REGISTRATION RIGHTS AGREEMENT
Dated as of June 15, 1998
of
PRIME RETAIL, INC.
and
PRIME RETAIL, L.P.
for the benefit of
HOLDERS OF COMMON UNITS
of
PRIME RETAIL, L.P.
and
CERTAIN STOCKHOLDERS OF PRIME RETAIL, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this " Agreement") is made and entered
into as of June 15, 1998, by PRIME RETAIL, INC., a Maryland corporation (the
"Company"), and PRIME RETAIL L.P., a Delaware limited partnership (the
"Partnership"), for the benefit of those Persons (as defined herein) who own
Shares (as defined herein) and those Persons (other than the Company) who own
Units (as defined herein) and their respective successors, assigns and
transferees (herein referred to collectively as the "Holders" and individually
as a "Holder");
WHEREAS, Prime Retail, Inc., a Maryland corporation ("Old Prime"), the
Partnership, Horizon Group, Inc., a Michigan corporation ("HGI"), the Company
(formerly known as Sky Merger Corp.), Horizon Group Properties, Inc., a Maryland
corporation, Horizon Group Properties, L.P., a Delaware limited partnership, and
Horizon/Xxxx Outlet Centers Limited Partnership, a Delaware limited partnership
("Horizon Partnership") have entered into that certain Amended and Restated
Agreement and Plan of Merger dated as of February 1, 1998 (the "Merger
Agreement");
WHEREAS, on the date hereof and in accordance with the Merger Agreement,
Horizon Partnership has merged with and into the Partnership (the "Partnership
Merger"), with the Partnership as the surviving partnership, HGI has merged with
and into the Company (the "Reincorporation"), with the Company as the surviving
corporation, and Old Prime has merged with and into the Company, with the
Company as the surviving corporation (the "Corporate Merger" and, together with
the Partnership Merger and the Reincorporation, the "Mergers");
WHEREAS, Old Prime, the Partnership and certain others have entered into a
Registration Rights Agreement dated March 22, 1994 (the "Old Prime Registration
Rights Agreement") and HGI has entered into a Registration Rights Agreement
dated as of July 14, 1995 (the "HGI Registration Rights Agreement" and, together
with the Old Prime Registration Rights Agreement, the "Prior Agreements").
WHEREAS, Sky Merger Corp. filed a registration statement (the "S-4
Registration Statement") registering the Shares issuable upon the exchange of
Units under the Securities Act.
WHEREAS, it is a condition to the consummation of the various transactions
contemplated by the Merger Agreement that the Company and the Partnership enter
into this Agreement;
WHEREAS, the Company and the Partnership have agreed, subject to the terms,
conditions and limitations set forth herein, to provide the Holders with the
registration rights set forth herein and it is the intent of the Company and the
Partnership that this Agreement supersede and replace the Prior Agreements in
their entirety.
NOW, THEREFORE, the Company for the benefit of the holders agrees as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Closing Date" shall have the meaning assigned to such term in the
Merger Agreement.
"Common Units" shall mean units of limited partnership interest
designated as Common Units in the Partnership Agreement and outstanding on
the date hereof, including any Common Units issued in connection with the
Partnership Merger, all of which interests are exchangeable for Company
Common Stock or, at the option of the Company as the general partner of the
Partnership, cash in accordance with Article XI of the Partnership
Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include any successors thereof.
"Company Common Stock" shall mean the shares of common stock, $0.01
par value per share, of the Company.
"Company Series B Preferred Stock" shall mean the shares of 8.5%
Series B Cumulative Participating Convertible Preferred Stock, $0.01 par
value per share, of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"HGI Common Stock" shall mean shares of common stock, $0.01 par value
per share, of HGI and any shares of capital stock into which such shares
are converted pursuant to the Reincorporation.
"Holder" or "Holders" shall have the meaning set forth in the
preamble. Holders shall be comprised of REIT Holders and Unit Holders.
"Old Prime Common Stock" shall mean shares of common stock, $0.01 par
value per share, of Old Prime.
"Partnership" shall have the meaning set forth in the preamble and
shall also include any successors thereof.
"Partnership Agreement" shall mean the Second Amended and Restated
Agreement of Limited Partnership of Partnership, as in effect on the
Closing Date and as from time to time amended, supplemented or modified in
accordance with the terms thereof.
"Person" shall mean an individual, partnership, corporation, trust,
limited liability company, or unincorporated organization, or a government
or agency or political subdivision thereof.
"Prime/Sky Merger Effective Time" shall have the meaning assigned to
such term in the Merger Agreement.
"Prospectus" shall mean the prospectus included in a Registration
Statement, and any such prospectus as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and by all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"Public Sale" shall mean a public sale or distribution of Registrable
Securities, including a sale pursuant to Rule 144A (or any similar
provision then in effect) under the Securities Act.
"Registrable Securities" shall mean the Shares, excluding (i) Shares
for which a Registration Statement relating to the sale thereof by the
Holder shall have become effective under the Securities Act and which have
been disposed of by the Holder under such Registration Statement, (ii)
Shares sold or which may be sold or otherwise distributed pursuant to Rule
144 or Rule 145 under the Securities Act in unlimited quantities in any
three-month period as confirmed in a written opinion of counsel to the
Company addressed to the Holder or (iii) Shares as to which registration
under the Securities Act is not required to permit the sale thereof by the
Holder to the public, and certificates without restrictive legend shall
have been delivered by the Company for such Shares.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualification of any of the Registrable
Securities and the preparation of a Blue Sky Memorandum) and compliance
with the rules of the NASD, (iii) all expenses of any Persons engaged by
the Company in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus,
certificates and other documents relating to the performance of and
compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities
on any securities exchange or exchanges pursuant to Section 3(a)(viii)
hereof, and (v) the fees and disbursements of counsel for the Company and
of the independent public accountants of the Company, including the
expenses of any special audits or "cold comfort" letters, if any, required
by or incident to such performance and compliance. Registration Expenses
shall specifically exclude underwriting discounts and commissions, and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a selling Holder, all of which shall be borne by such Holder
in all cases.
"Registration Notice" shall have the meaning set forth in Section
3(a)(ii) hereof.
"Registration Statement" shall mean the S-4 Registration Statement
and/or the "shelf" registration statement of the Company filed pursuant to
Section 2(a) hereof and any other entity required to be a registrant with
respect to such shelf registration statement pursuant to the requirements
of the Securities Act which covers all of the Registrable Securities on an
appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the SEC, and all amendments and supplements to
such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and
all materials incorporated by reference therein.
"REIT Holders" shall mean Holders of Shares, and their respective
successors, assigns and transferees.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean Securities Act of 1933, as amended from
time to time.
"Shares" shall mean Company Series B Preferred Stock and Company
Common Stock that, in either case, (i) are issuable upon the exchange of
Units in accordance with Article XI of the Partnership Agreement or; (ii)
were issued on the date hereof in connection with the Corporate Merger in
exchange for HGI Common Stock or Old Prime Common Stock that was held
immediately prior to the Prime/Sky Merger Effective Time by "affiliates" of
HGI or Old Prime, respectively, within the meaning of Rule 144(a)(1) under
the Securities Act.
"Shelf Registration" shall mean a registration required to be effected
pursuant to Section 2(a) hereof.
"Unit Holders" shall mean the holders (other than the Company) owning
Units on the date hereof and their respective successors, assigns and
transferees.
"Units" shall mean the Common Units.
2. Shelf Registration Under the Securities Act
(a) Filing of Registration Statement. As promptly as practicable after
the date hereof, but in any event within thirty (30) days of the date
hereof, the Company shall cause to be filed promptly a Registration
Statement on Form S-3 providing for the sale by the Company to the Holders
of Shares to be issued upon the exchange of Units in accordance with
Article XI of the Partnership Agreement and providing for the sale by the
Holders of Registrable Securities in accordance with the terms hereof and
will use its reasonable efforts to cause such Registration Statement to be
declared effective by the SEC as soon as reasonably
practicable. The Company agrees to use its reasonable efforts to keep the
Registration Statement continuously effective under the Securities Act
until such date as there shall no longer be any Registrable Securities
outstanding, and further agrees to supplement or amend the Registration
Statement, if and as required by the rules, regulations or instructions
applicable to the registration form used by the Company for such
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for Registration. Notwithstanding any provision of
this Section 2(a) to the contrary, if as of the date of this Agreement any
of the Registrable Securities are subject to an effective registration
statement under the Securities Act on a form permitting the sale of Shares
in the manner provided for in this Agreement, such registration statement
may, at the option of the Company, serve as the Registration Statement
required by this Section 2(a) for all purposes of this Agreement with
respect to such Shares. The Company shall cause to be filed a
post-effective amendment to such Registration Statement permitting resales
of such Shares and shall use its reasonable efforts to cause such
post-effective amendment to become effective on the date hereof or as soon
as reasonably practicable after the date hereof.
(b) Expenses. The Company shall pay all Registration Expenses in
connection with any Registration pursuant to Section 2. Each Holder shall
pay all underwriting discounts and commissions, the fees and disbursements
of counsel representing such Holder, and transfer taxes, if any, relating
to the sale or disposition of such Holder's Registrable Securities pursuant
to the Registration Statement.
(c) Inclusion in Registration Statement. The Company may require each
Holder of Registrable Securities to furnish to the Company in writing such
information regarding the proposed offer or sale by such Holder of such
Registrable Securities as the Company may from time to time reasonably
request in writing. Any Holder who does not provide the information
reasonably requested by the Company in connection with the Registration
Statement as promptly as practicably after receipt of such request, but in
no event later than ten (10) business days thereafter, shall not be
entitled to have its Registrable Securities included in the Registration
Statement.
(d) Obligations of Holders. Each Holder who sells Shares under a
Registration Statement shall be deemed to have agreed to all of the terms
and conditions of this Agreement and to assume and agree to perform any and
all obligations of a Holder hereunder.
3. Registration Procedures.
(a) Obligations of the Company. In connection with the Registration
Statement pursuant to Section 2(a) hereof, the Company shall:
(i) cause the Registration Statement to be available for the sale
of the Registrable Securities by Holders in one or more transactions
on the New York Stock Exchange ("NYSE") or otherwise, in special
offering, exchange distributions or secondary distribution pursuant to
and in accordance with the rules of the NYSE, in the over-the-counter
market,
in negotiated transactions, through the writing of options of the
Registrable Securities, or a combination of such methods of sale, and
to comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by
the SEC to be filed therewith; provided, however, the Registration
Statement shall also provide that sales may be made by the Holder
pursuant to Rule 144.
(ii) (A) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement effective for the period
required hereunder; (B) cause the Prospectus included in such
Registration Statement to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 or
any similar rule that may be adopted under the Securities Act; (C)
respond promptly to any comments received from the SEC with respect to
the Registration Statement, or any amendment, post-effective amendment
or supplement relating thereto; and (D) comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by the Registration Statement;
(iii) furnish to each Holder of Registrable Securities and to
each underwriter of an underwritten offering of Registrable
Securities, without charge, as many copies of each prospectus, and any
amendment or supplement thereto and such other documents as they may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; the Company consents to the
use of the Prospectus, by each such Holder of Registrable Securities,
in connection with the offering and sale of the Registrable Securities
covered by the Prospectus;
(iv) notify promptly each Holder of Registrable Securities (A) of
the issuance by the SEC 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, (B) if the Company
receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, and
(C) of the happening of any event during the period a Registration
Statement is effective as a result of which such Registration
Statement or the related Prospectus contains any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made (in the case of the
Prospectus), not misleading;
(v) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as
promptly as practicable;
(vi) use its reasonable efforts to register or qualify the
Registrable Securities subject to the Registration Statement under all
applicable state securities or "blue sky" laws of such jurisdictions
as any Holder of Registrable Securities covered by the Registration
Statement, and each underwriter thereof, if any, shall reasonably
request in writing, and do any and all other acts and things which may
be reasonably necessary or advisable to enable such Holder or any
underwriter to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however,
that the Company shall not be required to (A) qualify generally to do
business in any jurisdiction or to register as a broker or dealer in
such jurisdiction where it would not otherwise be required to qualify
but for this Section 3(a)(vi), (B) subject itself to taxation in any
such jurisdiction, or (C) submit to the general service of process in
any such jurisdiction;
(vii) upon the occurrence of any event contemplated by Section
3(a)(iv)(C) hereof, use its reasonable efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of a
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein, in the light of the circumstances under which they
were made, not misleading;
(viii) use its reasonable efforts to cause all Registrable
Securities to be listed on any securities exchange on which similar
securities issued by the Company are then listed;
(ix) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering at least twelve (12) months which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
(x) use its reasonable efforts. to cause the Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary by virtue of the business and operations of the Company
to enable Holders that have delivered Registration Notices to the
Company to consummate the disposition of such Registrable Securities.
(b) Obligations of Holders. In connection with and as a condition to the
Company's obligations with respect to a Registration Statement pursuant to
Section 2 hereof and this Section 3, each Holder agrees that (i) it will not
offer or sell its Registrable Securities under the Registration Statement until
it has received copies of the supplemental or amended Prospectus contemplated by
Section 3(a)(ii)(A) and (B) hereof and receives notice that any post-effective
amendment has become effective; and (ii) upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3(a)(iv)(C) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder
receives copies of the supplemented or amended Prospectus contemplated by
Section 3(a)(vi) hereof and receives notice that any post-effective amendment
has become effective, and, if so directed by the Company, such Holder will
deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.
(c) Additional Undertakings. The Company shall cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the selling Holders or the
underwriters, if any, may reasonably request at least three business days prior
to the closing of any sale
of Registrable Securities. The Company further agrees to enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) make 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;
(ii)obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and the
Holders of a majority in principal amount of the Registrable
Securities being sold) addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered in
opinion requested in sales of securities or underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters;
(iii) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants (and, if necessary,
any other independent certified public accountants of any subsidiary
of the Company or of any business acquired by the Company for which
financial statements are, or are required to be, included in the
Registration Statement) addressed to the underwriters, if any, and use
reasonable efforts to have such letter addressed to the selling
Holders of Registrable Securities (to the extent consistent with
Statement on Auditing Standards No. 72 of the American Institute of
Certified Public Accounts), such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with similar underwritten
offerings;
(iv) enter into a securities sales agreement with the Holders and
an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Securities, which agreement shall
be in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same
to set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth
in Section 4 hereof with respect to the underwriters and all other
parties to be indemnified pursuant to said Section or, at the request
of any underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings to the
Holders of the Registrable Securities being sold and the managing
underwriters, if any.
The above shall be done at closing under any underwriting or similar agreement
as and to the extent required thereunder.
4. Indemnification; Contribution.
(a) Indemnification by the Company and the Partnership. The Company and the
Partnership, jointly and severally, agree to indemnify and hold harmless each
Holder, each Person, if any, who participates as an underwriter in the offering
or sale of Registrable Securities hereunder, each officer and director of such
Holder and underwriter, and each Person, if any, who controls any Holder or such
underwriter within the meaning of Section 15 of the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which
Registrable Securities were registered under the Securities Act,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in
order 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 based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent
of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each
case whether or not a party, 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 the indemnity provided pursuant to this Section 4(a)
does not apply to any Holder or underwriter with respect to any loss, liability,
claim, damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company or the Partnership
by such Holder expressly for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) as evidenced
by a written statement duly executed by such Holder specifically stating that it
is for use in the preparation thereof.
(b) Indemnification by the Holders and Underwriters. Each Holder severally
agrees, and with respect to any underwriter the Company and the Partnership may
require an undertaking reasonably satisfactory to the Company and the
Partnership from such underwriter, to indemnify and hold harmless the Company,
the Partnership and the other selling Holders, and each of their respective
directors and officers (including each director and officer of the Company who
signed the Registration Statement), and each Person, if any, who controls the
Company, the Partnership or any other selling Holder within the meaning of
Section 15 of the Securities Act, to the same extent as the indemnity contained
in Section 5(a) hereof (except that any settlement described in Section 4(a)(ii)
shall be effected only with the written consent of such Holder), but only
insofar as such loss, liability, claim, damage or expense arises out of or is
based upon (i) any untrue statement or omission, or alleged untrue statements or
omissions, made in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company or the Partnership
by such selling Holder expressly for use in such Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto)
as evidenced by a written statement duly executed by such Holder specifically
stating that it is for use in the preparation thereof, or (ii) such Holder's
failure to deliver a Prospectus to any purchaser of Registrable Securities where
such a delivery obligation was applicable to such Holder's sale of Registrable
Securities and such Holder had been provided with sufficient copies of such
Prospectus for the relevant deliveries thereof. In no event shall the liability
of any Holder under this Section 4(b) be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Each indemnified party shall
give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party (i) shall not relieve
it from any liability which it may have under the indemnity agreement provided
in Section 4(a) or (b) above, unless and to the extent it did not otherwise
learn of such action and the lack of notice by the indemnified party results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided under Section 4(a) or (b) above. If the indemnifying party so elects
within a reasonable time after receipt of such notice, the indemnifying party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel chosen by the indemnifying party and approved by the
indemnified parties defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
or parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to assume
such defense and the indemnified party or parties shall be entitled to one
separate counsel at the indemnifying party's expense. If an indemnifying party
is not entitled to assume the defense of such action or proceeding as a result
of the proviso to the preceding sentence, such indemnifying party's counsel
shall be entitled to conduct the defense of such indemnified party or parties,
it being understood that both such counsel will cooperate with each other to
conduct the defense of such action or proceeding as efficiently as possible. If
an indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of counsel for the indemnified party or
parties. In such event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding. Any
settlement effected by the Company or the Partnership shall also release each
Holder that has sold securities pursuant to the Registration Statement, provided
such Holder is entitled to indemnification with respect to such sale pursuant to
this Section 4. The indemnification obligations provided pursuant to Section
4(a) and (b) hereof survive, with respect to a Holder, the transfer of
Registrable Securities by such Holder, and with respect to a Holder or the
Company, shall remain in full force and effect regardless of any investigation
made by or on behalf of any indemnified party, and shall be in addition to any
other rights (to indemnification, contribution or otherwise) which any
indemnified party may have pursuant to laws or contracts.
(d) Contribution.
(i) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 4 is for any reason held to be unenforceable although
applicable in accordance with its term, the Company and the
Partnership, jointly and severally, on the one hand, and the selling
Holders, on the other, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated
by such indemnity agreement incurred by the Company and the
Partnership, jointly and severally, and the selling Holders, in such
proportion as is appropriate to reflect the relative fault of the
Company and the Partnership on the one hand and the selling Holders on
the other hand as well as the relative benefits to such parties and
other equitable considerations (in such proportions that the selling
Holders are severally, not jointly, responsible for the balance), in
connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and indemnified parties shall be determined by
reference to, among, other things, whether the action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to, information supplied by, such indemnifying party or
the indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action.
(ii) The Company, the Partnership and the Holders agree that it
would not be just or equitable if contribution pursuant to this
Section 4(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 4(d), no selling Holder
shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such
selling Holder were sold to the public exceeds the amount of any
damages which such selling Holder would otherwise have been required
to pay by reason of such untrue statement or omission.
(iii) Notwithstanding the foregoing, 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. For purposes
of this Section 4(d), each Person, if any, who controls a Holder
within the meaning of Section 15 of the Securities Act and directors
and officers of a Holder shall have the same rights to contribution as
such Holder, and each director of the Company, each officer of the
Company who signed the Registration Statement and each Person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as Company
(iv) The contribution provided for in this Section 4(d) shall
survive, with respect to a Holder, the transfer of Registrable
Securities by such Holder, and with respect to a Holder or the
Company, shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party.
5. Rule 144 Sales.
(a) Reports. The Company covenants that it will file the reports
required to be filed by the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended, and will take such
further action as any Holder of Registrable Securities may reasonably
request, all to the extent required to enable such Holder to sell
Registrable Securities pursuant to Rule 144 under the Securities Act.
(b) Certificates. In connection with any sale, transfer or other
disposition by any Holder of any Registrable Securities pursuant to
Rule 144 under the Securities Act, the Company shall cooperate with
such Holder to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any Securities Act legend, and enable certificates for such
Registrable Securities to be for such number of shares and registered
in such names as the selling Holders may reasonably request at least
two (2) business days prior to any sale of Registrable Securities.
6. Miscellaneous.
(a) 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 written consent of
the Company and the Holders of a majority in amount of the outstanding
Registrable Securities; provided, however, that no amendment,
modification or supplement or waiver or consent that adversely effects
any rights under this
Agreement shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder. Notice of any
amendment, modification or supplement to this Agreement adopted in
accordance with this Section 6(a) shall be provided by the Company to each
Holder of Registrable Securities at least thirty (30) days prior to the
effective date of such amendment, modification or supplement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, (i) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the
provisions of this Section 6(b), which address initially is, with respect
to each Holder, the address and facsimile number set forth next to such
Holder's name on the books and records of the Company, or (b) if to the
Company or the Partnership, at: Prime Retail, Inc., 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxxx Xxxxx, Xxxxxxxxx, XX 00000 Attention: C. Xxxx Xxxxxxxxx,
facsimile number: (000) 000-0000. All such notices and communications shall
be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five (5) business days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt is acknowledged, if telecopied; or at the time delivered if
delivered by an air courier guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of
the Company, Partnership and the Holders, including without limitation and
without the need for an express assignment, subsequent Holders. If any
successor, assignee or transferee of any Holder shall acquire Registrable
Securities or Units, in any manner, whether by operation of law or
otherwise, such Registrable Securities or Units, as the case may be, shall
be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities or Units such Person shall be entitled
to receive the benefits hereof and shall be conclusively deemed to have
agreed to be bound by all of the terms and provisions hereof. Each such
Person shall be entitled to the benefits of this Agreement without the
consent of the Company, the Partnership or any other Holder.
(d) Headings. The headings in this Agreement are for the convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
(f) Specific Performance. The Company and the Holders hereto
acknowledge that there would be no adequate remedy at law if any party
fails to perform any of its obligations hereunder, and accordingly agree
that each party, in addition to any other remedy to which it may be
entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement in any court of
the United States or any State thereof having jurisdiction.
(g) Entire Agreement. This Agreement is intended by the Company as a
final expression of its agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the Company in
respect of the subject matter contained herein. This Agreement supersedes
all prior agreements and understandings of the Company with respect to such
subject matter.
IN WITNESS WHEREOF, the Company has executed this Agreement as of the
date first written above.
PRIME RETAIL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: President
PRIME RETAIL, L.P.
By: PRIME RETAIL, INC., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: President
