1
EXHIBIT 4.3
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
by and among
FORTRESS INVESTMENT CORP.,
FORTRESS PARTNERS, L.P.
and
FORTRESS PRINCIPAL INVESTMENT HOLDINGS LLC AND
THE ADDITIONAL PURCHASERS
dated as of June 10, 1998
--------------------------------------------------------------------------------
2
REGISTRATION RIGHTS AGREEMENT
Fortress Investment Corp.
INTRODUCTORY. This Registration Rights Agreement is made and entered
into as of June 10, 1998, by and among Fortress Investment Corp., a Maryland
corporation (the "Company"), Fortress Partners, L.P., a Delaware limited
partnership (the "Operating Partnership"), Fortress Principal Investment
Holdings LLC, a Delaware limited liability company (the "Purchaser"), and the
Additional Purchasers (as defined herein).
This Agreement is entered into pursuant to the subscription agreement
(the "Subscription Agreement"), dated June 1, 1998, by and among the Company and
the Purchaser and pursuant to additional subscription agreements (the
"Additional Subscription Agreements"; the Subscription Agreement and the
Additional Subscription Agreements shall be referred to herein collectively as
the "Subscription Agreements") to be entered into prior to July 10, 1998 by and
among the Company and additional purchasers (the "Additional Purchasers"; the
Purchaser and the Additional Purchasers shall be referred to herein collectively
as the "Purchasers"). In order to induce the Purchasers to enter into the
Subscription Agreements, the Company has agreed to provide the registration
rights provided for in this Agreement to the Purchasers and their direct and
indirect transferees.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
Additional Purchasers: The purchasers who enter into a subscription
agreement (in identical or similar form to the Subscription Agreement) named on
Schedule 1 hereto.
Affiliate: As to any specified Person, shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
of this Agreement.
Business Day: With respect to any act to be performed under this
Agreement, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in New York, New York, or other applicable
place where such act is to occur, are authorized or obligated by applicable law,
regulation or executive order to close.
Commission: The United States Securities and Exchange Commission.
Common Stock: Shares of common stock, $.01 par value per share, of the
Company.
1
3
Company: Fortress Investment Corp., Inc., a Maryland corporation, and
any successor corporation thereto.
Controlling Person: As defined in Section 7(a) of this Agreement.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Holder: Each record owner of any Registrable Shares from time to time,
including the Purchasers and their Affiliates.
Purchaser: Fortress Principal Investment Holdings LLC.
Purchasers: The Purchaser and the Additional Purchasers.
NASD: National Association of Securities Dealers, Inc.
Offering Memorandum: The Offering Memorandum of the Company dated June
5, 1998.
Operating Partnership: Fortress Partners, L.P., a Delaware limited
partnership, for which the Company serves as sole general partner.
Person: An individual, partnership, corporation, trust, or
unincorporated organization, or government agency or political subdivision
thereof.
Proceeding: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the Person subject thereto,
threatened.
Prospectus: The prospectus included in any Registration Statement,
including any preliminary prospectus, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
Subscription Agreement; Subscription Agreements: As defined in the
Introductory paragraph.
Redemption Shares: Shares of Common Stock issuable upon redemption of
Units.
Register, registered and registration: Such terms 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.
Registrable Shares: The Shares and the Redemption Shares, upon original
issuance thereof, and at all times subsequent thereto, until the earliest to
occur of (i) the second annual anniversary of the latest date of original
issuance of the Shares and the Redemption Shares, (ii) such time as all
outstanding Shares and Redemption Shares have been sold pursuant to a
Registration
2
4
Statement or have been transferred pursuant to Rule 144 or otherwise transferred
in a manner that results in the transferred security being delivered not being
subject to transfer restrictions under the Securities Act, (iii) such time as,
in the opinion of counsel to the Company, all of the Shares and Redemption
Shares held by persons who are not Affiliates of the Company may be resold
without registration under the Securities Act pursuant to Rule 144(k)(or any
successor rule), and (iv) such time as there are no longer any outstanding
Shares and Redemption Shares.
Registration Expenses: Any and all expenses incident to the performance
of or compliance with this Agreement, including, without limitation: (i) all
Commission, stock exchange, NASD registration, listing, inclusion and filing
fees, (ii) all fees and expenses incurred in connection with compliance with
international, federal or state securities or blue sky laws (including, without
limitation, any registration, listing and filing fees and reasonable fees and
disbursements of counsel in connection with blue sky qualification of any of the
Registrable Shares and the preparation of a Blue Sky Memorandum and compliance
with the rules of the NASD), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, duplicating, printing, delivering and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements,
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 or including of any of the Registrable Shares on any securities exchange
or The Nasdaq Stock Market pursuant to Section 5(k) of this Agreement, (v) the
fees and disbursements of counsel for the Company and of the independent public
accountants (including, without limitation, the expenses of any special audit
and "cold comfort" letters required by or incident to such performance) of the
Company (provided that Registration Expenses shall not include the fees and
expenses of any counsel to the Holders) and (vi) any fees and disbursements
customarily paid by issues or sales of securities (including the fees and
expenses of any experts retained by the Company in connection with any
Registration Statement), but excluding brokers' commissions and transfer taxes,
if any, relating to the sale or disposition of Registrable Shares by a Holder.
Registration Statement: Any registration statement of the Company that
covers the resale of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre-effective and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 144A: Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
3
5
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Shares: The shares of Common Stock being offered and sold pursuant to
the terms and conditions of the Subscription Agreements.
Underwritten Offering: A sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
Units: Units of limited partnership interest in the Operating
Partnership.
SECTION 2. SHELF REGISTRATION. As set forth in Section 5 hereof, the
Company agrees to file with the Commission as soon as reasonably practicable,
but in no event later than ninety (90) days after the date of this Agreement,
one or more shelf Registration Statements with respect to the sale from time to
time by the Holders of any and all Registrable Shares. The Company shall use its
best efforts to cause such Registration Statement to be declared effective by
the Commission as soon as practicable but, in any event, not later than the
effective date of any other registration statement of the Company filed with the
Commission under the Securities Act.
SECTION 3. EXPENSES. The Company shall pay all Registration Expenses in
connection with the registration of the Registrable Shares pursuant to this
Agreement. The Holder or Holders shall pay all broker's commissions and transfer
taxes, if any, and any other expense not specifically allocated to the Company
pursuant to this Agreement (in all cases, which relate to the sale or
disposition of such Holder's Registrable Shares pursuant to any Registration
Statement).
SECTION 4. REPORTS. The Company shall file the reports required to be
filed by it under the Securities Act and the Exchange Act in a timely manner,
and, prior to the effectiveness of the Registration Statement, if it is not
required to file such reports, will make available other information as required
by, and so long as necessary to permit sales of the Registrable Shares pursuant
to, Rule 144A.
SECTION 5. REGISTRATION PROCEDURES. In connection with the obligations
of the Company with respect to any registration pursuant to this Agreement, the
Company shall use its best efforts to effect or cause to be effected the
registration of the Registrable Shares under the Securities Act to permit the
sale of such Registrable Shares by the Holder or Holders in accordance with
customary methods of sale or distribution, including through brokers'
transactions and block trades, as well as any other intended method or methods
of distribution reasonably requested by the Purchasers or any Holder by notice
to the Company prior to the filing of the Registration Statement, and the
Company shall:
(a) prepare and file with the Commission, as specified in this
Agreement, a Registration Statement, which Registration Statement shall comply
as to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith, and use its best efforts to cause such registration statement to
become effective as soon as possible after filing but, in any event, not later
than the effective date of any other Registration Statement of the Company or
the Operating Partnership, and remain effective, subject to Section 6 of this
Agreement, until such time, as none of the Shares or Redemption Shares are
Registrable Shares.
4
6
(b) subject to Section 5(h), (i) prepare and file with the Commission
such amendments and post-effective amendments to each such Registration
Statement as may be necessary to keep such Registration Statement effective for
the period described in Section 5(a), (ii) cause each such Prospectus contained
therein 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, and (iii) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holder thereof;
(c) furnish to any Holder named in any Prospectus, without charge, as
many copies of such Prospectus, and any amendment or supplement thereto and such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Shares; the Company
consents to the use of any such Prospectus by such Holder in connection with the
offering and sale of the Registrable Shares covered by any such Prospectus;
(d) use reasonable efforts to register or qualify, or obtain exemption
from registration or qualification for, all Registrable Shares by the time the
applicable Registration Statement is declared effective by the Commission under
all applicable state securities or "blue sky" laws or Canadian securities laws
of such jurisdictions as any Holder shall reasonably request in writing; keep
each such registration or qualification or exemption effective during the period
such Registration Statement is required to be kept effective pursuant to Section
5(a); and do any and all other acts which may be reasonably necessary or
advisable to enable each Holder to consummate the disposition of such
Registrable Shares owned by such Holder; provided, however, that the Company
shall not be required to (i) 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 or register but for this Section
5(d), (ii) subject itself to taxation in any such jurisdiction, or (iii) submit
to the general service of process in any such jurisdiction;
(e) notify each Holder promptly and, if requested by any Holder,
confirm such information in writing: (i) of the date and time that a
Registration Statement has become effective and the date and time any
post-effective amendments and supplements thereto become effective; (ii) of the
issuance by the Commission or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose; (iii) of any request by the Commission or any
other federal or state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information; and
(iv) 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 or any document incorporated by reference therein 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, not misleading (which information
shall be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made);
(f) during the period of time referred to in Section 5(a), use all
reasonable efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of a
Registration Statement or suspending the qualification (or exemption from
qualification) of any of the Registrable Shares for sale in any jurisdiction,
promptly;
5
7
(g) upon request, furnish to each requesting Holder, without charge, at
least one conformed copy of each Registration Statement and any post-effective
amendment or supplement thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) except as provided in Section 6, upon the occurrence of any event
contemplated by Section 5(e)(iv), use its best efforts to promptly prepare a
supplement or 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 Shares, 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 statements therein, in the light of the circumstances
under which they were made, not misleading;
(i) if requested by the representative underwriters, if any, or any
Holders of Registrable Shares being sold in connection with an Underwritten
Offering, (i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the representative of the underwriters, if any, or
such Holders indicate relates to them or otherwise reasonably request be
included therein, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(j) in connection with an Underwritten Offering of Registrable Shares,
make available for inspection by representatives of the Holders and the
representative of any underwriters participating in any disposition pursuant to
a Registration Statement and any special counsel or accountant retained by such
Holders or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company and the Operating Partnership and cause
their respective officers, directors and employees to supply all information
reasonably requested by any such representatives, the representative of the
underwriters, counsel thereto or accountants in connection with a Registration
Statement; provided, however, that such records, documents or information which
the Company determines, in good faith, to be confidential and notifies such
representatives, representative of the underwriters, counsel thereto or
accountants are confidential shall be kept confidential and shall not be
disclosed by the representatives, representative of the underwriters, counsel
thereto or accountants unless (i) subject to the provisions hereof, the
disclosure of such records, documents or information is necessary to avoid or
correct a misstatement or omission in a Registration Statement or Prospectus,
(ii) the release of such records, documents or information is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, or (iii)
such records, documents or information have been generally made available to the
public; provided, however, that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
the Holders and the other parties entitled thereto by one counsel designated by
and on behalf of such Holders;
(k) use its best efforts (including, without limitation, seeking to
cure any deficiencies cited by the exchange or market in the Company's listing
or inclusion application) to list or include all Registrable Shares on a
securities exchange or The Nasdaq Stock Market;
(l) prepare and file in a timely manner all documents and reports
required by the Exchange Act which are incorporated by reference into any
Registration Statement;
(m) provide a CUSIP number for all Registrable Shares, not later than
the effective date of the Registration Statement;
6
8
(n) use all reasonable efforts to comply with all applicable rules and
regulations of the Commission and make generally available to its
securityholders, as soon as reasonably practicable, earnings statements which
cover at least twelve (12) months and which satisfy the provisions of Section
11(a) under the Securities Act and Rule 158 (or any similar rule promulgated
under the Securities Act) thereunder, no later than forty-five (45) days after
the end of each fiscal year of the Company;
(o) from and after a date not later than the effective date of such
Registration Statement, provide and cause to be maintained a transfer agent for
all Registrable Shares covered by any Registration Statement;
(p) in connection with any sale or transfer of the Registrable Shares
(whether or not pursuant to a Registration Statement) that will result in the
security being delivered not being subject to transfer restrictions under the
Securities Act, cooperate with the Holders and the representative of the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing the Registrable Shares to be sold, which certificates
shall not bear any transfer restrictive legend (other than the legend with
respect to the restrictions on ownership and transfer under the Company's
charter), and to enable such Registrable Shares to be in such denominations and
registered in such names as the representative of the underwriters, if any, or
Holders may request at least two (2) Business Days prior to any sale of the
Registrable Shares; and
(q) upon effectiveness of the first Registration Statement filed under
this Agreement, the Company will take such actions and make such filings as are
necessary to effect the registration of the Common Stock under the Exchange Act
simultaneously with or immediately following the effectiveness of the
Registration Statement.
The Company may require each Holder to furnish to the Company such
information regarding the proposed distribution by such Holder of Registrable
Shares as the Company may from time to time reasonably request in writing and no
Holder shall be entitled to be named as a selling securityholder in any
Registration Statement and no Holder shall be entitled to use the Prospectus
forming a part thereof if such Holder does not provide such information to the
Company.
Upon receipt of written notice from the Company of the happening of any
event of the kind described in Section 5(e)(iii) or 5(e)(iv), the Holders will
immediately discontinue disposition of Registrable Shares pursuant to a
Registration Statement until the Holders' receipt of the copies of a
supplemented or amended Prospectus. If so requested by the Company, the Holders
will deliver to the Company (at the expense of the Company) all copies in their
possession, other than permanent file copies then in the Holders' possession, of
the Prospectus covering such Registrable Shares at the time of receipt of such
notice.
SECTION 6. BLACK-OUT-PERIOD. Subject to the provision of this Section 6
and a good faith determination by a majority of the Board of Directors of the
Company that it is in the best interests of the Company to suspend the use of
the Registration Statement, following the effectiveness of a Registration
Statement (and the filings with any international, federal or state securities
commissions), the Company, by written notice to the Holders, may direct the
Holders to suspend sales of the Registrable Shares pursuant to the Registration
Statement, if any of the following events shall occur: (i) an Underwritten
Offering by the Company where the Company is advised by the representative of
underwriters for such Underwritten Offering that the sale of Registrable Shares
pursuant to the Registration Statement would have a material adverse effect on
the Company's
7
9
primary offering; (ii) pending negotiations relating to, or the consummation of,
a transaction or the occurrence of an event that requires additional disclosure
of material information by the Company in the Registration Statement and which
has not been so disclosed; (iii) a material corporate transaction is pending or
has occurred, the disclosure of which should be set forth in the Registration
Statement and the Board of Directors of the Company shall have determined in
good faith would not be in the best interests of the Company and its
stockholders; or (iv) the Board of Directors of the Company shall have
determined in good faith that it is in the best interests of the Company to
suspend the use of the Registration Statement. Upon the occurrence of any such
suspension, the Company shall use its best efforts to cause the Registration
Statement to become effective or to promptly amend or supplement the
Registration Statement on a post-effective basis or to take such action as is
necessary to make resumed use of the Registration Statement compatible with the
Company's best interests, as applicable, so as to permit the Holders to resume
sales of the Registrable Shares as soon as possible.
In the case of an event which causes the Company to suspend the
effectiveness of a Registration Statement (a "Suspension Event"), the Company
shall give written notice (a "Suspension Notice") to each of the Holders at the
addresses set forth in the stock transfer records of the Company to suspend
sales of the Registrable Shares and such notice shall state that such suspension
shall continue only for so long as the Suspension Event or its effect is
continuing and the Company is taking all reasonable steps to terminate
suspension of the effectiveness of the Registration Statement as promptly as
possible. The Holders shall not effect any sales of the Registrable Shares
pursuant to such Registration Statement at any time after receipt of a
Suspension Notice from the Company and prior to receipt of an End of Suspension
Notice (defined below). If so requested by the Company, the Holders will deliver
to the Company (at the expense of the Company) all copies in their possession,
other than permanent file copies then in the Holders' possession, of the
Prospectus covering such Registrable Shares at the time of receipt of the
Suspension Notice. The Holders may recommence effecting sales of the Registrable
Shares pursuant to the Registration Statement (or such filings) following
further notice to such effect (an "End of Suspension Notice") from the Company,
which End of Suspension Notice shall be given by the Company to the Holders and
the Purchaser in the manner described above promptly following the conclusion of
any Suspension Event.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company and the Operating Partnership. The
Company and the Operating Partnership agree to indemnify and hold harmless (i)
each Holder, (ii) each Person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the
foregoing (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 each Holder or any
controlling person as follows:
(i) from and against any and all loss, claim, liability and damage
whatsoever, as incurred, (a) arising out of any untrue or alleged untrue
statement of a material fact contained in any Registration Statement (or any
supplement or amendment thereto) pursuant to which Registrable Shares were
registered under the Securities Act, including all documents incorporated
therein by reference, or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (b) arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by reference,
or the omission or alleged omission to state a material fact required to be
stated therein or necessary in order to make
8
10
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that such indemnity with respect to any
Registration Statement or Prospectus shall not inure to the benefit of any
Holder or the Purchaser (or any controlling person, agent, employee, officer,
director, partner or representative thereof) to the extent that any such loss,
claim, liability, damage or expense arises out of such indemnified person's
failure to send or give a copy of the revised Registration Statement or final
Prospectus, as the same may be then supplemented or amended, to the Person
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
Shares to such Person if such statement or omission was corrected in such
revised Registration Statement or such final Prospectus and the Company shall
have delivered to such indemnified person a sufficient number of copies of such
revised Registration Statement or such final Prospectus in a timely manner so as
to permit such Holder to send or give a copy of the revised Registration
Statement or such final Prospectus containing such correction prior to the
written confirmation of the purchase and sale of such Registrable Shares;
(ii) from and against any and all loss, liability, claim and damage
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, if such settlement is effected with the
written consent of the Company (which consent shall not be unreasonably withheld
or delayed); and
(iii) from and against any and all expense reasonably incurred
(including reasonable fees and disbursements of counsel) 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 this indemnity agreement does not apply to any
Holder or agent thereof 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 by such Holder expressly for use in
a Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(b) Indemnification by Holders. Each Holder, on a pro rata basis,
agrees to indemnify and hold harmless the Company, and directors, officers,
partners, employees, representatives and agents (including 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 or
Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expenses described in the indemnity contained in Section 7(a) hereof
(provided, however, that any settlement described in Section 7(a)(ii) hereof is
effected with the written consent of such Holder), as incurred, but only with
respect to such untrue statements or omissions, or alleged untrue statements or
omissions, made in the 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 by the Holder
expressly for use in such Registration Statement (or any amendment thereto) or
such Prospectus (or any amendment or supplement thereto), and provided, further,
that no Holder shall be liable for any amount in excess of the net proceeds
received
9
11
by such Holder from the sale of such Holder's Registrable Shares pursuant to a
Registration Statement or a Prospectus, as the case may be.
(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 shall not relieve it
from any liability which it may have under this indemnity agreement except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. 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 in such
action or proceeding, which approval shall not be unreasonably withheld or
delayed; provided, however, that, if such indemnified party or parties
reasonably determines 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 select one separate
counsel (and any necessary local 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 such indemnifying
party's defense and counsel for the indemnified party or parties 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 not more than one counsel (and any necessary
local 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, which consent shall not be
unreasonably withheld or delayed. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
a settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. 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 for separate counsel for the indemnified parties incurred
thereafter in connection with such action or proceeding.
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 7 is for any reason held to be unenforceable, unavailable or
insufficient although applicable in accordance with it terms, the Company, the
Operating Partnership and a Holder shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, the Operating Partnership and the
Holder in such proportion as is appropriate to reflect the relative fault of the
Company and the Operating Partnership, on the one hand, and the Holder, on the
other, 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. Relative fault shall be determined by reference to,
among other things, whether an untrue or alleged untrue statement of a material
fact or an omission or alleged omission of a material fact relates to
information supplied by or available to the Company and the Operating
Partnership, on the one hand,
10
12
or the Holder, on the other hand, and by the parties relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. 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. No Holder shall be liable for any amount in excess
of the net proceeds received by such Holder from the sale of such Holder's
Registrable Shares pursuant to a Registration Statement or a Prospectus, as the
case may be. For purposes of this Section 7, each Person, if any, who controls a
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as such Holder, and
each director of the Company and 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 or Section 20 of the Exchange
Act and each partner, employee, representative or agent of the Company and the
Operating Partnership shall have the same rights to contribution as the Company
and the Operating Partnership. Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which contribution may be sought, it
shall promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligation it may have hereunder or otherwise unless
failure to provide such notice actually and materially prejudices such party of
parties.
SECTION 8. MISCELLANEOUS.
(a) Remedies. In the event of a breach by the Company, the Operating
Partnership or by a Holder of any of their obligations under this Agreement, the
Company, the Operating Partnership and each Holder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. It
is acknowledged and agreed that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, the parties shall
waive the defense that a remedy at law would be adequate.
(b) 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, the Operating Partnership and
Holders beneficially owning not less than fifty percent (50%) of the then
outstanding Registrable Shares; provided, however, that, for the purposes of
this Agreement, Registrable Shares that are owned, directly or indirectly, by
the Company, the Operating Partnership or an Affiliate of the Company or the
Operating Partnership shall not be deemed to be outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of a Holder whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of any other Holder may be given by such Holder;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(c) Notices. All notices and other communications provided for this
Agreement shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopy;
11
13
(i) if to the Company or the Operating Partnership, as provided
in the Subscription Agreements,
(ii) if to the Purchasers, as provided in the Subscription
Agreements, or
(iii) if to any Holder, to the address of such Holder as it
appears in the Common Stock register of the Company.
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when (v) delivered by hand, if
personally delivered, (w) one (1) Business Day after being timely delivered to a
next-day air courier, (x) five (5) Business Days after being deposited in the
mail, postage prepaid, if mailed, (y) when answered back, if telexed or (z) when
receipt is acknowledged by the recipient's telecopier machine, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Each Holder shall be
deemed a third party beneficiary of this Agreement. Neither the Company nor the
Operating Partnership may assign its rights or obligations hereunder without the
prior written consent of each Holder. Notwithstanding the foregoing, no assignee
of the Company or the Operating Partnership shall have any of the rights granted
under this Agreement until such assignee shall acknowledge its rights and
obligations hereunder by a signed written agreement pursuant to which such
assignee accepts such rights and obligations.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York without regard to principles of
conflicts of law.
(g) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth in this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Agreement. All references made in this Agreement to "Section" refer to such
Section of this Agreement, unless expressly stated otherwise.
12
14
(i) Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, shall be
entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
[Signature page follows.]
13
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
FORTRESS INVESTMENT CORP.,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
FORTRESS PARTNERS, L.P.,
a Delaware limited partnership
By: Fortress Investment Corp.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
The foregoing Agreement
is hereby confirmed and accepted
as of the date first above written.
FORTRESS PRINCIPAL INVESTMENT HOLDINGS LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------------
Title: Member
------------------------------------
16
Schedule 1
Additional Purchasers
The foregoing Agreement is hereby confirmed and accepted in all respects by the
following:
Name Number of Shares Signature
---- ---------------- ---------
Xxxxx Edinburg 2,680 shares /s/ Xxxxx Edinburg
Xxxxxxx X. Xxxxxx, Xx. 536 shares /s/ Xxxxxxx X. Xxxxxx, Xx.
Xxxx Xx 1,072 shares /s/ Xxxx Xx
Accepted and agreed to as of
the date first above written by:
FORTRESS INVESTMENT CORP.,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
FORTRESS PARTNERS, L.P.,
a Delaware limited partnership
By: Fortress Investment Corp.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
