.
(d) The Company will furnish to each selling holder and to the managing
underwriter or agent, without charge, as many signed copies of the Registration
Statement (as originally filed) and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith, including documents incorporated by
reference into the Prospectus, and signed copies of all consents and
certificates of experts, as such selling holder or the managing underwriter or
agent may reasonably request, and will furnish to the managing underwriter, for
each other underwriter participating in an underwritten offering, one conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (including documents incorporated by reference into the Prospectus but
without exhibits).
(e) The Company will deliver to each selling holder and each
underwriter or agent participating in such offering, without charge, as many
copies of each preliminary prospectus as such selling holder or such underwriter
or agent may reasonably request, and the Company hereby consents to the use of
such copies for purposes permitted by the Securities Act. The Company will
deliver to each selling holder and each underwriter or agent participating in
such offering, without charge, from time to time during the period when the
Prospectus is required to be delivered under the Securities Act, such number of
copies of the Prospectus (as supplemented or amended) as such selling holder or
such underwriter or agent may reasonably request.
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(f) The Company will comply with the Securities Act and the rules and
regulations of the SEC thereunder, the Exchange Act and the rules and
regulations of the SEC thereunder and any state securities laws or rules so as
to permit the completion of the distribution of the Registered Securities in
accordance with the intended method or methods of distribution contemplated in
the Prospectus. If at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the Registered Securities any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the selling holders, counsel for the underwriters
or agents or counsel for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of any such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the Securities Act or the rules and
regulations of the SEC thereunder, the Company will promptly prepare and file
with the SEC, subject to Section 3.1(c), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements and will
promptly furnish each selling holder and underwriter or agent with a reasonable
number of copies of such amendment or supplement.
(g) The Company will use its best efforts, in cooperation with the
selling holders or the underwriters or agents, as the case may be, to register
or qualify the Registered Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions as the selling holders or
the managing underwriter or agents, as the case may be, may designate and to
keep such registration or qualification in effect for so long as such
Registration Statement remains effective; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Registered Securities have been
qualified as above provided.
(h) The Company will effect the listing of the Registered Securities
covered by a Registration Statement on each national securities exchange on
which similar securities issued by the Company are then listed and make all
other necessary or appropriate filings with each such securities exchange.
(i) The Company shall make such representations and warranties to the
selling holders and the underwriters or agents, if any, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten public
offerings.
(j) On the effective date of the Registration Statement or, in the case
of an underwritten offering, on the date of delivery of the Registered
Securities sold pursuant thereto, the Company shall cause to be delivered to the
selling holders and the underwriters or agents, if any, opinions of counsel for
the Company with respect to, among other things, the due incorporation and good
standing of the Company; the qualification of the Company to transact business
as a foreign corporation; the due authorization, execution and delivery of this
Agreement; the due authorization,
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execution, authentication and issuance, and the validity and enforce ability, of
the Warrants and/or the Eligible Common Stock, as the case may be; the absence
of material legal or governmental proceedings involving the Company; the absence
of a material breach by the Company of, or a material default under, agreements
binding the Company; the absence of governmental approvals required to be
obtained in connection with the registration, offering and sale of the Warrants
and/or Eligible Common Stock, as the case may be; the compliance as to form of
the Registration Statement and any documents incorporated by reference therein
with the requirements of the Securities Act; the effectiveness of such
Registration Statement under the Securities Act; and a statement that, as of the
date of the opinion and of the Registration Statement or most recent
post-effective amendment thereto, as the case may be, nothing has come to the
attention of such counsel which causes them to believe that either the
Registration Statement or the Prospectus included therein, as then amended or
supplemented, or the documents incorporated by reference therein (in the case of
such documents, in the light of the circumstances existing at the time that such
documents were filed with the Commission under the Exchange Act), contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion as to the financial statements and
other financial data included therein or omitted therefrom).
In the event that any broker-dealer registered under the Exchange Act
shall be an "affiliate" (as defined in Rule 2720(b)(1) of the NASD Rules (or any
successor provision thereto)) of the Company or has a "conflict of interest" (as
defined in Rule 2720(b)(7) of the NASD Rules (or any successor provision
thereto)) and such broker-dealer shall underwrite, participate as a member of an
underwriting syndicate or selling group or assist in the distribution of any
Registrable Securities covered by the Shelf Registration Statement, whether as a
holder of such Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise, the Company shall
assist such broker-dealer in complying with the requirements of the NASD Rules,
including, without limitation, by (A) engaging a "qualified independent
underwriter" (as defined in Rule 2720(b)(15) of the NASD Rules (or any successor
provision thereto)) to participate in the preparation of the registration
statement relating to such Registrable Securities, to exercise usual standards
of due diligence in respect thereto and to recommend the public offering price
of such Registrable Securities, (B) indemnifying such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof, and (C) providing such information to such broker-dealer as
may be required in order for such broker-dealer to comply with the requirements
of the NASD Rules.
(k) Immediately prior to the effectiveness of the Registration
Statement or, in the case of an underwritten offering, at the time of delivery
of any Registered Securities sold pursuant thereto, the Company shall cause to
be delivered to the selling holders and the underwriters or agents, if any,
letters from the Company's independent public accountants stating that such
accountants are independent public accountants with respect to the Company
within the meaning of the Securities Act and the applicable published rules and
regulations of the SEC thereunder, and otherwise in customary form and covering
such financial and accounting matters as are customarily covered by letters of
the independent public accountants delivered in connection with primary
underwritten public offerings.
(l) If the managing underwriter or agent so requests, the underwriting
or agency agreement shall set forth in full the provisions hereof relating to
covenants, registration expenses,
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lock-up agreements, indemnification and contribution contained in this Article
8, with such changes therein as may be agreed to by the managing underwriter or
agent, the Company and the selling holders.
(m) The Company shall deliver such documents and certificates as may be
requested by any selling holder or the underwriters or agents, if any, to
evidence compliance with Section 3.1(i) and with any customary conditions
contained in the underwriting or agency agreement, if any.
(n) The Company will make available for inspection by representatives
of the selling holders and the underwriters or agents participating in such
offering, any attorney or accountant retained by such selling holders or
underwriters or agents and, with respect to any private placement of Warrants or
Underlying Common Stock, upon notice to the Company, prospective purchasers, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter or
agent, attorney or accountant in connection with the preparation of the
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by each such person (by, among other things, if so requested
by the Company, entering into a confidentiality agreement in form and substance
satisfactory to the Company) unless such records, information or documents
become part of the public domain through no fault of such person or unless
disclosure thereof is required by court or administrative order or the SEC
(including the federal securities law). Without limitation of the foregoing, the
Company will give the selling holders, their underwriters or agents and their
respective counsel, accountants and other representatives and agents the
opportunity to participate in the preparation of any prospectus or offering
circular included therein or filed with the SEC, and, to review all information
reasonably requested by each of them as shall be necessary or appropriate, in
the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
(o) The Company will make generally available to its security holders
as soon as practicable, but not later than forty-five (45) days after the close
of the period covered thereby (or ninety (90) days if such period is a fiscal
year), an earnings statement of the Company (in form complying with the
provisions of Rule 158 under the rules and regulations of the SEC under the
Securities Act), covering a period of twelve (12) months beginning after the
effective date of the Registration Statement but not later than the first day of
the Company's fiscal quarter next following such effective date.
(p) The Company will enter into such customary agreements, including a
customary underwriting or agency agreement with the underwriters or agents, if
any, and take all other reasonable actions in connection with the offering in
order to expedite or facilitate the disposition of the Registered Securities.
(q) The Company will provide a transfer agent and registrar for all
such Eligible Securities covered by such registration statement not later than
the effective date of such registration statement.
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(r) The Company will provide a CUSIP number for all Eligible Securities
being offered, not later than the effective date of the registration statement.
(s) The Company will take all such other commercially reasonable
actions as are necessary or advisable in order to expedite or facilitate the
disposition of such Eligible Securities.
(t) The Company shall cooperate with the selling holders and the
underwriters or agents participating in such offering to facilitate the timely
preparation and delivery of certificates representing such Registered Shares to
be sold, which certificates shall not bear any restrictive legends except as
required by law or the Articles of Incorporation or the Company's By-laws; and,
in the case of an underwritten offering, enable such Registered Shares to be in
such denominations and registered in such names as the managing underwriter or
underwriters may request in writing at least two business days prior to any sale
of the Registered Shares to the underwriters or agents participating in such
offering.
Section 3.2. Covenants of the Selling Holders.
(a) Each selling holder shall use its best efforts to furnish to the
Company such information regarding the distribution of such Registered
Securities as is customarily requested from selling holders in underwritten
public offerings to the extent necessary to permit the Company to comply with
the Securities Act; provided, that the Company will not include in any
Registration Statement, Prospectus or prospectus supplement information
concerning or relating to any Holder or selling holder to which such Holder or
selling holder shall reasonably object (unless the inclusion of such information
is required by applicable law or the regulation of any securities exchange to
which the Company may be subject), and the Company will not file any
Registration Statement, Prospectus or amendment or supplement thereto to which
such Holder or selling holder shall reasonably object; provided that, if such
Holder or selling holder objected to a registration statement to be filed in
connection with a Piggyback Registration, such Holder or selling holder may
withdraw any or all of its Eligible Securities from such registration statement
and the Company may file such registration statement.
(b) 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
3.1(a)(vi), such selling holder will forthwith discontinue the disposition of
its Registered Securities pursuant to the Registration Statement until such
selling holder's receipt of the copies of a supplemented or amended Prospectus
contemplated by Section 3.1(f), or until it is advised in writing by the Company
that the use of such Prospectus may be resumed. If the Company shall give any
such notice, the Company shall extend the period of time during which the
Company is required to keep the Registration Statement effective and usable by
the number of days during the period from the date of receipt of such notice to
the date when each selling holder of Registered Securities covered by such
Registration Statement either receives the copies of a supplemented or amended
Prospectus contemplated by Section 3.1(f) or is advised in writing by the
Company that the use of such Prospectus may be resumed.
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(c) No selling holders, as such, shall be required to make any
representation or warranty as to the accuracy or completeness of the
Registration Statement or otherwise relating to the offering (except solely as
to written information furnished to the Company by such selling holder expressly
for use in the Registration Statement).
Section 3.3. Registration Expenses.
(a) The Company will pay and bear all costs and expenses incident to
the performance of its obligations under this Agreement with respect to each
registration pursuant to Section 2.1 or 2.2, including, without limitation:
(i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), as originally
filed and as amended, any preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the selling holders or the underwriters or agents, as
the case may be;
(ii) the preparation, printing and distribution of any
underwriting or agency agreement, agreement among underwriters, selling
agreements, certificates representing the Registered Securities, any
Blue Sky or legal investment survey and other documents relating to the
performance of and compliance with this Agreement;
(iii) the fees and disbursements of the Company's counsel,
accountants and experts and the reasonable fees and disbursements of
one counsel retained by the selling holders pursuant to Section 3.3(b);
(iv) except as provided in Section 3.3(c), the fees and
disbursements of the underwriters or agents customarily paid by issuers
or sellers of securities and the reasonable fees and expenses of any
special experts retained in connection with the Registration Statement,
but excluding underwriting discounts and commissions and transfer
taxes, if any;
(v) the qualification of the Registered Securities under
applicable securities laws in accordance with Section 3.1(g) and any
filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the selling holders and the underwriters
or agents, as the case may be, in connection therewith, in connection
with any Blue Sky or legal investment survey and in connection with any
reserve share program;
(vi) all fees and expenses incurred in connection with the
listing, if any, of any of the Registered Securities on any securities
exchange pursuant to Section 3.1(h); and
(vii) up to a 5% underwriting discount or commission payable
to the underwriters or agents in connection with the sale of the
Registered Securities.
(b) In connection with the filing of each Registration Statement, the
Company will reimburse the selling holders for the reasonable fees and
disbursements of one firm of legal
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counsel, which shall be chosen by the Initial Holder, or if the Initial Holder
is not then a selling holder, the Representative(s) and shall be reasonably
satisfactory to the Company.
(c) Each selling holder will pay and bear all costs and expenses
incident to the delivery of the Registered Securities to be sold by it,
including any stock transfer taxes payable upon the sale of such Registered
Securities to the purchaser thereof and, to the extent not paid pursuant to
Section 3.3(a)(vii) above, any underwriting discounts or commissions payable to
underwriters or agents in connection therewith.
Section 3.4. Indemnification and Contribution.
(a) In connection with each registration pursuant to Section 2.1 or
2.2, the Company shall and hereby does indemnify and hold harmless each selling
holder of Eligible Securities, each underwriter or agent participating in such
offering, each person, if any, who controls any selling holder or any such
underwriter or agent within the meaning of Section 15 of the Securities Act, and
each officer, director, employee, agent, stockholder, member, partner or direct
or indirect owner of any of the foregoing (all of the foregoing being referred
to collectively as "Seller Parties" and individually as a "Seller Party"), as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of an untrue statement of a material fact included in any
preliminary or summary prospectus or the Prospectus (or any amendment
or supplement thereto or any document incorporated therein by
reference) or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever arising out of or based upon any such untrue statement
or omission, or any such alleged untrue statement or alleged omission,
if such settlement is effected with the written consent of the Company,
which shall not be unreasonably withheld or delayed; and
(iii) against any and all expense whatsoever, as incurred
(including fees and disbursements of counsel chosen by the Seller
Parties), reasonably incurred in investigating, preparing, defending
against or appealing any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that, with respect to any Seller Party, this indemnity does
not apply to any loss, liability, claim, damage or expense to the extent arising
out of an untrue statement or omission or
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alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Seller Party,
expressly for use in the Registration Statement (or any amendment thereto), or
any preliminary or summary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) Each selling holder agrees severally, and not jointly or jointly
and severally, to indemnify and hold harmless the Company, its directors, each
of its officers who signed a Registration Statement, each underwriter or agent
participating in such offering and the other selling holders, and each person,
if any, who controls the Company, any such underwriter or agent and any other
selling holder within the meaning of Section 15 of the Securities Act and each
officer, director, employee, agent, stockholder, member, partner or direct or
indirect owner of any of the foregoing, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section
3.4(a), as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), or any preliminary or summary prospectus 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 expressly for use in the Registration Statement (or any amendment
thereto), or any preliminary or summary prospectus or the Prospectus (or any
amendment or supplement thereto); provided, however, that the liability of any
selling holder under this Section 3.4(b) shall be limited to the amount of net
proceeds received by such selling holder in the offering giving rise to such
liability.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve the indemnifying party from any liability it may have
under this Agreement, except to the extent that the indemnifying party is
materially prejudiced thereby and shall not relieve the indemnifying party from
any liability it may have had to any indemnified party otherwise than under this
Section 3.4. In case any action or proceeding is brought against the indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, unless in the
reasonable judgment of the indemnified party a conflict may exist between the
indemnifying party and the indemnified party in respect of such claim or
proceeding, to assume the defense thereof, jointly with any other indemnifying
party so notified, with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party that it
so chooses, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that
(i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the claim within twenty (20) days after
receiving notice from the indemnified party that the indemnified party
believes it has failed to do so; or
(ii) if the indemnified party who is a defendant in any action
or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal
defenses available to the indemnified party which are not available to
the indemnifying party; or
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(iii) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional
conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall
have concluded that there may be legal defenses available to such party
or parties which are not available to the other indemnified parties or
to the extent representation of all indemnified parties by the same
counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for
any reasonable expenses therefor. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If for any reason the forgoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any loss, liability, claim, damage or expense in such proportion
as is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from such offering
of securities. If, however, the allocation provided in the immediately preceding
sentence is not permitted by applicable law, or if the indemnified party failed
to give the notice required by subparagraph (c) above and the indemnifying party
is materially prejudiced thereby, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. The relative fault 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 indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this subparagraph (d) were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this subparagraph (d).
The amount paid or payable in respect of any claim shall be deemed to include
any legal or other expenses incurred by such indemnified party in connection
with investigation or defending any such claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act or
the equivalent thereof under any applicable law) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresen
tation. Notwithstanding anything in this subparagraph (d) to the contrary, no
indemnifying party (other than the Company) shall be required pursuant to this
subparagraph (d) to contribute any amount in excess of the net proceeds received
by such indemnifying party from the sale of securities in the offering to which
the losses, claims, damages or liabilities of the indemnified parties relate,
less the amount of any indemnification payment made pursuant to this
subparagraph (d).
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(e) Any indemnity and reimbursement agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract. The indemnity and
contribution agreements contained in this Section 3.4 and the representations
and warranties of the Company referred to in Section 3.1(i) shall remain
operative and in full force and effect regardless of (i) any termination of any
underwriting or agency agreement, (ii) any investigation made by or on behalf of
the selling holders, the Company or any underwriter or agent or controlling
person or (iii) the consummation of the sale or successive resales of the
Registered Securities.
(f) The indemnification and contribution required herein shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
Section 3.5. Rule 144. The Company covenants that it will continue to
file on a timely basis the reports required to be filed by it under the
Securities Act and the rules and regulations of the SEC thereunder and the
Exchange Act and the rules and regulations of the SEC thereunder and it will
take such further action as any Holder of Eligible Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Eligible Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities Act,
as such Rule may be amended from time to time. Upon the request of any Holder of
Eligible Securities, the Company will deliver to such Holder a written statement
as to whether it has complied with such requirements.
Section 3.6. Participation in Underwritten Offerings. No Holder may
participate in any underwritten offering hereunder unless:
(a) Such Holder (other than the Initial Holder) executes a
power of attorney appointing one or more (up to three (3)) attorneys
(each, a "Representative") designated by the selling holders proposing
to sell a majority of the Eligible Securities proposed to be sold by
all selling holders. Each such Representative shall be authorized, on
customary terms, to execute the underwriting agreement on behalf of
each selling holder and to otherwise act for the selling holders in
connection with the offering.
(b) Such Holder (other than the Initial Holder) directly
through its Representative, enters into an underwriting agreement with
the Company, the other selling holders, any selling stockholders and
the underwriters, which underwriting agreement shall comply with the
provisions of this Article 8.
(c) Such Holder executes all questionnaires and other
documents required by the underwriting agreement to be executed by such
Holder.
Section 3.7. Lock-Up Agreements.
(a) Provided that the Company, within 10 Business Days after receiving
a Registration Demand, has not given notice to the Holder making such
Registration Demand to the effect that it is unable to provide a "lock-up" as
described in this Section 8.7(a) because it intends to issue securities within
the following 90 days, the Company agrees that it will not, directly or
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indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any share of Common Stock or securities convertible into or
exchangeable or exercisable for any share of Common Stock, other than any (i)
such sale or distribution of Common Stock upon exercise of Warrants in the case
of any registration pursuant to Section 7.l and (ii) Excluded Securities (as
defined below), for a period of ninety (90) days (or such shorter period as the
managing underwriter of such registration shall determine) from the effective
date of any Registration Statement pertaining to such Eligible Common
Stock."Excluded Securities" shall mean (1) options or other securities issued to
employees or directors of the Company, (2) securities issued in exchange for
interests in real property, (3) shares issued in connection with the Company's
DRIP, (4) securities issued upon conversion of convertible securities issued by
the Company and (5) non-convertible preferred stock of the Company and
non-convertible debt securities of the Company.
(b) Each Holder of Eligible Common Stock whose Eligible Common Stock is
covered by a Registration Statement filed pursuant to Sections 2.1 or 2.2 agrees
that it will not, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any shares of Common Stock (other than
the Eligible Common Stock covered by such Registration Statement) or any
Warrants or other securities convertible into or exchangeable or exercisable for
Common Stock, for a period of ninety (90) days (or such shorter period as the
managing underwriter of such registration shall determine) days from the
effective date of the Registration Statement pertaining to such Eligible Common
Stock.
(c) The lock-up agreements set forth in Sections 8.7(a) and 8.7(b)
shall be subject to customary exceptions that may be contained in an
underwriting agreement if any such registration involves an underwritten
offering.
ARTICLE 4
MISCELLANEOUS
Section 4.1. Notices. (a) Any notice, demand or delivery authorized by
this Agreement shall be in writing and shall be sufficiently given or made when
delivered or on the third Business Day following the date sent by first-class
mail, postage prepaid, addressed to the Company or the Initial Holder as
follows:
If to the Company: Wellsford Real Properties, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Initial Holder: W/W Group Holdings, L.L.C.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
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or (iii) such other address as shall have been furnished to the party giving or
making such notice, demand or delivery.
Section 4.2. APPLICABLE LAW. THIS AGREEMENT AND ALL RIGHTS ARISING
HEREUNDER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 4.3. Persons Benefitting. This Agreement shall be binding upon
and inure to the benefit of any Holders (each of whom is an intended third party
beneficiary), the Company and their respective successors, assigns,
beneficiaries, executors and administrators. Nothing in this Agreement is
intended or shall be construed to confer upon any Person, other than the Company
and the Holders (and such successors, assigns, beneficiaries, executors and
administrators), any right, remedy or claim under or by reason of this Agreement
or any part hereof.
Section 4.4. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
Section 4.5. Headings. The descriptive headings of the several Sections
of this Agreement are inserted for convenience and shall not control or affect
the meaning or construction of any of the provisions hereof.
Section 4.6. Remedies. In the event of a breach by the Company or by a
holder of Eligible Securities, of any of their obligations under this Agreement,
each holder of Eligible Securities or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and each holder of Eligible Securities agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it shall waive the defense that a remedy at law would
be adequate.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
W/W GROUP HOLDINGS, L.L.C
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
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