REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), is made and entered
into as of October ___, 1996, by and among Homegate Hospitality, Inc., a
Delaware corporation (the "Company"), and the other parties signatory hereto.
RECITALS
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WHEREAS, the parties hereto are to become owners of Common Stock (as
hereinafter defined) prior to the completion of the Company's initial public
offering;
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 agree as follows:
1. Definitions. For purposes of this Agreement, the following terms have
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the following meanings when used herein with initial capital letters:
Advice: As defined in Section 5 hereof.
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Common Stock: The Common Stock, par value $0.01 per share, of the
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Company.
Demand Notice: As defined in Section 2 hereof.
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Demand Registration: As defined in Section 2 hereof.
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Losses: As defined in Section 7 thereof.
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Piggyback Registration: As defined in Section 3 hereof.
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Prospectus: The prospectus included in any Registration Statement
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(including without limitation a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registrations 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 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: The Shares and other shares of Common Stock
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held by a party that are not already saleable by such party without
registration, upon the respective original issuance thereof, and at all times
subsequent thereto, until, in the case of any such security, (i) it is
effectively registered under the Securities Act and disposed of in accordance
with the Registration Statement
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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: As defined in Section 6 hereof.
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Registration Statement: Any registration statement of the Company
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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: Rule 144 under the Securities Act, as such Rule may be
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amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
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Securities Act: The Securities Act of 1933, as amended.
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Shares: All shares of Common Stock acquired by any party hereto
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(other than the Company) as a result of the merger of Extended Stay Limited
Partnership with and into the Company.
Special Counsel: As defined in Section 6(b) hereof.
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Underwritten registration or underwritten offering: A registration in
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which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Demand Registration.
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(a) Requests for Registration. At any time and from time to time
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after the date that is one year following the date of this Agreement, one or
more holders of Registrable Securities will have the right, 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
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Registration may be required unless the total amount of Registrable Securities
sought to be included in such Demand Registration has a market value of least
$20,000,000 (calculated based on the closing sale price of such securities on
the principal securities exchange on which such securities are listed on the
business day immediately preceding the date of the Demand Notice) as of the time
a Demand Notice is given and (ii) no Demand Notice may be given prior to six
months after the effective date of the immediately preceding Demand
Registration. 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 $20,000,000 (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.
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(b) Filing and Effectiveness. The Company will file a Registration
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Statement relating to any Demand Registration within 60 calendar days of the
date on which the Demand Notice is given 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 of Registrable Securities first give the Demand
Notice required by Section 2(a) hereof 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 of Registrable Securities 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 5 and 6 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 of
Registrable Securities and will, subject to the provisions of Section 2(c)
hereof, include in such registration all 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 of Registrable Securities will be permitted to withdraw in good faith
all of 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
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be registered pursuant to a Demand Registration, the Company shall provide
written notice to the other holders of Registrable Securities and will permit
all such holders who request to be included in the Demand Registration to
include any and 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 of Registrable Securities that the total amount of
Registrable Securities that such holders intend to include in such Demand
Registrable 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 of Registrable Securities on the
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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
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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
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financing plans of the Company or would require disclosure of information, the
premature disclosure
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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 of Registrable Securities in writing when the events or circumstances
permitting such postponement have ended.
3. Piggyback Registration.
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(a) Right to Piggyback. If at any time the Company proposes to file a
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registration statement under the Securities Act with respect to a primary
offering 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 employees of the
Company), then the Company will give written notice of such proposed filing to
the holders of Registrable Securities 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"). 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 of Registrable Securities 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
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managing underwriter or underwriters of a proposed underwritten offering on
behalf of the Company to permit holders of Registrable Securities 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. Notwithstanding
the foregoing, if the managing underwriter or underwriters of such offering
deliver an opinion to the holders of Registrable Securities to the effect that
the total amount of securities which such holders and the Company propose to
include in such offering 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 holders of Registrable Securities (allocated pro rata among
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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. The managing
underwriter or underwriters, applying the same standard, 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.
(c) Registration of Securities Other than Registrable Securities.
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Without the written consent of the holders of 66 2/3% of the then-outstanding
Registrable Securities and an appropriate amendment to this Agreement pursuant
to Section 10(c), the Company will not grant to any person the right to request
the Company to register any securities of the Company under the Securities Act,
provided, however, that with the consent of the holders of a majority of the
then-outstanding Registrable Securities, the Company may grant to any person the
same rights as the
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rights of a holder of Registrable Securities under this Agreement, either by an
amendment making such person a party to this Agreement or pursuant to a separate
agreement.
4. Restrictions on Sale by Holders of Registrable Securities. Each
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holder of Registrable Securities agrees, if such holder is so requested
(pursuant to a timely written notice) by the managing underwriter or
underwriters in an underwritten agreement of any class of securities that
constitutes Registrable Securities, not to effect any public sale or
distribution of any 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
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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 thereof 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
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Statement or Prospectus or any amendments or supplements thereto (including
documents would be incorporated or deemed to be incorporated thereby by
reference) the Company will furnish to the holders of the Registrable Securities
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 the 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 provisions 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 of Registrable Securities, the Special
Counsel and the managing underwriters, if any, promptly, and (if requested by
any such person) confirm such
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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 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(n) 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
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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 of Registrable Securities, 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 to be incorporated therein by reference and all
exhibits, unless requested in writing by such holder, counsel or underwriter).
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(g) Deliver to each selling holder of Registrable Securities, 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 reasonably request; and the Company hereby consents to the
use of such Prospectus or each amendment or supplement thereto by each of the
selling holders or Registrable Securities 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 of Registrable
Securities, 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
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Company will not be required to (i) qualify generally to do business in any
jurisdiction in which it is not then so qualified or (ii) take any action that
would subject it to any general service of process in any such jurisdiction in
which it is not then so subject.
(i) Cooperate with the selling holders of Registrable Securities 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 Statements 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 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.
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(l) Use all reasonable efforts to cause all Registrable Securities
covered by such Registration Statement to be (i) listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed or, if no similar securities issued by the Company are then so listed, on
the New York Stock Exchange or another national securities exchange if the
securities qualify to be so listed or (ii) authorized to be quoted on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or the National Market System of NASDAQ if the securities qualify to be so
quoted; in each case, if requested by the holders of a majority of the
Registrable Securities covered by such Registration Statement or the managing
underwriters, if any.
(m) Prior to the effective date of the first Demand Registration or
the first Piggyback Registration, whichever shall occur first, (i) engage an
appropriate transfer agent and provide the transfer agent with printed
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Securities.
(n) 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 holders of a majority of
the Registrable Securities being sold or, 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 of such Registrable Securities 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 of Registrable
Securities 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 holders and underwriters,
including without limitation the matters referred to in Section 5(n)(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 of Registrable Securities 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
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connection with each closing under such underwriting or similar agreement as and
to the extent required thereunder.
(o) Make available for inspection by a representative of the holders
of Registrable Securities being sold, 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
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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 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).
(p) 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.
(q) 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 seller of Registrable Securities 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 seller who unreasonably
fails to furnish such information within a reasonable time after receiving such
request.
Each holder of Registrable Securities 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 6(c)(vii) hereof, such
holder will forthwith discontinue disposition of such 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,
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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 (i) the copies of the supplemented or amended
Prospectus contemplated by Section 5(k) or (ii) the Advice.
6. Registration Expenses. (a) All fees and expenses incident to the
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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 (1) with respect
to filings required to be made with the National Association of Securities
Dealers, Inc. and (2) of compliance with securities or "blue sky" laws
(including without limitation fees and disbursements of counsel for the
underwriters or selling 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 an
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 sellers of the
Registrable Securities, (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(n)(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 Bylaws 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 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.
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7. Indemnification.
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(a) Indemnification by the Company. The Company will, without
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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 and 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, 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
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will not be liable to any holder of Registrable Securities 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 (i) (1)such holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale of
such holder of a Registrable Security to the person asserting the claim from
which such Losses arise and (2) the Prospectus would have completely corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission; or (ii) 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.
(b) Indemnification by Holders of Registrable Securities. In
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connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities 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 of Registrable Securities hereunder be
greater in amount than the dollar amount of the proceeds (net of payment of all
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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
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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,
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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.
(d) Contribution. If the indemnification provided for in this Section
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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
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
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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 of Registrable Securities will not be required to contribute
any amount in excess of the
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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 use its best efforts to file the reports
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required to be filed by it under the Securities Act and the Exchange Act, and
will cooperate with any holder of Registrable Securities (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 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 of Registrable Securities, 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 investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the holders of a majority of the
Registrable Securities included in the Demand Notice; provided, that such
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investment banker or manager shall re reasonably satisfactory to the Company.
If any Piggyback Registration is an underwritten offering, the Company will have
the right to select the investment banker or investment bankers and managers to
administer the offering.
10. Miscellaneous.
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(a) Remedies. In the event of a breach by the Company of its
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obligations under this Agreement, each holder of Registrable Securities, 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 specific 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
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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 of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof.
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(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 66 2/3% of the then-outstanding Registrable Securities, subject,
however, to the proviso of Section 3(c). 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 holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least 66 2/3% of the
Registrable Securities being sold by such holders; provided, however, that the
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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
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permitted hereunder shall be made in writing and will be deemed to 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:
(1) if to the Company, initially at 0000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, Telecopier Number (000) 000-0000, and thereafter at such
other address, notice of which is given to the holders of Registrable Securities
in accordance with the provisions of this Section 10(d); and
(2) if to any holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance with the
provisions of this Section 10(d).
(e) Owner of Registrable Securities. The Company will maintain, or
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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 of 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 of any Registrable Securities. 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
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be deemed to be an original and all of which taken together will constitute one
and the same instrument.
(h) Headings. The headings in this Agreement are for convenience of
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reference only and will not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
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IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
(j) Severability. If any term, provision, covenant or restriction of
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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, an 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 in 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 provisions 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
HOMEGATE HOSPITALITY, INC.
By:
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Name:
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Its:
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