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EXHIBIT 10.4
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Second Amended and Restated Registration Rights Agreement
(the "Agreement") is made and entered into as of July 30, 1998, by and between
American Industrial Properties REIT, a Texas real estate investment trust (the
"Company"), and USAA Real Estate Company, a Delaware corporation ("Investor").
WITNESSETH:
WHEREAS, pursuant to that certain Share Purchase Agreement
dated as of December 13, 1996, between the Company and Investor, Investor
purchased 924,600 Common Shares from the Company;
WHEREAS, pursuant to that certain Share Purchase Agreement,
dated as of December 20, 1996, among the Company, American Industrial
Properties REIT, Inc., a Maryland corporation ("Sub") and Investor (together
with the Share Purchase Agreement referenced in the preceding recital, the
"Purchase Agreement"), Investor purchased 998,100 Common Shares from Sub;
WHEREAS, the Company and the Investor entered into
Registration Rights Agreements dated as of December 19, 1996, December 20,
1996, and January 29, 1998 (collectively, the "Prior Registration Rights
Agreement");
WHEREAS, on December 1, 1997, Investor converted the Company's
$5,449,618 principal amount note (the "Convertible Note") to Investor into
544,961 Common Shares (such shares and the 924,600 Common Shares and the
998,100 Common Shares shall be referred to herein collectively as the
"Shares");
WHEREAS, pursuant to the terms of the Share Purchase
Agreement, an Agreement and Plan of Merger and the Convertible Note, the
Company and Investor agreed that the Company would grant certain registration
rights to Investor with respect to the Shares;
WHEREAS, the Company is entering into a Share Purchase
Agreement and a Registration Rights Agreement on the date hereof with
Developers Diversified Realty Corporation ("DDR"); and
WHEREAS, to enable the Company to enter into such agreements
with DDR, the Investor has agreed to amend the registration rights previously
granted to Investor by the Company;
NOW, THEREFORE, for the promises contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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1. Definitions.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Closing Date: The closing date as defined in the Purchase
Agreement.
Common Shares: The common shares of beneficial interest, $0.10
par value per share, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
Person: An individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Purchase Agreement: As defined in the Recitals to this
Agreement.
Purchasers: See Section 2(b) hereof.
Registrable Securities: (a) The Shares and (b) any securities
issued or issuable with respect to the Shares by way of share dividend or share
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Any Registrable Security
will cease to be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared effective by the SEC and
the Registrable Security has been disposed of pursuant to such effective
registration statement, (ii) the Registrable Security is sold under
circumstances in which all of the applicable conditions of Rule l44 (or any
similar provisions then in force) under the Securities Act are met, or (iii)
the Registrable Security has been otherwise transferred, the Company has
delivered a new certificate or other evidence of ownership for it not bearing a
legend restricting further transfer, and it may be resold without subsequent
registration under the Securities Act.
Registration Expenses: See Section 5 hereof.
Registration Statement: The Registration Statement of the
Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus included therein, all
amendments and supplements to such Registration Statement, including
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post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
SEC: The Securities and Exchange Commission or any successor
entity.
Securities Act: The Securities Act of 1933, as amended from
time to time.
Shares: As defined in the Recitals to this Agreement.
Shelf Registration: See Section 2(a) hereof.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Registration Rights.
(a) Shelf Registration. Upon the written request of the
Investor, the Company will file a "shelf" registration statement on any
appropriate form pursuant to Rule 415 (or similar rule that may be adopted by
the SEC) under the Securities Act (a "Shelf Registration"), which Shelf
Registration will cover the Registrable Securities that the Company has been so
requested to register by the Investor.
The Company hereby agrees to file such registration statement
as promptly as practicable following the request therefor, and in any event
within 60 days following the date such request is received by the Company, and
thereafter to use its commercially reasonable efforts to cause such Shelf
Registration to become effective and thereafter to keep it continuously
effective, and to prevent the happening of any event of the kind described in
Section 4(c)(3), (4), (5) or (6) hereof that requires the Company to give
notice pursuant to the last paragraph of Section 4 hereof, for a period
terminating on the third year anniversary of the date on which the SEC declares
the Shelf Registration effective, or such shorter period as shall terminate on
the date on which all the Registrable Securities covered by the Shelf
Registration have been sold pursuant to such Shelf Registration. The Company
shall be obligated to file only one Shelf Registration and shall not be
obligated to file a Shelf Registration if three Demand Registrations
(hereinafter defined) have been effected under Section 2(b).
The Company further agrees to promptly supplement or make amendments
to the Shelf Registration, if required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for shelf registration
or if requested by the Investor.
If the Investor so elects, the offering of Registrable Securities
pursuant to such registration shall be in the form of an Underwritten Offering.
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(b) Demand Registration. At any time during the five
year period following the Closing Date, the Investor may make a written
request (the "Demand Notice") for registration under the Securities Act (a
"Demand Registration") of its Registrable Securities. The Demand Notice will
specify the number of shares of Registrable Securities proposed to be sold and
will also specify the intended method of disposition thereof. Following
receipt of a Demand Notice from the Investor, the Company promptly will file a
registration statement on any appropriate form which will cover the Registrable
Securities that the Company has been so requested to register by the Investor.
Unless the Investor shall consent in writing, no party (including the
Company) other than DDR, Praedium II Industrial Associates LLC ("Praedium"),
MS Real Estate Special Situations Inc. ("MRSE"), certain clients of Morgan
Stanley Asset Management Inc. who have purchased Common Shares of the Company
(such clients together with MRSE, the "Morgan Entities"), LaSalle Advisors
Limited Partnership acting as agent for and on behalf of certain clients
("LaSalle"), or ABKB/LaSalle Securities Limited Partnership ("ABKB" and
together with LaSalle, the "LaSalle Entities") shall be permitted to offer
securities under any such Demand Registration. The Company shall not be
required to effect more than three Demand Registrations under this Section
2(b). A registration requested pursuant to this Section 2(b) will not be
deemed to have been effected (and it shall not count as one of the three Demand
Registrations) unless the Registration Statement relating thereto has become
effective under the Securities Act; provided, however that if, after such
Registration Statement has become effective, the offering of the Registrable
Securities pursuant to such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such registration will be deemed not to have been effected
(and it shall not count as one of the three Demand Registrations). The Investor
may at any time prior to the effective date of the Registration Statement
relating to such registration revoke a Demand Notice by providing a written
notice to the Company (in which case such Demand Registration shall not count
as one of the three Demand Registrations).
If the Investor so elects, the offering of Registrable Securities
pursuant to such registration shall be in the form of an Underwritten Offering.
If the managing underwriter or underwriters of such offering advise the Company
and the Investor in writing that in their opinion the number of shares of
Registrable Securities and shares of DDR, Praedium, the Morgan Entities or the
LaSalle Entities, if any, requested to be included in such offering is
sufficiently large to materially and adversely affect the success of such
offering, the Company will include in such registration the aggregate number of
Registrable Securities and shares of DDR, Praedium, the Morgan Entities or the
LaSalle Entities, if any, requested to be included, which in the opinion of
such managing underwriter or underwriters can be sold without any such material
adverse effect; provided, however, that no Registrable Securities or shares of
DDR, Praedium, the Morgan Entities or the LaSalle Entities, if any, may be
excluded before all shares proposed to be sold by other parties, including the
Company, have been excluded. If any Registrable Securities are excluded, such
registration shall not count as one of the three Demand Registrations. If the
amount of Registrable Securities proposed to be registered hereunder are
required to be excluded pursuant to this paragraph, the number of Registrable
Securities of the Investor and the number of shares of DDR, Praedium, the
Morgan Entities or the LaSalle Entities, if any, to be included in such
Registration shall be reduced
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pro rata (according to the total number of Registrable Securities or shares, as
the case may be, beneficially owned by each such holder), to the extent
necessary to reduce the total amount necessary to be included in the Offering
to the amount recommended by such managing underwriter or underwriters.
No registration pursuant to a request or requests referred to in this
subsection 2(b) shall be deemed to be a Shelf Registration.
(c) Incidental Registration. If at any time during the
five year period following the Closing Date, the Company proposes to file a
registration statement under the Securities Act (other than in connection with
a Registration Statement on Form S-4 or S-8, or any form that is substituting
therefor or is a successor thereto) with respect to an offering of any class of
security by the Company for its own account or for the account of any of its
security holders, then the Company shall give written notice of such proposed
filing to the Investor as soon as practicable (but in no event less than 30
days before the anticipated filing date), and such notice shall (i) offer the
Investor the opportunity to register such number of Registrable Securities as
it may request and (ii) describe such securities and specify the form and
manner and other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an Underwritten Offering and, if so, the identity of the
managing underwriter and whether such Underwritten Offering will be pursuant to
a "best efforts" or "firm commitment" underwriting and (y) the price (net of
any underwriting commissions, discounts and the like) at which the Registrable
Securities are reasonably expected to be sold, if such disclosure is acceptable
to the managing underwriter). The Investor shall advise the Company in writing
within 20 days after the date of receipt of such notice from the Company of the
number of Registrable Securities for which registration is requested. The
Company shall include in such Registration Statement all such Registrable
Securities so requested to be included therein, and, if such registration is an
Underwritten Registration, the Company shall use its commercially reasonable
efforts to cause the managing underwriter or underwriters to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included (on the same terms and conditions as similar
securities of the Company included therein to the extent appropriate);
provided, however, that if the managing underwriter or underwriters of such
offering deliver a written opinion to the Investor that either because of (i)
the kind of securities which the Investor, the Company, or any other Persons
intend to include in such offering or (ii) the size of the offering which the
Investor, the Company, or such other Persons intend to make, the success of the
offering would be materially and adversely affected by inclusion of the
Registrable Securities requested to be included, then (A) in the event that the
size of the offering is the basis of such managing underwriter's opinion, the
amount of securities to be offered for the account of the Investor and other
holders registering securities of the Company pursuant to similar incidental
registration rights shall be reduced pro rata (according to the Registrable
Securities beneficially owned by each such holder) to the extent necessary to
reduce the total amount of securities to be included in such offering to the
amount recommended by such managing underwriter or underwriters; and (B) in the
event that the combination of securities to be offered is the basis of such
managing underwriter's opinion, (x) the Registrable Securities and other
securities to be included in such offering shall be reduced as described in
clause (A) above or, (y)
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if the actions described in clause (A) would, in the judgment of the managing
underwriter and pursuant to a written opinion delivered to the Investor, be
insufficient to substantially eliminate the adverse effect that inclusion of
the Registrable Securities requested to be included would have on such
offering, such Registrable Securities will be excluded from such offering.
Notwithstanding the foregoing, if the Investor exercises an incidental
registration in connection with DDR's or Praedium's or the Morgan Entities' or
LaSalle Entities' demand registration rights, then the managing underwriter's
cutback provision under the demand registration right set forth in Section 2(b)
shall govern with respect to the Investor and not the managing underwriter's
cutback provision in this Section 2(c).
No registration pursuant to a request or requests referred to in this
subsection 2(c) shall be deemed to be a Shelf Registration.
3. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable
Securities. The Investor agrees, if reasonably requested by the managing
underwriters in an Underwritten Offering, not to effect any public sale or
distribution of securities of the Company of the same class as the securities
included in the Registration Statement relating to such Underwritten Offering,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such Underwritten Offering), during the 10-day period prior to the filing of
such Registration Statement, and during the 90-day period beginning on the
closing date of each Underwritten Offering made pursuant to such Registration
Statement, to the extent timely notified in writing by the Company or the
managing underwriters.
(b) Restrictions on Sale of Securities by the Company.
The Company agrees not to effect any public sale or distribution of any
securities similar to those being registered, or any securities convertible
into or exchangeable or exercisable for such securities (except pursuant to a
registration statement on Form S-4 or S-8, or any substitute form that may be
adopted by the SEC) during the ten days prior to the filing of a registration
statement with respect to an Underwritten Offering, and during the 90-day
period beginning on the effective date of such Registration Statement (except
as part of such registration statement (x) where the Investor participating in
such registration statement consents, (y) where the Investor is participating
in such registration statement pursuant to Section 2(c) hereof, such
registration statement was filed by the Company with respect to the sale of
securities by the Company, and the Investor is not simultaneously participating
in a registration statement pursuant to Section 2(b) hereof), or (z) with
respect to DDR, Praedium, the Morgan Entities or the LaSalle Entities, if such
parties are participating in a Demand Registration pursuant to Section 2(b)
hereof), or the commencement of a public distribution of Registrable Securities
pursuant to such registration statement.
4. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company will use its
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Securities in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company will use
commercially reasonable efforts to as expeditiously as possible:
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(a) prepare and file with the SEC, as soon as
practicable, and in any event within 60 days from the date of request, a
Registration Statement relating to the applicable registration on any
appropriate form under the Securities Act, which forms 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
of the Company, and use its commercially reasonable efforts to cause such
Registration Statement to become effective; provided that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of the
Registration Statement, the Company will furnish the Investor and the
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of the Investor and the underwriters,
if any, and the Company will not file any Registration Statement or amendment
thereto or any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Investor or the underwriters, if any,
shall reasonably object (except in the case of a filing pursuant to Section
2(c) hereof);
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period, or such
shorter period, which will terminate when all Registrable Securities included
in such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of all securities included in such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus; the Company shall not be deemed to have used
commercially reasonable efforts to keep a Registration Statement effective
during the applicable period if it voluntarily takes any action that would
result in the Investor not being able to sell its Registrable Securities during
that period unless such action is required under applicable law; provided that
the foregoing shall not apply to actions taken by the Company in good faith and
for valid business reasons, including without limitation the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 4(k) hereof, if applicable;
(c) notify the Investor and the managing underwriters, if
any, promptly (and in no event more than three days after the occurrence of any
of the following events), and (if requested by any such Person) confirm such
advice in writing, (l) when the Prospectus or any Prospectus 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,
(2) of any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (3) 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, (4) if at any
time the representations and warranties of the Company contemplated by
paragraph (m) below cease to be true and correct, (5) of the receipt by the
Company of any notification with respect to the
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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 (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) obtain the withdrawal of any order suspending the
effectiveness of the Registration Statement at the earliest possible moment;
(e) if reasonably requested by the managing underwriter
or underwriters or by the Investor, promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Investor agree should be included therein relating to the
sale of the Registrable Securities, including, without limitation, information
with respect to the number of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the Underwritten (or best efforts
underwritten) Offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(f) furnish to the Investor and each managing
underwriter, if any, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to the Investor and the underwriters, if any,
without charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Investor and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable
Securities, register or qualify or cooperate with the Investor, 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 as the Investor or
any underwriter reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the Registration Statement;
(i) cooperate with the Investor and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends (except as reasonably required to protect the Company's
status as a REIT); and enable such Registrable Securities to be in such
denominations and registered in
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such names as the managing underwriters may request at least two business days
prior to any sale of Registrable Securities to the underwriters;
(j) cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Investor or the underwriters, if any, to consummate the disposition of such
Registrable Securities;
(k) upon the occurrence of any event contemplated by
Section 4(c)(6) above, 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 an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(l) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed;
(m) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
connection therewith, whether or not an underwriting agreement is entered into
and whether or not the registration is an Underwritten Registration, (1) make
such representations and warranties to the Investor and the underwriters, if
any, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings; (2) 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 Investor and the
managing underwriters, if any, covering the matters customarily covered in
opinions requested in Underwritten Offerings and such other matters as may be
reasonably requested by the Investor and the underwriters, if any; (3) obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the Investor 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; (4) if an underwriting agreement is
entered into, the same shall set forth in full the indemnification provisions
and procedures of Section 6 hereof with respect to all parties to be
indemnified pursuant to said Section; and (5) deliver such documents and
certificates as may be reasonably requested by the Investor and the managing
underwriters, if any, to evidence compliance with clause (1) 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 required
thereunder;
(n) make available for inspection by a representative of
the Investor, any underwriter participating in any disposition pursuant to such
registration, and any attorney or accountant retained by the Investor or any
underwriter, all financial and other records, pertinent
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corporate documents and properties of the Company and cause the Company's
officers, trust managers and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such registration; provided that any records, information or
documents that the Company designates 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;
(o) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings statement
shall satisfy the provisions of section 11(a) of the Securities Act; and
(p) cooperate with the Investor and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
The Company may require the Investor to furnish to the Company such
information regarding the distribution of Registrable Securities as the Company
may from time to time reasonably request in writing.
The Investor agrees by acquisition of the Registrable Securities that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 4(k) hereof, the Investor will forthwith
discontinue disposition of Registrable Securities until the Investor's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
4(k) hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, the Investor will deliver to
the Company (at the Company's expense), all copies, other than permanent file
copies then in the Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods regarding the
effectiveness of Registration Statements set forth in Section 2 hereof and
Section 4(b) hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
4(c)(6) hereof to the date when the Investor shall receive copies of the
supplemented or amended prospectus contemplated by Section 4(k) hereof or the
Advice.
5. Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation: all registration and filing fees; fees with respect to filings
required to be made with the NASD; fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters or the Investor in connection with blue sky
qualifications of the Registrable Securities and determination of their
eligibility for investment under the laws of such jurisdictions as the
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managing underwriters and the Investor may designate); printing expenses,
messenger, telephone and delivery expenses; fees and disbursements of counsel
for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to
Section 4(m) hereof); securities acts liability insurance, if the Company so
desires; all internal expenses of the Company (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 the listing of the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed; and the fees and expenses of any Person, including special
experts, retained by the Company (all such expenses being herein called
"Registration Expenses") will be borne by the Company regardless of whether the
Registration Statement becomes effective. The Company shall not have any
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or any legal fees and expenses of
counsel to the Investor, except as expressly provided herein.
6. Indemnification: Contribution.
(a) Indemnification by Company. The Company agrees to
indemnify and hold harmless the Investor and its partners, officers, directors,
employees and agents, and each Person who controls any such Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
against all losses, claims, damages, liabilities and reasonable expenses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Company by the Investor
expressly for use therein. The Company will also indemnify underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers and trust managers 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 Investor, if
requested.
(b) Indemnification By Holder of Registrable Securities.
The Investor agrees to indemnify and hold harmless the Company and its trust
managers, officers, employees and agents, and each Person who controls the
Company (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) against any losses, claims, damages, liabilities and
reasonable expenses resulting from any untrue statement of a material fact or
any omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary prospectus or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information or affidavit
so furnished in writing by the Investor to the Company specifically for
inclusion in such Registration Statement or Prospectus. In no event shall the
liability of the Investor hereunder be greater in amount than the
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dollar amount of the proceeds received by such Person upon the sale of the
Registrable Securities giving rise to such indemnification obligation. 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.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice (and in any
event within 10 days) to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and
to participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (a) the indemnifying
party has agreed to pay such fees or expenses, (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such Person or (c) based upon written advice of counsel to such
Person, there shall be one or more defenses available to such Person that are
not available to the indemnifying party or there shall exist conflicts of
interest pursuant to applicable rules of professional conduct between such
Person and the indemnifying party (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such
Person), in each of which events the fees and expenses of such counsel shall be
at the expense of the indemnifying party. The indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld), but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action
or proceeding, the indemnifying party shall indemnify and hold harmless the
indemnified parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment. No indemnified party
will be required to consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. If for any reason the indemnification
provided for in the preceding clauses (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by the
preceding clauses (a) and (b), then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and
the indemnifying party, as well as any other relevant equitable considerations,
provided, that in no event shall the Investor be required to contribute an
amount greater than the dollar amount of the proceeds received by Investor with
respect to the sale of the Registrable Securities giving rise to such
indemnification obligation. The relative fault of the Company on the one hand
and of the Investor on the other shall be determined by reference to, among
other things, whether the untrue or alleged
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untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
7. Rule 144. The Company hereby agrees that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of the
Investor, make publicly available other information so long as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will take
such further action as the Investor may reasonably request, all to the extent
required from time to time to enable the Investor to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of the Investor, the Company
will deliver to the Investor a written statement as to whether it has complied
with such information and requirements.
8. Participation in Underwritten Registrations.
(a) If any of the Registrable Securities covered by the
Shelf Registration are to be sold in an Underwritten Offering (excluding under
Section 2(c)), the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by the Investor;
provided that such investment bankers and managers must be reasonably
satisfactory to the Company.
(b) No Person may participate in any Underwritten
Registration hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements. Nothing in this Section 8 shall be construed to create any
additional rights regarding the registration of Registrable Securities in any
Person otherwise than as set forth herein.
9. Miscellaneous.
(a) Remedies. Each party hereto, in addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement to the extent available under applicable law. Each party
hereto 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.
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(b) Third Party Registration Rights. The Company will
not after the date of this Agreement, enter into any agreement granting
registration rights to any other Person with respect to the securities of the
Company that are not junior or subordinate to the rights granted to the
Investor hereunder without the written consent of the Investor.
(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 without the written consent of the Company
and Investor.
(d) Notices. The notice provision contained in Section
9(d) of the Purchase Agreement shall be incorporated herein and shall be
governing under 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, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities, provided further,
that the Company cannot assign its rights hereunder except pursuant to a
merger.
(f) 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.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
(i) Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any current or future law,
and if the rights or obligations of the parties under this Agreement would not
be materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom. In lieu of such illegal, invalid or
unenforceable provision, there shall be added simultaneously as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes relating to this
Agreement are submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 9(i).
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(j) Arbitration. In the event of a dispute hereunder
which cannot be resolved by the parties, such dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment on the award rendered by the arbitration
panel may be entered in any court or tribunal of competent jurisdiction. Any
arbitration occurring under this Section 9(j) shall be held in Dallas, Texas.
(k) Entire Agreement. This Agreement is intended by the
parties as a 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. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter, including, but not limited to, the Prior
Registration Rights Agreement.
(l) Attorneys' Fees. In any proceeding brought to
enforce any provision of this Agreement the successful party shall be entitled
to recover reasonable attorneys' and accountants' fees in addition to its costs
and expenses and any other available remedy.
(m) Representation of the Trust. The Trust hereby
represents and warrants to Investor that the rights granted to Investor
hereunder are pari passu to the registration rights granted by the Trust to
each of Praedium, the Morgan Entities, the LaSalle Entities and DDR.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amended and Restated Registration Rights Agreement as of the date first written
above.
"COMPANY"
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ Charles W. Wolcott
---------------------------------------------
Charles W. Wolcott
President and Chief Executive Officer
"INVESTOR"
USAA REAL ESTATE COMPANY
/s/ T. Patrick Duncan
---------------------------------------------
T. Patrick Duncan
Senior Vice President - Real Estate Operations
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