Exhibit 10.2
PACIFIC GATEWAY PROPERTIES, INC.
REGISTRATION RIGHTS AGREEMENT
SEPTEMBER 21, 1998
TABLE OF CONTENTS
Page
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SECTION 1 .................................................................1
Restrictions on Transferability of Securities; ............................1
1.1. CERTAIN DEFINITIONS .............................................1
1.2. REQUESTED REGISTRATION ..........................................2
1.3. COMPANY REGISTRATION ............................................4
1.4. EXPENSES OF REGISTRATION ........................................5
1.6. REGISTRATION PROCEDURES .........................................6
1.7. INDEMNIFICATION .................................................7
1.7. INFORMATION BY HOLDER ...........................................9
1.8. LIMITATIONS ON REGISTRATION OF ISSUES OF SECURITIES .............9
1.9. RULE 144 REPORTING .............................................10
1.10. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS .................10
1.11. "MARKET STAND-OFF" AGREEMENT ..................................11
1.12. DELAY OF REGISTRATION .........................................11
1.13. EXCLUSION FROM REGISTRATION ...................................11
1.14. ALLOCATION OF REGISTRATION OPPORTUNITIES ......................12
SECTION 2 ................................................................12
MISCELLANEOUS ............................................................12
2.1. GOVERNING LAW ..................................................12
2.2. SUCCESSORS AND ASSIGNS .........................................13
2.3. ENTIRE AGREEMENT; AMENDMENT; WAIVER ............................13
2.4. NOTICES, ETC. ..................................................13
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2.5. SEPARABILITY ...................................................13
2.6. INFORMATION CONFIDENTIAL .......................................13
2.7. TITLES AND SUBTITLES ...........................................13
2.8. COUNTERPARTS ...................................................13
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 21st day of September
1998, by and among Pacific Gateway Properties, Inc., a New York corporation (the
"Company"), and the undersigned investor (the "Investor")
WHEREAS, the Company and the Investor are parties to the Series 1 Preferred
Stock Purchase Agreement of even date herewith (the "Series 1 Purchase
Agreement"); and
WHEREAS, in order to induce the Company to enter into the Series 1 Purchase
Agreement and to induce the Investor to invest funds in the Company pursuant to
the Series 1 Purchase Agreement, the Investor and the Company hereby agree that
this Agreement shall govern the rights of the Investor to cause the Company to
register shares of Common Stock issuable to the Investor and certain other
matters as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
SECTION 1
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
REGISTRATION RIGHTS
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1.1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "CLOSING" shall mean the date of the initial sale of shares of
the Company's Series 1 Preferred Stock.
(b) "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(c) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(d) "HOLDER" shall mean the Investor and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred in compliance with Section 1.11 hereof.
(e) "INITIATING HOLDERS" shall mean any Holder or Holders of the
outstanding Registrable Securities. For purposes of such calculation, holders
of Shares shall be considered to hold the shares of Common Stock then issuable
upon conversion of such Shares.
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(f) "INVESTORS" shall mean the Investor and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with the provisions of Section 1.11.
(g) "REGISTRABLE SECURITIES" shall mean (i) shares of Common Stock
issued or issuable pursuant to the conversion of the Shares and (ii) any Common
Stock issued as a dividend or other distribution with respect to or in exchange
for or in replacement of the shares referenced in (i) above, provided, however,
that Registrable Securities shall not include any shares of Common Stock that
are freely tranferable without registration.
(h) The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
(i) "REGISTRATION EXPENSES" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, expenses of any regular or special audits incident to or required
by any such registration, but shall not include Selling Expenses.
(j) "RULE 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor Rule that may be promulgated by the Commission.
(k) "RULE 145" shall mean Rule 145 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor Rule that may be promulgated by the Commission.
(1) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time, corresponding
to such Act.
(m) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for any Holder (other than the fees and
disbursements of counsel included in Registration Expenses).
(n) "SHARES" shall mean the Company's Series 1 Preferred Stock,
1.2. REQUESTED REGISTRATION
(a) REQUEST FOR REGISTRATION. If the Company shall receive from
Initiating Holders at any time, a written request specifying that it is made
pursuant to this Section 1.2 that the Company effect a registration with respect
to all or a part of the Registrable Securities having a reasonably anticipated
aggregate offering price, net of underwriting discounts and commissions, that
exceeds $2,000,000, the Company will:
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(i) promptly give written notice of the proposed registration to
all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with the Securities Act) as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after such written notice from the Company is effective.
The Company shall not be obligated to effect, or to take any action to such
registration pursuant to this Section 1.2:
(A) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration pursuant to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(b) Subject to the foregoing clauses (A) and (B), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders; provided, however, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration would be
seriously detrimental to the Company and the Board of Directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company for such registration statement to be filed
in the near future and that it is, therefore, essential to defer the filing of
such registration statement, then the Company shall have the right to defer such
filing for the period during which such disclosure would be seriously
detrimental, provided, that the Company may not defer the filing for a period of
more than one hundred twenty (120) days after receipt of the request of the
Initiating Holders, and, provided further, that (except as provided in clause
(a) above) the Company shall not defer its obligation in this manner more than
once in any twelve-month period.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Sections 1.2(d), 1.14 and 1.15 hereof,
include other securities of the Company and may include securities of the
Company being sold for the account of the Company.
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(c) UNDERWRITING. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 1.2 and the Company shall include such information in the written notice
referred to in Section 1.2(a)(i) above. The right of any Holder to registration
pursuant to Section 1.2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder with respect to such participation and
inclusion) to the extent provided herein.
(d) PROCEDURES. If the Company shall request inclusion in any
registration pursuant to Section 1.2 of securities being sold for its own
account, or if other Holders shall request inclusion in any registration
pursuant to Section 1.2, the Initiating Holders shall, on behalf of all Holders,
offer to include such securities in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of this
Section 1. The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the representative of the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders, which underwriter(s) shall be reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 1.2, if the representative
of the underwriters advises the Initiating Holders in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
number of shares to be included in the underwriting or registration shall be
allocated as set forth in Sections 1.14 and 1.15 hereof. If a Holder who has
requested inclusion in such registration as provided above does not agree to the
terms of any such underwriting, such Holder shall be excluded therefrom by
written notice from the Company, the underwriter or the Initiating Holders. The
securities so excluded shall also be withdrawn from registration. Any
Registrable Securities or other securities excluded shall also be withdrawn from
such registration. If shares are so withdrawn from the registration and if the
number of shares to be included in such registration was previously reduced as a
result of marketing factors pursuant to this Section 1.2(d), then the Company
shall offer to all Holders who have retained rights to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares withdrawn, with such shares to
be allocated among such Holders requesting additional inclusion in accordance
with Section 1.15.
1.3. COMPANY REGISTRATION
(a) If the Company shall determine to register any of its securities
either for its own account or the account of a security holder or holders
exercising their respective demand registration rights (other than pursuant to
Section 1.2 hereof), other than a registration relating solely to employee
benefit plans, or a registration relating solely to a Commission Rule 145
transaction, or a registration on any registration Form which does not permit
secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof; and
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(ii) use its best efforts to include in such registration (and
any related qualification under blue sky laws or other compliance), except as
set forth in Section 1.3(b) below, and in any underwriting involved therein, all
the Registrable Securities specified in a written request or requests, made by
any Holder within twenty (20) days after the written notice from the Company
described in clause (i) above is effective. Such written request may specify
all or a part of a Holder's Registrable Securities.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.3(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the holders of other securities of the Company
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.3, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting. The Company shall so advise all
Holders of securities requesting registration, and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated as set forth in Sections 1.14 and 1.15. If any Holder does
not agree to the terms of any such underwriting, such Holder shall be excluded
therefrom by written notice from the Company or the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration or if the number of shares
of Registrable Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among the persons requesting additional inclusion in accordance with
Section 1.15 hereof.
1.4. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 1.3 hereof shall be borne by the Company. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 1.2 hereof shall be borne by the Company; PROVIDED, HOWEVER,
that for the two year period commencing on the date of the Closing, all
Registration Expenses incurred pursuant to Section 1.2 shall be shared equally
between the Company and the Initiating Holders. All Selling Expenses relating to
securities so registered shall be borne by the holders of such securities.
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1.5. REGISTRATION PROCEDURES. In the case of each registration effected by
the Company pursuant to Section 1, the Company will keep each Holder advised in
writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will use its best efforts to:
(a) Keep such registration effective for a period of ninety (90) days
or until the Holder or Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs; provided,
however, that (i) such 90-day period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor
Rule under the Securities Act, permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (I) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as a Holder
from time to time may reasonably request;
(d) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(e) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
(f) Otherwise use its best efforts to comply 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 twelve months, but not more than eighteen months, beginning
with the first month after the effective date of the Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act; and
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(g) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 1.2 hereof, the Company will
enter into an underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and provided further that if the underwriter
so requests the underwriting agreement will contain customary contribution
provisions.
(h) Furnish, at the request of any Holder, on the date that the
Common Stock is delivered to the underwriters for sale in connection with a
registration being sold through underwriters, (i) an opinion, if any, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters and to the
Holders and (ii) a letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
1.6. INDEMNIFICATION
(a) The Company will indemnify each Holder, each of its officers,
directors, employees, affiliates and partners, legal counsel and accountants and
each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls within the meaning of Section 15 of the Securities Act
any underwriter, against all expenses, claims, losses, damages and liabilities
(or actions, proceedings or settlements in respect thereof) arising out of or
based on any untrue statement of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any Rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of its officers, directors, employees, affiliates, partners, legal counsel
and accountants and each person controlling such Holder, each such underwriter
and each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein. It is
agreed that the indemnity agreement contained in this Paragraph 1.6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent has not been unreasonably withheld).
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(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors,
officers, employees, affiliates, partners, legal counsel and accountants and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, each other such Holder
and each of their officers, directors, employees, affiliates and partners, and
each person controlling such Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and such
Holders, directors, officers, employees, affiliates, partners, legal counsel and
accountants, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement or omission is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder specifically for inclusion therein; provided, however,
that the obligations of such Holder hereunder (i) shall not apply to amounts
paid in settlement of any such claims, losses, damages or liabilities (or
actions in respect thereof) if such settlement is effected without the consent
of such Holder (which consent shall not be unreasonably withheld), and
(ii) shall be limited in amount to the net proceeds received by such Holder from
the sale of shares pursuant to such registration, qualification or compliance.
(c) Any person entitled to indemnification hereunder (an "Indemnified
Party") will (i) give prompt written notice to the party required to provide
indemnification (an "Indemnifying Party") of any claim with respect to which it
seeks indemnification and (ii) permit such Indemnifying Party to assume the
defense of such claim with counsel reasonably satisfactory to the Indemnified
Party, provided, however, that any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (x) the Indemnifying Party has agreed in writing
to pay such fees or expenses, or (y) the Indemnifying Party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to
such person or (z) in the reasonable judgment of any such person and the
Indemnifying Party, based upon advice of their respective counsel, a conflict of
interest may exist between such person and the Indemnifying Party with respect
to such claim (in which case, if the person notifies the Indemnifying Party in
writing that such person elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such claim on behalf of such person). If such defense is not
assumed by the Indemnifying Party, the Indemnifying Party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No Indemnifying Party shall consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect to such claim or
litigation without the consent of the Indemnified Party. The failure of any
Indemnified Party to
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give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1.7 unless the Indemnifying Party is
materially prejudiced thereby. An Indemnifying Party who is not entitled to,
or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such Indemnifying Party with respect to such claim, unless in the reasonable
judgment of any Indemnified Party a conflict of interest may exist between
such Indemnified Party and any other of such Indemnified Parties with respect
to such claim, in which event the Indemnifying Party shall be obligated to
pay the fees and expenses of such additional counsel or counsels. Each
Indemnified Party shall furnish such information regarding itself or the
claim in question as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with the defense of such
claim and litigation resulting therefrom
(d) If the indemnification provided for in this Section 1.6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
1.7. INFORMATION BY HOLDER. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request and
as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.8. LIMITATIONS ON REGISTRATION OF ISSUES OF SECURITIES. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of a majority in interest of the Holders, enter into any agreement with
any holder or prospective holder of any securities of the Company giving such
holder or prospective holder any registration rights the terms of which are
superior to the rights of the Holders hereunder or which grant such holder or
prospective holder demand registration rights exercisable prior to those of the
Holders under Section 1.2 hereof.
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1.9. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to
use its best efforts to:
(a) Make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from
and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements;
(c) So long as a Holder owns any Restricted Securities, furnish to
the Holder forthwith upon written request a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 (at any time from
and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as a Holder may reasonably request m availing itself of any
Rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.10. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register Registrable Securities granted to a Holder by the
Company pursuant to this Section 1 may be transferred or assigned by a Holder to
(i) any transferee or assignee of not less than 175,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits and the like), (ii) any
constituent partner or member of a partnership or limited liability company
Holder, respectively, (iii) any subsidiary or parent of a corporate Holder,
(iv) any person, trust or other entity if beneficial ownership or the power to
vote or dispose of the Registrable Securities resides in the same person or
persons after the transfer as immediately prior to such transfer or (v) any
Holder to whom rights have been transfered pursuant to clauses (i) through (iv);
provided, however, that the Company is given written notice at the time of or
within a reasonable time after such a transfer or assignment, stating the name
and address of said transferee or assignee and identifying the Securities with
respect to which such registration rights are being transferred or assigned, and
provided further that the transferee or assignee of such rights assumes in a
written instrument provided to the Company the obligations of such Holder under
this Section 1. For purposes of clause (iv) of the foregoing sentence, where
two or more persons share beneficial ownership or power to vote or dispose of
Registrable Securities and such persons take as transferees a distributive share
equal to all or less than all of the Registrable Securities to which they shared
voting or dispositive power prior to the transfer, with respect to each such
person beneficial ownership or the power to vote or dispose of the Registrable
Securities held by them shall be deemed to reside in the same person as prior to
the transfer. In addition, subject to the approval of the Board of Directors in
its sole discretion, the right to cause the Company to register Registrable
Securities granted to a Holder pursuant to this Section 1 hereof may be assigned
or
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transferred by a Holder to any other transferee who is an affiliated person
or entity of a Holder where such transfer is of the type intended to be
permitted by this Section 1.10. Any transferee or assignee under the foregoing
sentence must assume in a written instrument provided to the Company the
obligations of the transferring Holder under this Section 1.
1.11. "MARKET STAND-OFF" AGREEMENT. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, an Investor
shall not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Investor (other than those included in
the registration) through the facilities of any national securities exchange or
inter-dealer quotation system including sales pursuant to Rule 144 during the
one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company enter into similar agreements.
The obligations described in this Section 1.11 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms which may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms which may be promulgated in the future. The Company may impose stop-
transfer instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said one hundred eighty (180) day period.
1.12. DELAY OF REGISTRATION. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.13. TERMINATION OF REGISTRATION RIGHTS. The right of any Holder to
request registration or inclusion in any registration pursuant to this Agreement
shall terminate on the date on which all shares of Registrable Securities held
or entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any ninety (90) day period.
1.14. EXCLUSION FROM REGISTRATION. If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
any offering involving an underwriting exceeds the amount of securities sold
other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder or in such other proportions as shall mutually
be agreed to by such selling shareholders) but in no event shall (i) the amount
of securities of the selling Holders included in the offering be reduced below
the greater of (A) thirty percent (30%) of the total amount of securities
included in such offering or (B) the total percentage ownership of Investor in
the outstanding Common Stock of the Company assuming the full conversion of the
Series 1 Preferred Stock, (ii) any shares that a Holder of Registrable
Securities wishes to include in the offering be excluded from such offering
until all of the shares that selling shareholders who are not Holders of
Registrable Securities wish to include in such offering have
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been excluded from such offering, or (iii) notwithstanding (i) and (ii)
above, any shares being sold by a Holder exercising a registration right
granted in Section 1.2 be excluded from such offering. For purposes of the
preceding parenthetical concerning apportionment, for any selling shareholder
which is a Holder of Registrable Securities and which is a partnership or
corporation, the partners, retired partners and shareholders of such holder,
or the estates and family members of any such partners and retired partners
and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder," and any pro-rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and
individuals included in such "selling shareholder," as defined in this
sentence.
1.15. ALLOCATION OF REGISTRATION OPPORTUNITIES. In any circumstance in
which all of the Registrable Securities requested to be included in a
registration on behalf of the Holders cannot be so included as a result of
limitations of the aggregate number of shares of Registrable Securities which
may be so included, the number of shares of Registrable Securities to be
included shall be allocated among the Holders requesting inclusion of shares pro
rata on the basis of the number of shares of Registrable Securities that would
be held by such Holders, assuming conversion; provided, however, that, so that
such allocation shall not operate to reduce the aggregate number of Registrable
Securities to be included in such registration, if any Holder does not request
inclusion of the maximum number of shares of Registrable Securities allocated to
him pursuant to the above-described procedure, the remaining portion of his
allocation shall be reallocated among those requesting Holders whose allocations
did not satisfy their requests pro rata on the basis of the number of shares of
Registrable Securities that would be held by such Holders assuming conversion,
and this procedure shall be repeated until all of the shares of Registrable
Securities that may be included in the registration on behalf of the Holders
have been so allocated. The Company shall not limit the number of Registrable
Securities to be included in a registration pursuant to this Agreement in order
to include shares held by shareholders with no registration rights or to include
any other shares of stock issued to employees, officers, directors or
consultants pursuant to the Company's employee stock option plan or plans, or,
with respect to registrations under Section 1.2 hereof, in order to include in
such registration securities registered for the Company's own account.
SECTION 2
MISCELLANEOUS
2.1. GOVERNING LAW. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of California as if
entered into by and between California residents exclusively for performance
entirely within California.
2.2. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
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2.3. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including the
Exhibits hereto) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated, except by a written instrument signed by the Company and the holders
of at least sixty-six percent (66%) of the Registrable Securities and any such
amendment, waiver, discharge or termination shall be binding on all the Holders,
but in no event shall the obligation of any Holder hereunder be materially
increased, except upon the written consent of such Holder.
2.4. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mall, postage prepaid, or delivered personally addressed by hand or
special courier (a) if to an Investor, as indicated on the signature pages
hereto, or at such other address as such Investor or permitted assignee shall
have furnished to the Company in writing, or (b) if to the Company, at its
headquarters, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, or at such other address as the Company shall have furnished to each
holder in writing. All such notices and other written communications shall be
effective (i) if mailed, ten (10) days after mailing and (ii) if delivered
personally, upon delivery.
2.5. SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
2.6. INFORMATION CONFIDENTIAL. Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its use
only, and it will not use any information designated as confidential by the
Company in violation of the Exchange Act or reproduce, disclose or disseminate
such information to any other person (other than its employees or agents having
a need to know the contents of such information, and its attorneys), except in
connection with the exercise of rights under this Agreement, unless the Company
has made such information available to the public generally or such Holder is
required to disclose such information by a governmental body.
2.7. TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
2.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
2.9. NO PERSONAL LIABILTY. Nothing contained in this Agreement shall be
deemed to impose any personal liability on the part of any officer, director,
shareholder, partner, member, manager or employee of the Investor or the
Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Investors Rights
Agreement effective as of the day and year first above written.
PACIFIC GATEWAY PROPERTIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
Address: 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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INVESTOR:
GEM VALUE/PGP LLC
By: GEM Value Partners, L.L.C.,
Its Managing Member
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
Address: 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
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