Exhibit 10.21
Registration Rights Agreement by and between
CNL Hospitality Properties, Inc. and
Five Arrows Realty Securities II L.L.C.,
dated February 24, 1999
REGISTRATION RIGHTS AGREEMENT
by and between
CNL HOSPITALITY PROPERTIES, INC.
and
FIVE ARROWS REALTY SECURITIES II L.L.C.
Dated as of February 24, 1999
TABLE OF CONTENTS
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Page
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1. DEFINITIONS...................................................... 1
2. REGISTRATION UNDER THE SECURITIES ACT............................ 6
2.1 Demand Registration...................................... 6
2.2 Incidental Registration.................................. 9
2.3 Shelf Registration....................................... 11
2.4 Expenses................................................. 12
2.5 Underwritten Offerings................................... 12
2.6 Postponements............................................ 13
3. HOLDBACK ARRANGEMENTS............................................ 14
3.1 Restrictions on Sale by Holders of Registrable
Securities............................................... 14
3.2 Restrictions on Sale by the Company and Others........... 14
4. REGISTRATION PROCEDURES.......................................... 14
4.1 Obligations of the Company............................... 14
4.2 Seller Information....................................... 19
4.3 Notice to Discontinue.................................... 20
5. INDEMNIFICATION; CONTRIBUTION.................................... 20
5.1 Indemnification by the Company........................... 20
5.2 Indemnification by Holders............................... 21
5.3 Conduct of Indemnification Proceedings................... 21
5.4 Contribution............................................. 22
5.5 Other Indemnification.................................... 23
5.6 Indemnification Payments................................. 23
6. GENERAL.......................................................... 23
6.1 Adjustments Affecting Registrable Securities............. 23
6.2 Registration Rights to Others............................ 23
6.3 Availability of Information; Rule 144; Rule 144A;
Other Exemptions......................................... 24
6.4 Amendments and Waivers................................... 24
6.5 Notices.................................................. 25
6.6 Successors and Assigns................................... 26
6.7 Counterparts............................................. 26
6.8 Descriptive Headings, Etc................................ 27
6.9 Severability............................................. 27
6.10 Governing Law............................................ 27
6.11 Remedies; Specific Performance........................... 27
6.12 Entire Agreement......................................... 28
6.13 Nominees for Beneficial Owners........................... 28
6.14 Consent to Jurisdiction.................................. 28
6.15 Further Assurances....................................... 28
6.16 No Inconsistent Agreements............................... 29
6.17 Construction............................................. 29
REGISTRATION RIGHTS AGREEMENT (this or the "Agreement") dated
as of February 24, 1999, by and between CNL Hospitality Properties, Inc.
Maryland, a Maryland corporation (the "Company"), and Five Arrows Realty
Securities II L.L.C. a limited liability company organized under the laws of the
State of Delaware (the "Initial Holder").
W I T N E S S E T H :
WHEREAS, simultaneously herewith, the Company and the Initial
Holder are entering into a Securities Purchase Agreement (the "Subscription
Agreement"), pursuant to which the Company is issuing, and the Initial Holder is
purchasing, certain securities of the Company;
WHEREAS, simultaneously herewith, the Initial Holder is
purchasing, pursuant to the Subscription and Stockholders' Agreement, (the
"Hotel Investors Subscription Agreement") dated February 24, 1999 among CNL
Hotel Investors, Inc., Hospitality Partners, LP, a limited partnership of which
all of the equity interests are owned by the Company, the Company, the Initial
Holder and the other signatories thereto, shares of 8% Class A Cumulative
Exchangeable Preferred Stock of CNL Hotel Investors, Inc. (the "Class A
Preferred Stock") which are exchangeable into Common Shares; and
WHEREAS, in order to induce the Initial Holder to enter into
the Subscription Agreement and purchase shares of Class A Preferred Stock, the
Company has agreed to provide certain registration rights on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, and (ii) with respect to any
individual, shall also mean the spouse, sibling, child, step-child, grandchild,
niece, nephew or parent of such Person, or the spouse thereof; provided,
however, that none of the Initial Holder, its partners, members or Affiliates
shall be considered an Affiliate of the Company or any of its Subsidiaries for
purposes of this Agreement.
"Blackout Period" shall have the meaning set forth in Section
2.6.
"Certificate of Designations" shall mean the Articles
Supplementary classifying 50,886 shares of preferred stock as 8% Class A
Cumulative Preferred Stock, par value $.01 per share, liquidation preference
$1,000 per share, as filed with the Secretary of State of the State of Maryland.
"Class A Preferred Stock" shall have the meaning set forth in
the recitals.
"Common Shares" shall mean shares of common stock, par value
$0.01 per share, of the Company.
"Company" shall have the meaning set forth in the preamble.
"Conversion Shares" shall mean the Common Shares or other
equity securities issued or issuable upon exchange of the Class A Preferred
Stock.
"Demand Registration" shall mean a registration (shelf
registration or otherwise) under the Securities Act of Registrable Securities
required to be effected by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to the provisions of Section 2.1 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Holders" shall mean the Initial Holder for so long as it owns
any Registrable Securities and such of its respective heirs, successors and
permitted assigns (including any permitted transferees of Registrable
Securities) who acquire or are otherwise the transferee of Registrable
Securities, directly or indirectly, from such Initial Holder (or any subsequent
Holder), for so long as such heirs, successors and permitted assigns own any
Registrable Securities. For purposes of this Agreement, a Person will be deemed
to be a Holder whenever such Person holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities,
whether or not such purchase, conversion, exercise or exchange has actually been
effected and disregarding any legal restrictions upon the exercise of such
rights. Registrable Securities issuable upon exercise of an option or upon
conversion, exchange or exercise of another security shall be deemed outstanding
for the purposes of this Agreement.
"Holders' Counsel" shall mean one firm of counsel (per
registration) to the Holders of Registrable Securities participating in such
registration, which counsel shall be selected (i) in the case of a Demand
Registration by the Initiating Holders holding a majority of the Registrable
Securities for which registration was requested in the Request, and (ii) in all
other cases, by the Majority Holders of the Registration.
"Incidental Registration" shall mean a registration required
to be effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to the provisions of Section 2.2 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Initial Holder" shall have the meaning set forth in the
preamble.
"Initial Public Offering" shall mean the first public offering
of any class of securities of the Company pursuant to a registration statement
filed with and declared effective by the SEC.
"Initiating Holders" shall mean, with respect to a particular
registration, the Holders who initiated the Request for such registration.
"Inspectors" shall have the meaning set forth in Section
4.1(g).
"Majority Holders" shall mean (a) the Initial Holder, so long
as the Initial Holder and its Affiliates, collectively, hold at least 25% of the
outstanding Registrable Securities, or (b) one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities then
outstanding.
"Majority Holders of the Registration" shall mean, with
respect to a particular registration, one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities to be
included in such registration.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.
"Prospectus" shall mean the prospectus included in a
Registration Statement (including, without limitation, any preliminary
prospectus and any prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), and any such
Prospectus as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
(or deemed to be incorporated by reference) therein.
"Registrable Securities" shall mean (i) any Common Shares
issued to the Initial Holder pursuant to the Subscription Agreement; (ii) any
Conversion Shares issued or issuable upon exchange of the Class A Preferred
Stock issued to the Initial Holder pursuant to the Hotel Investors Subscription
Agreement, (iii) any Common Shares otherwise or hereafter purchased or acquired
by the Holders or their Affiliates and (iv) any other securities of the Company
(or any successor or assign of the Company, whether by merger, consolidation,
sale of assets or otherwise) which may be issued or issuable with respect to, in
exchange for, or in substitution of, Registrable Securities referenced in
clauses (i) through (iv) above by reason of any dividend or stock split,
combination of shares, merger, consolidation, recapitalization,
reclassification, reorganization, sale of assets or similar transaction. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have been declared effective under the Securities
Act and such securities shall have been disposed of in accordance with such
registration statement, (B) such securities can be sold pursuant to Rule 144 (or
any similar provisions then in force) under the Securities Act, (C) such
securities have been otherwise transferred, a new certificate or other evidence
of ownership for them not bearing the legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act, or (D) such securities
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance with this Agreement by the Company and
its subsidiaries, including, without limitation (i) all SEC, stock exchange,
NASD and other registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
and compliance with the rules of any stock exchange (including fees and
disbursements of counsel in connection with such compliance and the preparation
of a blue sky memorandum and legal investment survey), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing,
distributing, mailing and delivering any Registration Statement, any Prospectus,
any underwriting agreements, transmittal letters, securities sales agreements,
securities certificates and other documents relating to the performance of or
compliance with this Agreement, (iv) the fees and disbursements of counsel for
the Company, (v) the reasonable fees and disbursements of Holders' Counsel, (vi)
the fees and disbursements of all independent public accountants (including the
expenses of any audit and/or "cold comfort" letters) and the fees and expenses
of other Persons, including experts, retained by the Company, (vii) the expenses
incurred in connection with making road show presentations and holding meetings
with potential investors to facilitate the distribution and sale of Registrable
Securities which are customarily borne by the issuer, (viii) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, and (ix) premiums and other costs of policies of Company insurance
against liabilities arising out of the public offering of the Registrable
Securities being registered; provided, however, Registration Expenses shall not
include discounts and commissions payable to underwriters, selling brokers,
dealer managers or other similar Persons engaged in the distribution of any of
the Registrable Securities; and provided further, that in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead expenses of the
Company, auditing fees, premiums or other expenses relating to liability
insurance required by underwriters of the Company or other expenses for the
preparation of financial statements or other data normally prepared by the
Company in the ordinary course of its business or which the Company would have
incurred in any event; and provided, further, that in the event the Company
shall, in accordance with Section 2.2 or Section 2.6 hereof, not register any
securities with respect to which it had given written notice of its intention to
register to Holders, notwithstanding anything to the contrary in the foregoing,
all of the costs incurred by the Holders in connection with such registration
shall be deemed to be Registration Expenses.
"Registration Statement" shall mean any registration statement
of the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Request" shall have the meaning set forth in Section 2.1(a).
"SEC" shall mean the Securities and Exchange Commission, or
any successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Shelf Registration" shall have the meaning set forth in
Section 2.1(a).
"Subscription Agreement" shall have the meaning set forth in
the preamble.
"Underwriters" shall mean the underwriters, if any, of the
offering being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
"Withdrawn Demand Registration" shall have the meaning set
forth in Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in
Section 2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 Demand Registration.
(a) Right to Demand Registration.
(i) Subject to Section 2.1(c), at any time or from
time to time the Majority Holders shall have the right to request in writing
that the Company register all or part of such Holders' Registrable Securities (a
"Request") (which Request shall specify the amount of Registrable Securities
intended to be disposed of by such Holders and the intended method of
disposition thereof) by filing with the SEC a Demand Registration Statement;
provided, however, that the Company shall not be required to effect a Demand
Registration if the proposed Demand Registration would not cover at least the
lesser of $10 million of Registrable Securities or the total Registrable
Securities held by the Majority Holders.
(ii) As promptly as practicable, but no later than 10
days after receipt of a Request, the Company shall give written notice of such
requested registration to all Holders of Registrable Securities. Subject to
Section 2.1(b), the Company shall include in a Demand Registration (A) the
Registrable Securities intended to be disposed of by the Initiating Holders and
(B) the Registrable Securities intended to be disposed of by any other Holder
which shall have made a written request (which request shall specify the amount
of Registrable Securities to be registered and the intended method of
disposition thereof) to the Company for inclusion thereof in such registration
within 20 days after the receipt of such written notice from the Company.
(iii) The Company shall, as expeditiously as possible
following a Request, use its best efforts to cause to be filed with the SEC a
Demand Registration Statement providing for the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by all such Holders, to the extent necessary to permit the
disposition of such Registrable Securities so to be registered in accordance
with the intended methods of disposition thereof specified in such Request or
further requests (including, without limitation, by means of a shelf
registration pursuant to Rule 415 under the Securities Act (a "Shelf
Registration") if so requested and if the Company is then eligible to use such a
registration).
(iv) The Company shall use its best efforts to have
such Demand Registration Statement declared effective by the SEC as soon as
practicable thereafter and to keep such Demand Registration Statement
continuously effective for the period specified in Section 4.1(b).
(b) Priority in Demand Registrations. If a Demand Registration
involves an Underwritten Offering, and the sole or lead managing Underwriter, as
the case may be, of such Underwritten Offering shall advise the Company in
writing (with a copy to each Holder requesting registration) on or before the
date five days prior to the date then scheduled for commencement of such
offering that, in its opinion, the amount of Registrable Securities requested to
be included in such Demand Registration exceeds the number which can be sold in
such offering within a price range acceptable to the Majority Holders of the
Registration (such writing to state the basis of such opinion and the
approximate number of Registrable Securities which may be included in such
offering), the Company shall include in such Demand Registration, to the extent
of the number which the Company is so advised may be included in such offering,
the Registrable Securities requested to be included in the Demand Registration
by the Holders allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such Demand Registration by each of them.
In the event the Company shall not, by virtue of this Section 2.1(b), include in
any Demand Registration all of the Registrable Securities of any Holder
requesting to be included in such Demand Registration, such Holder may, upon
written notice to the Company given within five days of the time such Holder
first is notified of such matter, reduce the amount of Registrable Securities it
desires to have included in such Demand Registration, whereupon only such amount
of Registrable Securities, will be so included and the Holders not so reducing
shall be entitled to a corresponding increase in the amount of Registrable
Securities to be included in such Demand Registration.
(c) Limitations on Registrations. The rights of Holders of
Registrable Securities to request Demand Registrations pursuant to Section
2.1(a) are subject to the following limitations: (i) in no event shall the
Company be required to effect a Demand Registration until the earlier of (A) the
third anniversary of this Agreement, (B) the completion of the continuous
offering of Common Shares (or follow-on continuous offering of Common Shares),
(C) the initial public offering of Common Shares in an Underwritten Offering, or
(D) the listing of Common Shares on a national securities exchange or
over-the-counter-market, (ii) the Company shall not be obligated to effect a
Demand Registration unless 120 days have elapsed since the last day that a prior
Demand Registration Statement remained effective (or, if earlier, the day on
which the last of the Registrable Securities covered by such prior Demand
Registration Statement was sold), and (iii) in no event shall the Company be
required to effect more than 6 Demand Registrations (the "Initial Demands"),
provided that when the Majority Holders own less than 35% of the issued and
outstanding Common Shares on a fully diluted basis, the Company shall be
required to effect no more than the lesser of the number of Initial Demands
remaining and 3 Demand Registrations; provided, however, that such number shall
be increased to the extent the Company does not include in what would otherwise
be the final registration for which the Company is required to pay Registration
Expenses at least 75% of the number of Registrable Securities requested to be
registered by the Holders by reason of Section 2.1(b); and provided, further,
that the Registration Expenses in connection with each other Demand Registration
shall be allocated pro rata among all Persons on whose behalf securities of the
Company are included in such registration, on the basis of the respective
amounts of the securities then being registered on their behalf.
(d) Underwriting; Selection of Underwriters. Notwithstanding
anything to the contrary contained in Section 2.1(a), if the Initiating Holders
holding a majority of the Registrable Securities for which registration was
requested in the Request so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment
Underwritten Offering; and such Initiating Holders may require that all Persons
(including other Holders) participating in such registration sell their
Registrable Securities to the Underwriters at the same price and on the same
terms of underwriting applicable to the Initiating Holders. If any Demand
Registration involves an Underwritten Offering, the Request relating thereto
shall include a list of at least five firms from the firms named in Schedule
2.1(d) to act as the sole or managing Underwriters and any additional investment
bankers and managers to be used in connection with such registration. The
Company shall make the selection from, and designate the capacities for, such
firms within 10 days of receipt of such Request.
(e) Registration of Other Securities. Whenever the Company
shall effect a Demand Registration, no securities other than the Registrable
Securities shall be covered by such registration unless the Majority Holders of
the Demand Registration shall have consented in writing to the inclusion of such
other securities; provided, however, that such consent shall not be required if
the sole or managing Underwriters deliver to the majority Holders of such Demand
Registration an unqualified opinion that the inclusion of such other securities
would not impair the price, timing or quality of such Demand Registration.
(f) Effective Registration Statement; Suspension. A Demand
Registration Statement shall not be deemed to have become effective (and the
related registration will not be deemed to have been effected) (i) unless it has
been declared effective by the SEC and remains effective in compliance with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Demand Registration Statement for the
time period specified in Section 4.1(b), (ii) if the offering of any Registrable
Securities pursuant to such Demand Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, or (iii) if, in the case of an Underwritten
Offering, the conditions to closing specified in an underwriting agreement to
which the Company is a party are not satisfied other than by the sole reason of
any breach or failure by the Holders of Registrable Securities or are not
otherwise waived.
(g) Other Registrations. During the period (i) beginning on
the date of a Request and (ii) ending on the date that is 90 days after the date
that a Demand Registration Statement filed pursuant to such Request has been
declared effective by the SEC or, if the Holders shall withdraw such Request or
such Demand Registration Statement, on the date of such Withdrawn Request or
such Withdrawn Registration Statement, the Company shall not, without the
consent of the Majority Holders of the Registration, file a registration
statement pertaining to any other securities of the Company, which consent shall
not be unreasonably withheld.
(h) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the SEC (i) as
shall be selected by the Initiating Holders holding a majority of the
Registrable Securities for which registration was requested in the Request and
as shall be reasonably acceptable to the Company, and (ii) which shall be
available for the sale of Registrable Securities in accordance with the intended
method or methods of disposition specified in the requests for registration. The
Company agrees to include in any such Registration Statement all information
which any selling Holder, upon advice of counsel, shall reasonably request.
(i) Withdrawal of a Request. A Request may be withdrawn prior
to the filing of the Demand Registration Statement by the Majority Holders of
the Registration (a "Withdrawn Request") and a Demand Registration Statement may
be withdrawn prior to the effectiveness thereof by the Majority Holders of the
Registration (a "Withdrawn Demand Registration"), and such withdrawals shall be
treated as a Demand Registration which shall have been effected pursuant to this
Section 2.1 (and shall be counted toward the number of Demand Registrations
permitted hereunder), unless the Holders of Registrable Securities to be
included in such Registration Statement reimburse the Company for its reasonable
out-of-pocket Registration Expenses relating to the preparation and filing of
such Demand Registration Statement (to the extent actually incurred); provided;
however, that if a Withdrawn Request or Withdrawn Registration Statement is made
(i) because of a material adverse change in the business, financial condition or
prospects of the Company following the Request date, or (ii) because of a
postponement of such registration pursuant to Section 2.6 for at least 60 days,
then such withdrawal shall not be treated as a Demand Registration effected
pursuant to this Section 2.1 (and shall not be counted toward the number of
Demand Registrations permitted hereunder), and the Company shall pay all
Registration Expenses in connection therewith. Any Holder requesting inclusion
in a Demand Registration may, at any time prior to the effective date of the
Demand Registration Statement (and for any reason), revoke such request by
delivering written notice to the Company revoking such requested inclusion.
The registration rights granted pursuant to the provisions of
this Section 2.1 shall be in addition to the registration rights granted
pursuant to the other provisions of Section 2 hereof.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at
any time or from time to time proposes to register any of its Common Shares
under the Securities Act (other than (i) in a registration on Form S-4 or S-8 or
any successor form to such forms, (ii) in a continuous offering of Common Shares
(or follow-on continuous offering of Common Shares), and (iii) pursuant to
Section 2.1 or 2.3) for sale for its own account, the Company shall deliver
prompt written notice (which notice shall be given at least 30 days prior to
such proposed registration) to all Holders of Registrable Securities of its
intention to undertake such registration, describing in reasonable detail the
proposed registration and distribution (including the anticipated range of the
proposed offering price, the class and number of securities proposed to be
registered and the distribution arrangements) and of such Holders' right to
participate in such registration under this Section 2.2 as hereinafter provided.
Subject to the other provisions of this paragraph (a) and Section 2.2(b), upon
the written request of any Holder made within 20 days after the receipt of such
written notice (which request shall specify the amount of Registrable Securities
to be registered and the intended method of disposition thereof), the Company
shall effect the registration under the Securities Act of all Registrable
Securities requested by Holders to be so registered (an "Incidental
Registration"), to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered, by inclusion of such Registrable Securities in the
Registration Statement which covers the securities which the Company proposes to
register and shall use its best efforts to cause such Registration Statement to
become and remain effective with respect to such Registrable Securities in
accordance with the registration procedures set forth in Section 4. If an
Incidental Registration involves an Underwritten Offering, promptly upon
notification to the Company from the Underwriter of the price at which such
securities are to be sold, the Company shall so advise each participating
Holder. The Holders requesting inclusion in an Incidental Registration may, at
any time prior to the effective date of the Incidental Registration Statement
(and for any reason), revoke such request by delivering written notice to the
Company revoking such requested inclusion.
If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Incidental
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, (A) in
the case of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice, however, to the rights of
Holders to cause such registration to be effected as a registration under
Section 2.1 or and (B) in the case of a determination to delay such
registration, the Company shall be permitted to delay the registration of such
Registrable Securities for the same period as the delay in registering such
other securities; provided, however, that if such delay shall extend beyond 120
days from the date the Company received a request to include Registrable
Securities in such Incidental Registration, then the Company shall again give
all Holders the opportunity to participate therein and shall follow the
notification procedures set forth in the preceding paragraph. There is no
limitation on the number of such Incidental Registrations pursuant to this
Section 2.2 which the Company is obligated to effect.
The registration rights granted pursuant to the provisions of
this Section 2.2 shall be in addition to the registration rights granted
pursuant to the other provisions of Section 2 hereof.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis), and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
interfering with the successful marketing of the securities being offered (such
writing to state the basis of such opinion and the approximate number of such
securities which may be included in such offering without such effect), the
Company shall include in such registration, to the extent of the number which
the Company is so advised may be included in such offering without such effect,
in the case of a registration initiated by the Company, (A) first, the
securities that the Company proposes to register for its own account and (B)
second, the Registrable Securities requested to be included in such registration
by the Holders, allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such registration by each of them;
provided, however, that in the event the Company will not, by virtue of this
Section 2.2(b), include in any such registration all of the Registrable
Securities of any Holder requested to be included in such registration, such
Holder may, upon written notice to the Company given within three days of the
time such Holder first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such registration,
whereupon only the Registrable Securities, if any, it desires to have included
will be so included and the Holders not so reducing shall be entitled to a
corresponding increase in the amount of Registrable Securities to be included in
such registration.
(c) Selection of Underwriters. If any Incidental Registration
involves an Underwritten Offering, the sole or managing Underwriter(s) and any
additional investment bankers and managers to be used in connection with such
registration shall be subject to the approval of the Majority Holders of the
Registration (such approval not to be unreasonably withheld).
2.3 Shelf Registration.
If a request made pursuant to Section 2.1 is for a Shelf
Registration and if the Company is obligated pursuant to Section 2.1 to effect a
registration, the Company shall use its best efforts to keep the Shelf
Registration continuously effective through the date on which all of the
Registrable Securities covered by such Shelf Registration may be sold pursuant
to Rule 144(k) under the Securities Act (or any successor provision having
similar effect); provided, however, that prior to the termination of such Shelf
Registration, the Company shall first furnish to each Holder of Registrable
Securities participating in such Shelf Registration (i) an opinion, in form and
substance satisfactory to the Majority Holders of the Registration, of counsel
for the Company satisfactory to the Majority Holders of the Registration stating
that such Registrable Securities are freely saleable pursuant to Rule 144(k)
under the Securities Act (or any successor provision having similar effect) or
(ii) a "No-Action Letter" from the staff of the SEC stating that the SEC would
not recommend enforcement action if the Registrable Securities included in such
Shelf Registration were sold in a public sale other than pursuant to an
effective registration statement.
2.4 Expenses. The Company shall pay all Registration Expenses in
connection with any Demand Registration, Incidental Registration or Shelf
Registration, whether or not such registration shall become effective and
whether or not all Registrable Securities originally requested to be included in
such registration are withdrawn or otherwise ultimately not included in such
registration, except as otherwise provided with respect to a Withdrawn Request
and a Withdrawn Demand Registration in Section 2.1(a). Each Holder shall pay all
discounts and commissions payable to underwriters, selling brokers, managers or
other similar Persons engaged in the distribution of such Holder's Registrable
Securities pursuant to any registration pursuant to this Section 2.
2.5 Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by the sole or
lead managing Underwriter for any Underwritten Offering effected pursuant to a
Demand Registration, the Company shall enter into a customary underwriting
agreement with the Underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to each Holder of Registrable
Securities participating in such offering and to contain such representations
and warranties by the Company and such other terms as are generally prevailing
in agreements of that type, including, without limitation, indemnification and
contribution to the effect and to the extent provided in Section 5.
(b) Holders of Registrable Securities to be Parties to
Underwriting Agreement. The Holders of Registrable Securities to be distributed
by Underwriters in an Underwritten Offering contemplated by Section 2 shall be
parties to the underwriting agreement between the Company and such Underwriters
and may, at such Holders' option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such Underwriters shall also be made to and for the benefit
of such Holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such Underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holders of
Registrable Securities; provided, however, that the Company shall not be
required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
Registration Statement. No Holder shall be required to make any representations
or warranties to, or agreements with, the Company or the Underwriters other than
representations, warranties or agreements regarding such Holder, such Holder's
Registrable Securities and such Holder's intended method of disposition.
(c) Participation in Underwritten Registration.
Notwithstanding anything herein to the contrary, no Person may participate in
any underwritten registration hereunder unless such Person (i) agrees to sell
its securities on the same terms and conditions provided in any underwritten
arrangements approved by the Persons entitled hereunder to approve such
arrangement and (ii) accurately completes and executes in a timely manner all
questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
2.6 Postponements. The Company shall be entitled to postpone a Demand
Registration and to require the Holders of Registrable Securities to discontinue
the disposition of their securities covered by a Shelf Registration during any
Blackout Period (as defined below) (i) if the Board of Directors of the Company
determines in good faith that effecting such a registration or continuing such
disposition at such time would have a material adverse effect upon a proposed
sale of all (or substantially all) of the assets of the Company or a merger,
reorganization, recapitalization or similar current transaction materially
affecting the capital structure or equity ownership of the Company, or (ii) if
the Company is in possession of material information which the Board of
Directors of the Company determines in good faith it is not in the best
interests of the Company to disclose in a registration statement at such time,
or (iii) if the Company has delivered a notice pursuant to Section 2.2 that it
is undertaking an underwritten offering in which the Holders will be entitled to
exercise their incidental registration rights; provided, however, that the
Company may only delay a Demand Registration not constituting a Shelf
Registration pursuant to this Section 2.6 by delivery of a Blackout Notice (as
defined below) within 30 days of delivery of the request for such Registration
under Section 2.1 and may delay a Demand Registration and require the Holders of
Registrable Securities to discontinue the disposition of their securities
covered by a Shelf Registration only for a reasonable period of time not to
exceed 75 days (or such earlier time as such transaction is consummated or no
longer proposed or the material information has been made public) (the "Blackout
Period"). There shall be at least 60 consecutive days during which there is no
Blackout Period following any Blackout Period, and the aggregate Blackout
Periods during any 12-month period shall not exceed 150 days. The Company shall
promptly notify the Holders in writing (a "Blackout Notice") of any decision to
postpone a Demand Registration or to discontinue sales of Registrable Securities
covered by a Shelf Registration pursuant to this Section 2.6 and shall include a
general statement of the reason for such postponement, an approximation of the
anticipated delay and an undertaking by the Company promptly to notify the
Holders as soon as a Demand Registration may be effected or sales of Registrable
Securities covered by a Shelf Registration may resume. In making any such
determination to initiate or terminate a Blackout Period, the Company shall not
be required to consult with or obtain the consent of any Holder, and any such
determination shall be the Company's sole responsibility. Each Holder shall
treat all notices received from the Company pursuant to this Section 2.6 in the
strictest confidence and shall not disseminate such information. If the Company
shall postpone the filing of a Demand Registration Statement for more than 15
days, the Majority Holders of Registrable Securities who were to participate
therein shall have the right to withdraw the request for registration. Any such
withdrawal shall be made by giving written notice to the Company within 30 days
after receipt of the Blackout Notice. Such withdrawn registration request shall
not be treated as a Demand Registration effected pursuant to Section 2.1 (and
shall not be counted towards the number of Demand Registrations effected), and
the Company shall pay all Registration Expenses in connection therewith.
3. HOLDBACK ARRANGEMENTS.
3.1 Restrictions on Sale by Holders of Registrable Securities. Each
Holder of Registrable Securities agrees, by acquisition of such Registrable
Securities, if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten Offering of any Registrable Securities, not make
any short sale of, loan, grant any option for the purchase of or effect any
public sale or distribution, including a sale pursuant to Rule 144 (or any
successor provision having similar effect) under the Securities Act of any
Registrable Securities or any other equity security of the Company (or any
security convertible into or exchangeable or exercisable for any equity security
of the Company) (except as part of such underwritten registration), during the
nine business days (as such term is used in Regulation M under the Exchange Act)
prior to, and during the time period reasonably requested by the sole or lead
managing Underwriter not to exceed 90 days beginning on the effective date of
the applicable Registration Statement.
3.2 Restrictions on Sale by the Company and Others. The Company agrees
that (i) if timely requested in writing by the sole or lead managing Underwriter
in an Underwritten Offering of any Registrable Securities, it will not make any
short sale of, loan, grant any option for the purchase of or effect any public
sale or distribution of any of the Company's equity securities (or any security
convertible into or exchangeable or exercisable for any of the Company's equity
securities) during the nine business days (as such term is used in Regulation M
under the Exchange Act) prior to, and during the time period reasonably
requested by the sole or lead managing Underwriter not to exceed 90 days,
beginning on the effective date of the applicable Registration Statement (except
as part of such underwritten registration or pursuant to registrations on Forms
S-4 or S-8 or any successor form to such forms), and (ii) it will use its best
efforts to cause each holder of equity securities (or any security convertible
into or exchangeable or exercisable for any of its equity securities) of the
Company purchased from the Company at any time after the date of this Agreement
(other than in a registered public offering) that is a director, executive
officer or a holder of 5% or more of the Common Shares to so agree.
4. REGISTRATION PROCEDURES.
4.1 Obligations of the Company. Whenever the Company is required to
effect the registration of Registrable Securities under the Securities Act
pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC (promptly, and in any event
within 30 days after receipt of a request to register Registrable Securities)
the requisite Registration Statement to effect such registration, which
Registration Statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and the Company shall use its best
efforts to cause such Registration Statement to become effective (provided, that
the Company may discontinue or delay any registration of its securities that are
not Registrable Securities, and, under the circumstances specified in Section
2.2 or 2.6, its securities that are Registrable Securities); provided, however,
that before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, or comparable statements under securities or blue sky laws
of any jurisdiction, the Company shall (i) provide Holders' Counsel and any
other Inspector with an adequate and appropriate opportunity to participate in
the preparation of such Registration Statement and each Prospectus included
therein (and each amendment or supplement thereto or comparable statement) to be
filed with the SEC, which documents shall be subject to the review and comment
of Holders' Counsel, and (ii) not file any such Registration Statement or
Prospectus (or amendment or supplement thereto or comparable statement) with the
SEC to which Holder's Counsel, any selling Holder or any other Inspector shall
have reasonably objected on the grounds that such filing does not comply in all
material respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary (i) to keep such Registration Statement effective,
and (ii) to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement, in each case until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller(s) thereof set forth in such Registration Statement; provided, that
except with respect to any Shelf Registration, such period need not extend
beyond nine months after the effective date of the Registration Statement; and
provided further, that with respect to any Shelf Registration, such period need
not extend beyond the time period provided in Section 2.3, and which periods, in
any event, shall terminate when all Registrable Securities covered by such
Registration Statement have been sold (but not before the expiration of the 90
day period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable);
(c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement (including
each preliminary Prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities,
use its best efforts to register or qualify all Registrable Securities and other
securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions as any selling Holder of Registrable
Securities covered by such Registration Statement or the sole or lead managing
Underwriter, if any, may reasonably request to enable such selling Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such selling Holder and to continue such registration or qualification
in effect in each such jurisdiction for as long as such Registration Statement
remains in effect (including through new filings or amendments or renewals), and
do any and all other acts and things which may be necessary or advisable to
enable any such selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such selling Holder;
provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 4.1(d), (ii) subject itself to taxation
in any such jurisdiction, or (iii) consent to general service of process in any
such jurisdiction;
(e) use its best efforts to obtain all other approvals,
consents, exemptions or authorizations from such governmental agencies or
authorities as may be necessary to enable the selling Holders of such
Registrable Securities to consummate the disposition of such Registrable
Securities;
(f) promptly notify Holders' Counsel, each Holder of
Registrable Securities covered by such Registration Statement and the sole or
lead managing Underwriter, if any: (i) when the Registration Statement, any
pre-effective amendment, the Prospectus or any prospectus supplement related
thereto or post-effective amendment to the Registration Statement 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 or any state
securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related thereto 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 or threat of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of any
event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein not misleading, or
(B) the Prospectus included in such Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein, in the light of the
circumstances under which they were made, not misleading, (vi) if at any time
the representations and warranties contemplated by Section 2.5(b) cease to be
true and correct in all material respects, and (vii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate or that there exists circumstances not yet disclosed to the
public which make further sales under such Registration Statement inadvisable
pending such disclosure and post-effective amendment; and, if the notification
relates to an event described in any of the clauses (ii) through (vii) of this
Section 4.1(f), the Company shall promptly prepare a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that (1) such Registration Statement shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(2) as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in the light of the circumstances
under which they were made not misleading (and shall furnish to each such Holder
and each Underwriter, if any, a reasonable number of copies of such Prospectus
so supplemented or amended); and if the notification relates to an event
described in clause (iii) of this Section 4.1(f), the Company shall take all
reasonable action required to prevent the entry of such stop order or to remove
it if entered;
(g) make available for inspection by any selling Holder of
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter (in
the case of the opinion and the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable Securities and
provide and cause to be maintained a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than the
effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and any other governmental agency or
authority having jurisdiction over the offering, and make available to its
security holders, as soon as reasonably practicable but no later than 90 days
after the end of any 12-month period, an earnings statement (i) commencing at
the end of any month in which Registrable Securities are sold to Underwriters in
an Underwritten Offering and (ii) commencing with the first day of the Company's
calendar month next succeeding each sale of Registrable Securities after the
effective date of a Registration Statement, which statement shall cover such
12-month periods, in a manner which satisfies the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
(k) if so requested by the Majority Holders of the
Registration and if at such time the Company is not engaged in a continuous
offering (or follow-on continuous offering) of Common Shares, use its best
efforts to cause all such Registrable Securities to be listed (i) on each
national securities exchange on which the Company's securities are then listed
or (ii) if securities of the Company are not at the time listed on any national
securities exchange (or if the listing of Registrable Securities is not
permitted under the rules of each national securities exchange on which the
Company's securities are then listed), on a national securities exchange or
over-the-counter-market designated (subject to the Company's approval, which
shall not be unreasonably withheld) by the Majority Holders of the Registration;
(l) keep each selling Holder of Registrable Securities advised
in writing as to the initiation and progress of any registration under Section 2
hereunder;
(m) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and provide officers'
certificates and other customary closing documents;
(n) cooperate with each selling Holder of Registrable
Securities 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 NASD and make reasonably available its
employees and personnel and otherwise provide reasonable assistance to the
Underwriters (taking into account the needs of the Company's businesses and the
requirements of the marketing process) in the marketing of Registrable
Securities in any Underwritten Offering;
(o) furnish to each Holder participating in the offering and
the sole or lead managing Underwriter, if any, without charge, at least one
manually-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 deemed to be
incorporated by reference);
(p) cooperate with the selling Holders of Registrable
Securities and the sole or lead 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 issued in such denominations and registered in such
names in accordance with the underwriting agreement prior to any sale of
Registrable Securities to the Underwriters or, if not an Underwritten Offering,
in accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
(q) if requested by the sole or lead managing Underwriter or
any selling Holder of Registrable Securities, immediately incorporate in a
prospectus supplement or post-effective amendment such information concerning
such Holder of Registrable Securities, the Underwriters or the intended method
of distribution as the sole or lead managing Underwriter or the selling Holder
of Registrable Securities reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the Registrable
Securities being sold to the 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;
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; and supplement or make
amendments to any Registration Statement if requested by the sole or lead
managing Underwriter of such Registrable Securities; and
(r) use its best efforts to take all other steps necessary to
expedite or facilitate the registration and disposition of the Registrable
Securities contemplated hereby.
4.2 Seller Information. The Company may require each selling Holder of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding such Holder, such Holder's Registrable
Securities and such Holder's intended method of disposition as the Company may
from time to time reasonably request in writing; provided that such information
shall be used only in connection with such registration.
If any Registration Statement or comparable statement under
"blue sky" laws refers to any Holder by name or otherwise as the Holder of any
securities of the Company, then such Holder shall have the right to require (i)
the insertion therein of language, in form and substance reasonably satisfactory
to such holder and the Company, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, and (ii) in the event that such reference
to such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state "blue sky" or securities law then in force, the deletion of
the reference to such Holder.
4.3 Notice to Discontinue. Each Holder of Registrable Securities agrees
by acquisition of such Registrable Securities that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4.1(f)(ii) through (vii), such Holder shall forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.1(f) 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
Holder's possession of the Prospectus covering such Registrable Securities which
is current at the time of receipt of such notice. If the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective pursuant to this Agreement (including,
without limitation, the period referred to in Section 4.1(b)) by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 4.1(f) to and including the date when the Holder shall have
received the copies of the supplemented or amended prospectus contemplated by
and meeting the requirements of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, each Holder of
Registrable Securities, its officers, directors, partners, members,
shareholders, employees, Affiliates and agents (collectively, "Agents") and each
Person who controls such Holder (within the meaning of the Securities Act) and
its Agents, with respect to each registration which has been effected pursuant
to this Agreement, against any and all losses, claims, damages or liabilities,
joint or several, actions or proceedings (whether commenced or threatened) in
respect thereof, and expenses (as incurred or suffered and including, but not
limited to, any and all expenses incurred in investigating, preparing or
defending any litigation or proceeding, whether commenced or threatened, and the
reasonable fees, disbursements and other charges of legal counsel) in respect
thereof (collectively, "Claims"), insofar as such Claims arise out of or are
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to any such
registration or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided, however, that the Company will not be liable in any such
case to the extent that any such Claims arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission of a material fact so made in reliance upon and in conformity
with written information furnished to the Company by such Holder specifically
for use therein. The Company shall also indemnify any Underwriters of the
Registrable Securities, their Agents and each Person who controls any such
Underwriter (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of any Person who may be entitled to
indemnification pursuant to this Section 5 and shall survive the transfer of
securities by such Holder or Underwriter.
5.2 Indemnification by Holders. Each Holder, if Registrable Securities
held by it are included in the securities as to which a registration is being
effected, agrees to, severally and not jointly, indemnify and hold harmless, to
the fullest extent permitted by law, the Company, its directors and officers,
each other Person who participates as an Underwriter in the offering or sale of
such securities and its Agents and each Person who controls the Company or any
such Underwriter (within the meaning of the Securities Act) and its Agents,
against any and all Claims, insofar as such Claims arise out of or are based
upon any untrue or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to such
registration, 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, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Holder specifically for use therein; provided, however, that the
aggregate amount which any such Holder shall be required to pay pursuant to this
Section 5.2 shall in no event be greater than the amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities pursuant to
the Registration Statement giving rise to such Claims less all amounts
previously paid by such Holder with respect to any such Claims. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party and shall survive the transfer of such
securities by such Holder or Underwriter.
5.3 Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party of notice of any Claim or the commencement of any action or
proceeding involving a Claim under this Section 5, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party
pursuant to Section 5, (i) notify the indemnifying party in writing of the Claim
or the commencement of such action or proceeding; provided, that the failure of
any indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under this Section 5, except to the extent the
indemnifying party is materially and actually prejudiced thereby, and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 5, 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 indemnified
party 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 indemnified party unless (A) the indemnifying party has agreed
in writing to pay such fees and expenses, (B) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such indemnified party within 10 days after receiving notice
from such indemnified party that the indemnified party believes it has failed to
do so, (C) in the reasonable judgment of any such indemnified party, based upon
advice of counsel, a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claims (in which case, if
the indemnified party notifies the indemnifying party in writing that it elects
to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such indemnified party) or (D) such indemnified party is a
defendant in an action or proceeding which is also brought against the
indemnifying party and reasonably shall have concluded that there may be one or
more legal defenses available to such indemnified party which are not available
to the indemnifying party. No indemnifying party shall be liable for any
settlement of any such claim or action effected without its written consent,
which consent shall not be unreasonably withheld. In addition, without the
consent of the indemnified party (which consent shall not be unreasonably
withheld), no indemnifying party shall be permitted to consent to entry of any
judgment with respect to, or to effect the settlement or compromise of any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim), unless such settlement,
compromise or judgment (1) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim, (2) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party, and (3) does not provide for any
action on the part of any party other than the payment of money damages which is
to be paid in full by the indemnifying party.
5.4 Contribution. If the indemnification provided for in Section 5.1 or
5.2 from the indemnifying party for any reason is unavailable to (other than by
reason of exceptions provided therein), or is insufficient to hold harmless, an
indemnified party hereunder in respect of any Claim, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claim in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, in connection with the actions which resulted in such Claim, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. If, however, the foregoing allocation is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative faults but also the relative benefits of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by a party as a result of any Claim
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in Section 5.3, any legal or other fees,
costs or expenses reasonably incurred by such party in connection with any
investigation or proceeding. Notwithstanding anything in this Section 5.4 to the
contrary, no indemnifying party (other than the Company) shall be required
pursuant to this Section 5.4 to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such Claims,
less all amounts previously paid by such indemnifying party with respect to such
Claims. 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.
5.5 Other Indemnification. Indemnification similar to that specified in
the preceding Sections 5.1 and 5.2 (with appropriate modifications) shall be
given by the Company and each selling Holder of Registrable Securities with
respect to any required registration or other qualification of securities under
any Federal or state law or regulation of any governmental authority, other than
the Securities Act. The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract.
5.6 Indemnification Payments. The indemnification and contribution
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when bills are
received or any expense, loss, damage or liability is incurred.
6. General.
6.1 Adjustments Affecting Registrable Securities. The Company agrees
that it shall not effect or permit to occur any combination or subdivision of
shares which would adversely affect the ability of the Holder of any Registrable
Securities to include such Registrable Securities in any registration
contemplated by this Agreement or the marketability of such Registrable
Securities in any such registration.
6.2 Registration Rights to Others. The Company has not previously
entered into an agreement with respect to its securities granting any
registration rights to any Person. If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act, (i) such rights
shall not be in conflict with or adversely affect any of the rights provided in
this Agreement to the Holders and (ii) if such rights are provided on terms or
conditions more favorable to such holder than the terms and conditions provided
in this Agreement, the Company shall provide (by way of amendment to this
Agreement or otherwise) such more favorable terms or conditions to the Holders.
6.3 Availability of Information; Rule 144; Rule 144A; Other Exemptions.
So long as the Company shall not have filed a registration statement pursuant to
Section 12 of the Exchange Act or a registration statement pursuant to the
requirements of the Securities Act, the Company shall, at any time and from time
to time, upon the request of any Holder of Registrable Securities and upon the
request of any Person designated by such Holder as a prospective purchaser of
any Registrable Securities, furnish in writing to such Holder or such
prospective purchaser, as the case may be, a statement as of a date not earlier
than 12 months prior to the date of such request of the nature of the business
of the Company and the products and services it offers and copies of the
Company's most recent balance sheet and profit and loss and retained earnings
statements, together with similar financial statements for such part of the two
preceding fiscal years as the Company shall have been in operation, all such
financial statements to be audited to the extent audited statements are
reasonable available, provided that, in any event the most recent financial
statements so furnished shall include a balance sheet as of a date less than 16
months prior to the date of such request, statements of profit and loss and
retained earnings for the 12 months preceding the date of such balance sheet,
and, if such balance sheet is not as of a date less than 6 months prior to the
date of such request, additional statements of profit and loss and retained
earnings for the period from the date of such balance sheet to a date less than
6 months prior to the date of such request. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company covenants that it shall timely file any reports
required to be filed by it under the Securities Act or the Exchange Act
(including, but not limited to, the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c) of Rule 144 under the Securities
Act), and that it shall take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 and Rule 144A under the Securities Act, as such rules may be amended from
time to time, or (ii) any other rule or regulation now existing or hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company shall deliver to such Holder a written statement as to whether it
has complied with such requirements.
6.4 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, without the written
consent of the Company and the Holders holding more than 50% of the Registrable
Securities then outstanding; provided, however, that no such amendment,
modification, supplement, waiver or consent to departure shall reduce the
aforesaid percentage of Registrable Securities without the written consent of
all of the Holders of Registrable Securities; and provided further, that nothing
herein shall prohibit any amendment, modification, supplement, termination,
waiver or consent to departure the effect of which is limited only to those
Holders who have agreed to such amendment, modification, supplement,
termination, waiver or consent to departure.
6.5 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to the applicable
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties in accordance with the
provisions of this Section:
(i) If to the Company, to:
CNL Hospitality Properties, Inc.
CNL Group
000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: C. Xxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Shaw, Pittman, Xxxxx & Xxxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. XxXxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(ii) If to the Initial Holder, to:
Five Arrows Realty Securities II L.L.C.
c/o Rothschild Realty, Inc.
1251 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Telephone: (0000 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(iii) If to any subsequent Holder, to the address of such
Person set forth in the records of the Company.
All notices, communications, or other documents required to be
given hereunder, shall be in writing and shall be given either personally, by
telecopy (followed by first class U.S. mail), by Federal Express or other
reputable express delivery service for overnight delivery, or by mailing the
same in a sealed envelope, first-class mail, postage prepaid and either
certified or registered, return receipt requested. All such notices,
communications and documents shall be deemed to have been given on the date of
delivery, if given personally, by telecopy, or by overnight courier, or two days
after the date of mailing, if mailed.
6.6 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, successors
and permitted assigns (including any permitted transferee of Registrable
Securities). Any Holder may assign to any permitted (as determined under the
Subscription Agreement and the Hotel Investors Subscription Agreement)
transferee of its Registrable Securities (other than a transferee that acquires
such Registrable Securities in a registered public offering or pursuant to a
sale under Rule 144 of the Securities Act (or any successor rule)), its rights
and obligations under this Agreement; provided, however, if any permitted
transferee shall take and hold Registrable Securities, such transferee shall
promptly notify the Company and by taking and holding such Registrable
Securities such permitted transferee shall automatically be entitled to receive
the benefits of and be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement as if it were a party
hereto (and shall, for all purposes, be deemed a Holder under this Agreement).
If the Company shall so request, any heir, successor or permitted assign
(including any permitted transferee) shall agree in writing to acquire and hold
the Registrable Securities subject to all of the terms hereof. For purposes of
this Agreement, "successor" for any entity other than a natural person shall
mean a successor to such entity as a result of such entity's merger,
consolidation, sale of substantially all of its assets, or similar transaction.
Except as provided above or otherwise permitted by this Agreement, neither this
Agreement nor any right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by any Holder or by the Company without the
consent of the other parties hereto.
6.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
6.8 Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (4) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.
6.9 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
6.10 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Maryland (without giving effect to
the conflict of laws principles thereof).
6.11 Remedies; Specific Performance. The parties hereto acknowledge
that money damages would not be an adequate remedy at law if any party fails to
perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Agreement, none of the parties hereto shall raise the
defense that there is an adequate remedy at law. Except as otherwise provided by
law, a delay or omission by a party hereto in exercising any right or remedy
accruing upon any such breach shall not impair the right or remedy or constitute
a waiver of or acquiescence in any such breach. No remedy shall be exclusive of
any other remedy.All available remedies shall be cumulative.
6.12 Entire Agreement. This Agreement, the Subscription Agreement and
the Hotel Investors Subscription Agreement (collectively, the "Other
Agreements") are 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. There are no restrictions, promises, representations,
warranties, covenants or undertakings relating to such subject matter, other
than those set forth or referred to herein or in the Other Agreements. This
Agreement and the Other Agreements supersede all prior agreements and
understandings between the Company and the other parties to this Agreement with
respect to such subject matter.
6.13 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
6.14 Consent to Jurisdiction. Each party to this Agreement hereby
irrevocably and unconditionally agrees that any legal action, suit or proceeding
arising out of or relating to this Agreement or any agreements or transactions
contemplated hereby may be brought in any federal court of the Southern District
of New York or any state court located in New York County, State of New York,
and hereby irrevocably and unconditionally expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and hereby
irrevocably and unconditionally waives any claim (by way of motion, as a defense
or otherwise) of improper venue, that it is not subject personally to the
jurisdiction of such court, that such courts are an inconvenient forum or that
this Agreement or the subject matter may not be enforced in or by such court.
Each party hereby irrevocably submit to the exclusive jurisdiction of the
aforementioned courts in such action, suit or proceeding. Each party hereby
irrevocably and unconditionally consents to the service of process of any of the
aforementioned courts in any such action, suit or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth or provided for in Section 6.5 of this Agreement, such service to
become effective 10 days after such mailing. Nothing herein contained shall be
deemed to affect the right of any party to serve process in any manner permitted
by law or commence legal proceedings or otherwise proceed against any other
party in any other jurisdiction to enforce judgments obtained in any action,
suit or proceeding brought pursuant to this Section.
6.15 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
6.16 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement which is inconsistent with the rights granted to the Holders
in this Agreement.
6.17 Construction. The Company and the Initial Holder acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by the Company and the
Holders.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
CNL HOSPITALITY PROPERTIES, INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------
Name:Xxxxx X. Xxxxxx, Xx.
Title:Chairman and Chief Executive
Officer
FIVE ARROWS REALTY SECURITIES II L.L.C.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name:Xxxxxxx X. Xxxxxx
Title:Manager
-30-
Schedule 2.1(d)
Underwriters Choice
-------------------
AG Xxxxxxx
Xxxxx & Company Incorporated
BancBoston Xxxxxxxxx Xxxxxxxx Inc.
Bear Xxxxxxx & Co. Inc.
BT Alex. Xxxxx Incorporated
CS First Boston Corporation
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxxx Sachs & Co.
ING Barings Xxxxxx Xxxx L.L.C.
Xxxx Xxxxx
XX Xxxxxx Securities Inc.
Xxxxxx Brothers Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
Nationsbanc Xxxxxxxxxx Securities L.L.C.
Xxxxx Xxxxxx Incorporated
Xxxxxxx Xxxxx Barney Inc.
i
