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