EXHIBIT 4.8
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
by and between
THE FORTRESS GROUP, INC.
and
PROMETHEUS HOMEBUILDERS LLC
Dated as of
March 6, 1998
TABLE OF CONTENTS
Page
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1. DEFINITIONS................................................1
2. DEMAND REGISTRATIONS.......................................4
(a) Timing Of Demand Registrations.........................4
(b) Number of Demand Registrations.........................4
(c) Required Thresholds....................................4
(d) Participation..........................................4
(e) Underwriter's Cutback..................................5
(f) Managing Underwriter...................................5
(g) Black-Out Periods of Investor..........................5
3. PIGGYBACK REGISTRATIONS....................................5
(a) Participation..........................................5
(b) Underwriter's Cutback..................................6
(c) Company Control........................................6
4. HOLD-BACK AGREEMENTS.......................................6
(a) By Holders of Registrable Securities...................6
(b) By the Company and Others..............................7
5. REGISTRATION PROCEDURES....................................7
6. REGISTRATION EXPENSES.....................................11
(a) Demand Registrations..................................11
(b) Piggyback Registrations...............................11
(c) Company Expenses......................................11
7. INDEMNIFICATION...........................................11
(a) Indemnification by Company............................11
(b) Indemnification Procedures............................12
(c) Indemnification by Holder of Registrable Securities...13
(d) Contribution..........................................13
8. EXCHANGE ACT REPORTING REQUIREMENTS.......................14
9. REQUIREMENTS FOR PARTICIPATION IN UNDERWRITTEN OFFERINGS..14
10. SUSPENSION OF SALES.......................................15
11. FUTURE REGISTRATION RIGHTS AGREEMENTS.....................15
12. MISCELLANEOUS.............................................16
(a) Remedies..............................................16
(b) No Inconsistent Agreements............................16
(c) Amendments and Waivers................................16
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(d) Notices...............................................16
(e) Successors and Assigns................................17
(f) Counterparts..........................................17
(g) Table of Contents and Headings........................17
(h) Governing Law.........................................17
(i) Severability..........................................17
(j) Forms.................................................18
(k) Entire Agreement......................................18
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This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is made and entered into as of March 6, 1998, by and between The Fortress Group,
Inc., a Delaware corporation (the "Company") and Prometheus Homebuilders LLC
(the "Investor").
WHEREAS, on September 30, 1997, the Company and the Investor entered into
that certain registration rights agreement (the "Original Registration Rights
Agreement")
WHEREAS, In order to induce the Investor to enter into the that certain
Second Amended and Restated Stock Purchase Agreement, dated as of March 6, 1998
hereof (the "Stock Purchase Agreement"), the Company has agreed to amend and
restate the Original Registration Rights Agreement as set forth in this
Agreement. The execution of this Agreement is a condition to the Second Closing
under the Stock Purchase Agreement.
NOW, THEREFORE The parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Board: The Board of Directors of the Company.
Claim: Any loss, claim, damages, liability or expense (including
the reasonable costs of investigation and legal fees and expenses).
Common Stock: The common stock, par value $0.01 per share, of the
Company.
Demand Registration: A registration pursuant to Section 2 hereof.
Equity Security: Any capital stock of the Company or any security
convertible, with or without consideration, into any such stock, or
any security carrying any warrant or right to subscribe to or purchase
any such stock, or any such warrant or right.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Firm Commitment Underwritten Offering: An offering in which the
underwriters agree to purchase securities for distribution pursuant to
a registration statement under the Securities Act and in which the
obligation of the underwriters is to purchase all the securities being
offered if any are purchased.
Holder: The beneficial owner of a security. For all purposes of
this Agreement, the Company shall be entitled to treat the record
owner of a security as the beneficial owner of such security unless
the Company has been given written notice of the existence and
identity of a different beneficial owner. A Holder of Preferred Stock
shall be deemed to be the Holder of the Common Stock into which such
Preferred Stock could be converted. A Holder of a Warrant shall be
deemed to be the Holder of the Common Stock for which such Warrant
could be exercised.
Indemnified Holder: Any Holder of Registrable Securities, any
officer, director, employee or agent of any such Holder and any Person
who controls any such Holder within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act.
Misstatement: An untrue statement of a material fact or an
omission to state a material fact required to be stated in a
Registration Statement or Prospectus or necessary to make the
statements in a Registration Statement, Prospectus or preliminary
prospectus not misleading.
Person: A natural person, partnership, corporation, business
trust, association, joint venture or other entity or a government or
agency or political subdivision thereof.
Piggyback Registration: A registration pursuant to Section 3
hereof.
Preferred Stock: The Class AA Convertible Preferred Stock and the
Class AB Convertible Redeemable Preferred Stock of the Company being
issued and sold pursuant to the Stock Purchase Agreement.
Prospectus: The prospectus included in any Registration
Statement, as supplemented by any and all prospectus supplements and
as amended by any and all post-effective amendments and including all
material incorporated by reference in such prospectus.
Registration: A Demand Registration or a Piggyback Registration.
Registration Expenses: The out-of-pocket expenses of a
Registration, including:
(1) all registration and filing fees (including fees with
respect to filings required to be made with the National
Association of Securities Dealers);
(2) fees and expenses of compliance with securities or blue
sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky
qualifications of the Registrable Securities and determinations
of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or holders of a
majority of the Registrable Securities being sold may designate);
(3) printing, messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company and of
not more than one firm of attorneys for the sellers of the
Registrable Securities;
(5) fees and disbursements of all independent certified
public accountants of the Company incurred in connection with
such Registration (including the expenses of any special audit
and "cold comfort" letters incident to such registration);
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(6) fees and disbursements of underwriters (excluding
discounts, commissions, fees or expenses of underwriters, selling
brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable
Securities);
(7) premiums and other costs of securities acts liability
insurance if the Company so desires or if the underwriters or
selling holders of Registrable Securities so require; and
(8) fees and expenses of any other Persons retained by the
Company.
Registration Statement: Any registration statement under the
Securities Act on an appropriate form (which form shall be available
for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof and shall include
all financial statements required by the SEC to be filed therewith)
which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included in such registration
statement, amendments (including post-effective amendments) and
supplements to such registration statement, and all exhibits to and
all material incorporated by reference in such registration statement.
Registrable Securities: (a) The shares of the Preferred Stock,
whether or not owned by the Investor, (b) any debt instruments
("Debt") issued pursuant to Section 10.16 of the Stock Purchase
Agreement, whether or not owned by the Investor, (c) the shares of
Common Stock issued or issuable upon conversion of the Preferred Stock
or Debt, whether or not owned by the Investor, (d) the shares of
Common Stock issued or issuable upon exercise of any Warrants, whether
or not owned by the Investor, the 898,845 shares of Common Stock to be
acquired by Investor pursuant to that certain stock purchase agreement
dated as of February 19, 1998 by and among the Investor and certain
Stockholders of the Company, and (f) any securities issued or issuable
with respect to such Common Stock by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or reorganization whether or not owned by the
Investor; provided that any such share or other security shall be
deemed to be Registrable Securities only if and so long as it is a
Transfer Restricted Security.
Securities Act: The Securities Act of 1933, amended.
SEC: The Securities and Exchange Commission.
Transfer Restricted Security: A security that has not been sold
to or through a broker, dealer or underwriter in a public distribution
or other public securities transaction or sold in a transaction exempt
from the registration and prospectus delivery requirements of the
Securities Act under Rule 144 promulgated thereunder (or any successor
rule). The foregoing notwithstanding, a security shall remain a
Transfer Restricted Security until (i) all stop transfer instructions
or notations and restrictive legends with respect to such security
have been lifted or removed and (ii) the Holder of such security has
received at Company expense an opinion of counsel to the Company
(which counsel and opinion are reasonably satisfactory to such
Holder), to the effect that such shares in such Holders hands are
freely transferable in any public or private transaction without
registration under the Securities Act (or such Holder has waived
receipt of such opinion).
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Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an
underwriter for distribution to the public.
Warrants: The warrants to purchase Common Stock issued pursuant
to that certain Amended and Restated Warrant Agreement dated of even
date herewith by and among the Company and the Investor and that
certain Supplemental Warrant Agreement to be entered into as of the
first Subsequent Closing (as defined in the Stock Purchase Agreement)
by and among the Company and the Investor.
2. Demand Registrations.
(a) Timing Of Demand Registrations.
Holders of Registrable Securities constituting at least twenty percent
(20%) of the Registrable Securities then outstanding may request at any time
that the Company file a registration statement under the Securities Act on an
appropriate form (which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof and shall include all financial statements required by the SEC to be
filed therewith) covering the shares of Registrable Securities that are the
subject of such request.
(b) Number of Demand Registrations.
The Company shall be obligated to prepare, file and cause to become
effective pursuant to this Section 2: (i) no more than two Registration
Statements in any two-year period and (ii) no more than three Registration
Statements in total; provided, however, that a Registration Statement shall not
be counted as one of the three Demand Registrations hereunder unless it becomes
effective and is maintained effective in accordance with the requirements
specified in Section 5(a).
(c) Required Thresholds.
The Company shall not be obligated to prepare, file and cause to become
effective pursuant to this Section 2 a Registration Statement on Form S-1 unless
the proposed aggregate public offering price of the securities to be included in
such Demand Registration is at least $5 million. Nor shall the Company be
obligated to prepare, file and cause to become effective such Registration
Statement upon a demand made by less than 50% of the Holders of the Registrable
Securities then outstanding if such demand is made less than 90 days after the
effective date of the Companys most recent registration statement for shares of
Common Stock (other than a Registration Statement on Form S-4 or Form S-8 or any
successor forms thereto).
(d) Participation.
The Company shall promptly give written notice to all Holders of
Registrable Securities upon receipt of a request for a Demand Registration
pursuant to Section 2(a) above. The Company shall include in such Demand
Registration such shares of Registrable Securities for which it has received
written requests to register such shares within 30 days after such written
notice has been given.
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(e) Underwriters Cutback.
If the public offering of Registrable Securities is to be underwritten and,
in the good faith judgment of the managing underwriter, the inclusion of all the
Registrable Securities requested to be registered hereunder would interfere with
the successful marketing of a smaller number of such shares of Registrable
Securities, the number of shares of Registrable Securities to be included shall
be reduced to such smaller number with the participation in such offering to be
pro rata among the Holders of Registrable Securities requesting such
registration, based upon the number of shares of Registrable Securities owned by
such Holders.
Any shares that are thereby excluded from the offering shall be withheld
from the market by the Holders thereof for a period (not to exceed 30 days prior
to the effective date and 75 days thereafter) that the managing underwriter
reasonably determines is necessary in order to effect the underwritten public
offering.
The Company and, subject to the requirements of Section 11 hereof, other
Holders of securities of the Company may include such securities in such
Registration if, but only if, the managing underwriter concludes that such
inclusion will not interfere with the successful marketing of all the
Registrable Securities requested to be included in such registration.
(f) Managing Underwriter.
The managing underwriter or underwriters of any underwritten public
offering covered by a Demand Registration shall be selected by the Holders of a
majority of the shares of Registrable Securities to be included in such
registration.
(g) Black-Out Periods of Investor.
Notwithstanding anything herein to the contrary, (i) the Company shall have
the right, exercisable once per Demand Registration to require the Investor not
to sell under a Demand Registration or to suspend the effectiveness thereof (but
not for a period exceeding 90 days in any calendar year) if the Company
determines, in its good faith judgment, that such offering or continued
effectiveness would interfere with any material financing, acquisition,
disposition, corporate reorganization or other material transaction involving
the Company or any of its subsidiaries or public disclosure thereof would be
required prior to the time such disclosure might otherwise be required, or when
the Company is in possession of material information that it deems advisable not
to disclose in a registration statement.
3. Piggyback Registrations.
(a) Participation.
Each time the Company decides to file a registration statement under the
Securities Act (other than registrations on Forms S-4 or S-8 or any successor
form thereto, and other than a Demand Registration) covering the offer and sale
by it or any of its security holders of any of its securities for money, the
Company shall give written notice thereof to all Holders of Registrable
Securities. The Company shall include in such registration statement such shares
of Registrable Securities for which it has received written requests to register
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such shares within 30 days after such written notice has been given. If the
registration statement is to cover an underwritten offering, such Registrable
Securities shall be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the underwriters.
(b) Underwriter's Cutback.
Subject to the requirements of Section 11 hereof, if in the good faith
judgment of the managing underwriter of such offering the inclusion of all of
the shares of Registrable Securities and any other Common Stock requested to be
registered would interfere with the successful marketing of a smaller number of
such shares, then the number of shares of Registrable Securities and other
Common Stock to be included in the offering (except for shares of Registrable
Securities to be included in a Demand Registration in accordance with Section 2
hereof) shall be reduced to such smaller number with the participation in such
offering to be in the following order of priority: (1) first, the shares of
Registrable Securities requested to be included, and (2) second, any other
shares of Common Stock requested to be included. Any necessary allocation among
the Holders of shares within each of the foregoing groups shall be pro rata
among such Holders requesting such registration based upon the number of shares
of Common Stock and Registrable Securities owned by such Holders.
All shares so excluded from the underwritten public offering shall be
withheld from the market by the Holders thereof for a period (not to exceed 30
days prior to the effective date and 75 days thereafter) that the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering.
(c) Company Control.
The Company may decline to file a Registration Statement after giving
notice to any Holder pursuant to Section 3(a) above, or withdraw a Registration
Statement after filing and after such notice, but prior to the effectiveness
thereof, provided that the Company shall promptly notify each Holder in writing
of any such action and provided further that the Company shall bear all expenses
incurred by such Holder or otherwise in connection with such withdrawn
Registration Statement.
4. Hold-Back Agreements.
(a) By Holders of Registrable Securities.
Upon the written request of the managing underwriter of any underwritten
offering of the Company's securities, a Holder of Registrable Securities shall
not sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
such registration) without the prior written consent of such managing
underwriter for a period (not to exceed 30 days before the effective date and 75
days thereafter) that such managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering; provided that
each of the officers and directors of the Company shall have entered into
substantially similar holdback agreements with such managing underwriter
covering at least the same period.
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(b) By the Company and Others.
The Company agrees:
(i) not to effect any public or private sale or distribution of its
Equity Securities during the 30-day period prior to, and during the 75-day
period after, the effective date of each underwritten offering made
pursuant to a Demand Registration or a Piggyback Registration, if so
requested in writing by the managing underwriter (except as part of such
underwritten offering or pursuant to registrations on Forms S-4 or S-8 or
any successor forms thereto), and
(ii) not to issue any Equity Securities other than for sale in a
registered public offering unless each of the Persons to which such
securities are issued has entered a written agreement binding on its
transferees not to effect any public sale or distribution of such
securities during such period, including, without limitation, a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration, if and to the extent permitted hereunder).
5. Registration Procedures.
If and whenever the Company is required to register Registrable Securities
in a Demand Registration or a Piggyback Registration, the Company will use its
best efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended plan of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC as soon as practicable a
Registration Statement with respect to such Registrable Securities and use
its best efforts to cause such Registration Statement to become effective
and remain effective until the Registrable Securities covered by such
Registration Statement have been sold, provided that before filing a
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall furnish to the Holders of the Registrable
Securities covered by such Registration Statement and the underwriters, if
any, draft copies of all such documents proposed to be filed, which
documents will be subject to the review of such Holders and underwriters,
and the Company shall not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto to which the Holders of
a majority of the Registrable Securities covered by such Registration
Statement or the underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be requested by any Holder of Registrable Securities or
any underwriter of Registrable Securities or as may be required by the
rules, regulations or instructions applicable to the registration form used
by the Company or by the Securities Act or rules and regulations thereunder
to keep the Registration Statement effective until all Registrable
Securities covered by such Registration Statement are sold in accordance
with the intended plan of distribution set forth in such Registration
Statement or supplement to the Prospectus;
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(c) promptly notify the selling Holders of Registrable Securities and
the managing underwriter, if any, and (if requested by any such Person)
confirm such advice in writing:
(i) when the Prospectus or any supplement or post-effective
amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become
effective,
(ii) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information,
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose,
(iv) if at any time the representations and warranties of the
Company contemplated by clause (i) of paragraph (o) below cease to be
accurate in all material respects,
(v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and
(vi) of the existence of any fact which results in the
Registration Statement, the Prospectus or any document incorporated
therein by reference containing a Misstatement;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible time;
(e) if requested by the managing underwriter or a Holder of
Registrable Securities being sold in connection with an underwritten
offering, immediately incorporate in a supplement or post-effective
amendment such information as the managing underwriter and the Holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the sale of the Registrable Securities, including,
without limitation, information with respect to the number of shares of
Registrable Securities being sold to underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other terms of
the underwritten offering of the Registrable Securities to be sold in such
offering; and make all required filings of such supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such supplement or post-effective amendment;
(f) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement) provide copies of such
document to counsel to the selling Holders of Registrable Securities and to
the managing underwriter, if any, and make the Company's representatives
available for discussion of such document and make such changes in such
document prior to the filing thereof as counsel for such selling Holders or
underwriters may reasonably request;
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(g) furnish to each selling Holder of Registrable Securities and the
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(h) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of each Prospectus
(and each preliminary prospectus) as such Persons may reasonably request
(the Company hereby consenting to the use of each such Prospectus (or
preliminary prospectus) by each of the selling Holders of Registrable
Securities and the underwriters, if any, in connection with the offering
and sale of the Registrable Securities covered by such Prospectus (or
preliminary prospectus);
(i) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling Holders of Registrable Securities,
the underwriters, if any, and their respective counsel in connection with
the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions in the
United States as such selling Holders or underwriters may designate in
writing and do anything else necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided that the Company shall not be required
to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so
subject;
(j) cooperate with the selling Holders of Registrable Securities and
the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing
the Registrable Securities to be sold and cause such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriter may request at least three business days prior to any sale of
Registrable Securities to the underwriters;
(k) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities in the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Registrable Securities;
(l) if the Registration Statement or the Prospectus contains a
Misstatement, prepare a supplement or post-effective amendment to the
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, the Prospectus will not contain a Misstatement;
(m) use its best efforts to cause all Registrable Securities covered
by the Registration Statement to be listed on any national securities
exchange or authorized for quotation on NASDAQ or in the National Market
System, if requested by the Holders of a majority of such Registrable
Securities or the managing underwriter, if any;
(n) provide a CUSIP number for all Registrable Securities not later
than the effective date of the Registration Statement;
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(o) enter into such agreements (including an underwriting agreement)
and do anything else necessary or advisable in order to expedite or
facilitate the disposition of such Registrable Securities, and in such
connection:
(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in primary underwritten offerings;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriter, if any,
and the Holders of a majority of the Registrable Securities being
sold) addressed to each selling Holder and the underwriter, if any,
covering the matters customarily covered in opinions delivered to
underwriters in primary underwritten offerings and such other matters
as may be reasonably requested by such Holders or underwriters;
(iii) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
selling Holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by underwriters in
connection with primary underwritten offerings;
(iv) if an underwriting agreement is entered into, cause the same
to include the indemnification and contribution provisions and
procedures of Section 7 hereof with respect to all parties to be
indemnified pursuant to said Section (or, with respect to the
indemnification of such underwriters, such similar indemnification and
contribution provisions as such underwriters shall customarily
require); and
(v) deliver such documents and certificates as may be requested
by the Holders of a majority of the Registrable Securities being sold
and the managing underwriter, if any, to evidence compliance with
clause (i) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent otherwise reasonably requested by the
Holders of a majority of the Registrable Securities being sold;
(p) make available for inspection by representatives of the Holders of
a majority of the Registrable Securities being sold, any underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney or accountant retained by the sellers or any such
underwriter, all financial and other records and pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such representative, underwriter, attorney or accountant in connection
with the Registration; provided that any records, information or documents
that are designated by the Company in writing as confidential shall be kept
confidential by such Persons unless disclosure of such records, information
or documents is required by court or administrative order; and
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(q) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of
the Securities Act, no later than 45 days after the end of any 12-month
period (or 90 days, if such period is a fiscal year) (x) commencing at the
end of any fiscal quarter in which Registrable Securities are sold to
underwriters in an underwritten offering, or, if not sold to underwriters
in such an offering, (y) beginning with the first month of the Companys
first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said 12-month periods.
6. Registration Expenses.
(a) Demand Registrations.
The Company shall bear all Registration Expenses incurred in connection
with the first two of the three Demand Registrations and of any Registrations
which do not become or are not maintained effective in accordance with the
requirements specified in Section 5(a) other than any Registration terminated
prior to effectiveness at the request of, or solely as a result of the actions
of holders whose Registrable Securities are included in such registration. The
Registration Expenses of the third Demand Registration incurred by the Investor
or any other holder whose Registrable Securities are included in such Demand
Registration shall be split proportionally between the Investor, any such holder
and the Company.
(b) Piggyback Registrations.
The Company shall bear all Registration Expenses incurred in connection
with all Piggyback Registrations.
(c) Company Expenses.
The Company also will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with any listing of the securities to
be registered on a securities exchange, and the fees and expenses of any Person,
including special experts, retained by the Company.
7. Indemnification.
(a) Indemnification by Company.
The Company agrees to indemnify and hold harmless each Indemnified Holder
from and against all Claims arising out of or based upon any Misstatement or
alleged Misstatement, except insofar as such Misstatement or alleged
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Misstatement was based upon information furnished in writing to the Company by
such Indemnified Holder expressly for use in the document containing such
Misstatement or alleged Misstatement. This indemnity shall not be exclusive and
shall be in addition to any liability which the Company may otherwise have. The
foregoing notwithstanding, the Company shall not be liable to the extent that
any such Claim arises out of or is based upon a Misstatement or alleged
Misstatement made in any preliminary prospectus if (i) such Indemnified Holder
failed to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale of Registrable Securities giving rise to
such Claim and (ii) the Prospectus would have corrected such untrue statement or
omission.
In addition, the Company shall not be liable to the extent that any such
Claim arises out of or is based upon a Misstatement or alleged Misstatement in a
Prospectus, (x) if such Misstatement or alleged Misstatement is corrected in an
amendment or supplement to such Prospectus and (y) having previously been
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such Indemnified Holder thereafter fails to deliver
such Prospectus as so amended or supplemented prior to or concurrently with the
sale to the person who purchased a Registrable Security from such Indemnified
Holder and who is asserting such Claim.
The Company shall also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in a
distribution covered by a Registration Statement, their officers and directors
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 same extent as
provided above with respect to the indemnification of the Indemnified Holders of
Registrable Securities.
(b) Indemnification Procedures.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against an Indemnified Holder in respect
of which indemnity may be sought from the Company, such Indemnified Holder shall
promptly notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Holder and the payment of all expenses.
Such Indemnified Holder shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such separate counsel shall be the expense of such Indemnified
Holder unless (i) the Company has agreed to pay such fees and expenses, (ii) the
Company shall have failed to assume the defense of such action or proceeding or
has failed to employ counsel satisfactory to such Indemnified Holder in any such
action or proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Holder and the
Company, and such Indemnified Holder shall have been advised by counsel that
there may be one or more legal defenses available to such Indemnified Holder
that are different from or additional to those available to the Company.
If such Indemnified Holder notifies the Company in writing that it elects
to employ separate counsel at the expense of the Company as permitted by the
provisions of the preceding paragraph, the Company shall not have the right to
assume the defense of such action or proceeding on behalf of such Indemnified
Holder. The foregoing notwithstanding, the Company shall not be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
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time for such Indemnified Holder and any other Indemnified Holders (which firm
shall be designated in writing by such Indemnified Holders) in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances.
The Company shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless such Indemnified
Holders from and against any loss or liability by reason of such settlement or
judgment.
(c) Indemnification by Holder of Registrable Securities.
Each Holder of Registrable Securities agrees to indemnify and hold harmless
the Company, its directors and officers and each Person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Holder, but only with respect to information relating
to such Holder furnished in writing by such Holder expressly for use in any
Registration Statement, Prospectus or preliminary prospectus. In no event,
however, shall the liability hereunder of any selling Holder of Registrable
Securities be greater than the dollar amount of the proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
In case any action or proceeding shall be brought against the Company or
its directors or officers or any such controlling person, in respect of which
indemnity may be sought against a Holder of Registrable Securities, such Holder
shall have the rights and duties given the Company and the Company or its
directors or officers or such controlling person shall have the rights and
duties given to each Holder by Sections 7(a) and 7(b) above.
The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement.
(d) Contribution.
If the indemnification provided for in this Section 7 is unavailable to an
indemnified party under Section 7(a) or Section 7(c) above (other than by reason
of exceptions provided in those Sections) in respect of any Claims referred to
in such Sections, then each applicable 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 Claims in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and of the Indemnified Holder on the other in connection with the statements or
omissions which resulted in such Claims as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the Claims
referred to above shall be deemed to include, subject to the limitations set
forth in Section 7(b), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
13
The relative fault of the Company on the one hand and of the Indemnified
Holder on the other shall be determined by reference to, among other things,
whether the Misstatement or alleged Misstatement relates to information supplied
by the Company or by the Indemnified Holder and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
Misstatement or alleged Misstatement.
The Company and each Holder of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 7(d), an Indemnified Holder
shall not be required to contribute any amount in excess of the amount by which
(i) the total price at which the securities that were sold by such Indemnified
Holder and distributed to the public were offered to the public exceeds (ii) the
amount of any damages which such Indemnified Holder has otherwise been required
to pay by reason of such Misstatement.
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.
8. Exchange Act Reporting Requirements.
From and after the date hereof, the Company shall (whether or not it shall
then be required to do so) timely file such information, documents and reports
as the Commission may require or prescribe under Section 13 or 15(d) (whichever
is applicable) of the Exchange Act. In addition, the Company shall take such
other measures and file such other information, documents and reports, as shall
hereafter be required by the Commission as a condition to the availability of
Rule 144 under the Securities Act (or any successor provision) and the use of
Form S-3.
From and after the date hereof, the Company shall forthwith upon request
furnish any Holder of Registrable Securities (i) a written statement by the
Company that it has complied with such reporting requirements, (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents filed by the Company with the Commission as such Holder
may reasonably request in availing itself of an exemption for the sale of
Registrable Securities without registration under the Securities Act.
The purpose of the foregoing requirements are (x) to enable any such Holder
to comply with the current public information requirements contained in
paragraph (c) of Rule 144 under the Securities Act (or any successor provision)
and (y) to qualify the Company for the use of registration statements on Form
S-3.
9. Requirements for Participation in Underwritten Offerings.
No Person may participate in any underwritten offering pursuant to a
Registration hereunder unless such Person (a) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
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the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
10. Suspension of Sales.
Upon receipt of written notice from the Company that a Registration
Statement or Prospectus contains a Misstatement, each Holder of Registrable
Securities shall forthwith discontinue disposition of Registrable Securities
until such Holder has received copies of the supplemented or amended Prospectus
required by Section 5(1) hereof, or until such Holder is advised in writing by
the Company that the use of the Prospectus may be resumed, and, if so directed
by the Company, such Holder shall deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Holders
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice.
11. Future Registration Rights Agreements.
Except for an underwriting agreement between the Company and one or more
professional underwriters of securities, the Company shall not agree after the
date hereof to register any Equity Securities under the Securities Act unless
such agreement specifically provides that:
(a) the Holder of such Equity Securities may not participate in any
Demand Registration without the consent of the Holders of a majority of the
shares of the Registrable Securities included in such registration unless:
(i) the offering of the Registrable Securities is to be a Firm
Commitment Underwritten Offering and the managing underwriter
concludes that the public offering or sale of such Equity Securities
would not interfere with the successful marketing of all Registrable
Securities requested to be sold and
(ii) the Holders of Registrable Securities shall have the right
to participate, to the extent they may request, in any registration
statement initiated under a demand registration right exercised by the
Holder of such Equity Securities, except that if the managing
underwriter of a public offering made pursuant to such a demand
registration limits the number of shares of Common Stock to be sold,
the participation of the Holders of the Registrable Securities and the
Holders of all other Common Stock (other than the Equity Securities
held by such Holder of Equity Securities) shall be determined as set
forth in Section 3 hereof.
(b) the Holder of such Equity Securities may not participate in any
Piggyback Registration if the sale of Registrable Securities is to be
underwritten unless, if the managing underwriter limits the total number of
shares to be sold, the Holders of such Equity Securities and the Holders of
Registrable Securities are entitled to participate in such underwritten
distribution based on the order of priority set forth in Section 3 hereof,
and
(c) all Equity Securities excluded from any Registration as a result
of the foregoing limitations may not be publicly offered or sold for a
15
period (not to exceed at least 30 days prior to the effective date and 75
days thereafter) that the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering of
Registrable Securities registered pursuant to this Agreement.
12. Miscellaneous.
(a) Remedies.
Each Holder of Registrable Securities, in addition to being entitled to
exercise all rights provided herein, in the Stock Purchase Agreement and granted
by law, including recovery of damages, shall be entitled to specific performance
of its rights under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements.
The Company shall not on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof.
Other than as disclosed on Schedule I attached hereto, the Company has not
previously entered into any agreement with respect to its securities granting
any registration rights to any Person. The rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any such agreements, except as noted on Schedule I.
(c) 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 unless the Company has
obtained the written consent of the Holders of at least a majority of the
outstanding shares of Registrable Securities. The foregoing notwithstanding, a
waiver or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders of shares of Registrable Securities whose
shares are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders of shares of
Registrable Securities may be given by the Holders of a majority of the shares
of Registrable Securities being sold.
(d) Notices.
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, registered first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in accordance with the
provisions hereof, which address initially is, with respect to the
16
Investor, the address set forth on the Investor's signature page of the
Stock Purchase Agreement, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: R. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Esq.; and
(ii) if to the Company, initially at its address set forth in the
Stock Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions hereof, with a copy to
Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery. The Company shall promptly provide a list of the most current
addresses of the Holders of Registrable Securities given to it in accordance
with the provisions hereof to any such Holder for the purpose of enabling such
Holder to communicate with other Holders in connection with this Agreement.
(e) Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
(f) Counterparts.
This Agreement may be executed in one or more of counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same agreement.
(g) Table of Contents and Headings.
The table of contents and headings in this Agreement are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
(h) Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(i) Severability.
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
17
(j) Forms.
All references in this Agreement to particular forms of registration
statements are intended to include all successor forms which are intended to
replace, or to apply to similar transactions as, the forms herein referenced.
(k) Entire Agreement.
This Agreement and the Stock Purchase Agreement are intended by the parties
as the final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein with respect to the registration rights granted by the Company
with respect to the securities sold pursuant to the Stock Purchase Agreement.
This Agreement and the Stock Purchase Agreement supersede all prior agreements
and understandings between the parties with respect to such subject matter.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THE FORTRESS GROUP, INC.
By: /s/
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Title: President
-------------------------------
PROMETHEUS HOMEBUILDERS LLC
by: LF Strategic Realty Investors II L.P.,
its member
by: Lazard Frres Real Estate Investors L.L.C.,
its general partner
By: /s/
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: Principal
-------------------------------
-------------------------------
19
SCHEDULE 1
TO REGISTRATION RIGHTS AGREEMENT
1. Agreement and Plan of Reorganization dated as of March 11, 1996, as amended,
by an among the Company, ▇▇▇▇▇▇▇▇▇▇ Acquisition, Inc., ▇▇▇▇▇▇▇▇▇▇ Holdings, Inc.
and the Stockholders named therein.
2. Amended and Restated Agreement and Plan of Reorganization dated as of March
11, 1996, as amended, by and among the Company, ▇▇▇▇▇▇▇▇▇▇▇ Acquisition, Inc.,
▇▇▇▇▇▇▇▇▇▇▇ Homes, Custom Homes Division, Inc. and the Stockholders named
therein.
3. Amended and Restated Agreement and Plan of Reorganization dated as of March
11, 1996, as amended, by and among the Company, Genesee Acquisition, Inc., The
Genesee Company, The Genesee Company/ Castle Pines, Ltd., The Genesee Company of
Michigan, Ltd., Genesee Development Company and the Stockholders named therein.
4. Amended and Restated Agreement and Plan of Reorganization dated as March 11,
1996, as amended, by and among the Company, Sunstar Acquisition, Inc., Solaris
Development Corporation and the Stockholders named therein.
5. Asset Purchase Agreement dated August 31, 1996 by and among the Company,
Fortress Acquisition, Inc., Landmark Homes, Inc., B. ▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇.
6. Asset Purchase Agreement dated February 28, 1997 by and among the Company,
Fortress-Florida, Inc., ▇▇ ▇▇▇▇▇▇ Construction, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇.
7. Purchase Agreement dated as of August 18, 1997 by and among the Company,
Fortress ▇▇▇▇▇▇▇▇, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ Homes, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ Land, LLC,
▇▇▇▇▇▇▇▇ Limited Partnership, Thornblade, LLC and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
Certain provision in agreements 1 through 4 above pertaining to priority on
registration and Section 3(b) of this Agreement are inconsistent in certain
respects. The Company agrees that it shall use its best efforts to obtain, prior
to the Second Closing under the Stock Purchase Agreement, the consent of the
parties to such agreements to modification of such provisions reasonably
sufficient to make such provision consistent with Section 3(b).