Exhibit 10.8
FORM OF REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of the
______ day of ____________, 1998 by and between Wilshire Real Estate Investment
Trust Inc., a Maryland corporation (the "Company") and Wilshire Realty Services
Corporation, a Delaware corporation (the "Manager").
RECITALS
WHEREAS, at the closing of the Company's initial public offering of its
common stock (the "Closing") the Company and the Manager entered into an
agreement (the "Management Agreement") pursuant to which the Manager will
perform managerial services for the Company and its subsidiaries;
WHEREAS, the Company has established a stock option plan (the "Plan")
pursuant to which options to acquire shares of Common Stock may be granted, and,
pursuant to an agreement (the "Stock Option Agreement") the Company will grant
at closing options available under the Plan (the "Options") to the Manager,
which will entitle the Manager to acquire 985,000 shares (1,135,000 assuming the
Underwriters exercise their overallotment option in full) of Common Stock which
shares will become exerciseable over a four-year vesting period.
WHEREAS, the shares of Common Stock subject to the Options have not been
registered under the Securities Act of 1933, as amended (the "Securities Act");
WHEREAS, from time to time, the Manager may acquire additional shares of
Common Stock;
WHEREAS, the parties hereto desire to set forth certain rights of the
Manager as holders of Common Stock;
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements contained in this Agreement, the parties hereto mutually agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS
"Affiliate" means (i) any Person that, directly or indirectly, controls or
is controlled by or is under common control with such Person, (ii) any other
Person that beneficially owns, directly or indirectly, 5% or more of the
outstanding capital stock, shares or equity interests of such Person, or (iii)
any officer, director, employee, partner or trustee of such Person or any Person
controlling, controlled by or under common control with such Person (excluding
trustees and persons serving in similar capacities who are not otherwise
Affiliates of such Person). For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
"Agreement" means this Registration Rights Agreement, as the same shall be
amended, modified, or supplemented from time to time.
"Closing" means the date on which the Company's registration statement on
Form S-11, pursuant to which the Company's initial public offering of Common
Stock will be made, is declared effective.
"Closing Date" means the date on which the Closing occurs.
"Closing Price" means the average of the high bid and low asked prices in
the over-the-counter market, as reported by The Nasdaq Stock Market.
"Code" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision of the Code as of the date hereof and any
succeeding provision of the Code.
"Market Price" means, as of any determination date, the average of the
Closing Prices for the five consecutive Trading Days ending on such date.
"Person" means a natural person, a corporation, a partnership, a trust, a
joint venture, any regulatory authority, or any other entity or organization.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shelf Registration" shall mean the registration of the shares owned by the
Manager by the Company effected pursuant to Section 2.01 hereof.
"Shelf Registration Period" shall mean the period of time the Company is
required to make and maintain the Shelf Registration as defined in Section 2.01
hereof.
"Trading Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
ARTICLE II
SHELF REGISTRATION
SECTION 2.01. Shelf Registration. Upon termination of the Management
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Agreement by the Company, the Company agrees to file with the SEC, upon the
request of the Manager within two (2) years of such termination, no later than
thirty days after the request, a shelf registration statement under Rule 415 of
the Securities Act, or similar rule that may be adopted by the SEC (a "Shelf
Registration") with respect to all shares of Common Stock held by the Manager
(or, if so requested by the Manager, a specified portion of such shares). The
Company will use its best efforts to have such Shelf Registration declared
effective under the Securities Act as soon as possible. The Manager shall notify
the Company of the method or methods of disposition that may be utilized by them
in disposing of such shares and such information shall be included in the
prospectus included in such Shelf Registration to the extent such methods are
permitted by applicable law.
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The Company will use its best efforts to keep the Shelf Registration
continuously effective until the date when all of the shares of Common Stock
covered thereby are sold thereunder (the "Shelf Registration Period"). The
Company agrees to furnish the Manager such number of copies of the relevant
prospectuses, and supplements or amendments thereto, and such other documents as
the Manager reasonably requests, during the Shelf Registration Period. The
Company further agrees to supplement or make amendments to any 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 the Shelf Registration. The Company shall
keep the Manager advised as to the initiation and progress of the registration
of the shares pursuant to the Shelf Registration.
Moreover, upon request of the Manager, the Company shall register or
qualify the shares covered by the Shelf Registration under the securities or
blue sky laws of such jurisdictions within the United States as the Manager
shall reasonably request, and do such other reasonable acts and things as may be
required to enable the Manager to consummate the sale or other disposition in
such jurisdiction of the shares of Common Stock.
SECTION 2.02. Allocation of Expenses. The Company shall pay all expenses
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in connection with the Shelf Registration, including, without limitation (a) all
expenses incident to filing with the National Association of Securities Dealers,
Inc., (b) registration fees, (c) printing expenses, (d) accounting and legal
fees and expenses, except to the extent the Manager elects to engage accountants
or attorneys in addition to the accountants and attorneys engaged by the
Company, (e) accounting expenses incident to or required by any such
registration or qualification, and (f) expenses of complying with the securities
or blue sky laws of any jurisdictions in connection with such registration or
qualifications; provided, however, the Company shall not be liable for (i) any
underwriting discounts or commissions to any broker attributable to the sale of
the Manager's shares, or (ii) any fees or expenses incurred by the Manager in
connection with such registration which, according to the written instructions
of any regulatory authority, the Company is not permitted to pay.
SECTION 2.03. Indemnification. In connection with the Shelf Registration,
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the Company agrees to indemnify the Manager in accordance with the provisions of
Sections 3.05 through 3.08 hereof.
SECTION 2.04. Listing on Securities Exchange. If the Company shall list
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or maintain the listing of any Common Stock on any securities exchange or
national market system, it will at its expense and as necessary to permit the
registration and sale of the Manager's shares of Common Stock hereunder, list
and maintain such shares thereon.
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ARTICLE III
OTHER REGISTRATIONS
SECTION 3.01. Participation in Other Registrations.
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(a) If at any time on or after the termination of the Management Agreement
the Company shall propose the registration under the Securities Act of a public
offering of Common Stock, the Company shall give written notice of such proposed
registration as promptly as practicable to the Manager, and if, within fifteen
(15) days after the giving of such notice, the Manager request the Company in
writing to include any shares of Common Stock that are owned by the Manager and
that have not previously registered under a Shelf Registration declared
effective by the SEC, the Company shall include in the registration such amount
of such shares of Common Stock as the Manager shall request; provided, however,
that the Company shall not be required to give notice or include such shares in
any such registration if the proposed registration relates solely to (i)
securities to be offered to employees pursuant to a stock option, stock savings,
or other employee benefit plan, (ii) securities proposed to be issued in
exchange for securities or assets of, or in connection with a merger of
consolidation with, another entity, (iii) securities to be offered by the
Company generally to any class or series of its then existing security holders,
(iv) securities issuable upon the conversion of securities which are the subject
of an underwritten redemption, or (v) securities to be offered or issued
pursuant to a combination of transactions referred to in clauses (i) through
(iv).
(b) If the proposed public offering is to be made pursuant to a firm
commitment underwriting, at the option of either the Company or the proposed
managing underwriter, the shares requested to be included by the Manager shall
be included in such underwriting, on the same terms and conditions as to
underwriting discounts and commissions.
SECTION 3.02. Obligations of the Company. The Company shall undertake the
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following obligations to the Manager in connection with the registration of
the shares of the Manager pursuant to Section 3.01 hereof:
(a) The Company shall furnish to the Manager or their managing
underwriter such number of copies of each preliminary prospectus and final
prospectus and amendment or supplement thereto as the Manager may
reasonably request in order to effect the sale of the shares to be offered
and sold by the Manager pursuant to Section 3.01 hereof, but only while
the Company is required to cause the registration statement to remain
current.
(b) The Company shall use its best efforts to qualify the offering
under applicable blue sky or other securities laws of such jurisdictions as
may be specified by the Manager.
(c) If necessary, the Company shall furnish to the Manager
certificates representing ownership of the shares being offered which
contain no restrictive legends, in such numbers and denominations as the
Manager shall reasonably request.
(d) The Company shall use its best efforts (including, without
limitation, preparation of necessary post-effective amendments and
supplements) to cause the registration statement to remain current for
ninety (90) calendar days following its effective date or such lesser
period as the Manager and its managing underwriter may accept.
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(e) The Company shall afford the Manager and its representatives the
opportunity to make such reasonable examination and inquiry into the
financial condition and business of the Company and its Affiliates as the
Manager's counsel may deem necessary or prudent in connection with the
preparation of the registration statement or any other materials to be used
in connection with the Manager's offering.
SECTION 3.03. Conditions to Obligations of the Company. The obligations
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of the Company to use its best efforts to cause the shares owned by the Manager
to be registered under the Securities Act are subject to the following
conditions:
(a) In no event will the Company's obligations or duties under
Article IV hereof apply or extend to any shares previously registered under
a Shelf Registration pursuant to Article II hereof that was declared by the
SEC to be, and that remains, effective.
(b) Any request by the Manager for registration shall specify the
amount of shares intended to be sold, contain the undertaking of the
Manager to provide all such information as may be reasonably required in
order to permit the Company to comply with all applicable requirements of
the SEC and to obtain acceleration of the effective date of the
registration statement, identify any proposed underwriters, and specify the
proposed method of offering and sale.
(c) The Company may require, as a condition to fulfilling its
obligations hereunder, the indemnification agreements described in Section
3.06 from the Manager and their underwriters.
(d) The Company shall not be required to register shares pursuant to
Section 3.01 if, within ten (10) calendar days following receipt of the
request for registration, the Company shall commit itself to repurchase the
shares at the Market Price of such shares as of the date the Company
receives such request.
SECTION 3.04. Expenses of Registration. All underwriting discounts and
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commissions attributable to shares being sold by the Manager shall be borne by
the Manager. As to the other expenses of registration:
(a) In connection with any registration pursuant to Section 2.01, the
Manager shall pay or reimburse the Company for the SEC registration fee,
printing expenses, and the reasonable expenses of qualifying the offering
under applicable blue sky or other securities laws; provided, however, that
such fees and expenses shall be borne by the Company with respect to the
first two (2) registrations requested by the Manager under Section 2.01;
and provided, further, that if the Company shall include any other
securities of its issue in any registration pursuant to Section 2.01, such
fees and expenses shall be apportioned among the Manager and the other
offerors in accordance with the amount of securities being offered.
(b) In connection with the first two (2) registrations requested by
the Manager under Section 3.01, the Company shall pay the fees and expenses
referred to in Section 3.04(a); provided, however, that as to any fees and
expenses required to be paid by other security holders of the Company, such
fees and expense shall be apportioned among the Manager and other security
holders in accordance with the amount of securities being offered.
(c) Any other fees or expenses incurred by one of the parties to a
registration, including, without limitation, fees and expenses of attorneys
and accountants, shall be borne by such party.
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SECTION 3.05. Indemnification by the Company. In the case of each
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registration pursuant to Article II or III hereof, the Company agrees to
indemnify and hold harmless the Manager, the directors and officers of the
Manager, each underwriter of the shares of the Manager so registered, and each
person (if any) who controls the Manager or any such underwriter within the
meaning of Section 15 of the Securities Act, against any and all losses, claims,
damages, or liabilities to which they or any of them may become subject under
the Securities Act or any other statute or common law, including any amount paid
in settlement of any litigation, commenced or threatened, if such settlement is
effected with the written consent of the Company, and to reimburse them for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as any such losses, claims, damages,
liabilities, or actions arise out of or are based upon (a) any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement filed to register the sale of such shares or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under blue sky or other securities laws of jurisdictions in which
the shares are offered (a "Blue Sky Filing"), or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (b) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of such registration statement,
or contained in the final prospectus (as amended or supplemented if the Company
shall have filed with the SEC any amendment thereof or supplement thereto) if
used within the period during which the Company is required to keep the
registration statement to which such prospectus relates current, or the omission
or alleged omission to state therein (if so used) a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the indemnification
agreement contained in this Section 3.05 shall not (i) apply to such losses,
claims, damages, liabilities, or actions arising out of, or based upon, any such
untrue statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by the Manager or
such underwriter specifically for use in connection with preparation of the
registration statement, any preliminary prospectus or final prospectus contained
in the registration statement, any such amendment or supplement thereto or any
Blue Sky Filing, or (ii) inure to the benefit of any underwriter or any person
controlling such underwriter, if such underwriter failed to send or give a copy
of the final prospectus to the person asserting the claim at or prior to the
written confirmation of the sale of such shares to such person and if the untrue
statement or omission concerned has been corrected in such final prospectus.
SECTION 3.06. Indemnification by the Manager. In the case of each
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registration pursuant hereto, the Manager and each underwriter of the shares of
the Manager so registered shall agree in the same manner and to the same extent
as set forth in Section 3.05 hereof to indemnify and hold harmless the Company,
each person (if any) who controls the Company within the meaning of Section 15
of the Securities Act, the directors of the Company, and those officers of the
Company who shall have signed any such registration statement, with respect to
any untrue statement or alleged untrue statement in, or omission or alleged
omission from, such registration statement or any post-effective amendment
thereto or any preliminary prospectus or final prospectus (as amended or
supplemented if amended or supplemented as aforesaid) contained in such
registration statement or any Blue Sky Filing, if such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by such indemnifying party specifically for use in accordance with
the preparation of the registration statement, any preliminary prospectus or
final prospectus contained in the registration statement, any such amendment or
supplement thereto, or any Blue Sky Filing.
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SECTION 3.07. Indemnification Procedures.
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(a) Each indemnified party shall, with reasonable promptness after
its receipt of written notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought from an
indemnifying party on account of an indemnity agreement contained herein,
notify the indemnifying party in writing of the commencement thereof.
(b) The omission to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party unless the
failure to give notice materially adversely affects the ability of the
indemnifying party to defend a claim which is the subject of
indemnification hereunder (in which case the indemnifying party shall be
relieved of its obligation only to the extent of offsetting any loss,
damage, or liability it suffers as a consequence of the failure against its
monetary obligation to the indemnified party).
(c) In case any such action shall be brought against any indemnified
party and the indemnified party shall so notify an indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein and to the extent it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party hereunder for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, except as
provided below.
(d) The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel reasonably
satisfactory to the indemnified party, or (iii) the named parties to any
such action (including any impleaded parties) have been advised by such
counsel that representation of such indemnified party and the indemnifying
party by the same counsel would be inappropriate under applicable standards
of professional conduct (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party). No indemnifying party shall be liable for any
settlement entered into without its consent.
(e) The indemnity agreements contained herein shall be in addition to
any liabilities which the indemnifying party may have pursuant to law.
SECTION 3.08. Contribution.
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(a) If for any reason the indemnification provisions contemplated
herein are either unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, or liabilities
referred to therein, then the party that otherwise would be required to
provide indemnification or the indemnifying party (in either case, for
purposes of this section, the "Indemnifying Party") in respect of such
losses, claims, damages, or liabilities, shall contribute to the amount
paid or payable by the party that would otherwise be entitled to
indemnification or the indemnified party (in either case, for purposes of
this section, the "Indemnified Party") as a result of such losses, claims,
damages, liabilities, or expense, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and the Indemnified
Party, as well as any other relevant
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equitable considerations. The relative fault of the Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact related to
information supplied by the Indemnifying Party or Indemnified Party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities, and expenses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party. In no
event shall any holder of shares covered by the registration be required to
contribute an amount greater than the dollar amount of the proceeds
received by such holder from the sale of shares pursuant to the
registration giving rise to the liability.
(b) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this section were determined by PRO RATA
allocation (even if the holders or any underwriters or all of them were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No person or entity
determined to have committed a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
ARTICLE IV
GENERAL
SECTION 4.01. Notices. All communications required or permitted under this
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Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Manager at 1776 S.W. Madison
Street, Portland, Oregon 97205; provided, however, that the Manager may specify
a different address by notifying the Company in writing of such different
address. Notices to the Company shall be delivered at or mailed to 1776 S.W.
Madison Street, Portland, Oregon 97205, or such different address as the Company
may notify the Manager in writing.
SECTION 4.02. Entire Agreement. This Agreement and exhibits attached
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hereto constitute the entire agreement of the parties and supersede all prior
written agreements and prior and contemporaneous oral agreements, understandings
and negotiations with respect to the subject matter hereof.
SECTION 4.03. Pronouns and Plurals. When the context in which words are
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used in this Agreement indicates that such is the intent, words in the singular
number shall include the plural and the masculine gender shall include the
neuter or female gender as the context may require.
SECTION 4.04. Headings. The article headings or sections in this Agreement
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are for convenience only and shall not be used in construing the scope of this
Agreement or any particular article.
SECTION 4.05. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
SECTION 4.06. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, each party hereto, through its officer thereunto duly
authorized, has duly executed this Agreement as of the day and year first above
written.
WILSHIRE REAL ESTATE
INVESTMENT TRUST INC.
By: ______________________________
Name: ____________________________
Its: _______________________________
WILSHIRE REALTY SERVICES CORPORATION
By: ______________________________
Name: ____________________________
Its: _______________________________
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