REGISTRATION RIGHTS AGREEMENT
by and between
FAC REALTY TRUST, INC.
and
PROMETHEUS SOUTHEAST RETAIL LLC
dated as of
February 24, 1998
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as
of February 24, 1998, by and between FAC Realty Trust, Inc., a Maryland
corporation (the "Company") and Prometheus Southeast Retail LLC ("Buyer"), an
affiliate of Lazard Freres Real Estate Investors, LLC ("LFREI"). Capitalized
terms not otherwise defined herein have the meaning ascribed to them in the
Stock Purchase Agreement (as herein after defined).
WHEREAS, the Company and Buyer have entered into a Stock
Purchase Agreement, dated as of the date hereof (the "Stock Purchase
Agreement"), that provides for the purchase by Buyer and sale by the Company to
Buyer of shares of Company Common Stock and Contingent Value Rights; and
WHEREAS, in order to induce Buyer to enter into the Stock
Purchase Agreement, the Company has agreed to provide the registration rights
set forth herein;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
Section 1. Definitions. As used herein, the following terms
shall have the following meanings:
(a) "Agreement" shall have the meaning set forth in
the first paragraph hereof.
(b) "Buyer" shall mean Buyer, and shall also include any
Affiliate of LFREI, a majority or more of the voting power and of the economic
interests of which is Beneficially Owned by LFREI.
(c) "Commencement Date" shall mean the date of the Initial
Closing.
(d) "Commission" shall mean the Securities and Exchange
Commission, and any successor thereto.
(e) "Company" shall have the meaning set forth in the first
paragraph hereof.
(f) "Company Registration Expenses" shall mean the fees and
disbursements of counsel and independent public accountants for the Company
incurred in connection with the Company's performance of or compliance with this
Agreement, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, and any
premiums and other costs of policies of insurance obtained by the Company
against liabilities arising out of the sale of any securities.
(g) "Contingent Value Right Agreement" means that certain
Contingent Value Right Agreement, dated as of the date hereof, between the
Company and Buyer.
(h) "Demand Registration" shall have the meaning set forth
in Section 2(a).
(i) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and any successor thereto, and the rules and regulations
thereunder.
(j) "NASD" shall mean the National Association of
Securities Dealers, Inc.
(k) "Registrable Securities" shall mean (i) any and all
shares of Company Common Stock acquired by Buyer pursuant to the Stock Purchase
Agreement, (ii) any and all securities acquired by Buyer pursuant to Section 4.2
of the Stockholders Agreement, (iii) any and all shares of Company Common Stock
issued, if any, by the Company pursuant to its payment obligations under the
Contingent Value Right Agreement, and (iv) any securities issued or issuable
with respect to any Company Common Stock or other securities referred to in
clause (i), (ii) or (iii) by way of conversion, exchange, stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (B) such securities shall have been sold in accordance with Rule 144
(or any successor provision) under the Securities Act or (C) such securities are
eligible to be resold pursuant to Rule 144(k).
(l) "Registration Expenses" shall mean all registration,
filing and stock exchange or NASD fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, any fees and disbursements of any separate counsel retained by Buyer,
and transfer taxes, if any, and any premiums and other costs of policies of
insurance obtained by Buyer against liabilities arising out of the public
offering of securities, including Company Registration expenses, but
specifically excludes any fees and disbursements of underwriters customarily
paid by sellers of securities who are not the issuers of such securities and all
underwriting discounts and commissions.
(m) "Registration Suspension Period" shall have the meaning
set forth in Section 2(b).
(n) "Securities Act" shall mean the Securities Act of 1933,
as amended, and any successor thereto, and the rules and regulations thereunder.
(o) "Stock Purchase Agreement" shall have the meaning set
forth in the second paragraph hereof.
(p) "Suspension Notice" shall have the meaning set forth in
Section 2(b).
(q) "Underwritten/Placed Offering" shall mean a sale of
securities of the Company to an underwriter or underwriters for reoffering to
the public or on behalf of a person other than the Company through an agent for
sale to the public.
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Section 2. Demand Registration
(a) Obligation to File. At any time following the
Commencement Date, promptly upon the written request of Buyer, the Company will
use its best efforts to file with the Commission a registration statement under
the Securities Act for the offering of all of the Registrable Securities which
Buyer requests to be registered (the "Demand Registration"). The Demand
Registration shall be on an appropriate form and the Demand Registration and any
form of prospectus included therein shall reflect such plan of distribution or
method of sale as Buyer notifies the Company, including the sale of some or all
of the Registrable Securities in a public offering or, if requested by Buyer,
subject to receipt by the Company of such information (including information
relating to purchasers) as the Company reasonably may require, (i) in a
transaction constituting an offering outside the United States which is exempt
from the registration requirements of the Securities Act in which the seller
undertakes to effect registration after the completion of such offering in order
to permit such shares to be freely tradeable in the United States, (ii) in a
transaction constituting a private placement under Section 4(2) of the
Securities Act in connection with which the seller undertakes to effect a
registration after the conclusion of such placement to permit such shares to be
freely tradeable by the purchasers thereof, or (iii) in a transaction under Rule
144A of the Securities Act in connection with which the seller undertakes to
effect a registration after the conclusion of such transaction to permit such
shares to be freely tradeable by the purchasers thereof. The Company shall use
its best efforts to cause the Demand Registration to be declared effective by
the Commission within 60 days from the date of receipt of the written request,
and, upon the request of Buyer, keep the Demand Registration effective for up to
90 days, unless the distribution of securities registered thereunder has been
earlier completed; provided, however, that if such Demand Registration will
require the Company to prepare or file audited financial statements with respect
to any fiscal year by a date prior to the date on which the Company would
otherwise be required to prepare and file such audited financial statements,
then Buyer must notify the Company at least 30 days in advance of the date upon
which such audited financial statements will be required to be filed. During the
period during which the Demand Registration is effective, the Company shall
supplement or make amendments to the Demand Registration, if required by the
Securities Act or if reasonably requested by Buyer or an underwriter of
Registrable Securities, including to reflect any specific plan of distribution
or method of sale, and shall use its best efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after filing.
(b) Black-Out Periods of Buyer. Notwithstanding anything
herein to the contrary, (i) the Company shall have the right from time to time
to require Buyer not to sell under the Demand Registration or to suspend the
effectiveness thereof during the period starting with the date 30 days prior to
the Company's good faith estimate, as certified in writing by an executive
officer of the Company to Buyer, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement relating to an
existing shelf registration statement, in either case, pertaining to an
underwritten public offering of equity securities of the Company for the account
of the Company, and ending on the date 75 days following the effective date of
such registration statement or the date of filing of the final
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prospectus supplement, and (ii) the Company shall be entitled to require Buyer
not to sell under the Demand Registration or to suspend the effectiveness
thereof (but not for a period exceeding 75 days in any calendar year), if the
Company determines, in its good faith judgment, that such offering or continued
effectiveness would interfere with any material financing, acquisition,
disposition, corporate reorganization or other material transaction involving
the Company or any of its subsidiaries or public disclosure thereof would be
required prior to the time such disclosure might otherwise be required, or when
the Company is in possession of material information that it deems advisable not
to disclose in a registration statement.
Once any registration statement filed pursuant to this
Section 2 or in which Registrable Securities are included pursuant to Section 3
has been declared effective, any period during which the Company fails to keep
such registration statement effective and usable for resale of Registrable
Securities for the period required by Section 4(b) shall be referred to as a
"Registration Suspension Period." A Registration Suspension Period shall
commence on and include the date that the Company gives written notice to Buyer
of its determination that such registration statement is no longer effective or
usable for resale of Registrable Securities (the "Suspension Notice") to and
including the date when the Company notifies Buyer that the use of the
prospectus included in such registration statement may be resumed for the
disposition of Registrable Securities.
(c) Number of Demand Registrations. The Company shall be
obligated to effect, under this Section 2, only four Demand Registrations (no
more than two of which may be requested in any two-year period). A Demand
Registration shall not be deemed to have been effected, nor shall it be
sufficient to reduce the number of Demand Registrations available to Buyer under
this Section 2, if such registration cannot be used by Buyer for more than 60
days as a result of any stop order, injunction or other order of the Commission
or other Government Authority for any reason other than an act or omission of
Buyer and all the Registerable Securities registered thereunder are not sold.
(d) Size of Demand Registration. The Company shall not be
required to effect a Demand Registration of less than a fair market value, based
on the closing market price on the trading day immediately prior to the date of
notice (as reported in the Wall Street Journal), of $10,000,000, except that if
the fair market value, based on the closing market price on the trading day
immediately prior to the date of notice (as reported in the Wall Street
Journal), of the Registrable Securities outstanding is less than $10,000,000,
then the Company shall be required to effect a Demand Registration of all of the
remaining Registrable Securities outstanding.
(e) Notice. The Company shall give Buyer prompt notice in
the event that the Company has suspended sales of Registrable Securities under
Section 2(b).
(f) Expenses. All Registration Expenses incurred in
connection with the Demand Registrations which may be requested under this
Section 2 shall be borne by the Company, with Buyer only paying underwriting
fees and discounts.
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(g) Selection of Underwriters. Any and all underwriters or
other agents involved in any sale of Registrable Securities pursuant to a
registration statement contemplated by this Section 2 shall include such
underwriter(s) or other agent(s) as selected by Buyer and approved of by the
Company, which approval shall not be unreasonably withheld; provided that any
Affiliate of Buyer shall in all events be approved by the Company.
Section 3. Incidental Registrations
(a) Notification and Inclusion. If the Company proposes to
register any of its common equity securities under the Securities Act (other
than a registration relating solely to the sale of securities to participants in
a dividend reinvestment plan, a registration on Form S-4 relating to a business
combination or similar transaction permitted to be registered on such Form S-4,
a registration on Form S-8 relating solely to the sale of securities to
participants in a stock or employee benefit plan, a registration permitted under
Rule 462 under the Securities Act registering additional securities of the same
class as were included in an earlier registration statement for the same
offering, and declared effective, or a shelf registration statement under the
Securities Act covering common equity securities with an aggregate offering
price of less than $50.0 million), whether or not for sale for its own account,
the Company shall, at each such time after the Commencement Date until Buyer no
longer holds Registerable Securities, promptly give written notice of such
registration to Buyer. Upon the written request of Buyer given within 10 days
after receipt of such notice by Buyer, the Company shall seek to include in such
proposed registration such Registrable Securities as Buyer shall request be so
included and shall use its reasonable best efforts to cause a registration
statement covering all of the Registrable Securities that Buyer has requested to
be registered to become effective under the Securities Act. The Company shall be
under no obligation to complete any offering of securities it proposes to make
under this Section 3 and shall incur no liability to Buyer for its failure to do
so. If, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to Buyer and, thereupon,
(i) in the case of a determination not to register, the Company shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses incurred in connection therewith) and (ii) in the case of a
determination to delay registering, the Company shall be permitted to delay
registering any Registrable Securities for the same period as the delay in
registering such other securities.
(b) Cut-back Provisions. If a registration pursuant to this
Section 3 involves an Underwritten/Placed Offering of the securities so being
registered, whether or not solely for sale for the account of the Company, which
securities are to be distributed by or through one or more underwriters of
recognized standing under underwriting terms customary for such transaction, and
the underwriter or the managing underwriter, as the case may be, of such
Underwritten/Placed Offering shall inform the Company of its belief that the
amount of securities requested to be included in such registration or offering
exceeds the amount which
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can be sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per share of the
securities to be sold), then the Company will include in such registration (i)
first, all the securities of the Company which the Company proposes to sell for
its own account or the account of others (other than Buyer) requesting inclusion
in such registration pursuant to rights to registration on request, and (ii)
second, to the extent of the amount which the Company is so advised can be sold
in (or during the time of) such offering, Registrable Securities and other
securities requested to be included in such registration, pro rata among Buyer
and others exercising incidental registration rights, on the basis of the shares
of Company Common Stock owned by all such persons.
(c) Expenses. The Company shall bear and pay all Company
Registration Expenses incurred in connection with any registration of
Registrable Securities pursuant to this Section 3 for Buyer, and all
Registration Expenses incurred in connection with any registration of any
securities for the Company's own account referred to in the first sentence of
Section 3(a), and Buyer shall bear and pay all underwriting fees and discounts
incurred in connection with any registration of Registrable Securities pursuant
to this Section 3 for Buyer.
(d) Duration of Effectiveness. At the request of Buyer, the
Company shall, subject to Section 2(b), use its reasonable best efforts to keep
any registration statement for which Registrable Securities are included under
this Section 3 effective and usable for up to 90 days (subject to extension for
the length of any Registration Suspension Period), unless the distribution of
securities registered thereunder has been earlier completed; provided, however,
that in no event will the Company be required to prepare or file audited
financial statements with respect to any fiscal year by a date prior to the date
on which the Company would be so required to prepare and file such audited
financial statements if such registration statement were no longer effective and
usable.
Section 4. Registration Procedures. In connection with the
filing of any registration statement as provided in Section 2 or 3, the Company
shall use its reasonable best efforts to, as expeditiously as reasonably
practicable:
(a) prepare and file with the Commission the requisite
registration statement (including a prospectus therein) to effect such
registration and use its reasonable best efforts to cause such registration
statement to become effective, provided that before filing such registration
statement or any amendments or supplements thereto, the Company will furnish to
the counsel selected by Buyer copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request made by
such counsel to make changes in any information contained in such documents
relating to Buyer;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of such
registration and to comply with the
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provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until the earlier of such time
as all of such securities have been disposed of and the date which is 90 days
after the date of initial effectiveness of such registration statement;
(c) furnish to Buyer such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statements (including each complete prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, including documents incorporated by reference, as
Buyer may reasonably request;
(d) register or qualify all Registrable Securities under
such other securities or blue sky laws of such jurisdictions as Buyer shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable Buyer to consummate the
disposition in such jurisdictions of the securities owned by Buyer, except that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this paragraph be obligated to be so qualified, or
to consent to general service of process in any such jurisdiction, or to subject
the Company to any material tax in any such jurisdiction where it is not then so
subject;
(e) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other
Government Authority as may be reasonably necessary to enable Buyer to
consummate the disposition of such Registrable Securities;
(f) furnish to Buyer a signed counterpart, addressed to
Buyer (and the underwriters, if any), of
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), reasonably satisfactory in form and substance to
Buyer, and
(ii) to the extent permitted by then applicable rules
of professional conduct, a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have certified the
Company's financial statements included in such registration statement, covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of the accountants' letter,
with respect to events subsequent to the date of such financial statements, all
as are customarily covered in opinions of issuer's counsel and in
7
accountants' letters delivered to the underwriters in underwritten public
offerings of securities;
(g) immediately notify Buyer at any time when the Company
becomes aware that a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and at
the request of Buyer promptly prepare and furnish to Buyer a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(h) comply or continue to comply in all material respects
with the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file any amendment or supplement to such registration
statement or prospectus to which Buyer shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act, having been furnished with
a copy thereof at least five Business Days prior to the filing thereof;
(i) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not later than the
effective date of such registration statement; and
(j) list all Company Common Stock covered by such
registration statement on any securities exchange on which any of the Company
Common Stock is then listed.
Buyer shall furnish in writing to the Company such information regarding Buyer
(and any of its affiliates), the Registrable Securities to be sold, the intended
method of distribution of such Registrable Securities, and such other
information requested by the Company as is necessary for inclusion in the
registration statement relating to such offering pursuant to the Securities Act
and the rules of the Commission thereunder. Such writing shall expressly state
that it is being furnished to the Company for use in the preparation of a
registration statement, preliminary prospectus, supplementary prospectus, final
prospectus or amendment or supplement thereto, as the case may be.
Buyer agrees by acquisition of the Registrable Securities that upon
receipt of any notice from the Company of the happening of any event of the kind
described in paragraph (g) of this Section 4, Buyer will forthwith discontinue
its disposition of Registrable Securities pursuant to the
8
registration statement relating to such Registrable Securities until Buyer's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph (g) of this Section 4.
Section 5. Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offerings by Buyer, under a
registration requested pursuant to Section 2(a), the Company will enter into a
customary underwriting agreement with such underwriters for such offering, to
contain such representations and warranties by the Company and such other terms
as are customarily contained in agreements of this type, including indemnities
to the effect and to the extent provided in Section 7. Buyer shall be a party to
such underwriting agreement and may, at its option, require that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of Buyer.
Buyer shall not be required to make any representations or warranties to or
agreement with the Company or the underwriters other than representations,
warranties or agreements regarding Buyer and Buyer's intended method of
distribution and any other representation or warranty required by law.
Section 6. Preparation: Reasonable Investigation. In
connection with the preparation and filing of the registration statement under
the Securities Act, the Company will give Buyer, its underwriters, if any, and
their respective counsel, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of Buyer's and such underwriters' respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
Section 7. Indemnification
(a) Indemnification by the Company. In the event of any
registration of any Registrable Securities of the Company under the Securities
Act, the Company will, and hereby does, indemnify and hold harmless (i) Buyer
and each other person who participates as an underwriter in the offering or sale
of such securities, (ii) each person, if any, who controls (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) Buyer or
any another person referenced in clause (i) above (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of Buyer or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as a
"Buyer Indemnitee"), against any losses, claims, damages or liabilities, joint
or several, to which any Buyer Indemnitee may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the
9
statements therein, in light of the circumstances under which they were made,
not misleading, and the Company will reimburse such Buyer Indemnitee for any
reasonable legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceedings; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by a Buyer
Indemnitee specifically stating that it is for use in the preparation thereof;
and provided, further, that the Company shall not be liable to any person who
participates as an underwriter in the offering or sale of Registrable Securities
or any other person, if any, who controls such underwriter within the meaning of
the Securities Act in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such person's failure to send or give a copy of the final prospectus or
supplement to the persons asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such person if such
statement or omission was corrected in such final prospectus or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any Buyer Indemnitee and shall survive the transfer of
such securities by Buyer.
(b) Indemnification by Buyer. The Buyer will, and hereby
does, indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 7) the Company, each director of the
Company, each officer of the Company and each other person, if any, who controls
the Company within the meaning of the Securities Act, and each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue statement
of a material fact in or omission or alleged omission to state a material fact
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by Buyer specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer, or controlling person and
shall survive the transfer of such securities by Buyer.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 7,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party
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to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 7, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Section 7 (with appropriate
modifications) shall be given by the Company and Buyer with respect to any
required registration or other qualification of securities under any federal or
state law or regulation of Governmental Authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required
by this Section 7 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.
(f) Contribution. If, for any reason, the foregoing
indemnity is unavailable, or is insufficient to hold harmless an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of the expense, loss, damage or
liability, (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other (determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission 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), or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or provides a lesser sum
to the indemnified party than the amount hereinafter calculated, in the
proportion as is appropriate to reflect not only the relative fault of the
indemnifying party and the indemnified party, but also the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 8. Covenants Relating to Rule 144. The Company will
file in a timely manner (taking into account any extensions granted by the
Commission), information, documents and reports in compliance with the Exchange
Act and will, at its expense, forthwith upon the request
11
of Buyer, deliver to Buyer a certificate, signed by the Company's principal
financial officer, stating (a) the Company's name, address and telephone number
(including area code), (b) the Company's Internal Revenue Service identification
number, (c) the Company's Commission file number, (d) the number of shares of
Company Common Stock and the number of shares of Company Preferred Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least 90 days prior to the date of
such certificate and in addition has filed the most recent annual report
required to be filed thereunder. If at any time the Company is not required to
file reports in compliance with either Section 13 or Section 15(d) of the
Exchange Act, the Company will, at its expense, forthwith upon the written
request of Buyer, make available adequate current public information with
respect to the Company within the meaning of paragraph (c)(2) of Rule 144 of the
General Rules and Regulations promulgated under the Securities Act.
Section 9. Miscellaneous.
(a) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section 9(a), provided receipt of copies of such counterparts is confirmed.
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
(c) Entire Agreement. This Agreement (including agreements
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred to
herein. This Agreement is not intended to confer upon any person not a party
hereto (and their successors and assigns) any rights or remedies hereunder.
(d) Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to the
Company shall be addressed to:
FAC Realty Trust, Inc.
00000 Xxxxxxx Xxxxxxx, 0xx Xx.
Xxxx Xxxxx
Xxxx, XX 00000
Attention: X. Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
12
with a copy to:
Xxxxxx & Bird LLP
000 XXX Xxxxx
0000 Xxxxxxxx Xxx.
P.O. Drawer 31107
Raleigh, North Carolina 27622-1107
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer. Notices to Buyer shall be
addressed to:
Lazard Freres Real Estate Investors, LLC
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: R. Xxxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(e) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors. Neither party shall be permitted to assign any of its rights
hereunder to any third party, except that if Buyer transfers any or all
Registrable Securities to another person, such transferee shall be considered an
intended beneficiary hereof and may exercise all rights of Buyer hereunder
(provided that any transferee that holds less than 50% of all outstanding
Registrable Securities shall not be entitled to request a Demand Registration
pursuant to Section 2 hereof).
(f) Headings. The Section and other headings contained in
this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or other headings contained herein mean Sections or other headings of
this Agreement unless otherwise stated.
(g) Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term
13
or provision hereof on the part of such other party hereto to be performed or
complied with. The waiver by any party hereto of a breach of any term or
provision hereof shall not be construed as a waiver of any subsequent breach.
(h) Interpretation; Absence of Presumption. For the
purposes hereof, (i) words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other gender
as the context requires, (ii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and Section, paragraph or other references are to the Sections, paragraphs, or
other references to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word "or" shall not be exclusive, and (v)
provisions shall apply, when appropriate, to successive events and transactions.
This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
(i) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
[Signature Page Follows]
14
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
PROMETHEUS SOUTHEAST RETAIL LLC
By: LF Strategic Realty Investor II, L.P.,
its sole member
By: Lazard Freres Real Estate Investors, LLC,
its general partner
By: ________________________
Name: ___________________________
Title: __________________________
FAC REALTY TRUST, INC.
By: ________________________
Name: X. Xxxxxxx Xxxxxx
Title: Chief Executive Officer
