Exhibit 99.1
REGISTRATION RIGHTS AGREEMENT
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This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered
into as of November 17, 2003, by and among CharterMac, a statutory trust formed
under the laws of the State of Delaware ("CharterMac"), and APH Associates L.P.,
DLK Associates L.P, Marc Associates, L.P., Related General II, L.P., ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, SJB Associates L.P., J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Fried Family 2001 Trust (each a
"Holder" and collectively, the "Holders").
WHEREAS, on the date hereof, an affiliate of CharterMac, CharterMac
Capital Company, LLC, a Delaware limited liability company ("CCC"), is
acquiring, among other things, certain assets from the Holders pursuant to (i) a
Contribution Agreement dated as of December 17, 2002 (the "Contribution
Agreement") by and among CCC and other parties named therein, and (ii) that
certain Contribution Agreement dated as of November 17, 2003 by and among J.
▇▇▇▇▇▇▇ ▇▇▇▇▇, JMF Associates, L.P. and Fried Family 2001 Trust and CCC (the
"Fried Contribution Agreement"), and in connection therewith certain Holders
will receive units of limited liability company interest in CCC (such units
received pursuant to the Contribution Agreement being referred to herein as the
"Special Common Units");
WHEREAS, CCC, CharterMac Corporation, a Delaware corporation ("CM
Corp."), and certain Holders are parties to an Exchange Rights Agreement (as
defined below) which provides such Holders, among other things, with the right
to demand that CCC redeem their Special Common Units for cash or, at the
election of CM Corp., CM Corp. may satisfy that redemption request through the
issuance of Common Shares (as defined below);
WHEREAS, ▇▇▇▇ and CharterMac have entered into that certain ▇▇▇▇
Option in consideration of ▇▇▇▇ agreeing to serve as the non-executive Chairman
of the Board of Trustees of CharterMac; and
WHEREAS, in order to induce certain Holders to consummate the
transactions contemplated by the Contribution Agreement, the Fried Contribution
Agreement and ▇▇▇▇ to serve as non-executive Chairman of the Board of Trustees
of CharterMac, CharterMac has agreed to grant to the Holders the registration
rights set forth in Section 2 hereof.
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
Section 1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Agent" means the principal placement agent on an agented placement
of Registrable Securities.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York are permitted or
required by any applicable law to close.
"CCC" shall have the meaning set forth in the Preamble.
"CharterMac" shall have the meaning set forth in the Preamble and
also shall include CharterMac's successors.
"Commission" shall mean the Securities and Exchange Commission.
"Common Shares" shall mean the common shares of beneficial interest
of CharterMac.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Rights Agreement" shall mean the Exchange Rights
Agreement, dated the date hereof, among CCC, CM Corp. and the Holders.
"Exchange Shares" shall mean the Common Shares issuable, as
applicable, upon (i) exchange of the Special Common Units issued or to be issued
pursuant to the Contribution Agreement or (ii) exercise of the options granted
to ▇▇▇▇ pursuant to the ▇▇▇▇ Option.
"Holdback Period" shall have the meaning set forth in Section 4(d).
"Holder" or "Holders" shall have the meaning set forth in the
Preamble, and shall include the transferee of any such Person's Exchange Shares
acquiring rights in accordance with Section 7 hereof whenever such Person owns
of record Exchange Shares, or holds a security convertible into or exercisable
or exchangeable for, Registrable Securities, whether or not such acquisition,
conversion or exchange has actually been effected and disregarding any legal
restrictions upon the exercise of such rights. If CharterMac receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Exchange Shares, CharterMac may act upon the
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basis of the instructions, notice or election received from the registered owner
of such Exchange Shares.
"Institutional Lender" means either a financial institution
(including, without limitation, a commercial bank, mortgage bank, investment
bank, life insurer or pension fund) in the business of making loans and having
assets exceeding $25 billion, or any public or private company in the business
of making loans to real estate companies and having assets exceeding $1 billion
or a subsidiary of such financial institution or such private or public company.
"Independent Trustees" shall have the same meaning as in the Second
Amended and Restated Trust Agreement of CharterMac dated as of November 17,
2003.
"Majority Selling Holders" means those Selling Holders whose
Registrable Securities included in such Registration Statement represent a
majority of the Registrable Securities of all Selling Holders included therein.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, estate, or unincorporated organization, or other
entity, or a government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Securities" shall mean (i) the Exchange Shares; (ii)
any Common Shares or other securities issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange by CharterMac
generally for, or in replacement by CharterMac generally of, any Exchange
Shares; (iii) any securities issued pursuant to a stock split or a
reclassification of, or in substitution for, any Exchange Shares; and (iv) any
securities issued in exchange for the Exchange Shares in any merger, combination
or reorganization of CharterMac; provided, however, that Registrable Securities
shall not include any securities which have theretofore been registered and sold
pursuant to the Securities Act or which have been sold to the public pursuant to
Rule 144 or any similar rules promulgated by the Commission pursuant to the
Securities Act or are eligible for sale pursuant to Rule 144(k). For purposes of
this Agreement, a Person will be deemed to be a Holder of Registrable Securities
whenever such Person has the then-existing right to acquire such Registrable
Securities (by conversion, exchange, purchase
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or otherwise), whether or not such acquisition has actually been effected and
whether or not the Company or any other Person has the right to redeem the
securities exchangeable for the Registrable Securities in lieu of issuing the
Registrable Securities.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all Commission, stock exchange or NASD registration and filing fees; (ii)
all fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualification of any of the Registrable
Securities and the preparation of a Blue Sky Memorandum) and compliance with the
rules of the NASD; (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates, documents incorporated by reference and
other documents required to be prepared by CharterMac in its ordinary course of
business relating to the performance of and compliance with this Agreement; (iv)
all fees and expenses incurred in connection with the listing, if any, of any of
the Registrable Securities on any securities exchange or exchanges; and (v) the
fees and disbursements of counsel for CharterMac and of the independent public
accountants of CharterMac, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance.
Registration Expenses shall specifically exclude underwriting discounts and
commissions relating to the sale or disposition of Registrable Securities by a
Selling Holder, the fees and disbursements of counsel representing a Selling
Holder, and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Selling Holder, all of which shall be borne by such
Holder in all cases.
"Registration Statement" or "Shelf Registration Statement" shall
mean a "shelf" registration statement of CharterMac and any other Person
required to be a registrant with respect to such shelf registration statement
pursuant to the requirements of the Securities Act which covers the issuance or
resale of the Registrable Securities on Form S-3 or otherwise under Rule 415
promulgated under the Securities Act, or any similar rule that may be adopted by
the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
"▇▇▇▇" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇.
"▇▇▇▇ Option" shall mean that certain ▇▇▇▇ Option Agreement dated as
of the date hereof.
"Rule 144" and "Rule 145" shall mean Rule 144 and Rule 145
promulgated under the Securities Act, and any successor rule or regulation under
the Securities Act.
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"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, and any successor act.
"Selling Holders" means, with respect to a specified Registration
Statement pursuant to this Agreement, the Holders whose Registrable Securities
are included in such Registration Statement.
"Shelf Registration" shall mean a registration required to be
effected pursuant to Section 2 hereof.
"Special Common Units" shall have the meaning set forth in the
Preamble.
"Transfer" means and includes the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
security or any transfer upon any merger or consolidation) (and correlative
words shall have correlative meanings); provided, however, that any transfer or
other disposition upon foreclosure or other exercise of remedies of a secured
creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as security shall constitute a Transfer.
"Underwriters' Representative" means the managing underwriter, or,
in the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers; provided, that the managing
underwriter shall be subject to the approval of not less than a majority of the
Independent Trustees.
"Underwritten Offering" shall have the meaning set forth in Section
4(d).
"Violation" shall have the meaning set forth in Section 6(a)(1).
Section 2. Shelf Registration Under the Securities Act.
(a) Filing of Shelf Registration Statement. CharterMac
shall file a Shelf Registration Statement providing for the sale by the Holders
of the Registrable Securities by January 17, 2004, and will use its commercially
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission as soon as practicable. CharterMac agrees to use its
commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective for a period expiring on the date on which all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or have become eligible for
sale pursuant to Rule 144(k) promulgated under the Securities Act and further
agrees during such period to supplement or amend the Shelf Registration
Statement, if and as required
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by the rules, regulations or instructions applicable to the registration form
used by CharterMac for such Shelf Registration Statement or by the Securities
Act or by any other rules and regulations thereunder for shelf registration.
Notwithstanding the foregoing, CharterMac shall not be required to file a
Registration Statement or to keep a Registration Statement effective if the
negotiation or consummation of a transaction is pending or an event has
occurred, which negotiation, consummation or event would require additional
disclosure by CharterMac in the Registration Statement of material information
which CharterMac has a bona fide business purpose for keeping confidential and
the nondisclosure of which in the Registration Statement might cause the
Registration Statement to fail to comply with applicable disclosure
requirements; provided, however, that CharterMac may not delay, suspend or
withdraw a Registration Statement for such reason for more than (60) days or
more often than twice during any period of 12 consecutive months. CharterMac is
not required to file a separate Registration Statement, but may file one
Registration Statement covering the Registrable Securities held by more than one
Holder.
(b) Expenses. CharterMac shall pay all Registration
Expenses in connection with any registration pursuant to Section 2(a). Each
Holder shall pay all underwriting discounts, if any, sales commissions, the fees
and disbursements of counsel representing such Holder and transfer taxes, if
any, relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement or Rule 144 promulgated under the
Securities Act.
(c) Notwithstanding anything to the contrary contained
herein, CharterMac shall not be required to amend or supplement a Shelf
Registration Statement pursuant to Section 2(a) hereof (i) in respect of more
than three underwritten distributions, (ii) in respect of more than one
underwritten distribution in any 12 month period, or (iii) if the aggregate
market value (as determined by the average of the closing price of Common Shares
for the five consecutive trading days preceding the date of determination) of
the Registrable Securities that the Selling Holders' Request be sold in such
underwritten distribution does not equal at least $25,000,000.
(d) Incidental Registration. If, at any time during the
period which CharterMac is required to keep a Shelf Registration Statement
effective pursuant to Section 2(a), CharterMac proposes to file a registration
statement under the Securities Act (other than a registration statement on a
Form S-4 or S-8 or filed in connection with an exchange offer or an offering of
securities solely to CharterMac's existing stockholders) with respect to an
underwritten offering on any form that would also permit the registration of the
Registrable Securities, and such filing is to be on its behalf and/or on behalf
of selling holders of its securities for the general registration of Common
Shares to be sold for cash, CharterMac shall promptly give each Holder written
notice of such registration setting forth the date on which CharterMac proposes
to file such registration statement and advising each Holder of its right to
have Registrable Securities included in such registration. Upon the written
request of any Holder received by
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CharterMac within ten (10) business days following the date of CharterMac's
notice, CharterMac shall use its best efforts to cause to be registered under
the Securities Act all of the Registrable Securities that each such Holder has
requested to be registered. CharterMac shall have the absolute right to withdraw
or cease to prepare or file any registration statement for any offering referred
to in this Section 2 without any obligation or liability to any Holder.
CharterMac shall not be required to include any Holder's Registrable Securities
in any underwriting unless such holder accepts the terms of the underwriting as
agreed to between CharterMac and the underwriters selected by it. If, in the
written opinion of the managing underwriter or underwriters, the amount of
Registrable Securities requested to be included in such registration would
materially adversely affect such offering, or the timing thereof, then
CharterMac will include in such registration, to the extent of the amount and
class which CharterMac is so advised can be sold without such material adverse
effect in such offering, in addition to the securities proposed to be sold by
CharterMac for its own account, the Registrable Securities requested to be
included in such registration by the Holders pursuant to this Section 2 and all
securities offered for the account of other Persons pursuant to the exercise of
contractual rights, pro rata based on the estimated gross proceeds from the sale
thereof.
Section 3. Registration Procedures.
(a) Obligations of CharterMac. In connection with the
obligations of CharterMac with respect to the Registration Statement required to
be filed pursuant to Section 2 hereof, CharterMac shall, to the extent
applicable:
(1) Prepare and file with the Commission within the
time period set forth in Section 2 hereof, a Shelf Registration Statement with
respect to such Registrable Securities (which Registration Statement shall be
available for the Selling Holders' intended method or methods of distribution
and shall comply 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 commercially reasonable efforts to cause such
Registration Statement to become effective as soon as practicable.
(2) Promptly notify each Selling Holder when the
Registration Statement and any post-effective amendments and supplements thereto
are declared effective, and confirm such notice in writing.
(3) Respond as promptly as practicable to any comments
received by the Commission with respect to the Shelf Registration Statement and
prepare and file with the Commission such amendments and supplements to each
such Registration Statement and the Prospectus used in connection with such
Registration Statement or any document incorporated therein by reference or file
any other required document as may be necessary to comply with the provisions of
the Securities Act and rules thereunder, including the filing of the
supplemental Prospectus pursuant to Rule 424, with respect to the disposition of
all securities covered by such Registration
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Statement and the instructions applicable to the registration form used by
CharterMac. If the Registration Statement is for an underwritten offering,
CharterMac shall amend the Registration Statement or supplement the Prospectus
whenever required by the terms of the underwriting agreement entered into
pursuant to Section 3(a)(6). In the event that any Registrable Securities
included in a Registration Statement subject to, or required by, this Agreement
remain unsold at the end of the period during which CharterMac is obligated to
maintain the effectiveness of such Registration Statement, CharterMac may file a
post-effective amendment to the Registration Statement for the purpose of
removing such securities from registered status.
(4) Furnish to each Selling Holder of Registrable
Securities, without charge, such numbers of copies of the Registration
Statement, any pre-effective or post-effective amendment thereto, the
Prospectus, including each preliminary Prospectus and any amendments or
supplements thereto, in each case in conformity with the requirements of the
Securities Act and the rules thereunder, and such other related documents as any
such Selling Holder may reasonably request in order to facilitate the
disposition of Registrable Securities owned by such Selling Holder; CharterMac
consents to the use of the Prospectus, including each preliminary Prospectus, by
each such Selling Holder of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or the
preliminary Prospectus.
(5) Use CharterMac's commercially reasonable efforts
(i) to register and qualify the Registrable Securities covered by such
Registration Statement under such other securities or Blue Sky laws of such
states or jurisdictions in the United States as shall be reasonably requested by
the Underwriters' Representative or Agent or any Selling Holder and to keep such
qualification effective during the period such Registration Statement is
effective and do any and all other acts and things which may be reasonably
necessary or advisable to enable any Selling Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Selling Holder, and (ii) to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement, or the lifting of any suspension
of the qualification (or exemption from qualification) of the offer and transfer
of any of the Registrable Securities in any jurisdiction, at the earliest
possible moment; provided, however, that CharterMac shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business or
register as a broker or dealer in any such jurisdiction where it would not
otherwise be required to qualify or register but for this Section 3(a)(5), (ii)
subject itself to taxation in any such jurisdiction, or (iii) to file a general
consent to service of process in any such states or jurisdictions.
(6) In the event of any underwritten or agented
offering, enter into and perform CharterMac's obligations under an underwriting
or agency agreement (including indemnification and contribution obligations of
underwriters or agents and representations and warranties by CharterMac to the
Selling Holders and the underwriters), in usual and customary form in the
securities business for such an
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arrangement between underwriters and companies of CharterMac's size and
investment stature, with the managing underwriter or underwriters of or agents
for such offering and use commercially reasonable efforts to obtain executed
lock-up agreements from the officers and directors of CharterMac and from the
holders of more than 5% of CharterMac's equity securities, if requested by the
underwriters; provided, that such agreement shall not contain any provision
applicable to CharterMac that is inconsistent with the provisions of this
Agreement. CharterMac shall also reasonably cooperate with the Majority Selling
Holders and the Underwriters' Representative or Agent for such offering in the
marketing of the Registrable Shares, including making available CharterMac's
officers, accountants, counsel, premises, books and records for such purpose,
but CharterMac shall not be required to incur any out-of-pocket expense pursuant
to this sentence.
(7) Promptly notify each Selling Holder of any stop
order suspending the effectiveness of a Registration Statement issued or for the
issuance of which proceedings have been instituted, or, to the extent CharterMac
has actual knowledge thereof, threatened to be issued by the Commission or any
state securities authority in connection therewith, and confirm such notice in
writing, and take all commercially reasonable actions required to prevent the
entry of such stop order or to remove it as soon as reasonably practicable if
entered.
(8) Promptly notify each Selling Holder of the
happening of any event as a result of which the Registration Statement or the
related Prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made (in
the case of the Prospectus), not misleading, and confirm such notice in writing.
(9) Make generally available to CharterMac's security
holders copies of an earnings statement satisfying the provisions of Section
11(a) of the Securities Act as soon as reasonably practicable but in any event
no later than 90 days following the end of the 12-month period beginning with
the first month of CharterMac's first fiscal quarter commencing after the
effective date of each Registration Statement filed pursuant to this Agreement.
(10) Subject to Section 2(a), upon the occurrence of
any event contemplated by Section 3(a)(8), use its reasonable efforts promptly
to prepare and file a supplement or prepare, file and obtain effectiveness of a
post-effective amendment to a Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
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(11) Make available for inspection by any Selling
Holder, any underwriter participating in such offering and the representatives
of such Selling Holder and Underwriter, all financial and other information as
shall be reasonably requested by them, and provide the Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter the opportunity to discuss the business affairs
of CharterMac with its principal executives and independent public accountants
who have certified the audited financial statements included in such
Registration Statement, in each case all as reasonably necessary to enable them
to exercise their due diligence responsibility under the Securities Act;
provided, however, that information that CharterMac determines, in good faith,
to be confidential and which CharterMac advises such Person in writing is
confidential shall not be disclosed unless such Person signs a confidentiality
agreement reasonably satisfactory to CharterMac, or the related Selling Holder
of Registrable Securities agrees to be responsible for such Person's breach of
confidentiality on terms reasonably satisfactory to CharterMac or unless the
disclosure of such records, documents or information is necessary to avoid or
correct a material misstatement or omission in a Registration Statement.
(12) Use CharterMac's commercially reasonable efforts
to obtain a so-called "comfort letter" from its independent public accountants,
and legal opinions of counsel to CharterMac addressed to the Selling Holders, in
customary form and covering such matters of the type customarily covered by such
letters, and in a form that shall be reasonably satisfactory to Majority Selling
Holders. CharterMac shall furnish to each Selling Holder a signed counterpart of
any such comfort letter or legal opinion. Delivery of any such opinion or
comfort letter shall be subject to the recipient furnishing such written
representations or acknowledgments as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
(13) Within a reasonable time prior to the filing of
any Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus, provide, at no charge,
copies of such document (not including any documents incorporated by reference
therein unless requested) to the Holders of Registrable Securities. Within a
reasonable time after filing thereof with the Commission, furnish to each
Holder, without charge, at least one conformed copy of each Registration
Statement and any post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless requested).
(14) Provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such Registration
Statement from and after a date not later than the effective date of such
Registration Statement.
(15) Use commercially reasonable efforts to cause the
Registrable Securities covered by such Registration Statement (i) if similar
securities of CharterMac are then listed on a securities exchange or included
for quotation in a
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recognized trading market, to be so listed or included for so long as such
similar securities of CharterMac are so listed or included, and (ii) to be
registered with or approved by such other United States or state governmental
agencies or authorities as may be necessary by virtue of the business and
operations of CharterMac to enable the Selling Holders of Registrable Securities
to consummate the disposition of such Registrable Securities.
(16) Use CharterMac's commercially reasonable efforts
to provide a CUSIP number for the Registrable Securities prior to the effective
date of the first Registration Statement including Registrable Securities.
(17) Take such other actions as are reasonably required
in order to expedite or facilitate the disposition of Registrable Securities
included in each such Registration Statement.
(b) Holders' Obligations. It shall be a condition precedent
to the obligations of CharterMac to take any action pursuant to Sections 2 and 3
hereof with respect to the Registrable Securities of any Selling Holder of
Registrable Securities that such Selling Holder shall furnish to CharterMac such
information regarding such Selling Holder, the number of the Registrable
Securities owned by it, and the intended method of disposition of such
Registrable Securities as shall be required to effect the registration of such
Selling Holder's Registrable Securities, and to cooperate with CharterMac in
preparing such Registration Statement.
Section 4. Agreements of Selling Holder. In connection with any
Registration Statement pursuant to Section 2 hereof, each Selling Holder agrees,
as applicable:
(a) to execute the underwriting agreement, if any, agreed
to by the Majority Selling Holders or CharterMac, as the case may be;
(b) that it will not offer or sell its Registrable
Securities under the Registration Statement until it has received copies of the
supplemented or amended Prospectus contemplated by Section 3(a)(3) hereof and
receives notice that any post-effective amendment (if required) has become
effective;
(c) that upon receipt of any notice from CharterMac of the
happening of any transaction or event of the kind described in Section 3(a)(8)
hereof, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to a Registration Statement until the Holder receives copies
of the supplemented or amended Prospectus contemplated by Section 3(a)(3) hereof
and receives notice that any post-effective amendment (if required) has become
effective, and, if so directed by CharterMac, the Holder will deliver to
CharterMac (at the expense of CharterMac) all copies in its possession, other
than permanent file copies then in such Holder's possession, of the
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Prospectus covering such Registrable Securities current immediately preceding
the time of receipt of such notice; and
(d) that upon the receipt of notice from CharterMac, as
requested by the managing underwriter or underwriters of a public offering of
Common Shares, or other securities convertible into, or exercisable or
exchangeable for, Common Shares, that is underwritten on a firm commitment basis
for the account of CharterMac (an "Underwritten Offering"), the Holders shall
not effect any public or private sale of any Common Shares through the
Registration Statement, during the period (the "Holdback Period") beginning 14
days prior to, and ending 90 days after, the effective date of the registration
statement relating to such Underwritten Offering; provided the aggregate number
of days during which one or more Holdback Periods are in effect shall not exceed
120 days during any 12-month period.
Section 5. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, CharterMac shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of CharterMac which would allow such holder or prospective holder
to include such securities in any Registration Statement filed under Section 2
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such Registration Statement only to
the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which are included.
Section 6. Indemnification; Contribution.
(a) Indemnification by CharterMac. If any Registrable
Securities are included in a Registration Statement under this Agreement:
(1) To the extent permitted by applicable law,
CharterMac shall indemnify and hold harmless each Selling Holder, each Person,
if any, who controls such Selling Holder within the meaning of the Securities
Act, and each officer, director, trustee, partner, and employee of such Selling
Holder and such controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint or several), including attorneys' fees and
disbursements and expenses of investigation, incurred by such party arising out
of or based upon any of the following statements, omissions or violations
(collectively, a "Violation"):
(i) Any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary Prospectus or final Prospectus contained therein, or any
amendments or supplements thereto or any document incorporated by reference
therein;
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(ii) The omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(iii) Any violation or alleged violation by
CharterMac of the federal securities laws or any applicable state securities law
or any rule or regulation promulgated under the Securities Act, the Exchange Act
or any applicable state securities law in connection the registration of the
Registrable Securities pursuant to this Agreement;
provided, however, that the indemnification required by this Section 6(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of
CharterMac, which consent shall not be unreasonably withheld, nor shall
CharterMac be liable in any such case for any such loss, claim, damage,
liability or expense to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished to CharterMac by the indemnified party expressly for use
in connection with such Registration Statement; provided, further, that the
indemnity agreement contained in this Section 6(a) shall not apply to any
underwriter to the extent that any such loss is based on or arises out of an
untrue statement or alleged untrue statement of a material fact, or an omission
or alleged omission to state a material fact, contained in or omitted from any
preliminary Prospectus if the final Prospectus shall correct such untrue
statement or alleged untrue statement, or such omission or alleged omission, and
a copy of the final Prospectus has not been sent or given to such Person at or
prior to the confirmation of sale to such Person if such underwriter was under
an obligation to deliver such final Prospectus and failed to do so. CharterMac
shall also indemnify underwriters participating in the distribution of the
Registrable Securities, their officers, directors, agents and employees and each
Person who controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the extent as is customary
and typical in similar underwritten distributions.
(b) Indemnification by Holder. If any of a Selling Holder's
Registrable Securities are included in a Registration Statement under this
Agreement, to the extent permitted by applicable law, such Selling Holder shall
indemnify and hold harmless CharterMac, each of its trustees, officers,
employees and agents, each Person, if any, who controls CharterMac within the
meaning of the Securities Act, any other Selling Holder, any controlling Person
of any such other Selling Holder and each officer, director, partner, and
employee of such other Selling Holder and such controlling Person, against any
and all losses, claims, damages, liabilities and expenses (joint and several),
including attorneys' fees and disbursements and expenses of investigation,
incurred by such party arising out of or based upon any Violation, in each case
to the extent (and only to the extent) that such Violation is based on or arises
from written information furnished by such Selling Holder to CharterMac
expressly for use in connection with such Registration Statement (or any
amendments thereto) or any Prospectus (or any
13
amendment or supplement thereto); provided, however, that (x) the
indemnification required by this Section 6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if settlement
is effected without the consent of the relevant Selling Holder of Registrable
Securities, which consent shall not be unreasonably withheld, and (y) in no
event shall the amount of any indemnity under this Section 6(b) exceed the gross
proceeds from the applicable offering received by such Selling Holder. In no
event shall a Holder be jointly liable with any other Holder as a result of its
indemnification obligations.
(c) Conduct of Indemnification Proceedings. Reasonably
promptly after receipt by an indemnified party under this Section 6 of notice of
the commencement of any action, suit, proceeding, investigation or threat
thereof made in writing for which such indemnified party may make a claim under
this Section 6, such indemnified party shall deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. The failure to deliver written notice to the indemnifying party within a
reasonable time following the commencement of any such action, if not otherwise
known by the indemnifying party shall relieve such indemnifying party of any
liability to the indemnified party under this Section 6 to the extent of any
material prejudice or forfeiture of substantial rights or defenses resulting
therefrom but shall not relieve the indemnifying party of any liability that it
may have to any indemnified party otherwise than pursuant to this Section 6. Any
fees and expenses incurred by the indemnified party (including any fees and
expenses incurred in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the indemnified party, as incurred,
within thirty (30) days of written notice thereof to the indemnifying party so
long as such indemnified party shall have provided the indemnifying party with a
written undertaking to reimburse the indemnifying party for all amounts so
advanced if it is ultimately determined that the indemnified party is not
entitled to indemnification hereunder. Any such indemnified party shall have the
right to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses, (ii) the indemnifying party
shall have failed to assume the defense of such action, claim or proceeding in a
timely manner, or (iii) such indemnified party reasonably determines that a
conflict of interest exists where it is advisable for such indemnified party to
be represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to such indemnified party which are different from or
in addition to those available to the indemnifying party (in which case, if such
indemnified party notifies the indemnifying party in writing that it 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
action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding
14
or separate but substantially similar or related actions, claims or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
additional firm of attorneys (together with appropriate local counsel) at any
time for all such indemnified parties, unless such indemnified party reasonably
determines that a conflict of interest exists where it is advisable for such
indemnified party to be represented by separate counsel or that, upon advice of
counsel, there may be legal defenses available to such indemnified party which
are different from or in addition to those available to any other of such
indemnified parties in which event the indemnifying party shall be obligated to
pay the fees and expenses of such additional counsel or counsels). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding or claim without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld.
(d) Contribution. If the indemnification required by this
Section 6 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 6:
(1) The indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 6(a) and Section 6(b), any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
(2) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in Section 6(d)(1). 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.
(e) Full Indemnification. If indemnification is available
under this Section 6, the indemnifying parties shall indemnify each indemnified
party to the full
15
extent provided in this Section 6 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 6(d)(1).
(f) Survival. The obligations of CharterMac and the Selling
Holders of Registrable Securities under this Section 6 shall survive the
completion of any offering of Registrable Securities pursuant to a Registration
Statement under this Agreement, and otherwise.
Section 7. Transfer of Registration Rights. All rights of a Holder
with respect to Exchange Shares pursuant to this Agreement may be Transferred by
such Holder to any Person in connection with the Transfer of Exchange Shares to
such Person, in all cases. CharterMac shall not be bound by any such Transfer
until the transferor or transferee shall have delivered to the secretary of
CharterMac written notification of such Transfer setting forth the name of the
transferor, name and address of the transferee, and the number of Exchange
Shares which shall have been so Transferred.
Section 8. Covenants of CharterMac. CharterMac hereby agrees and
covenants that it shall file as and when applicable, on a timely basis, all
reports required to be filed by it under the Securities Act and the Exchange
Act. If CharterMac is not required to file reports pursuant to the Exchange Act,
upon the request of any Holder of Registrable Securities, CharterMac shall make
publicly available the information specified in subparagraph (c)(2) of Rule 144.
CharterMac shall take such further action as may be reasonably required from
time to time and as may be within the reasonable control of CharterMac, to
enable the Holders to Transfer Exchange Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 or
any similar rule or regulation hereafter adopted by the Commission.
In connection with any sale, transfer or other disposition by a
Holder of any Exchange Shares pursuant to Rule 144, CharterMac shall cooperate
with such Holder to facilitate the timely preparation and delivery of
certificates representing Exchange Shares to be sold and not bearing any
Securities Act legend, and enable certificates for such Exchange Shares to be
for such number of shares and registered in such names as the Holder may
reasonably request at least two Business Days prior to any sale of Exchange
Shares.
Section 9. Miscellaneous.
(a) Notices. All notices and other communications given or
made pursuant hereto shall be in writing and delivered by hand or sent by
registered or certified mail (postage prepaid, return receipt requested) or by
nationally recognized overnight air courier service and shall be deemed to have
been duly given or made as of the date delivered if delivered personally, or if
mailed, on the third business day after mailing (on the first business day after
mailing in the case of a nationally recognized overnight air courier service) to
the parties at the following addresses:
16
if to CharterMac, to:
CharterMac
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
and:
if to the Holders, to such Holder at their respective
address set forth on Schedule A hereto.
Any party may by notice given in accordance with this
Section 9(a) to the other parties designate another address or Person for
receipt of notices hereunder.
(b) Amendments and Waivers. This Agreement may be modified,
amended or supplemented only by an instrument in writing signed by all of the
parties hereto; provided that consent to any modification, amendment or
supplement by CharterMac shall require approval of not less than a majority of
the Independent Trustees.
(c) Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the party
or parties entitled to the benefits thereof only by a written instrument signed
by the party granting such waiver (which, in the case of a waiver by CharterMac,
shall require the approval of not less than a majority of the Independent
Trustees), but such a waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 9(c).
(d) Governing Law. This Agreement shall be governed by the
laws of the State of New York without regard to the conflict of laws principles
thereof.
(e) Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity,
17
legality or enforceability of this Agreement, including any such provision, in
any other jurisdiction, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted by law.
Upon such determination that any provision is invalid, illegal or incapable of
being enforced, the parties hereto will negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby and thereby are fulfilled to the extent possible.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Section Headings. The section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. All references in this Agreement to Sections
are to sections of this Agreement, unless otherwise indicated.
(h) Entire Agreement. This Agreement, together with the
Contribution Agreement and the other Collateral Agreements (as defined in the
Contribution Agreement), embodies the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, inducements, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein or therein. This Agreement, the Contribution Agreement and the other
Collateral Agreements supersede all prior written or oral agreements and
understandings between the parties with respect to the transactions.
(i) Successors, Assigns and Transferees.
(1) This Agreement shall inure to the benefit of and be
binding upon the successors, assigns and transferees of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders. In connection with any transaction in which any Person other
than CharterMac becomes obligated to issue any securities in exchange for
Special Common Units (including pursuant to any merger, combination or
reorganization of CharterMac or any sale of all or substantially all of the
assets of CharterMac), such Person shall execute an assumption agreement
assuming CharterMac's obligations hereunder on terms reasonably satisfactory to
the Investor Members.
(2) If any successor, assignee or transferee of a
Holder shall acquire Special Common Units or Registrable Securities, in any
manner, whether by operation of law or otherwise, such Special Common Units or
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Special Common Units or Registrable
Securities such Person shall be entitled to receive
18
the benefits hereof and shall be conclusively deemed to have agreed to be bound
by all of the terms and provisions hereof.
(3) The term "successor, assignee or transferee of a
Holder" shall include any Person that acquires Special Common Units or
Registrable Securities by operation of law, including upon the merger or
consolidation, liquidation or dissolution of the Holder.
(4) A pledgee of Registrable Securities which is an
Institutional Lender shall be entitled to all the benefits of a Holder under
this Agreement and CharterMac agrees to identify such pledgee as a potential
selling shareholder in the original filing of the Shelf Registration Statement
or, if necessary, file a supplement or amendment thereto within five (5)
Business Days of receipt of a request therefor from such pledgee in order to so
identify such pledgee.
(j) Interpretation.
(1) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. If any ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties and no presumptions or burden of proof will arise
favoring or disfavoring any party by virtue of authorship of any provisions of
this Agreement.
(2) All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.
(3) The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation."
(k) Further Assurances. Each of the parties shall use
reasonable efforts to execute and deliver to any other party such additional
documents and take such other action, as any other party may reasonably request
to carry out the intent of this Agreement and the transactions contemplated
hereby.
(l) Specific Performance. The parties hereto acknowledge
that there would be no adequate remedy at law if any party fails to perform any
of its obligations hereunder, and accordingly agree that each party, in addition
to any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
[SIGNATURE PAGES FOLLOW]
19
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be duly executed on its behalf, as of the date first written
above.
CHARTERMAC
By: _______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Operating Officer
APH ASSOCIATES L.P.
By: APH Associates, Inc., its general
partner
By: ___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
DLK ASSOCIATES L.P.
By: DLK Associates, Inc., its general
partner
By: ___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
------------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
FRIED FAMILY 2001 TRUST
By: ___________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Trustee
By: ___________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
Trustee
MARC ASSOCIATES, L.P.
By: Marc Associates, Inc., its
general partner
By: ___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
RELATED GENERAL II, L.P.
By: RCMP, Inc., its general partner
By: ___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SJB ASSOCIATES L.P.
By: SJB Associates, Inc., its general partner
By: ___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
2
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ___________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Pursuant to Power of Attorney
3
Schedule A
----------
Addresses for Notices
---------------------
If to APH Associates L.P.:
c/o Related Capital Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
If to DLK Associates L.P.:
c/o Related Capital Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to Marc Associates, L.P.:
c/o Related Capital Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to SJB Associates L.P.:
c/o Related Capital Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Related General II L.P.:
c/o Related Capital Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
and with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ or the Fried Family 2001 Trust:
c/o Phoenix Realty Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.