EXHIBIT 10.11
COMMON STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of November 25, 1997
by and between
CAPITAL AUTOMOTIVE REIT
as the Company,
and
FBR ASSET INVESTMENT CORPORATION
as the Purchaser
This Registration Rights Agreement (the "Agreement") is made and entered
into as of November 25, 1997, by and between Capital Automotive REIT, a Maryland
real estate investment trust (the "Company"), and FBR Asset Investment
Corporation, a Virginia corporation (the "Purchaser").
This Agreement is made pursuant to the Stock Purchase Agreement (the
"Purchase Agreement"), dated November 25, 1997, between the Company and the
Purchaser. In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights provided
for in this Agreement to the Purchaser and its respective direct and indirect
transferees. The execution of this Agreement is a condition to the closing of
the transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
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As used in this Agreement, the following terms shall have the following
meanings:
Affiliate: (i) Any person directly or indirectly owning, controlling,
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or holding, with power to vote ten percent or more of the outstanding voting
securities of such other person, (ii) any person ten percent or more of whose
outstanding voting securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other person, (iii) any person directly or
indirectly controlling, controlled by, or under common control with such other
person, (iv) any executive officer, director, trustee or general partner of such
other person, and (v) any legal entity for which such person acts as an
executive officer, director, trustee or general partner. An indirect
relationship shall include circumstances in which a person's spouse, children,
parents, siblings or mothers-, fathers-, sisters or brothers-in-law is or has
been associated with a person.
Agreement: This Registration Rights Agreement, as the same may be
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amended, supplemented or modified from time to time in accordance with the terms
hereof.
Business Day: With respect to any act to be performed hereunder, each
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Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or other applicable place where such
act is to occur are authorized or obligated by applicable law, regulation or
executive order to close.
Closing Date: The Closing Date for the IPO.
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Commission: The Securities and Exchange Commission.
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Common Stock: Common stock of the Company.
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Company: Capital Automotive REIT, a Maryland real estate investment
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trust, and any successor corporation thereto.
Controlling person: As defined in Section 8(a) hereof.
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Exchange Act: The Securities Exchange Act of 1934, as amended, and
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the rules and regulations promulgated by the Commission pursuant thereto.
Form S-3. Such form under the Securities Act as is in effect on the
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date hereof or any successor registration form under the Securities Act
subsequently adopted by the Commission that permits inclusion or incorporation
of substantial information by reference to other documents filed by the Company
with the Commission.
Holder: Each registered holder of any Registrable Shares.
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Indemnified Party: As defined in Section 8(a) hereof.
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IPO: As defined in the Purchase Agreement.
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Person: An individual, partnership, corporation, trust, unincorporated
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organization, government or agency or political subdivision thereof, or any
other legal entity.
Proceeding: An action, claim, suit or proceeding (including, without
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limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the person subject thereto,
threatened.
Prospectus: The prospectus included in any Registration Statement,
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including any preliminary prospectus, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
Purchase Agreement: The Purchase Agreement is as defined in the preamble.
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Purchaser: FBR Asset Investment Corporation.
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Register, registered and registration: Such terms shall refer to a
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registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable
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rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
Registrable Shares: Each of the Shares until (i) the date on which it
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has been registered effectively pursuant to the Securities Act and disposed of
in accordance with the Registration Statement relating to it, (ii) the date on
which either it is distributed to the public pursuant to Rule 144 (or any
similar provisions then in effect) or is saleable pursuant to Rule 144(k)
promulgated by the Commission pursuant to the Securities Act or (iii) the date
on which it is saleable, without restriction, pursuant to an available exemption
from registration under the Securities Act, or (iv) the date on which it is sold
to the Company.
Registration Statement: Any registration statement of the Company
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that covers the resale of any of the Registrable Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement.
Rule 144: Rule 144 promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 144A: Rule 144A promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 158: Rule 158 promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 174: Rule 174 promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the
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Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission as a replacement thereto
having substantially the same effect as such rule.
Securities Act: The Securities Act of 1933, as amended, and the rules
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and regulations promulgated by the Commission thereunder.
Shares: The shares of Common Stock being offered and sold pursuant to
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the terms and conditions of the Purchase Agreement.
Underwritten Offering: A sale of securities of the Company to an
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underwriter or underwriters for reoffering to the public.
2. Piggyback Registration
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(a) Piggyback Registration Rights and Notice of Registration. The
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Company shall notify all Holders of Registrable Shares in writing at least
thirty (30) days prior to filing any registration statement under the Securities
Act for purposes of effecting a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding registration statements
relating to any registration under Section 3 or 4 of this Agreement or to any
employee benefit plan or a corporate reorganization) and will afford each such
Holder an opportunity to include in such registration statement all or any part
of the Registrable Shares then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Shares held by such Holder shall, within twenty (20) days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Shares such
Holder wishes to include in such registration statement. If a Holder decides
not to include all of its Registrable Shares in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Shares in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
therein.
(b) Right to Terminate Registration. The Company shall have the
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right to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Holder has elected to include Registrable Shares in such registration.
(c) Underwriting. If a registration statement under which the
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Company gives notice under this Section 2 is for an Underwritten Offering, then
the Company shall so advise the Holders of Registrable Shares. In such event,
the right of any such Holder's Registrable Shares to be included in a
registration pursuant to this Section 2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Shares in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Shares through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter(s) selected for such underwriting. Notwithstanding any
other provision of this Agreement, if the managing underwriter(s) determine(s)
in good faith that marketing factors require a limitation of the number of
shares to be underwritten, then the managing underwriter(s) may exclude shares
(including Registrable Shares) from the registration and the underwriting, and
the number of shares that may be included in the registration and the
underwriting shall be allocated, first, to the Company, and second, to each of
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the Holders requesting inclusion of their Registrable Shares in such
registration statement on a pro rata basis based on the total number of
Registrable Shares then held by each such Holder, provided, however, that the
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right of the underwriters to exclude shares (including Registrable Shares) from
the registration and underwriting as described above shall be restricted so that
(i) the number of Registrable Shares included in any such registration is not
reduced below twenty-five percent (25%) of the shares included in the
registration, and (ii) all shares that are not Registrable Shares and are held
by persons who are employees or directors of the Company (or any subsidiary of
the Company) shall first be excluded from such registration and underwriting
before any Registrable Shares are so excluded. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the underwriter, delivered at least ten (10)
business days prior to the effective date of the registration statement.
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Any Registrable Shares excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder that is a
partnership or corporation, the partners, retired partners and shareholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "Holder," and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
(d) Hold-Back Agreement. By electing to include Registrable Shares
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in any registration pursuant to Section 2 hereof, the Holder of the Registrable
Shares shall be deemed to have agreed not to effect any public sale or
distribution of securities of the Company of the same or similar class or
classes of the securities included in the Registration Statement or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act,
during such periods as reasonably requested by the representatives of the
underwriters, if an Underwritten Offering, or the Company in any other
registration.
(e) The Company shall not be obligated to effect, or to take any
action to effect any such registration of Registrable Shares pursuant to this
Section 2:
(i) in any particular jurisdiction in which the Company would
be required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in affecting such registration,
qualification, or compliance, unless the Company is already subject to service
or required to be so qualified in such jurisdiction and except as may be
required by the Securities Act, or
(ii) if within 14 days after its receipt of a written request
to effect such registration, the Company causes to be delivered to the Holders
an opinion of counsel reasonably acceptable to the Holders to the effect that
the proposed disposition of Registrable Shares by the Holders will not require
registration or qualification under the Securities Act, it being specifically
understood and agreed that the Holders will promptly furnish to the Company and
such counsel all information such counsel may reasonably request in order to
enable such counsel to determine whether it would be able to render such
opinion.
(f) Expenses. All expenses incurred in connection with a
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registration pursuant to this Section 2 (excluding underwriters' and brokers'
discounts and commissions), including without limitation all federal and "blue
sky" registration and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the
Company.
3. Demand Registration
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(a) Demand Registration Right. If the Company shall receive at any
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time after six months from the Closing Date, a written request from the Holders
of at least fifty (50) percent of the outstanding Registrable Shares that the
Company file a registration statement under the Securities Act covering the
registration of Registrable Shares pursuant to this Section 3, then the Company
shall, within ten (10) business days of the receipt of such written request,
give written
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notice of such request ("Request Notice") to all Holders, and use its reasonable
best efforts to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Shares that Holders request to be registered
and included in such registration by written notice given by such Holders to the
Company within thirty (30) days after receipt of the Request Notice, subject
only to the limitations of this Section 3; provided that the Registrable Shares
requested by all Holders to be registered pursuant to such request have an
anticipated aggregate public offering price (before any underwriting discounts
and commissions) of not less than $2,500,000.
(b) Underwriting. If the Holders initiating the registration
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request under this Section 3 ("Initiating Holders") intend to distribute the
Registrable Shares covered by their request by means of an underwriting, then
they shall so advise the Company as a part of their request made pursuant to
this Section 3 and the Company shall include such information in the written
notice referred to in Section 3(a). In such event, the right of any Holder to
include its Registrable Shares in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Shares in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their
Registrable Shares through such underwriting shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting by the Company and a majority in interest of the
Initiating Holders. Notwithstanding any other provision of this Section 3, if
the underwriter(s) advise(s) the Company in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all Holders of Registrable Shares that would otherwise
be registered and underwritten pursuant hereto, and the number of Registrable
Shares that may be included in the underwriting shall be reduced as required by
the underwriter(s) and allocated among the Holders of Registrable Shares on a
pro rata basis according to the number of Registrable Shares then outstanding
held by each Holder requesting registration (including the Initiating Holders);
provided, however, that the number of shares of Registrable Shares to be
included in such underwriting and registration shall not be reduced unless all
other securities of the Company are first entirely excluded from the
underwriting and registration. Any Registrable Shares excluded and withdrawn
from such underwriting shall be withdrawn from the registration.
(c) Maximum Number of Demand Registrations. The Company is
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obligated to effect only one (1) such registration pursuant to this Section 3.
(d) Deferral. Notwithstanding the foregoing, if the Company shall
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furnish to Holders requesting the filing of a registration statement pursuant to
this Section 3, a certificate signed by the President or Chief Executive Officer
of the Company stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of not more than 120 days
after receipt of the request of the Initiating Holders.
(e) Expenses. All expenses incurred in connection with a
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registration pursuant to this Section 3, including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders (but excluding
underwriters' discounts and
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commissions), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 3 shall bear such Holder's proportionate
share (based on the total number of shares sold in such registration other than
for the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such offering.
Notwithstanding the foregoing, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 3 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Shares to be registered, unless the Holders of a
majority of the Registrable Shares then outstanding agree to forfeit their right
to demand registration pursuant to this Section 3 (in which case such right
shall be forfeited by all Holders of Registrable Shares); provided, further,
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that if at the time of such withdrawal, the Holders have learned of a material
adverse change in the condition, business, or prospects of the Company not known
to the Holders at the time of their request for such registration and have
withdrawn their request for registration with reasonable promptness after
learning of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to this
Section 3.
(f) The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 3:
(i) in any particular jurisdiction in which the Company would
be required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in effecting such registration,
qualification, or compliance, unless the Company is already subject to service
or required to be so qualified in such jurisdiction and except as may be
required by the Securities Act; or
(ii) if, within 14 days after its receipt of a written request
to effect such registration, the Company causes to be delivered to the Holders
an opinion of counsel reasonably acceptable to the Holders to the effect that
the proposed disposition of Registrable Shares by the Holders will not require
registration or qualification under the Securities Act, it being specifically
understood and agreed that the Holders will promptly furnish to the Company and
such counsel all information such counsel may reasonably request in order to
enable such counsel to determine whether it would be able to render such
opinion.
4. Form S-3 Registration
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(a) In case the Company shall receive from the Holders of at least
twenty (20) percent of all outstanding Registrable Shares a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Shares owned by such Holders, then the Company will:
(i) Notice. Promptly give written notice of the proposed
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registration and the Holders' request therefor, and any related qualification or
compliance, to all other Holders of Registrable Shares; and
(ii) Registration. As soon as practicable, use its reasonable
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best efforts to effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holders'
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Registrable Shares as are specified in such request, together with all or such
portion of the Registrable Shares of any other Holders joining in such request
as are specified in a written request given within twenty (20) days after
receipt of such written notice from the Company; provided, however, that the
Company shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 4:
(1) if Form S-3 is not available for such offering by the
Holders;
(2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Shares and such other securities (if any) at an aggregate price
to the public of less than $1,000,000;
(3) if the Company shall furnish to the Holders a
certificate signed by the President or Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement no more than once during any twelve month period for a period of not
more than 120 days after receipt of the request of the Holders under this
Section 4;
(4) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 4;
(5) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or to
execute a general consent to service of process in effecting such registration,
qualification, or compliance, unless the Company is already subject to service
or required to be so qualified in such jurisdiction and except as may be
required by the Securities Act; or
(6) if within 14 days after its receipt of a written
request to effect such registration, the Company causes to be delivered to the
Holders an opinion of counsel reasonably acceptable to the Holders to the effect
that the proposed disposition of Registrable Shares by the Holders will not
require registration or qualification under the Securities Act, it being
specifically understood and agreed that the Holders will promptly furnish to the
Company and such counsel all information such counsel may reasonably request in
order to enable such counsel to determine whether it would be able to render
such opinion.
(iii) Expenses. The Company shall pay all expenses incurred in
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connection with each registration requested pursuant to this Section 4,
(excluding underwriters' or brokers' discounts and commissions), including
without limitation all filing, registration and qualification, printers' and
accounting fees, the fees and disbursements of the Company, and the reasonable
fees and disbursements of one counsel for the selling Holders.
(b) Not Demand Registration. Form S-3 registrations shall not be
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deemed to be demand registrations as described in Section 3 above.
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(c) Number of Form S-3 Registrations. Upon request in accordance
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with this Section 4, the Company is obligated to effect such registrations semi-
annually pursuant to this Section 4.
5. Rule 144 Reporting. With a view to making available the benefits of
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certain rules and regulations of the Commission that may at any time permit the
sale of the Registrable Shares to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) So long as a Holder owns any Registrable Shares, to furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as a Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Holder to sell any such securities
without registration (at any time after the Company has become subject to the
reporting requirements of the Exchange Act).
6. Registration Procedures. In connection with the obligations of the Company
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with respect to any registration pursuant to this Agreement, the Company shall
use its reasonable best efforts to effect or cause to be effected the
registration of the Registrable Shares under the Securities Act to permit the
sale of such Registrable Shares by the Holder or Holders in accordance with the
Holders' intended method or methods of distribution, and the Company shall:
(a) prepare and file with the Commission, as specified in this Agreement,
a Registration Statement, which Registration Statement shall comply as to form
in all material respects with the requirements of the applicable form and
include all financial statements required by the Commission to be filed
therewith, and use its reasonable best efforts to cause such Registration
Statement to become effective and remain effective for the lesser of a period of
ninety (90) days or until all such Registrable Shares are sold in accordance
with the intended distribution of such Shares;
(b) subject to Section 6(i) hereof, prepare and file with the Commission
such amendments and post-effective amendments to each such Registration
Statement as may be necessary to keep such Registration Statement effective for
the applicable period; cause each such Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 or any similar rule that may be adopted under the
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Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Holder thereof;
(c) furnish to the Holder of Registrable Shares without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder may
reasonably request, in order to facilitate the public sale or other disposition
of the Registrable Shares; the Company consents to the use of any such
Prospectus, including each preliminary Prospectus, by the Holder of Registrable
Shares, if any, in connection with the offering and sale of the Registrable
Shares covered by any such Prospectus;
(d) use its reasonable best efforts to register or qualify, or obtain
exemption for registration or qualification for, all Registrable Shares by the
time the applicable Registration Statement is declared effective by the
Commission under all applicable state securities or "blue sky" laws of such
jurisdictions as the Holder of Registrable Shares covered by a Registration
Statement shall reasonably request in writing, keep each such registration or
qualification or exemption effective during the period such Registration
Statement is required to be kept effective and do any and all other acts and
things that may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Registrable Shares
owned by such Holder; provided, however, that the Company shall not be required
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to (i) qualify generally to do business in any jurisdiction or to register as a
broker or dealer in such jurisdiction where it would not otherwise be required
to qualify but for this Section 6(d), (ii) subject itself to taxation in any
such jurisdiction, or (iii) submit to the general service of process in any such
jurisdiction; provided, further, that if the Company fails to list the
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Registrable Shares on a national stock exchange or qualify for quotation on an
automatic quotation system at or prior to the time the Registration Statement is
declared effective by the Commission because it fails to meet requirements for
such listing or quotation regarding the number of holders, the obligation in
this Section 6(d) shall not require the Company to register or qualify the
Registrable Shares in any jurisdiction where the Company reasonably concludes,
based upon the advice of securities counsel, that such registration or
qualification would require unreasonable effort (including, without limitation,
amendments to the Company's charter or bylaws) or expense;
(e) notify the Holder of Registrable Shares promptly and, if requested by
such Holder, confirm such advice in writing (i) when a Registration Statement
has become effective and when any post-effective amendments and supplements
thereto become effective, (ii) of the issuance by the Commission or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
and (iii) of the happening of any event during the period a Registration
Statement is effective as a result of which such Registration Statement or the
related Prospectus 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 not misleading, and (iv) at the request of any such Holder,
promptly to furnish to such Holder 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 purchaser 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;
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(f) upon request by the Holder, furnish to the Holder of Registrable
Shares copies of any request by the Commission or any state securities authority
of amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(g) make every reasonable effort to avoid the issuance of, or if issued to
obtain the withdrawal of, any enjoining order suspending the use or
effectiveness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Registrable
Shares for sale in any jurisdiction, at the earliest possible moment;
(h) upon request furnish to the Holder of Registrable Shares, 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);
(i) upon the occurrence of any event contemplated by Section 6(e)(iii)
hereof, use its best efforts to prepare a supplement or post-effective amendment
to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Shares, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(j) If requested by the representative underwriters, if any, or any
Holders of Registrable Shares being sold in connection with such offering, (i)
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the representative of the underwriters, if any, or such Holders
indicate relates to them or otherwise reasonably request be included therein,
and (ii) make all required filings of such prospectus supplement or such post-
effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
-------- -------
required to take any action pursuant to this Section 6 that would, in the
opinion of counsel for the Company, violate applicable law;
(k) make available to inspection by representatives of the Holder of
the Registrable Shares and the representative of any underwriters participating
in any disposition pursuant to a Registration Statement and any special counsel
or accountant retained by such Holders or underwriters, all financial and other
records, pertinent corporate documents and properties of the Company and cause
the respective officers, directors and employees of the Company to supply all
information reasonably requested by any such representatives, the representative
of the underwriters, the special counsel or accountants in connection with a
Registration Statement; provided, however, that such records, documents or
-----------------
information that the Company determines, in good faith, to be confidential and
notifies such representatives, representative of the underwriters, special
counsel or accountants are confidential shall not be disclosed by the
representatives, representative of the underwriters, special counsel or
accountants unless (i) the disclosure of such records, documents or information
is necessary to avoid or correct a misstatement or omission in a Registration
Statement, (ii) the release of such records, documents or information is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction, or
(iii) such records, documents or information have been generally made available
to the public;
11
(l) use its reasonable best efforts (including, without limitation,
seeking to cure any deficiencies (within the Company's control) cited by the
exchange or market in the Company's listing application) to list all Registrable
Shares on the American Stock Exchange or The NASDAQ National Market (or the
NASDAQ Small Cap Market if not qualified for the NASDAQ National Market (unless
the Company qualifies and chooses to list all Registrable Shares on the New York
Stock Exchange, in which event the Company shall use its best efforts to list
all Registrable Shares on the New York Stock Exchange);
(m) provide a CUSIP number for all Registrable Shares, not later than
the effective date of the Registration Statement;
(n) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission and make generally available
to its securityholders, as soon as reasonably practicable, earnings statements
covering at least 12 months that satisfy the provisions of Section 1l(a) of the
Securities Act and Rule 158 (or any similar rule promulgated under the
Securities Act) thereunder;
(o) provide and cause to be maintained a transfer agent for all
Registrable Shares covered by any Registration Statement from and after a date
not later than the effective date of such Registration Statement; and
(p) In connection with any sale or transfer of the Registrable Shares
that will result in such securities no longer being the Registrable Shares,
cooperate with the Holders and the representative of the underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing
the Registrable Shares to be sold, which certificates shall not bear any
restrictive legends and to enable such Registrable Shares to be in such
denominations and registered in such names as the representative of the
underwriters, if any, or Holders may request at least two Business Days prior to
any sale of the Registrable Shares.
(q) The Company may require the Holder of Registrable Shares to
furnish to the Company such information regarding the proposed distribution by
such Holder of such Registrable Shares as the Company may from time to time
reasonably request in writing or as shall be required to effect the registration
of their Registrable Shares.
(r) The Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 6(e)(iii)
hereof, such Holder will immediately discontinue disposition of Registrable
Shares pursuant to a Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus. If so directed by the Company,
such Holder will deliver to the Company (at the expense of the Company) all
copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of such notice.
7. Black-Out Period. (a) Following the effectiveness of a Registration
----------------
Statement (and the filings with any state securities commissions), the Company
may direct the Holder to suspend sales of the Registrable Shares for such times
as the Company reasonably may determine is necessary and advisable, including
the following events: (i) an Underwritten Offering by the
12
Company where the Company is advised by the representative of underwriters for
such Underwritten Offering that sale of Registrable Shares under the
Registration Statement would have a material adverse effect on the primary
offering, or (ii) pending negotiations relating to, or consummation of, a
transaction or the occurrence of an event (x) that would require additional
disclosure of material information by the Company in the Registration Statement
(or such filings), (y) as to which the Company has a bona fide business purpose
for preserving confidentiality, or (z) that renders the Company unable to comply
with Commission requirements, in each case under circumstances that would make
it impractical or inadvisable to cause the Registration Statement (or such
filings) to become effective or to promptly amend or supplement the Registration
Statement on a post-effective basis, as applicable.
(b) In the case of an event that causes the Company to suspend the
effectiveness of a Registration Statement (a "Suspension Event"), the Company
may give notice (a "Suspension Notice") to the Holders to suspend sales of the
Registrable Shares so that the Company may correct or update the Registration
Statement (or such filings); provided, however, that such suspension shall
continue only for so long as the Suspension Event or its effect is continuing.
The Holders shall not effect any sales of the Registrable Shares pursuant to
such Registration Statement (or such filings) at any time after it has received
a Suspension Notice from the Company. If so directed by the Company, the
Holders will deliver to the Company all copies of the Prospectus covering the
Registrable Shares held by them at file time of receipt of the Suspension
Notice. The Holders may recommence effecting sales of the Registrable Shares
pursuant to the Registration Statement (or such filings) following further
notice to such effect (an "End of Suspension Notice") from the Company, which
End of Suspension Notice shall be given by the Company promptly following the
conclusion of any Suspension Event.
(c) Notwithstanding Section 2 hereof, if the Company shall give a
Suspension Notice pursuant to this Section 8, the Company agrees it shall extend
the period during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from the date
of the giving of the Suspension Notice to and including the date when the
Holders shall have received the End of Suspension Notice and copies of the
supplemented or amended Prospectus necessary to resume sales.
8. Indemnification Contribution
----------------------------
(a) Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless (i) the Purchaser, (ii) each Holder of the Registrable Shares,
(iii) each person, if any, who controls (within the meaning of the Securities
Act or the Exchange Act) any of the foregoing (any of the persons referred to in
this clause (iii) being hereinafter referred to as a "controlling person"), and
(iv) the respective officers, directors, partners, employees, representatives
and agents of the Purchaser, each Holder of the Registrable Shares, or any
controlling person thereof (any person referred to in clause (i), (ii), (iii) or
(iv) may hereinafter be referred to as an "Indemnified Party"), as follows:
(i) from and against any and all loss, claim, liability, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement (or
any amendment thereto) pursuant to which Registrable Shares were registered
under the Securities Act including all documents
13
incorporated therein by reference, or the omission or alleged omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by reference,
or the omission or alleged omission to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
--------
however, that such indemnity with respect to any Prospectus shall not inure to
-------
the benefit of the Holder (or any controlling person thereof) to the extent that
any such loss, claim, liability, damage or expense arises out of such Holder's
failure to send or give a copy of the final Prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Shares to such person if such statement
or omission was corrected in such final Prospectus.
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, if such settlement is effected with the
written consent of the Company (which consent shall not be unreasonably
withheld); and
(iii) from and against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), incurred in
investigating, preparing or defending against any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened, in
each case whether or not a party, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not apply to the
-------- -------
Holder with respect to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(b) Indemnification by Holders. Each Holder severally agrees to
--------------------------
indemnify and hold harmless the Company, each of its directors and officers
(including each officer of the Company who signed the Registration Statement),
each person, if any, who controls the Company, within the meaning of the
Securities Act and the Exchange Act, any underwriter and any Holder selling
securities under such Registration Statement or any of such other Holder's
partners, directors or officers or any person who controls such Holder within
the meaning of the Securities Act or the Exchange Act, against any and all loss,
liability, claim, damage and expenses described in the indemnity contained in
Section 8(a) hereof (provided, however, that any settlement described in Section
-------- -------
8(a) (ii) hereof is effected with the written consent of such Holder, which
consent shall not be unreasonably withheld), as incurred, but only with respect
to such untrue statement or omission, or alleged untrue statements or omissions,
made in a Registration Statement (or any
14
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in such Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto).
If the Holder elects to include Registrable Shares in an Underwritten Offering
pursuant to Section 3 or 4 hereof, the Holder shall be required to agree to such
indemnification provisions as may be required by the underwriter in connection
with such Underwritten Offering.
(c) Conduct of Indemnification Proceedings. Each indemnified Party
--------------------------------------
shall give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve it
from any liability that it may have under this indemnity agreement except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. If the indemnifying party so elects within a reasonable time
after receipt of such notice, the indemnifying party may assume the defense of
such action or proceeding at such indemnifying party's own expense with counsel
chosen by the indemnifying party and approved by the Indemnified Party or
parties in such action or proceeding, which approval shall not be unreasonably
withheld; provided, however, that if such Indemnified Party or parties
-------- -------
reasonably determines that a conflict of interest exists where it is advisable
for such Indemnified Party or parties to be represented by separate counsel or
that, upon advice of counsel, there may be legal defenses available to them that
are different from or in addition to those available to the indemnifying party,
then the indemnifying party shall not be entitled to assume such defense and the
Indemnified Party or parties shall be entitled to one separate counsel at the
indemnifying party's expense. If an indemnifying party is not entitled to
assume the defense of such action or proceeding as a result of the proviso to
the preceding sentence, such indemnifying party's counsel shall be entitled to
conduct such indemnifying party's defense, and counsel for the Indemnified Party
or parties shall be entitled to conduct the defense of such Indemnified Party or
parties, it being understood that both such counsel will cooperate with each
other to conduct the defense of such action or proceeding as efficiently as
possible. If an indemnifying party is not so entitled to assume the defense of
such action or does not assume such defense, after having received the notice
referred to in the first sentence of this paragraph, the indemnifying party or
parties will pay the reasonable fees and expenses counsel for the Indemnified
Party or parties. In such event, however, no indemnifying party will be liable
for any settlement effected without the written consent of such indemnifying
party. No indemnifying party shall, without the consent of the Indemnified
Party, consent to entry of any judgment or enter into a settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. If an indemnifying party is entitled to assume, and
assumes, the defense of such action or proceeding in accordance with this
paragraph, such indemnifying party shall not be liable for any fees and expenses
for counsel for the Indemnified Parties incurred thereafter in connection with
such action or proceeding.
(d) Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
this Section 8 is for any reason held to be unenforceable, unavailable or
insufficient although applicable in accordance with it terms, the Company and
Holder shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
the
15
Company and the Holder in such proportion so that the Holder is responsible
for the portion represented by the percentage that the public offering price of
its Registrable Shares offered by and sold under the Registration Statement
bears to the public offering price of all securities offered by and sold under
such Registration Statement. Notwithstanding the foregoing, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person, if any, who controls a Holder within the meaning of Section 15 of
the Securities Act shall have the same rights to contribution as such Holder,
and each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company. Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which contribution may be sought, it
shall promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligation it may have hereunder or otherwise.
(e) Survival. The obligations of the Company and the Holders under
--------
this Section 8 shall survive the completion of any offering of Registrable
Shares in a Registration Statement and otherwise.
9. Market Stand-Off Agreement. Each Holder hereby agrees that it shall not,
---------------------------
to the extent requested by the Company or an underwriter of securities of the
Company, sell or otherwise transfer or dispose of any Registrable Shares (other
than to donees or partners of the Holder who agree to be similarly bound) for up
to one hundred eighty (180) days following the effective date of a Registration
Statement of the Company filed under the Securities Act; provided, however,
-----------------
that:
(a) such agreement shall be applicable only to the first such Registration
Statement of the Company that covers securities to be sold on its behalf to the
public in an Underwritten Offering but not to Registrable Shares sold pursuant
to such Registration Statement, and
(b) all executive officers and trustees of the Company then holding Common
Stock of the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section 9 and to impose stop transfer instructions with respect
to the Registrable Shares and such other shares of stock of each Holder (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.
10. Termination of the Company's Obligations. The Company shall have no
----------------------------------------
obligations pursuant to this Agreement with respect to: (a) any request or
requests for registration made by any Holder on a date more than two (2) years
after the closing date of the Company's initial public offering; or (b) any
Registrable Shares proposed to be sold by a Holder in a registration pursuant to
this Agreement if, in the opinion of counsel to the Company, all such
Registrable
16
Shares proposed to be sold by a Holder may be sold in a three-month period
without registration under the Securities Act pursuant to Rule 144 under the
Securities Act.
11. Limitations on Subsequent Registration Rights. From and after the date of
---------------------------------------------
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the then outstanding Registrable Shares, enter into any
agreement with any holder or prospective holder of any securities of the Company
that would allow such holder or prospective holder (a) to include such
securities in any registration filed under Section 3 hereof, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Shares of the Holders
that is included, or (b) to make a demand registration that could result in such
registration statement being declared effective prior to the earlier of either
of the dates set forth in Section 3(a), or within one hundred twenty (120) days
of the effective date of any registration effected pursuant to Section 3.
17
12. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company, or by a Holder of
--------
the Registrable Shares, of any of their obligations under this Agreement, each
Holder of the Registrable Shares of the Company, in addition to being entitled
to exercise all rights granted by law, including recovery and damages, will be
entitled to specific performance of its rights under this Agreement; provided,
---------
however, that no holder shall have any right to obtain or seek an injunction
-------
restraining or otherwise delaying any registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.
(b) Amendments and Waivers. The provisions of this Agreement, including
----------------------
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, except if the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Registrable Shares is obtained;
provided, however, that for the purposes of this Agreement, Registrable Shares
-------- -------
that are owned, directly or indirectly, by either the Company or an Affiliate of
the Company are not deemed outstanding. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with, respect to a matter
that relates exclusively to the rights of Holders of the Registrable Shares
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders of the
Registrable Shares may be given by Holders of a majority of the Registrable
Shares being sold by such Holders pursuant to such Registration Statement;
provided, however, that the provisions of this sentence may not be amended,
-------- -------
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(c) Notices. All notices and other communications provided for herein
-------
shall be made in writing by hand-delivery, next-day air courier, certified
first-class mail, return receipt requested, telex or telecopy;
(i) if to the Company, to Waterview Building, ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO;
(ii) if to the Purchaser, to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, ATTN: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive Officer;
(iii) if to any other person who is then the registered Holder of any
Registrable Shares, to the address of such Holder as it appears in the Common
Stock register of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given (v) when delivered by
hand, if personally delivered, (w) one Business Day after being timely delivered
to a next-day air courier, (x) five Business Days after being deposited in the
mail, postage prepaid, if mailed, (y) when answered back, if telexed, or (z)
when receipt is acknowledged by the recipient's telecopier machine, if
telecopied.
(d) Successors and Assigns. Notwithstanding anything herein to the
----------------------
contrary, the registration rights of a Holder under Sections 2, 3, or 4 hereof
may be assigned only to a party who acquires at least 10,000 Common Shares;
provided, however, that no party may be assigned
-----------------
18
any of the foregoing rights unless the Company is given written notice by the
assigning party at the time of such assignment stating the name and address of
the assignee and identifying the securities of the Company as to which the
rights in question are being assigned; and provided, further that any such
-----------------
assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 12(d).
(e) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Virginia, as applied to
contracts made and performed within the Commonwealth of Virginia without regard
to principles of conflicts of law.
(g) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the terms of this
Agreement. All references made in this Agreement to "Section" refer to such
Section of this Agreement, unless expressly stated otherwise.
(i) Costs and Attorneys' Fees. In any action or proceeding brought to
-------------------------
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover its reasonable costs and attorneys' fees in
addition to any other available remedy.
(j) Adjustment for Stock Splits, etc. Wherever in this Agreement there
--------------------------------
is a reference to a specific number of shares, then upon the occurrence of any
subdivision, combination, or stock dividend of such shares, the specific number
of shares so referenced in this Agreement shall automatically be proportionally
adjusted to reflect the affect on the outstanding shares of such class or series
of stock by such subdivision, combination, or stock dividend.
(k) Aggregation of Stock. All shares held or acquired by affiliated
--------------------
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
SIGNATURE PAGE FOLLOWS
19
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
THE COMPANY: CAPITAL AUTOMOTIVE REIT
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
THE PURCHASER: FBR ASSET INVESTMENT CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
20