EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
dated as of April 1, 1997
among
CAPSTAR HOTEL COMPANY
and
The Other Parties Listed on the Signature Pages Hereto
TABLE OF CONTENTS
Page No.
1. DEFINITIONS......................................................1
2. DEMAND REGISTRATION..............................................3
(a) REQUESTS FOR REGISTRATION..................................3
(b) FILING AND EFFECTIVENESS...................................3
(c) PRIORITY ON DEMAND REGISTRATION............................4
(d) POSTPONEMENT OF DEMAND REGISTRATION........................4
3. PIGGYBACK REGISTRATION...........................................4
(a) RIGHT TO PIGGYBACK.........................................4
(b) PRIORITY ON PIGGYBACK REGISTRATIONS........................5
4. RESTRICTIONS ON SALE BY THE HOLDERS..............................5
5. REGISTRATION PROCEDURES..........................................5
6. REGISTRATION EXPENSES...........................................11
7. INDEMNIFICATION.................................................12
(a) INDEMNIFICATION BY THE COMPANY............................12
(b) INDEMNIFICATION BY THE HOLDERS............................12
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS....................13
(d) CONTRIBUTION..............................................13
8. RULE 144........................................................14
9. UNDERWRITTEN REGISTRATIONS......................................14
10. MISCELLANEOUS...................................................15
(a) REMEDIES..................................................15
(b) NO INCONSISTENT AGREEMENTS................................15
(c) AMENDMENTS AND WAIVERS....................................15
(d) NOTICES...................................................15
(e) OWNER OF REGISTRABLE SECURITIES...........................16
(f) SUCCESSORS AND ASSIGNS....................................16
(g) COUNTERPARTS..............................................16
(h) HEADINGS..................................................16
(i) GOVERNING LAW.............................................16
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(j) SEVERABILITY..............................................16
(k) ENTIRE AGREEMENT..........................................17
(l) ATTORNEYS' FEES...........................................17
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and
entered into as of April 1, 1997, by and among CapStar Hotel Company, a Delaware
corporation (the "Company"), and the other parties signatory hereto (each a
"Holder" and, collectively, the "Holders").
RECITALS
WHEREAS, the Holders have entered into, or are equity owners in
entities that have entered into, agreements which contemplate, among other
things, the execution and delivery of this Agreement by the Company and the
Holders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. DEFINITIONS: For purposes of this Agreement, the following
terms have the following meanings when used herein with initial capital letters:
"ADVICE" shall have the meaning set forth in Section 5 hereof.
"COMMON STOCK" shall mean the Common Stock, par value $0.01 per
share, of the Company.
"DEMAND NOTICE" shall have the meaning set forth in Section 2
hereof.
"DEMAND REGISTRATION" shall have the meaning set forth in Section 2
hereof.
"HOLDER" or "HOLDERS" shall have the meaning set forth in the
Preamble.
"LOSSES" shall have the meaning set forth in Section 7 hereof.
"OPERATING PARTNERSHIP" shall mean CapStar Management Company, L.P.,
a Delaware limited partnership.
"PIGGYBACK REGISTRATION" shall have the meaning set forth in
Section 3 hereof.
"PROSPECTUS" shall mean the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of
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the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"REGISTRABLE SECURITIES" shall mean each of the Shares, until, in
the case of any such Share, (i) it is effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering it, (ii) it is saleable by the holder thereof pursuant to Rule 144(k),
or (iii) it is distributed to the public by the holder thereof pursuant to Rule
144.
"REGISTRATION EXPENSES" shall have the meaning set forth in Section
6 hereof.
"REGISTRATION STATEMENT" shall mean any registration statement of
the Company under the Securities Act that covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement
(including post-effective amendments), all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"RULE 144" shall mean Rule 144 promulgated by the SEC under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARES" shall mean all shares of Common Stock issued or to be
issued to any Holder upon the redemption of the Units which were issued to the
Holders pursuant to the Acquisition Agreement, dated February 13, 1997, among
the Company and the other parties identified on the signature pages thereof.
"SPECIAL COUNSEL" shall have the meaning set forth in Section 6(b)
hereof.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" shall mean a
sale of securities of the Company to an underwriter for reoffering to the public
pursuant to a Registration Statement filed by the Company with the SEC under the
Securities Act.
"UNITS" shall mean units representing limited partnership ownership
interests in the Operating Partnership, which interests may be redeemed, under
certain circumstances for Shares.
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2. DEMAND REGISTRATION.
(a) REQUESTS FOR REGISTRATION. At any time and from time to
time after September 1, 1997, the Holders will have the right, exercisable by
written notice delivered to the Company (a "Demand Notice"), to require the
Company to register (a "Demand Registration") Registrable Securities under and
in accordance with the provisions of the Securities Act; PROVIDED, HOWEVER, that
(i) no such Demand Registration may be required unless the total amount of
Registrable Securities sought to be included in such Demand Registration has a
market value of at least $10 million (calculated based on the closing sale price
of the Common Stock on the New York Stock Exchange on the business day
immediately preceding the date of the Demand Notice) as of the time a Demand
Notice is given (unless such registration request is for all remaining
Registrable Securities) and (ii) no Demand Notice may be given prior to six
months after the effective date of (x) an immediately preceding Demand
Registration or (y) an immediately preceding "demand registration" of Common
Stock (the "Seller Securities") of a stockholder other than a Holder (a
"Seller") pursuant to a registration rights agreement between such Seller and
the Company. Notwithstanding the foregoing, a good faith decision by a Holder to
withdraw Registrable Securities from registration will not affect the Company's
obligations hereunder even if the amount remaining to be registered has a market
value of less than $10 million (calculated as aforesaid). Subject to the
foregoing, there shall be no limit on the number of Demand Registrations that
may be required pursuant to this Agreement.
(b) FILING AND EFFECTIVENESS. The Company will file a
Registration Statement relating to any Demand Registration as soon as possible
after the date on which the Demand Notice is given (but in no event later than
60 calendar days after receipt of such Demand Notice) and will use all
reasonable efforts to cause the same to be declared effective by the SEC within
120 calendar days of the date on which the Holders first give the Demand Notice
required by Section 2(a) hereof, as the case may be, with respect to such Demand
Registration. All requests made pursuant to this Section 2 will specify the
number of Registrable Securities to be registered and will also specify the
intended methods of disposition thereof.
If any Demand Registration is requested to be effected as a "shelf"
registration by the Holders demanding such Demand Registration, the Company will
keep the Registration Statement filed in respect thereof effective for a period
of up to six months from the date on which the SEC declares such Registration
Statement effective (subject to extension pursuant to Sections 4 and 5 hereof)
or such shorter period that will terminate when all Registrable Securities
covered by such Registration Statement have been sold pursuant to such
Registration Statement.
Within ten calendar days after receipt of such Demand Notice, the
Company will serve written notice thereof (the "Notice") to all other Holders
and will, subject to the provisions of Section 2(d) hereof, include in such
registration all
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Registrable Securities with respect to which the Company receives written
requests for inclusion therein within 20 calendar days after the receipt of the
Notice by the applicable Holder. The Holders will be permitted to withdraw in
good faith all or part of the Registrable Securities from a Demand Registration
at any time prior to the effective date of such Demand Registration, in which
event the Company will promptly amend or, if applicable, withdraw the related
Registration Statement.
(c) PRIORITY ON DEMAND REGISTRATION. If Registrable Securities
are to be registered pursuant to a Demand Registration, the Company shall
provide written notice to the other Holders and will permit all such Holders to
be included in the Demand Registration to include any or all Registrable
Securities held by such Holders in such Demand Registration. Notwithstanding the
foregoing, if the managing underwriter or underwriters of an underwritten
offering to which such Demand Registration relates advises the Holders that the
total amount of Registrable Securities that such Holders intend to include in
such Demand Registration is in the aggregate such as to materially and adversely
affect the success of such offering, then the number of Registrable Securities
to be included in such Demand Registration will, if necessary, be reduced and
there will be included in such underwritten offering the number of Registrable
Securities that, in the opinion of such managing underwriter or underwriters,
can be sold without materially and adversely affecting the success of such
offering, allocated PRO RATA among the Holders on the basis of the amount of
Registrable Securities requested to be included therein by each such Holder.
(d) POSTPONEMENT OF DEMAND REGISTRATION. The Company will be
entitled to postpone the filing period of any Demand Registration for a
reasonable period of time not in excess of 90 calendar days, if the Company
determines, in the good faith exercise of the business judgment of its Board of
Directors, that such registration and offering could materially interfere with
BONA FIDE financing, acquisition, corporate reorganization or any other
corporate development involving the Company or would require disclosure of
information, the premature disclosure of which could materially and adversely
affect the Company. If the Company postpones the filing of a Registration
Statement, it will promptly notify the Holders in writing when the events or
circumstances permitting such postponement have ended.
3. PIGGYBACK REGISTRATION.
(a) RIGHT TO PIGGYBACK. If at any time the Company proposes to
file a registration statement under the Securities Act with respect to a primary
offering, or a secondary offering on behalf of a Seller, of any class of equity
securities (or securities convertible into, exchangeable for or exercisable for
a class of equity securities of the Company) by the Company (other than a
registration statement (i) on Form X-0, X-0 or any successor form thereto, (ii)
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders or (iii) filed solely in connection with
an offering made solely to
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employees of the Company), then the Company will give written notice of such
proposed filing to the Holders at least 30 calendar days before the anticipated
filing date. Such notice will offer such Holders the opportunity to register
such amount of Registrable Securities as each such Holder may request (a
"Piggyback Registration"), including as a shelf registration in the manner
contemplated by Section 2(b) hereof. Subject to Section 3(b) hereof, the Company
will include in each such Piggyback Registration all Registrable Securities with
respect to which the Company has received written requests for inclusion
therein. The Holders will be permitted to withdraw all or part of the
Registrable Securities from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. The Company will
cause the managing underwriter or underwriters of a proposed underwritten
offering on behalf of the Company to permit Holders requested to be included in
the registration for such offering to include therein all such Registrable
Securities requested to be so included on the same terms and conditions as any
securities of the Company included therein or, at the Holders' option, on the
same terms and conditions as any Seller Securities included therein by a Seller
pursuant to a "piggyback registration" right granted under a registration rights
agreement between such Seller and the Company included therein. Notwithstanding
the foregoing, if the managing underwriter or underwriters of such offering
deliver an opinion to the Holders to the effect that the total amount of
securities which such Holders and all Sellers propose to include in such
offering (when added to the securities which the Company is selling) is such as
to materially and adversely affect the success of such offering, then the amount
of securities to be included therein for the account of the Holders (allocated
PRO RATA among such Holders on the basis of the Registrable Securities requested
to be included therein by each such Holder) will be reduced (to zero if
necessary) to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter or underwriters;
PROVIDED, that if any Seller Securities are also sought to be included in such
offering, no reduction of Registrable Securities that the Holders seek to
include in such offering shall be made unless such Seller Securities and
Registrable Securities are reduced PRO RATA. As between Seller Securities, on
the one hand, and Registrable Securities, on the other hand, pro rata reductions
shall be made on the basis of the securities requested to be included in the
relevant offering by the Sellers and the Holders, respectively. The managing
underwriter or underwriters, applying the same standards set forth above, may
also exclude entirely from such offering all Registrable Securities proposed to
be included in such offering to the extent the Registrable Securities are not of
the same class as securities of the Company included in such offering.
4. RESTRICTIONS ON SALE BY THE HOLDERS. Each Holder agrees, if such
Holder is so requested (pursuant to a timely written notice) by the managing
underwriter or underwriters in an underwritten offering of any class of
securities that constitutes Registrable Securities, not to effect any public
sale or distribution of any
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of the Company's securities of such class (except as part of such underwritten
offering), including a sale pursuant to Rule 144, during the 10-calendar day
period prior to, and during the 90-calendar day period beginning on, the closing
date of such underwritten offering.
5. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations pursuant to Sections 2 and 3 hereof, the Company will
effect such registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible, in each case, to
the extent applicable:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and remain effective
as provided herein; PROVIDED, HOWEVER, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto (including
documents that would be incorporated or deemed to be incorporated therein by
reference) the Company will furnish to the Holders whose Registrable Securities
are covered by such Registration Statement, the Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to review of such Holders, the Special Counsel and
such underwriters, and the Company will not file any such Registration Statement
or amendment thereto or any Prospectus or any supplement thereto (including such
documents which, upon filing, would or would be incorporated or deemed to be
incorporated by reference therein) to which the Holders of a majority of the
Registrable Securities covered by such Registration Statement, the Special
Counsel or the managing underwriter, if any, shall reasonably object on a timely
basis.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 2; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
as so amended or to such Prospectus as so supplemented.
(c) Notify the selling Holders, the Special Counsel and the
managing underwriters, if any, promptly, and (if requested by any such person)
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any other federal or state
governmental authority for
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amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contained in any agreement contemplated by Section 5(m) hereof
(including any underwriting agreement) cease to be true and correct, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the occurrence of any event which makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in a
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, in the case of the
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction, at the
earliest possible moment.
(e) If requested by the managing underwriters, if any, or the
Holders of a majority of the Registrable Securities being registered, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such Holder agree should
be included therein as may be required by applicable law and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; PROVIDED, HOWEVER, that the Company will not be required to take any
actions under this Section 5(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.
(f) Furnish to each selling Holder, the Special Counsel and
each managing underwriter, if any, without charge, at least one conformed copy
of the Registration Statement and any post-effective amendment thereto,
including financial statements (but excluding schedules, all documents
incorporated or deemed incorporated therein by reference and all exhibits,
unless requested in writing by such selling Holder, counsel or underwriter).
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(g) Deliver to each selling Holder, the Special Counsel and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto as such persons may request;
and the Company hereby consents to the use of such Prospectus or each amendment
or supplement thereto by each of the selling Holders and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as any seller or underwriter
reasonably requests in writing; use all reasonable efforts to keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdiction of the Registrable Securities covered by the applicable
Registration Statement; PROVIDED, HOWEVER, that the Company will not be required
to (i) qualify general to do business in any jurisdiction in which it is not
then so qualified or (ii) take any action that would subject it to general
service of process in any such jurisdiction in which it is not then so subject.
(i) Cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriters, if any, shall request at least two business days
prior to any sale of Registrable Securities to the underwriters.
(j) Use all reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States except as may be required solely as a consequence of the nature of
such selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section
5(c)(vi) or 5(c)(vii) hereof, prepare a supplement or post-effective amendment
to each Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
being sold
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thereunder, such Prospectus will not contain 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 light of the circumstances under which they
were made, not misleading.
(l) Use all reasonable efforts to cause all Registrable
Securities covered by such Registration Statement to be listed on each
securities exchange, if any, on which similar securities issued by the Company
are then listed.
(m) Enter into such agreements (including, in the event of an
underwritten offering, an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other actions in
connection therewith (including those requested by the selling Holders, in the
event of an underwritten offering, those requested by the managing underwriters)
in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Holders and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the Holders of a majority of the Registrable
Securities being sold) addressed to such selling Holder and each of the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such selling Holders and underwriters, including without limitation
the matters referred to in Section 5(m)(i) hereof; (iii) use its best efforts to
obtain "comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed to each selling Holder
and each of the underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "comfort" letters in
connection with underwritten offerings; and (iv) deliver such documents and
certificates as may be requested by the Holders of a majority of the Registrable
Securities being sold, the Special Counsel and the managing underwriters, if
any, to evidence the continued validity of the representations and warranties of
the Company and its subsidiaries made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement or similar agreement entered into by the Company. The foregoing
actions will be taken in connection with each closing under such underwriting or
similar agreement as and to the extent required thereunder.
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(n) Make available for inspection by a representative of the
selling Holders, any underwriter participating in any disposition of Registrable
Securities, and any attorney or accountant retained by such selling Holders or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the officers,
directors and employees of the Company and its subsidiaries to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement; PROVIDED,
HOWEVER, that any records, information or documents that are designated by the
Company in writing as confidential at the time of delivery of such records,
information or documents will be kept confidential by such persons unless (i)
such records, information or documents are or come to be in the public domain or
otherwise publicly available, (ii) disclosure of such records, information or
documents is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, or (iii) disclosure of such
records, information or documents, in the opinion of counsel to such person, is
otherwise required by law (including, without limitation, pursuant to the
requirements of the Securities Act).
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 calendar days after the end of any 12-month period (or 90 calendar days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten offering,
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company, after the effective date
of a Registration Statement, which statements shall cover said 12-month period.
(p) In connection with any underwritten offering, cause
appropriate members of its management to cooperate and participate on a
reasonable basis in the underwriters' "road show" conferences related to such
offering.
The Company may require each selling Holder as to which any
registration is being effected to furnish to the Company such information
regarding the distribution of such Registrable Securities as the Company may,
from time to time, reasonably request in writing and the Company may exclude
from such registration the Registrable Securities of any selling Holder who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Holder will be deemed to have agreed by virtue of its
acquisition of such Registrable Securities that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in Section
5(c)(ii), 5(c)(iii), 5(c)(v), 5(c)(vi) or 5(c)(vii) hereof, such Holder will
forthwith discontinue disposition of such
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Registrable Securities covered by such Registration Statement or Prospectus
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(k) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus. In the event the Company shall give any such notice, the time period
prescribed in Section 2(a) hereof will be extended by the number of days during
the time period from and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) hereof or (y) the Advice.
6. REGISTRATION EXPENSES.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company will be borne by the Company
whether or not any of the Registration Statements become effective. Such fees
and expenses will include, without limitation, (i) all registration and filing
fees (including without limitation fees and expenses (x) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.
and (y) of compliance with securities or "blue sky" laws (including without
limitation fees and disbursements of counsel for the underwriters or Holders in
connection with "blue sky" qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the managing underwriters, if any, or
Holders of a majority of the Registrable Securities being sold may designate)),
(ii) printing expenses (including without limitation expenses of printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the Holders of a majority of the Registrable
Securities included in any Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company
and the Special Counsel for the selling Holders, (v) fees and disbursements of
all independent certified public accountants referred to in Section 5(m)(iii)
hereof (including the expenses of any special audit and "comfort" letters
required by or incident to such performance), (vi) any fees and expenses of any
"qualified independent underwriter" or other independent appraiser participating
in an offering pursuant to Section 3 of Schedule E to the By-laws of the
National Association of Securities Dealers, Inc., (vii) Securities Act liability
insurance if the Company so desires such insurance, and (viii) fees and expenses
of all other persons retained by the Company. In addition, the Company will pay
its internal expenses (including without limitation all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange on which
similar securities issued by the Company are then listed and the fees and
expenses of any person, including special
12
experts, retained by the Company. In no event, however, will the Company be
responsible for any underwriting discount or selling commission with respect to
any sale of Registrable Securities pursuant to this Agreement.
(b) In connection with any Demand Registration or Piggyback
Registration hereunder, the Company will reimburse the Holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (the "Special Counsel"),
together with appropriate local counsel, chosen by the Holders of a majority of
the Registrable Securities being registered.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company will, without
limitation as to time, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder of Registrable Securities registered pursuant to
this Agreement, the officers, directors, partners, managers, agents and
employees of each of them, each person who controls such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, managers, agents and employees of any
such controlling person, from and against all losses, claims, damages,
liabilities, costs (including without limitation the costs of investigation and
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of Prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are based solely upon
information furnished in writing to the Company by such Holder expressly for use
therein; PROVIDED, HOWEVER, that the Company will not be liable to any Holder to
the extent that any such Losses arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if either (A) (i) such Holder failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such Holder to the person asserting the claim from
which such Losses arise and (ii) the Prospectus would have completely corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission; or (B) such untrue statement or alleged untrue statement, omission or
alleged omission is completely corrected in an amendment or supplement to the
Prospectus previously furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, and such Holder thereafter fails
to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.
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(b) INDEMNIFICATION BY THE HOLDERS. In connection with any
Registration Statement in which a Holder is participating, such Holder will
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus and
will indemnify, to the fullest extent permitted by law, the Company, its
directors and officers, agents and employees, each person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling persons, from and against all Losses arising out of or based upon
any untrue statement of a material fact contained in any Registration Statement,
Prospectus or preliminary prospectus or arising out of or based upon any
omission of 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 omission is contained in any information so
furnished in writing by such Holder to the Company expressly for use in such
Registration Statement or Prospectus and was relied upon by the Company in the
preparation of such Registration Statement, Prospectus or preliminary
prospectus. In no event will the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any person
shall become entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any action or proceeding with respect to which such indemnified
party seeks indemnification or contribution pursuant hereto; PROVIDED, HOWEVER,
that the failure to so notify the indemnifying party will not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced materially by such failure. All fees
and expenses (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) will be paid to
the indemnified party, as incurred, within five calendar days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). The indemnifying party will not consent to entry of any judgment or
enter into any settlement or otherwise seek to terminate any action or
proceeding in which any indemnified party is or could be a party and as to which
indemnification or contribution could be sought by such indemnified party under
this Section 7, unless such judgment, settlement or other termination includes
as an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance satisfactory to the
indemnified party, from all liability in respect of such claim or litigation for
which such indemnified party would be entitled to indemnification hereunder.
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(d) CONTRIBUTION. If the indemnification provided for in this
Section 7 is unavailable to an indemnified party under Section 7(a) or 7(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, will, jointly and severally, contribute to the amount
paid or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or indemnifying parties, on the one hand, and such indemnified party, on
the other hand, in connection with the actions, statement or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party or indemnifying parties, on the
one hand, and such indemnified party, on the other hand, will 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 of a material fact, has been taken or made by, or related to the
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, statement or omission. The amount paid or
payable by a party as a result of any Losses will be deemed to include any legal
or other fees or expenses incurred by such party in connection with any action
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 7(d), an indemnifying party that
is a selling Holder will not be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceed the amount of any damages which such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder will be in addition to any liability the Company may
otherwise have hereunder or otherwise. The provisions of this Section 7 will
survive so long as Registrable Securities remain outstanding, notwithstanding
any transfer of the Registrable Securities by any Holder thereof or any
termination of this Agreement.
8. RULE 144. The Company will file the reports required to be filed
by it under the Securities Act and the Exchange Act, and will cooperate with any
Holder (including without limitation by making such representations as any such
Holder may reasonably request), all to the extent required from time to time to
enable
15
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitations of the exemptions provided by Rule 144.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such filing requirements.
Notwithstanding the foregoing, nothing in this Section 8 will be deemed to
require the Company to register any of its securities under any section of the
Exchange Act.
9. UNDERWRITTEN REGISTRATIONS. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the managing underwriter that will administer the offering will be selected by
the Holders of a majority of the Registrable Securities included in the Demand
Notice so long as such managing underwriter shall be reasonably satisfactory to
the Company; PROVIDED, HOWEVER, that the Company shall have the right to select
any co-managing underwriters so long as such co-managing underwriters shall be
reasonably satisfactory to the such Holders. If any Piggyback Registration is an
underwritten offering, the Company will have the right to select the managing
underwriters to administer the offering.
10. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specified
performance in respect of such breach, it will waive the defense that a remedy
at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company has not, as of the
date hereof, and will not, on or after the date hereof, enter into any agreement
with respect to its securities which is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of 90% of the then-outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of the Holders whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least 75% of the Registrable Securities being sold by such
Holders; PROVIDED, HOWEVER, that the
16
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(d) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing and will be deemed given (i)
when made, if made by hand delivery, (ii) upon confirmation, if made by
telecopier, or (iii) one business day after being deposited with a reputable
next-day courier, to the parties as follows:
(x) if to the Company, initially at 0000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Telecopier (000) 000-0000, Attention:
President, and thereafter at such other address, notice of which is given to the
Holders in accordance with the provisions of this Section 10(d); and
(y) if to any Holder, at the most current address given
by such Holder to the Company in accordance with the provisions of this
Section 10(e).
(e) OWNER OF REGISTRABLE SECURITIES. The Company will
maintain, or will cause its registrar and transfer agent to maintain, a stock
book with respect to the Common Stock, in which all transfers of Registrable
Securities of which the Company has received notice will be recorded. The
Company may deem and treat the person in whose name Registrable Securities are
registered in the stock book of the Company as the owner thereof for all
purposes, including without limitation the giving of notices under this
Agreement.
(f) SUCCESSORS AND ASSIGNS. This Agreement will inure to the
benefit of and be binding upon the successors and assigns of each of the parties
(including any pledgee acquiring securities by foreclosure) and will inure to
the benefit of each Holder. Notwithstanding the foregoing, no transferee will
have any of the rights granted under this Agreement (i) until such transferee
shall have acknowledged its rights and obligations hereunder by a signed written
statement of such transferee's acceptance of such rights and obligations, (ii)
if the transferor notifies the Company in writing on or prior to such transfer
that the transferee shall not have such rights, or (iii) if such transferee was
not a party to this Agreement on the date hereof (or an affiliate of a party
hereto) and acquired Registrable Securities in open-market purchases or pursuant
to an underwritten public offering.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
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(h) HEADINGS. The headings in this Agreement are for
convenience of reference only and will not limit or otherwise affect the meaning
hereof.
(i) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(j) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein will remain in full force and effect
and will in no way be affected, impaired or invalidated, and the parties hereto
will use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(k) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings among the parties with respect to such
registration rights.
(l) ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the court,
will be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(m) TERMINATION. This Agreement shall terminate, and thereby
become null and void, on the tenth anniversary of the date hereof; provided,
however, that the provisions of Section 7 and Sections 10(i) and (l) shall
survive the termination of this Agreement.
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IN WITNESS HEREOF, the parties have executed a counterpart signature
page of this Agreement as of the date first above written.
CAPSTAR HOTEL COMPANY
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