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EXHIBIT 10.33
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT, dated as of October 15, 1997,
among SUNSTONE HOTEL INVESTORS, INC. ("Sunstone"), a Maryland corporation,
XXXXXXXXX REAL ESTATE FUND I, L.P., a Delaware limited partnership ("Xxxxxxxxx
Fund") and XXXXXXXXX CO-INVESTMENT PARTNERSHIP I, L.P., a Delaware limited
partnership ("Xxxxxxxxx Co-Investment Fund" and collectively with Xxxxxxxxx
Fund, the "Funds").
RECITALS
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WHEREAS, pursuant to a Stock Purchase Agreement, dated as of
August 4, 1997 (the "Stock Purchase Agreement"), among Sunstone, Xxxxxxxxx Fund,
Xxxxxxxxx Co-Investment Fund and Xxxxxx Realty Corporation ("Xxxxxx"), Sunstone
will purchase 100% of the outstanding common stock of Xxxxxx from the Funds on
the date hereof (the "Stock Purchase"). In consideration for the common stock of
Xxxxxx, the Funds shall receive, among other things, (i) 2,284,262 shares of
common stock, par value $0.01 per share, of Sunstone (the "Common Stock") and
(ii) 250,000 shares of 7.9% Series A Cumulative Convertible Preferred Stock, par
value $0.01 per share, of Sunstone (the "Convertible Preferred Stock") on the
terms and conditions set forth in the Stock Purchase Agreement; and
WHEREAS, it is a condition to the obligations of each of Sunstone
and the Funds to consummate the transactions contemplated by the Stock Purchase
Agreement that this Registration Rights Agreement be executed and delivered by
Sunstone and the Funds.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements herein contained the parties hereto agree as follows:
AGREEMENT
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1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following respective meanings:
"Common Stock" shall mean the common stock, par value $0.01 per
share, of Sunstone and its successors.
"Demand Party" shall mean (a) Xxxxxxxxx Fund, (b) Xxxxxxxxx
Co-Investment Fund or (c) any other Holder or Holders, including,
without limitation, any present or
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future general or limited partner of either of the Funds, or any general
or limited partner of any general or limited partner thereof, that may
become an assignee of such Funds' rights hereunder; provided that to be
a Demand Party under clause (c), a Holder or Holders must either
individually or in the aggregate with all other Holders with whom it is
acting together to demand registration own at least 500,000 shares of
Registrable Securities.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
of the SEC thereunder, all as the same shall be in effect from time to
time, and a reference to a particular section thereof shall be deemed to
include a reference to the comparable section, if any, of any such
similar federal statute.
"Holder" shall mean each of the Funds, and any other holder of
Registrable Securities (including any direct or indirect transferees of
the Funds) who agree in writing to be bound by the provisions of this
Agreement.
"Initial Lock-Up Period" shall have the meaning set forth in the
Stock Purchase Agreement.
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or any
department or agency thereof or other entity of whatever nature.
"Registrable Securities" shall mean (1) the Common Stock issued
to the Funds pursuant to the Stock Purchase Agreement, (2) the Common
Stock issued or issuable upon conversion of the Convertible Preferred
Stock issued to the Funds pursuant to the Stock Purchase Agreement, and
(3) any Common Stock which may be issued or distributed by way of stock
dividend or stock split or other distribution, recapitalization or
reclassification with respect to, or in exchange for, or in replacement
of, any other Registrable Securities. As to any particular Registrable
Securities, once issued, such Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to
the sale by the Holder of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of
in accordance with such registration statement, (ii) such securities
shall have been distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, (iii) such securities
shall have been otherwise transferred, new certificates for such
securities not bearing a legend restricting further transfer shall have
been delivered by Sunstone and subsequent disposition of such securities
shall not require registration or qualification of such securities under
the Securities Act or any state securities or blue sky law then in
force, or (iv) 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, including, without
limitation, (i) all SEC and stock
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exchange or National Association of Securities Dealers, Inc. (the
"NASD") registration and filing fees (including, if applicable, the fees
and expenses of any "qualified independent underwriter," as such term is
defined in Schedule E to the By-laws of the NASD, and of its counsel),
(ii) all fees and expenses of complying with securities or blue sky laws
(including the reasonable fees and disbursements of counsel for the
underwriters, if any, in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery
expenses, (iv) all fees and expenses incurred in connection with the
listing of the Registrable Securities on the New York Stock Exchange or
on any securities exchange pursuant to clause (viii) of Section 5, (v)
the fees and disbursements of one counsel for Sunstone and of its
independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements
of one counsel selected pursuant to Section 8 hereof by the Holders of
the Registrable Securities being registered to represent such Holders in
connection with each such registration, (vii) any fees and disbursements
of underwriters, if any, customarily paid by the issuers or sellers of
securities, including liability insurance if Sunstone so desires or if
the underwriters so require, and the reasonable fees and expenses of any
special experts retained in connection with the requested registration,
but excluding underwriting discounts and commissions, transfer taxes,
and (viii) other reasonable out-of-pocket expenses of Holders (provided
that such expenses shall not include expenses of counsel other than
those provided for in clause (vi) above).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of
the SEC thereunder, all as the same shall be in effect from time to
time, and a reference to a particular section thereof shall be deemed to
include a reference to the comparable section, if any, of any such
similar federal statute.
"SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
2. Incidental Registrations. (a) Right to Include Common or
Common Equivalent Registrable Securities. If Sunstone at any time after the
Initial Lock-Up Period proposes to register its Common Stock under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), for sale for its own account,
in a manner which would permit registration of Registrable Securities for sale
to the public under the Securities Act, it will, at each such time, give prompt
written notice to all Holders of Registrable Securities of its intention to do
so and of such Holders' rights under this Section 2. Upon the written request of
any such Holder made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder), Sunstone will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities which Sunstone has been
so requested to register by the Holders thereof, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered;
provided that (i) if, at any time after giving written notice of its intention
to register
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any securities and prior to the effective date of the registration statement
filed in connection with such registration, Sunstone shall determine for any
reason not to proceed with the proposed registration of the securities to be
sold by it, Sunstone may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, 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 in connection therewith), and (ii) if such registration involves an
underwritten offering, all Holders of Registrable Securities requesting to be
included in Sunstone's registration must sell their Registrable Securities to
the underwriters selected by Sunstone on the same terms and conditions as apply
to Sunstone, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings; and provided further that under no
circumstances will the scope of any indemnification or contribution obligations
of any Holder be broader than the provisions of Section 6(b) hereof nor will the
maximum liability of the Holders be greater than that specified in Section 6
hereof. If a registration requested pursuant to this Section 2(a) involves an
underwritten public offering, any Holder of Registrable Securities requesting to
be included in such registration may elect, in writing within seven (7) business
days prior to the effective date of the registration statement filed in
connection with such registration, not to register such securities in connection
with such registration. Nothing in this Section 2(a) shall operate to limit the
right of any Holder to request the registration of Common Stock issuable upon
conversion or exercise of convertible securities held by such Holder
notwithstanding the fact that at the time of request such Holder holds only
convertible securities.
(b) Expenses. Sunstone will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.
(c) Priority in Incidental Registrations. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter advises Sunstone in writing that, in its opinion, the number of
shares of Common Stock requested to be included in such registration exceeds the
number which can be sold in such offering, so as to be likely to have an adverse
effect on the price, timing or distribution of the Common Stock offered in such
offering as contemplated by Sunstone, then Sunstone will include in such
registration (i) first, 100% of the securities Sunstone proposes to sell and
(ii) second, the number of Registrable Securities requested to be included in
such registration which, in the opinion of such managing underwriter, can be
sold without having the adverse effect referred to above, such amount to be
allocated pro rata among all requesting Holders on the basis of the relative
number of shares of Registrable Securities then held by each such Holder
(provided that any shares thereby allocated to any such Holder that exceed such
Holder's request will be reallocated among the remaining requesting Holders in
like manner).
(d) Limitations on Shelf Offerings. Notwithstanding the
foregoing, in the event that Registrable Securities have been included in a
registration effected by Sunstone pursuant to Rule 415 under the Securities Act
in accordance with this Section 2, the Holders agree that, without the prior
written consent of Sunstone, they will not effect more than one sale of
Registrable Securities pursuant to such registration in any 30-day period.
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3. Registration on Request. (a) Request by the Demand Party. At
any time after the Initial Lock-Up Period, upon the written request of the
Demand Party requesting that Sunstone effect the registration under the
Securities Act of all or part of such Demand Party's Registrable Securities and
specifying the amount and intended method of disposition thereof, Sunstone will
promptly give written notice of such requested registration to all other Holders
of such Registrable Securities, and thereupon will, as expeditiously as
possible, use its best efforts to effect the registration under the Securities
Act of:
(i) such Registrable Securities (including, if such request
relates to a security which is convertible into shares of Common Stock,
the shares of Common Stock issuable upon such conversion) which Sunstone
has been so requested to register by the Demand Party; and
(ii) all other Registrable Securities of the same class or series
as are to be registered at the request of a Demand Party and which
Sunstone has been requested to register by any other Holder thereof by
written request given to Sunstone within 15 days after the giving of
such written notice by Sunstone (which request shall specify the amount
and intended method of disposition of such Registrable Securities),
all to the extent necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to be
registered; provided, that with respect to any Demand Party, Sunstone shall not
be obligated to effect any registration of Registrable Securities under this
Section 3(a) unless such Demand Party requests that Sunstone register at least
20% of the total number of Registrable Securities then outstanding (or such
lesser percent if the anticipated aggregate offering price, net of underwriting
discounts and commissions would exceed $10,000,000); and provided, further,
that, Sunstone shall not be obligated to file a registration statement relating
to any registration request under this Section 3(a) (x) within a period of six
months after the effective date of any other registration statement relating to
any registration request under this Section 3(a) or relating to any registration
effected under Section 2 in which Registrable Securities were included in such
registration, (y) if with respect thereto the managing underwriter, the SEC, the
Securities Act or the rules and regulations thereunder, or the form on which the
registration statement is to be filed, would require the completion of an audit
other than the regular audit conducted by Sunstone at the end of its fiscal
year, in which case the filing may be delayed until the completion of such
regular audit (unless the Holders of the Registrable Securities to be registered
agree to pay the expenses of Sunstone in connection with such an audit other
than the regular audit) or (z) subject to Section 9(j)(ii), during any period of
not more than 90 days that the Company, its executive officers or directors are
precluded from selling shares of Common Stock as the result of any lock-up
restrictions imposed by any underwriter in a previous primary offering, unless
such underwriters agree otherwise. Nothing in this Section 3 shall operate to
limit the right of a Holder to request the registration of Common Stock issuable
upon conversion or exercise of convertible securities held by such Holder
notwithstanding the fact that at the time of request such Holder holds only
convertible securities.
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(b) Notwithstanding the foregoing provisions of Section 3(a),
Sunstone shall not be obligated to effect more than two demand registrations
pursuant to requests made by the Demand Holders pursuant to this Section 3. No
Holder's rights under this Section 3 shall be affected by a registration
pursuant to Section 2.
(c) Registration Statement Form. If any registration requested
pursuant to this Section 3, which is proposed by Sunstone to be effected by the
filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement), shall be in connection with an underwritten
public offering, and if the managing underwriter shall advise Sunstone in
writing that, in its opinion, the inclusion of additional information is of
material importance to the success of such proposed offering, then such
registration shall include such other information.
(d) Expenses. Sunstone will pay all Registration Expenses in
connection with each of the registrations of each class or series of Registrable
Securities effected pursuant to this Section 3.
(e) Effective Registration Statement. A registration requested
pursuant to this Section 3 will not be deemed to have been effected unless the
applicable registration statement has become effective; provided that if, prior
to the end of any applicable distribution period as defined in the Securities
Act, the offering of Registrable Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected with respect to any selling Holder whose Registrable
Securities that are registered have not been fully distributed.
(f) Selection of Underwriters. If a requested registration
pursuant to this Section 3 involves an underwritten offering, the Holders of a
majority of the shares of Registrable Securities which are held by Holders and
which Sunstone has been requested to register shall have the right to select the
investment banker or bankers and managers to administer the offering; provided,
however, that such investment banker or bankers and managers shall be reasonably
satisfactory to Sunstone.
(g) Priority in Requested Registrations. If a requested
registration pursuant to this Section 3 involves an underwritten offering and
the managing underwriter advises Sunstone in writing that, in its opinion, the
number of shares of Common Stock requested to be included in such registration
(including securities of Sunstone which are not Registrable Securities) exceeds
the number which can be sold in such offering, Sunstone will include in such
registration only the Registrable Securities requested to be included in such
registration. In the event that the number of Registrable Securities requested
to be included in such registration exceeds the number which, in the opinion of
such managing underwriter, can be sold, the number of such Registrable
Securities to be included in such registration shall be allocated pro rata among
all requesting Holders on the basis of the relative number of shares of
Registrable Securities then held by each such Holder; provided that any shares
thereby allocated to any such Holder that exceed such Holder's request shall be
reallocated among the remaining requesting Holders in like manner;
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provided, further that if any such exclusion causes less than 90% of the number
of shares of Registrable Securities as to which registration was requested by
the Holders to be registered, such registration shall not constitute a request
for registration under Section 3(b). In the event that the number of Registrable
Securities requested to be included in such registration is less than the number
which, in the opinion of the managing underwriter, can be sold, Sunstone may
include in such registration up to the number of shares of Common Stock that, in
the opinion of the underwriter, can be sold.
(h) Additional Rights. If Sunstone at any time grants to any
other holders of Common Stock, or Common Stock issuable upon conversion,
exchange or exercise of a security, any rights to request Sunstone to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 3,
the terms of this Section 3 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
The provisions of this Section 3(h) will not be applicable to the registration
rights of the limited partners of Sunstone Hotel Investors, L.P. permitting them
to require Sunstone to register the shares of Common Stock into which their
partnership units are exchangeable.
4. Stock Purchase Agreement Transfer Restrictions.
Notwithstanding anything in this Agreement to the contrary, any sales of
Registrable Securities shall be subject to the conditions set forth in Section
4.10 of the Stock Purchase Agreement.
5. Registration Procedures. If and whenever Sunstone is required
to use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, Sunstone
will, as expeditiously as possible:
(a) prepare and, in any event within 120 days after the
end of the period within which a request for registration may be given
to Sunstone, file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such
registration statement to become effective; provided, however, that
Sunstone may discontinue any registration of its securities which is
being effected pursuant to Section 2 at any time prior to the effective
date of the registration statement relating thereto or in accordance
with Section 3(b);
(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 to keep such registration
statement effective during the distribution period, in the case of a
registration effected pursuant to Section 2, or for a period not in
excess of 270 days (or such lesser period ending on the day after the
distribution of all registered securities is complete) in the case of a
registration effected pursuant to Section 3, and to comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement;
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provided that before filing a registration statement or prospectus
relating to the sale of Registrable Securities, or any amendments or
supplements thereto, Sunstone will furnish to counsel selected pursuant
to Section 8 hereof by the Holders of the Registrable Securities covered
by such registration statement to represent such Holders, copies of all
documents proposed to be filed, which documents will be subject to the
review of such counsel within five (5) days after receipt thereof, and
Sunstone will give reasonable consideration in good faith to any
comments of such counsel;
(c) furnish to each seller of such Registrable Securities
such number of copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits
filed therewith, including any documents incorporated by reference),
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and summary
prospectus), in conformity with the requirements of the Securities Act,
and such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities by such
seller;
(d) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that Sunstone shall not for any
such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements
of this clause (iv), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to cause such Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(f) notify promptly each seller of any such Registrable
Securities covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act within the appropriate period mentioned in clause (b) of
this Section 5, of Sunstone's becoming aware that the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing,
and at the request of any such seller, prepare and furnish to such
seller a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated
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therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement,
if required, an earnings statement which shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations
promulgated thereunder;
(h) (i) use its best efforts to list such Registrable
Securities on any securities exchange on which the Common Stock is then
listed if such Registrable Securities are not already so listed and if
such listing is then permitted under the rules of such exchange; and
(ii) use its best efforts to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(i) enter into such customary agreements (including an
underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other persons in
addition to, or in substitution for the provisions of Section 6 hereof,
and take such other actions as sellers of a majority of shares of such
Registrable Securities or the underwriters, if any, reasonably requested
in order to expedite or facilitate the disposition of such Registrable
Securities;
(j) to the extent permitted by the rules of the AICPA, use
its best efforts to obtain a "cold comfort" letter or letters from
Sunstone's independent public accountants in customary form and covering
matters of the type customarily covered by "cold comfort" letters as the
seller or sellers of a majority of shares of such Registrable Securities
shall reasonably request (provided that Registrable Securities
constitute at least 25% of the securities covered by such registration
statement, unless such a "cold comfort" letter or letters are provided
to other selling holders in connection with such registration); it being
understood, however, that Sunstone will, if requested by the
underwriters in any underwritten offering, be obligated to use its best
efforts to obtain for such underwriters a "cold comfort" letter or
letters from Sunstone's independent public accountants in customary
form;
(k) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other
agent retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and
properties of Sunstone, and cause all of Sunstone's officers, directors
and employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with
such registration statement;
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(l) notify counsel (selected pursuant to Section 8 hereof)
for the Holders of Registrable Securities included in such registration
statement and the managing underwriter or agent, immediately, and
confirm the notice in writing (A) when the registration statement, or
any post-effective amendment to the registration statement, shall have
become effective, or any supplement to the prospectus or any amendment
prospectus shall have been filed, (B) of the receipt of any comments
from the SEC, (C) of any request of the SEC to amend the registration
statement or amend or supplement the prospectus or for additional
information and (D) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or of any
order preventing or suspending the use of any preliminary prospectus, or
of the suspension of the qualification of the registration statement for
offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes;
(m) use reasonable efforts to prevent the issuance of any
stop order suspending the effectiveness of the registration statement or
of any order preventing or suspending the use of any preliminary
prospectus and, if any such order is issued, to obtain the withdrawal of
any such order at the earliest possible moment;
(n) if requested by the managing underwriter or agent or
any Holder of Registrable Securities covered by the registration
statement, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
agent or such Holder reasonably requests to be included therein,
including, without limitation, the number of Registrable Securities
being sold by such Holder to such underwriter or agent, the purchase
price being paid therefor by such underwriter or agent and any other
terms of the underwritten offering of the Registrable Securities to be
sold in such offering; and make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after
being notified of the matters incorporated in such prospectus supplement
or post-effective amendment;
(o) cooperate with the Holders of Registrable Securities
covered by the registration statement and the managing underwriter or
agent, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing
securities sold under the registration statement, and enable such
securities to be in such denominations and registered in such names as
the managing underwriter or agent, if any, or such Holders may request;
(p) obtain for delivery to the Holders of Registrable
Securities being registered and to the underwriter or agent an opinion
or opinions of counsel for Sunstone in customary form and in form,
substance and scope reasonably satisfactory to such Holders,
underwriters or agents and their counsel; and
(q) cooperate with each seller of Registrable Securities
and each underwriter or agent participating in the disposition of such
Registrable Securities and their respective counsel in connection with
any filings required to be made with the NASD.
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Sunstone may require each seller of Registrable Securities as to
which any registration is being effected to furnish Sunstone with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as Sunstone
may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt
of any notice from Sunstone of the happening of any event of the kind described
in clause (f) of this Section 5, such Holder will 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 clause (f) of this
Section 5, and, if so directed by Sunstone, such Holder will deliver to Sunstone
(at Sunstone's expense) all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Securities
current immediately prior to the receipt of such notice. In the event Sunstone
shall give any such notice, the period mentioned in clause (b) of this Section 5
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to clause (f) of this Section 5 and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by clause (f) of this Section 5.
In lieu of satisfying the requirements of Sections 2 or 3
hereunder, Sunstone may, at any time after the Initial Lock-Up Period, elect to
file a registration statement pursuant to Rule 415 under the Securities Act
permitting the resale of all Registrable Securities and shall covenant and agree
to keep such registration statement effective for a period of two years after
the expiration of the Initial Lock-Up Period (or such shorter period as to any
Holder that is then entitled to sell his or its Registrable Securities under
Rule 144 in any three-month period without restriction). All other provisions of
this Agreement shall continue to apply to any such registration. Upon expiration
of the initial two-year registration, if a Holder still holds Registrable
Securities that cannot be sold under Rule 144 during any three-month period
without restriction, Sunstone will file a new registration statement pursuant to
Rule 415 under the Securities Act (or maintain the effectiveness of the initial
registration statement) permitting the resale of all such Registrable Securities
that then remain unsold and shall keep such registration statement effective for
one additional period of two years.
6. Indemnification.
(a) Indemnification by Sunstone. In the event of any
registration of any securities of Sunstone under the Securities Act pursuant to
Section 2 or 3, Sunstone will, and it hereby does, indemnify and hold harmless,
to the extent permitted by law, the seller of any Registrable Securities covered
by such registration statement, each affiliate of such seller and their
respective directors and officers or general and limited partners or members or
managing members (including any director, officer, affiliate, employee, agent or
controlling Person of any of the foregoing), each other Person who participates
as an underwriter in the offering or sale of such securities and each other
Person, if any, who controls such seller or any such underwriter within the
meaning of the Securities Act (collectively, the "Seller Indemnified Parties"),
against any and
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all losses, claims, damages or liabilities, joint or several, and expenses
(including reasonable attorney's fees and reasonable expenses of investigation)
to which such Seller Indemnified Party may become subject under the Securities
Act, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof, whether or not such
Seller Indemnified Party is a party thereto) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement thereto, or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances under which they were made) not misleading, and Sunstone
will reimburse such Seller Indemnified Party for any legal or any other expenses
reasonably incurred by it in connection with investigating or defending against
any such loss, claim, liability, action or proceeding (collectively, a
"Violation"); provided that Sunstone shall not be liable to any Seller
Indemnified Party in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or amendment or
supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to Sunstone
through an instrument duly executed by such seller specifically stating that it
is for use in the preparation thereof nor shall it apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Sunstone (which consent shall not
be unreasonably withheld or delayed); and provided, further, that in the case of
any registration effected pursuant to Section 3 or any registration effected
pursuant to Section 2 in which the underwriters have agreed to indemnify the
Holders for the matters set forth in this proviso, if any losses, claims,
damages or liabilities arise out of or are based upon a Violation which did not
appear in the final prospectus, Sunstone shall not have any liability with
respect thereto to the Holder, any underwriter, or any person who controls such
Holder or underwriter within the meaning of Section 15 of the Securities Act if
the Holder or underwriter delivered a copy of the preliminary prospectus to the
person alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as so supplemented, to such person at or
prior to the written confirmation of the sale to such person. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or any Seller Indemnified Party and shall survive the
transfer of such securities by such seller.
(b) Indemnification by the Seller. In the event of any
registration of any securities of Sunstone under the Securities Act pursuant to
Section 2 or 3, each selling Holder will, and it hereby does, indemnify and hold
harmless, to the extent permitted by law, Sunstone and all other prospective
sellers of Registrable Securities, each affiliate of Sunstone or such seller and
their respective directors and officers or general and limited partners or
members or managing members (including any director, officer, affiliate,
employee, agent or controlling Person of any of the foregoing) and each other
Person, if any, who controls Sunstone or any such seller within the meaning of
the Securities Act (collectively, the "Company Indemnified Parties") against any
and all losses, claims, damages or liabilities, joint or several, and expenses
(including reasonable
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attorney's fees and reasonable expenses of investigation) to which such Company
Indemnified Party may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Company Indemnified Party is
a party thereto) arise out of or are based upon any untrue statement or alleged
untrue statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if 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 Sunstone through an instrument
duly executed by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing, provided that no Holder shall be liable to any
Company Indemnified Party with respect to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld or
delayed); and provided further that if any losses, claims, damages or
liabilities arise out of or are based upon a violation which did not appear in
the final prospectus, no Holder shall have any liability with respect thereto to
Sunstone, any other seller or any person who controls Sunstone or such other
seller within the meaning of Section 15 of the Securities Act if Sunstone or an
underwriter delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as so supplemented, to such person at or prior to
the written confirmation of the sale to such person. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
Sunstone or any of the prospective sellers, or any of their respective
affiliates, directors, officers or controlling Persons and shall survive the
transfer of such securities by such seller. In no event shall the liability of
any selling Holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Notices of Claims, Etc. Promptly after receipt by a Seller
Indemnified Party or a Company Indemnified Party (an "Indemnified Party")
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 6, such Indemnified Party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided that the failure of the Indemnified Party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 6, except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an Indemnified Party,
unless in such Indemnified Party's reasonable judgment a conflict of interest
between such Indemnified Party and indemnifying parties may exist in respect of
such claim, the indemnifying party will be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from the indemnifying party to such
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Party for any legal or
other expenses subsequently incurred
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by the latter in connection with the defense thereof other than reasonable costs
of investigation. In the event that the Indemnified Parties are conducting the
defense of any action or other claims, the indemnifying party will not be
responsible for the costs and expenses of more than one counsel for all of the
Indemnified Parties (plus the fees and expenses of one local counsel if the
action is pending in a foreign jurisdiction). No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof, the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, 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 losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and Indemnified Parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and Indemnified Parties 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 Parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Section 6(d) as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6(d) 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.
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.
(e) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 6 (with appropriate
modifications) shall be given by Sunstone and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this
Section 6 shall be in addition to any liability which any party may otherwise
have to any other party.
(g) Conflicting Provisions. To the extent that the provisions
of this Section 6 differ from the terms and conditions of any indemnification
provision contained in any
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underwriting agreement entered into in connection with any underwritten offering
effected pursuant to Section 2 hereof, the indemnification provisions contained
in such underwriting agreement will, for all purposes, supersede the terms and
conditions of this Section 6. To the extent that the provisions of this Section
6 differ from the terms and conditions contained in any underwriting agreement
entered into in connection with any underwritten offering effected pursuant to
Section 3 hereof, then (x) unless otherwise agreed to by the Holders of
Registrable Securities participating in any such registration, with respect to
the substantive scope and limitations (including, without limitation, the
maximum liability of the Holders) of the indemnification and contribution
provided by Sunstone and the Holders to the Indemnified Person, the provisions
of this Section 6 shall govern and supersede the terms of such Underwriting
Agreement and (y) with respect to all other matters the terms of the
underwriting agreement will supersede the terms and conditions of this Section
6.
(h) Indemnification by Underwriters. Sunstone may require, as
a condition to including any Registrable Securities in any registration
statement filed in accordance with Section 3 herein, that Sunstone shall have
received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold harmless Sunstone in customary form.
7. Rule 144. Sunstone covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if Sunstone is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
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 shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, Sunstone will deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
anything contained in this Section 7, Sunstone may de-register under Section 12
of the Exchange Act if it is then permitted to do so pursuant to the Exchange
Act and the rules and regulations thereunder and, in such circumstances, shall
not be required hereby to file any reports which may be necessary in order for
Rule 144 or any similar rule or regulation to be available.
8. Selection of Counsel. In connection with any registration of
Registrable securities pursuant to Sections 2 and 3 hereof, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered by
such registration.
9. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended and
Sunstone may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if Sunstone shall have obtained the
written consent to such amendment,
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action or omission to act, of the Holders of a majority of the Registrable
Securities then outstanding; provided, however, that no amendment, waiver or
consent to the departure from the terms and provisions of this Agreement that is
adverse to the Funds or any of their respective successors and assigns shall be
effective as against any such Person for so long as such Person holds any
Registrable Securities unless consented to in writing by such Person. Each
Holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any consent authorized by this Section 9(a), whether or not such
Registrable Securities shall have been marked to indicate such consent.
(b) Successors, Assigns and Transferees. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. The rights to cause the Company to register
Registrable Securities pursuant to Section 2 or 3 may be assigned (but only with
all related obligations) by a Holder to a transferee or assignee of such
securities, provided: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee assigns
in writing to be bound by and subject to the terms and conditions of this
Agreement. Without limitation of the foregoing, in the event that either of the
Funds distributes or otherwise transfers any shares of the Registrable
Securities to any of its present or future general or limited partners, Sunstone
hereby acknowledges that the registration rights granted pursuant to this
Agreement shall be transferred to such partner or partners on a pro rata basis,
and that at or after the time of any such distribution or transfer, any such
partner or group of partners shall designate a Person to act on its behalf in
delivering any notices or making any requests hereunder. Notwithstanding the
foregoing, in the event of a transfer of the registration rights granted
pursuant to this Agreement to a Fund's general or limited partners, such
partners shall not have any registration rights pursuant to Section 2 with
respect to any registration effected pursuant to Rule 415 under the Securities
Act.
(c) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
(i) (A) if to Sunstone:
Sunstone Hotel Investors, Inc.
000 Xxxxx xx Xxxxxxxxxx
Xxxxx 000
Xxx Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Alter
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with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
0000 XxxXxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
(ii) if to Xxxxxxxxx Fund:
Xxxxxxxxx Real Estate Fund I, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
with a copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(iii) if to Xxxxxxxxx Co-Investment Fund
Xxxxxxxxx Co-Investment Partnership I, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
with a copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(iv) if to any other holder of Registrable
Securities, to the address of such other holder as shown in the stock record
book of Sunstone, or to such other address as any of the above shall have
designated in writing to all of the other above.
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All such notices and communications shall be deemed to have been given
or made (1) when delivered by hand, (2) five business days after being deposited
in the mail, postage prepaid, (3) when telexed answer-back received or (4) when
telecopied, receipt acknowledged.
(d) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(e) 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 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.
(f) Counterparts. This Agreement may be executed in
counterparts, and by different parties in separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
(g) Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of New York applicable to contracts made and to be performed therein.
The parties to this Agreement hereby agree to submit to the jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof in any
action or proceeding arising out of or relating to this Agreement.
(h) Specific Performance. The parties hereto acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, it is agreed that they
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States or
any state thereof, in addition to any other remedy to which they may be entitled
at law or in equity. Notwithstanding the foregoing, no Holder shall have any
right to obtain or seek an injunction restraining or otherwise delaying or
requiring the completion of any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.
(i) Limited Liability of Partners. Notwithstanding any other
provision of this Agreement, neither the general partner nor the limited
partners, nor any future general or limited partner of the Funds, nor any member
or managing member of the Funds shall have any personal liability for
performance of any obligation of such Common Stock Partnership or the Funds
under this Agreement.
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(j) "Market Stand-Off" Agreement. (i) Subject to clauses (ii)
and (iii) below, each Holder hereby agrees that during the period in which
Sunstone and its officers and directors are prohibited by the underwriters from
selling, transferring or otherwise disposing of Common Stock (but in no event
more than ninety (90) days) following the effective date of a registration
statement of the Company filed under the Securities Act, without the prior
written consent of the underwriters it shall not, whether or not such Holder is
participating in the offering, to the extent requested by the Company, sell or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any Common Stock of the Company held by it at any time during such period
except Common Stock included in such registration. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the securities of each Holder (and the shares or securities of any
other person subject to the foregoing restrictions) until the end of such
period.
(ii) Anything herein to the contrary notwithstanding, the
Holders will not be prohibited from selling or otherwise disposing of shares of
Common Stock pursuant to this Section 9(j) and/or clause (z) of Section 3(a) for
more than 90 days during any nine-month period.
(iii) The provisions of this Section 9(j) shall terminate as
to any Holder at such time as such Holder is able to sell all of the Registrable
Securities held by it under Rule 144 in any three-month period without
restriction.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be duly executed on its behalf as of the
date first written above.
SUNSTONE HOTEL INVESTORS, INC.
By: /S/ XXXXXX X. ALTER
----------------------------------------
Xxxxxx X. Alter
President
XXXXXXXXX REAL ESTATE FUND I, L.P.
By: Xxxxxxxxx Real Estate Partners
Management, L.L.C., its general partner
By: Xxxxxxxxx Real Estate Partners,
L.L.C., its managing member
By: /S/ XXXXXXXX X. XXXX
------------------------------
Xxxxxxxx X. Xxxx
Managing Principal
XXXXXXXXX CO-INVESTMENT PARTNERSHIP I, L.P.
By: Xxxxxxxxx Real Estate Partners
Management, L.L.C., its general partner
By: Xxxxxxxxx Real Estate Partners,
L.L.C., its managing member
By: /S/ XXXXXXXX X. XXXX
------------------------------
Xxxxxxxx X. Xxxx
Managing Principal
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