EXHIBIT 10.1
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EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of July 31, 2002 (this
"AGREEMENT"), by and between MERISTAR HOTELS & RESORTS, INC., a Delaware
corporation (the "COMPANY"), on the one hand, and CGLH PARTNERS I LP, a Delaware
limited partnership and CGLH PARTNERS II LP, a Delaware limited partnership
(CGLH Partners I LP and CGLH Partners II LP, together, the "SHAREHOLDER"), on
the other hand.
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 1,
2002 as amended on June 3, 2002 (the "MERGER AGREEMENT") between the Company and
Interstate Hotels Corporation, a Maryland Corporation ("INTERSTATE"), Interstate
will be merged with and into the Company, with the Company surviving (the
"MERGER");
WHEREAS, Shareholder owns certain convertible securities of Interstate
and has agreed, pursuant to an Interstate Stockholder Voting and Conversion
Agreement between Shareholder and the Company dated as of May 1, 2002 as amended
on June 3, 2002 (the VOTING AGREEMENT"), to convert such convertible securities
in connection with the Merger such that after the Effective Time (as defined in
the Merger Agreement) Shareholder will be the owner of shares of common stock,
par value $.01 per share, of the Company (the "COMMON STOCK");
WHEREAS, following the Merger, Shareholder may be deemed an Affiliate
of the Company and may therefore, following the Merger, be restricted in its
ability to resell such shares of Common Stock pursuant to applicable securities
laws;
WHEREAS, it is a condition to the obligations of Interstate to close
the Merger that the Company shall have entered into this Agreement with
Shareholder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, the Voting Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows, effective at the Effective
Time:
ARTICLE I
Definitions
1.1. CERTAIN DEFINITIONS. In this Agreement:
"AGREEMENT" has the meaning given to it in the preamble.
"COMMON STOCK" has the meaning given to it in the recitals of this
Agreement
"DESIGNATED JURISDICTIONS" has the meaning given to it in Section
2.2(a) of this Agreement.
"ELECTED JURISDICTIONS" has the meaning given to it in Section 2.1(a)
of this Agreement.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC promulgated under such Act.
"INSPECTORS" has the meaning given to it in Section 2.4(h) of this
Agreement.
"OTHER SECURITIES" has the meaning given to it in Section 2.2(b) of
this Agreement.
"REGISTRABLE SECURITIES" means the shares of Common Stock held by
Shareholder immediately following the consummation of the transactions
contemplated by the Merger Agreement and the Voting Agreement, and any
additional shares of Common Stock thereafter acquired by Shareholder whether in
connection with any stock dividend on, or any stock split, reclassification or
reorganization of any of such shares or such additional shares, or otherwise, in
each case, until such Common Stock may be sold by Shareholder without
restriction under Rule 144(k) under the Securities Act.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated under such Act.
"SHAREHOLDER" has the meaning given to it in the preamble of this
Agreement.
"SPECIFIED SECURITIES" has the meaning given to it in Section 2.1(a) of
this Agreement.
"SUBJECT SECURITIES" means shares of Common Stock or other debt or
equity securities of the Company convertible into or exchangeable for shares of
Common Stock.
"VOTING AGREEMENT" has the meaning given to it in the recitals of this
Agreement.
ARTICLE II
REGISTRATION RIGHTS
2.1. INCIDENTAL RIGHTS.
(a) If at any time or from time to time the Company
proposes to file with the SEC a registration statement (whether on Form
S-1, S-2, or S-3, or any equivalent form then in effect) for the
registration under the Securities Act of any Subject
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Securities for sale, for cash consideration, to the public by the
Company or on behalf of one or more securityholders of the Company
(excluding any sale of securities upon conversion into or exchange or
exercise for shares of Common Stock, and any shares of Common Stock
issuable by the Company upon the exercise of employee stock options, or
to any employee stock ownership plan, or in connection with any
acquisition made by the Company, any securities exchange offer, any
registration of securities originally placed pursuant to Rule 144A
under the Securities Act, dividend reinvestment plan, employee benefit
plan, corporate reorganization, or in connection with any amalgamation,
merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with one or more other corporations if the
Company is the surviving corporation), the Company shall give
Shareholder at least 20 days' prior written notice of the proposed
filing (or if 20 days' notice is not practicable, a reasonable shorter
period to be not less than 7 days), which notice shall outline the
nature of the proposed distribution and the jurisdictions in the United
States in which the Company proposes to qualify and offer such
securities (the "ELECTED JURISDICTIONS"). On the written request of
Shareholder received by the Company within 15 days after the date of
the Company's delivery to Shareholder of the notice of intended
registration (which request shall specify the Registrable Securities
sought to be disposed by Shareholder and the intended method or methods
by which dispositions are intended to be made), the Company shall,
under the terms and subject to the conditions of this ARTICLE II, at
its own expense as provided in SECTION 4.1, include in the -----------
------------ coverage of such registration statement (or in a separate
registration statement concurrently filed) and qualify for sale under
the blue sky or securities laws of the various states in the Elected
Jurisdictions the number of Registrable Securities of the kind being
registered (the "SPECIFIED SECURITIES") held by Shareholder or into
which the Registrable Securities are convertible, as the case may be,
and which Shareholder has so requested to be registered or qualified
for distribution, to the extent required to permit the distribution (in
accordance with the intended method or methods thereof as aforesaid) in
the Elected Jurisdictions requested by Shareholder of such Registrable
Securities.
(b) If the distribution proposed to be effected by the
Company involves an underwritten offering of the securities being so
distributed by or through one or more underwriters, and if the managing
underwriter of such underwritten offering indicates in writing its
opinion that including all or part of the Specified Securities in the
coverage of such registration statement or in the distribution to be
effected by such prospectus will materially and adversely affect the
sale of securities proposed to be sold (which opinion of the managing
underwriter shall also state the maximum number of shares, if any,
which can be sold by Shareholder requesting registration under this
SECTION 2.1 without materially adversely affecting the sale of the
securities proposed to be sold), then the number of Specified
Securities which Shareholder shall have the right to include in such
registration statement shall be reduced to the maximum number of shares
or principal amount, in the case of debt, specified by the managing
underwriter. First priority, after the absolute priority afforded to
the Company, shall be afforded to the Specified Securities held by
Shareholder and no securities proposed to be sold by Shareholder shall
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be so reduced until all securities proposed to be sold by all other
parties (other than the Company) have been entirely eliminated.
(c) The Company shall have the sole right to select any
underwriters, including the managing underwriter, of any public
offering of securities made other than as a result of the rights
granted in SECTION 2.2. Nothing in this SECTION 2.1 shall create any
liability on the part of the Company to Shareholder if the Company for
any reason decides not to file or to delay or withdraw a registration
statement (which the Company may do in its sole discretion).
(d) Shareholder shall have the right to withdraw its
request for inclusion of its Specified Securities in any registration
statement pursuant to this SECTION 2.1 by giving written notice to the
Company of its request to withdraw; PROVIDED, HOWEVER, that (i) such
request must be made in writing prior to the execution of the
underwriting agreement (or such other similar agreement) with respect
to such registration and (ii) such withdrawal shall be irrevocable and,
after making such withdrawal, Shareholder shall no longer have any
right to include Registrable Securities in the registration as to which
such withdrawal was made.
(e) Shareholder may request to have Registrable
Securities included in an unlimited number of registrations under this
SECTION 2.1.
2.2. DEMAND RIGHTS.
(a) Upon written request of Shareholder made at any time,
the Company shall, under the terms and subject to the conditions set
forth in this SECTION 2.2, and SECTIONS 2.3 and 2.4, file (and use its
reasonable efforts to cause to become effective) a registration
statement covering, and use its reasonable efforts to qualify for sale
under the blue sky or securities laws of the various states of the
United States as may be requested by Shareholder (except any such state
in which, in the opinion of the managing underwriter of the offering,
the failure to so qualify would not materially and adversely affect the
proposed offering or in which the Company would be required to submit
to general jurisdiction to effect such registration), in accordance
with the intended method or methods of disposition set forth in that
notice, of such number of Registrable Securities, as may be designated
by Shareholder in its request, or that portion thereof designated in
said request for registration in each of the Designated Jurisdictions
(as defined below). A request for registration under this SECTION 2.2
shall specify the number of Registrable Securities to be registered,
the jurisdictions in the United States in which such registration is to
be effected (the "DESIGNATED JURISDICTIONS") and the proposed manner of
sale, including the name and address of any proposed underwriter. The
principal underwriter or underwriters for any such offering shall be
selected by Shareholder, subject to the Company's approval, which may
not be unreasonably withheld or delayed. Notwithstanding any other
provision in this Section, Shareholder shall not be permitted to make a
demand for registration pursuant to this Section unless the number of
Registrable Securities covered by such demand is at least 2,500,000
shares of Common Stock (or securities convertible into such number of
shares of Common Stock) (as such number
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may be appropriately adjusted to reflect stock splits, reverse stock
splits, dividends and any other recapitalization or reorganization of
the Company including, without limitation, an adjustment to take
account of the five-for-one reverse stock split proposed for approval
at the Company's 2002 annual meeting of stockholders) or such lesser
number of shares as would yield gross proceeds of not less than $2
million based on the average closing price of the Common Stock over the
ten trading day period immediately preceding the date of the written
request hereunder.
(b) If the distribution proposed to be effected pursuant
to this SECTION 2.2 involves an underwritten offering of Registrable
Securities and securities of the Company other than Registrable
Securities ("OTHER SECURITIES"), and if the managing underwriter of
such underwritten offering indicates in writing its opinion that
including all or part of such securities in the coverage of such
registration statement will materially and adversely affect the sale of
the securities proposed to be sold, then the number of securities
proposed to be sold shall be reduced to the maximum number of
securities (or principal amount) specified by the managing underwriter.
In such a case, first priority shall be afforded to Registrable
Securities in accordance with SECTION 2.1(B) AND (C).
(c) The Company may delay the filing of any registration
statement requested under this SECTION 2.2, or delay its effectiveness,
for a reasonable period (but not longer than 90 days) if, in the sole
judgment of the Company's Board of Directors, (i) a delay is necessary
in light of pending financing transactions, corporate reorganizations
or other major events involving the Company, or (ii) filing at the time
requested would materially and adversely affect the business or
prospects of the Company in view of disclosures that may be thereby
required. Once the cause of the delay is eliminated, the Company shall
promptly notify Shareholder and, promptly after Shareholder notifies
the Company to proceed, the Company shall file a registration statement
and begin performance of its remaining obligations under this SECTION
2.2.
(d) The Shareholder shall be entitled to request not more
than seven registrations under this SECTION 2.2 (PROVIDED that the
filing of a registration statement in more than one Designated
Jurisdiction in connection with a concurrent or substantially
concurrent distribution shall be deemed for the purposes of this
Agreement to be a single registration). However, if Shareholder
requests a registration under this SECTION 2.2, but no registration
statement becomes effective with respect to the Registrable Securities
covered by such request, or any registration statement is withdrawn or
prematurely terminated (whether pursuant to this SECTION 2.2 or as a
result of any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court), then such request
shall not count as a request for purposes of determining the number of
requests for registration Shareholder may make under this SECTION 2.2.
(e) If there is an effective registration statement
requested by Shareholder pursuant to this SECTION 2.2, Shareholder may
require the Company to delay the filing of any registration statement
relating to convertible securities or shares of Common Stock or delay
its effectiveness, for a reasonable period (but not longer than 90
days) if, in the sole judgment of Shareholder, a delay is necessary in
order to avoid
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materially and adversely affecting the disposition of Registrable
Securities pursuant to the offering by Shareholder; PROVIDED that the
foregoing shall not limit the Company's right to file and have declared
effective registration statements for any other offering.
2.3. REGISTRATION CONDITIONS. Notwithstanding any other provision
of this Agreement, the Company shall not be required to effect a registration of
any securities under this ARTICLE II, or file any post-effective amendment to
such a registration statement relating to such a qualification:
(a) unless Shareholder agrees to (x) sell and distribute
a portion or all of their Registrable Securities in accordance with the
plan or plans of distribution adopted by and through underwriters, if
any, acting for the Company or any such other sellers of Common Stock
and (y) bear a pro rata share of underwriter's discounts and
commissions;
(b) if, in the case of a request for registration under
SECTION 2.2, the Company has given notice under SECTION 2.1 of its
intention to file a registration statement under the Securities Act and
has not completed or abandoned the proposed offering (for so long as
the Company continues in good faith to pursue the proposed offering);
and
(c) unless the Company has received from Shareholder all
information the Company has reasonably requested concerning Shareholder
and its method of distribution of Registrable Securities, so as to
enable the Company to include in the registration statement all facts
required to be disclosed in it.
2.4. COVENANTS AND PROCEDURES. If the Company becomes obligated
under this ARTICLE II to effect a registration of Registrable Securities on
behalf of Shareholder, then (as applicable to the jurisdictions for which such
registration is to be made):
(a) The Company, at its expense as provided in SECTION
4.2, shall prepare and file with the SEC a registration statement
covering such securities and such other related documents as may be
necessary or appropriate relating to the proposed distribution, and
shall use reasonable efforts to cause the registration statement to
become effective. The Company will also, with respect to any
registration statement, file such post-effective amendments to the
registration statement (and use reasonable efforts to cause them to
become effective) and such supplements as are necessary so that current
prospectuses are at all times available for a period of at least 180
days after the effective date of the registration statement or for such
longer period, not to exceed 360 days, as may be required under the
plan or plans of distribution set forth in the registration statement.
Shareholder shall promptly provide the Company with such information
with respect to Shareholder' Registrable Securities to be so registered
and, if applicable, the proposed terms of their offering, as is
required for the registration. If the Registrable Securities to be
covered by the registration statement are not to be sold to or through
underwriters acting for the Company, the Company shall:
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(i) deliver to Shareholder, as promptly
as practicable, as many copies of preliminary prospectuses as
Shareholder may reasonably request (in which case Shareholder
shall keep a written record of the distribution of the
preliminary prospectuses and shall refrain from delivery of
the preliminary prospectuses in any manner or under any
circumstances which would violate the Securities Act or the
securities laws of any other jurisdiction, including the
various states of the United States);
(ii) deliver to Shareholder, as soon as
practicable after the effective date of the registration
statement, and from time to time thereafter during the
applicable period described in SECTION 2.4, as many copies of
the relevant prospectus as Shareholder may reasonably request;
and
(iii) in case of the happening, after the
effective date of the registration statement and during the
applicable 180 or 360-day period described in the second
sentence of SECTION 2.4(A), of any event or occurrence as a
result of which the prospectus, as then in effect, would
include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make any statement therein not misleading in the
light of the circumstances in which it was made, give
Shareholder written notice of the event or occurrence and
prepare and furnish to Shareholder, in such quantities as it
may reasonably request, copies of an amendment of or a
supplement to such prospectus as may be necessary so that the
prospectus, as so amended or supplemented and thereafter
delivered to purchasers of the Registrable Securities covered
by such prospectus, 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,
in the light of the circumstances under which it was made, not
misleading.
(b) The Company will notify Shareholder of any action by
the SEC or any Commission to suspend the effectiveness of any
registration statement filed pursuant hereto or the initiation or
threatened initiation of any proceeding for such purpose or the receipt
by the Company of any notification with respect to the suspension of
the qualification of the securities for sale in any jurisdiction.
Immediately upon receipt of any such notice, Shareholder shall cease to
offer or sell any Registrable Securities pursuant to the registration
statement or prospectus in the jurisdiction to which such order or
suspension relates. The Company will also notify Shareholder promptly
of the occurrence of any event or the existence of any state of facts
that, in the judgment of the Company, should be set forth in such
registration statement or prospectus. Immediately upon receipt of such
notice, Shareholder shall cease to offer or sell any Registrable
Securities pursuant to such registration statement or prospectus, cease
to deliver or use such registration statement or prospectus and, if so
requested by the Company, return to the Company at the Company's
expense all copies of such registration statement or prospectus. The
Company will as promptly as practicable take such action as may be
necessary to amend or supplement such registration statement or
prospectus in order to set forth or reflect such event or state of
facts and provide copies of such proposed amendment or supplement to
Shareholder.
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(c) On or before the date on which the registration
statement is declared effective, the Company shall use its reasonable
efforts to:
(i) register or qualify (and cooperate
with Shareholder, the underwriter or underwriters, if any, and
their counsel, in connection with the registration or
qualification of) the securities covered by the registration
statement for offer and sale under the securities or blue sky
laws of each state and other jurisdiction as Shareholder or
any underwriter reasonably requests;
(ii) keep each such registration or
qualification effective, including through new filings, or
amendments or renewals, during the period the registration
statement or prospectus is required to be kept effective; and
(iii) do any and all other acts or things
necessary or advisable to enable the disposition in all such
jurisdictions of the Registrable Securities covered by the
applicable registration statement, provided that the Company
will not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified.
(d) The Company shall use its reasonable efforts to cause
all Registrable Securities of Shareholder included in the registration
statement to be listed, by the date of the first sale of such shares
pursuant to such registration statement, on the New York Stock Exchange
or such other securities exchange or exchanges on which the Common
Stock is then listed or proposed to be listed, if any, as directed by
Shareholder (subject to the Company's consent, which consent shall not
be unreasonably withheld or delayed).
(e) The Company shall make available to Shareholder and
any underwriter participating in the offering conducted pursuant to the
registration statement an earnings statement satisfying Section 11(a)
of the Securities Act no later than 45 days after the end of the
12-month period beginning with the first day of the Company's first
fiscal quarter commencing after the effective date of the registration
statement. The earnings statement shall cover such 12-month period.
This requirement will be deemed to be satisfied if the Company timely
files complete and accurate information on Forms 10-Q, 10-K, and 8-K
under the Exchange Act, and otherwise complies with Rule 158 under the
Securities Act as soon as feasible.
(f) The Company shall cooperate with Shareholder and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold under the
registration statement, and to enable such securities to be in such
denominations and registered in such names as the managing underwriter
or underwriters, if any, or Shareholder, may request, subject to the
underwriters' obligation to return any certificates representing unsold
securities.
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(g) The Company shall use its reasonable efforts to cause
Registrable Securities covered by the registration statement to be
registered with or approved by such other governmental agencies or
authorities in the United States (including the registration of
Registrable Securities under the Exchange Act) as may be necessary to
enable Shareholder or the underwriter or underwriters, if any, to
consummate the disposition of such securities.
(h) The Company shall, during normal business hours and
upon reasonable notice, make available for inspection by Shareholder,
any underwriter participating in any offering pursuant to the
registration statement, and any attorney, accountant or other agent
retained by Shareholder or any such underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate
documents, and properties of the Company (including non-public
information), as shall be reasonably necessary to enable the Inspectors
to exercise their due diligence responsibilities; PROVIDED that any
Inspector receiving non-public information shall have previously
entered into an appropriate confidentiality agreement in mutually
satisfactory form and substance. The Company shall also cause its
officers, directors, and employees to supply all information reasonably
requested by any Inspector in connection with the registration
statement.
(i) The Company shall use its reasonable efforts to
obtain a "cold comfort" letter and, as applicable, a "long-form comfort
letter" from the Company's independent public accountants, and an
opinion of counsel for the Company, each in customary form and covering
such matters of the type customarily covered by cold comfort letters
and long form comfort letters and legal opinions in connection with
public offerings of securities, as Shareholder reasonably request.
(j) The Company shall enter into such customary
agreements (including an underwriting agreement containing such
representations and warranties by the Company and such other terms and
provisions, as are customarily contained in underwriting agreements for
comparable offerings and are reasonably satisfactory to the Company)
and take all such other actions as Shareholder or the underwriters
participating in such offering and sale may reasonably request in order
to expedite or facilitate such offering and sale (other than such
actions which are disruptive to the Company or require significant
management availability), including providing reasonable availability
of appropriate members of senior management of the Company to provide
customary due diligence assistance in connection with any offering and
to participate in customary "road show" presentations in connection
with any underwritten offerings in substantially the same manner as
they would in an underwritten primary registered public offering by the
Company of its Common Stock, after taking into account the reasonable
business requirements of the Company in determining the scheduling and
duration of any road show.
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ARTICLE III
INDEMNIFICATION
3.1. INDEMNIFICATION BY THE COMPANY. In the event of any
registration under the Securities Act by any registration statement pursuant to
rights granted in this Agreement of Registrable Securities held by Shareholder,
the Company will hold harmless Shareholder and each underwriter of such
securities and each other person, if any, who controls any Shareholder or such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities (including legal fees and costs of court), joint
or several, to which Shareholder or such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or any actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact (i) contained, on its effective date, in any registration
statement under which such securities were registered under the Securities Act
or any amendment or supplement to any of the foregoing, or which arise out of or
are based upon the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) contained in any preliminary prospectus, if used prior to the
effective date of such registration statement, or in the final prospectus (as
amended or supplemented if the Company shall have filed with the SEC any
amendment or supplement to the final prospectus) if used within the period which
the Company is required to keep the registration to which such registration
statement or prospectus relates current under SECTION 2.4, or which arise out of
or are based upon the omission or alleged omission (if so used) to state a
material fact required to be stated in such prospectus or necessary to make the
statements in such prospectus not misleading; and will reimburse Shareholder and
each such underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, or liability; PROVIDED, HOWEVER, that
the Company shall not be liable to any Shareholder or its underwriters or
controlling persons in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company through a written
instrument duly executed by Shareholder or such underwriter specifically for use
in the preparation thereof; PROVIDED FURTHER that the Company shall not be
liable to any Shareholder or its underwriters or controlling persons in any such
case with respect to losses, claims, damages or liabilities (including legal
fees and costs of court) that arise out of or are based on an untrue statement
or alleged untrue statement or omission or alleged omission made in any
prospectus used in connection with any request for registration under Section
2.2, to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission is corrected in any amendment or supplement to such
prospectus if both (y) the person asserting such loss, claim, damage or
liability purchased securities in reliance on such prospectus but was not given
such amendment or supplement thereto on or prior to the confirmation of the sale
of such securities and such amendment or supplement was required by law to be
delivered on or prior to the confirmation of such sale and (z) the Company had
delivered to such Shareholder or its underwriters such amendment or supplement
thereto pursuant to Section 2.4(a)(iii) in the requisite quantity and on a
timely basis
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to permit proper delivery to such person on or prior to the date of confirmation
of the sale of such securities.
3.2. INDEMNIFICATION BY SHAREHOLDER. It shall be a condition
precedent to the obligation of the Company to include in any registration
statement any Registrable Securities of Shareholder that the Company shall have
received from Shareholder an undertaking, reasonably satisfactory to the Company
and its counsel, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in SECTION 3.1) the Company, each director of the
Company, each officer of the Company who shall sign the registration statement,
and any person who controls the Company within the meaning of the Securities
Act, (i) with respect to any statement or omission from such registration
statement, or any amendment or supplement to it, if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company through a written instrument duly executed by Shareholder specifically
for use in the preparation of such registration statement or amendment or
supplement, and (ii) with respect to compliance by Shareholder with applicable
laws in effecting the sale or other disposition of the securities covered by
such registration statement.
3.3 INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party of notice of the commencement of any action involving a claim
referred to in the preceding Sections of this ARTICLE III, the indemnified party
will, if a resulting claim is to be made or may be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of the
action. If any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the defense
of the action with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume defense of the action, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses incurred by the
latter in connection with the action's defense. An indemnified party shall have
the right to employ separate counsel in any action or proceeding and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such indemnified party's expense unless (a) the employment of such counsel has
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has not assumed the defense and employed counsel reasonably
satisfactory to the indemnified party within 30 days after notice of any such
action or proceeding, or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include the indemnified party and
the indemnifying party and the indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to the
indemnified party that are different from or additional to those available to
the indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action or proceeding on behalf of the
indemnified party), it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to all local
counsel which is necessary, in the good faith opinion of both counsel for the
indemnifying party and counsel for the indemnified party in order to adequately
represent the indemnified parties) for the indemnified party and that all such
fees and expenses shall be reimbursed as they are incurred upon written request
and presentation of invoices. Whether or not a defense is assumed by the
indemnifying party, the indemnifying party will not
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be subject to any liability for any settlement made without its consent. No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term the giving by the
claimant or plaintiff, to the indemnified party, of a release from all liability
in respect of such claim or litigation.
3.4. CONTRIBUTION. If the indemnification required by this ARTICLE
III from the indemnifying party is unavailable to or insufficient to hold
harmless an indemnified party in respect of any indemnifiable losses, claims,
damages, liabilities, or expenses, then the indemnifying party shall contribute
to the amount paid or payable by the indemnified party as a result of such
losses, claims, damages, liabilities, or expenses in such proportion as is
appropriate to reflect (i) the relative benefit of the indemnifying and
indemnified parties and (ii) if the allocation in clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect the relative
benefit referred to in clause (i) and also the relative fault of the indemnified
and indemnifying 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 the indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact, has been made by, or relates to information supplied by,
such indemnifying party or 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 as a result of the losses, claims, damage,
liabilities, and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding. The Company and Shareholder agree that it would
not be just and equitable if contribution pursuant to this SECTION 3.4 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the prior
provisions of this SECTION 3.4.
Notwithstanding the provisions of this SECTION 3.4, no indemnifying
party shall be required to contribute any amount in excess of the amount by
which the total price at which the securities were offered to the public by the
indemnifying party exceeds the amount of any damages which the indemnifying
party has otherwise been required to pay by reason of an untrue statement or
omission. 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 a fraudulent misrepresentation.
ARTICLE IV
OTHER AGREEMENTS
4.1. OTHER REGISTRATION RIGHTS. The Company agrees that it will not
grant to any party registration rights which would allow such party to limit
Shareholder' priority for the sale or distribution of Registrable Securities
upon the exercise of a demand registration right pursuant to SECTION 2.2 or
incidental registration rights pursuant to Section 2.1.
4.2. EXPENSES. All expenses incurred by the Company in connection
with any registration statement covering Registrable Securities offered by
Shareholder, including, without
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limitation, all registration and filing fees (including all expenses incident to
filing with the New York Stock Exchange), printing expenses, reasonable fees and
disbursements of counsel (except for the fees and disbursements of counsel for
Shareholder) and of the independent certified public accountants, underwriter's
reasonable legal, accounting and out-of-pocket expenses, and the expense of
qualifying such securities under state blue sky laws, shall be borne by the
Company, including such expenses of any registration delayed by the Company
under the fourth paragraph of SECTION 2.2; PROVIDED, HOWEVER, that the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to SECTION 2.2 if the registration request is subsequently
withdrawn at the request of Shareholder (in which case Shareholder shall bear
such expenses, each such Shareholder to bear its pro rata share of the expense
based on the number of Registrable Securities such Shareholder intended to
include in such registration compared to the total number of Registrable
Securities all of such Shareholder intended to include in such registration),
unless Shareholder agrees to forfeit its right to one demand registration under
SECTION 2.2; PROVIDED FURTHER, however, that if at the time of such withdrawal,
Shareholder have learned of a material adverse change in the condition,
business, or prospects of the Company from that known at the time of its
request, then Shareholder shall not be required to pay any of such expenses and
shall retain their rights pursuant to SECTION 2.2. The Company's obligations
under this SECTION 4.2 shall apply to each registration under the Securities Act
or state blue sky legislation pursuant to SECTION 2.2. However, all
underwriter's discounts and commissions covering Registrable Securities offered
by Shareholder shall be borne by Shareholder.
4.3. DISPOSITIONS DURING REGISTRATION. Each Shareholder agrees
that, without the consent of the managing underwriter(s) in an underwritten
offering in respect of Common Stock or other Subject Securities, it will not
effect any sale or distribution of Common Stock or other Subject Securities
(other than Registrable Securities included in such offering), during the ten
(10) day period prior to, and during the ninety (90) day period beginning on,
the effective date of the registration statement filed by the Company in respect
of such underwritten offering, or any shorter period as may apply to the Company
and its affiliates.
4.4. TRANSFER OF RIGHTS. All rights of Shareholder under this
Agreement shall be transferable by Shareholder to any party who acquires
Registrable Securities from Shareholder and who executes an instrument in form
and substance satisfactory to the Company in which it agrees to be bound by the
terms of this Agreement as if an original signatory hereto, in which case such
transferee shall thereafter be a "Shareholder" for all purposes of this
Agreement. In the case of any assignment, the party or parties who have the
rights and benefits of Shareholder under this Agreement shall become parties to
and be subject to this Agreement, and shall not, as a group, have the right to
request any greater number of registrations than Shareholder would have had if
no assignment had occurred. Upon any transfer of the registration rights or
benefits of this Agreement, Shareholder shall give the Company written notice
prior to or promptly following such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned. Such notice shall include or be accompanied by a written
undertaking by the transferee to comply with the obligations imposed hereunder.
Unless otherwise agreed by Shareholder and the parties to whom registration
rights have been transferred, in the event any registration rights are
transferred in accordance with the terms of this Agreement, any actions required
to be taken by Shareholder will be taken with the
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approval of the holders of such registration rights who hold a majority of the
Registrable Securities, whose actions shall bind all such holders of such
registration rights.
4.5. BEST REGISTRATION RIGHTS. If the Company grants to any Person
with respect to any security issued by the Company or any of its Affiliates
registration rights (other than as to the number of demand registrations) that
provide for terms that are in any manner more favorable to the holder of such
registration rights than the terms granted to Shareholder (or if the Company
amends or waives any provision of any agreement providing registration rights of
others or takes any other action whatsoever to provide for terms that are more
favorable to other holders than the terms provided to Shareholder other than the
number of demand registrations or the minimum amount of shares required to
exercise demand registration rights), then this Agreement shall immediately be
deemed amended to provide Shareholder with any (or all) of such more favorable
terms as Shareholder shall elect to include herein. The Company shall promptly
give notice to Shareholder of the granting of any such registration rights to
another Person.
ARTICLE V
MISCELLANEOUS
5.1. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, fax or air courier
guaranteeing delivery:
(a) If to the Company, to:
MeriStar Hotels & Resorts, Inc.
1010 Wisconsin Avenue
Suite 500
Washington, D.C. 20007
Attention: Christopher L. Bennett, Esq.
Telecopy: (207) 295-1026
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Richard S. Borisoff, Esq.
Facsimile: (212) 757-3990
or to such other person or address as the Company shall furnish to Shareholder
in writing;
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(b) If to Shareholder, to:
CGLH Partners I LP and CGLH Partners II LP
c/o Lehman Brothers Holdings Inc.
399 Park Avenue,
8th Floor
New York, NY 10022
Attention: Joseph Flannery
Fax: (646) 758-1938
with a copy to:
Continental Gencom Holdings
c/o Mr. K. Alibhai and Mr. S. Weiser
3250 Mary Street
Suite 500
Miami, Florida 33133
Facsimile: (305) 445-4255
with a copy to:
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
150 West Flagler Street
Suite 2200
Miami, Florida 33130
Attn: Richard E. Schatz, Esq.
Fax: (305) 789-3395
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, New York 10004
Attn: Jonathan Mechanic, Esq.
Fax: (212) 859-8582
or to such other person or address as Shareholder shall furnish to the Company
in writing.
All such notices, requests, demands and other communications shall be
deemed to have been duly given: at the time of delivery by hand, if personally
delivered; five (5) Business Days after being deposited in the mail, postage
prepaid, if mailed domestically in the United States (and seven (7) Business
Days if mailed internationally); when answered back, if telexed; when receipt
acknowledged, if telecopied; and on the Business Day for which delivery is
guaranteed, if timely delivered to an air courier guaranteeing such delivery.
5.2. SECTION HEADINGS. The article and section headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
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References in this Agreement to a designated "Article" or "Section" refer to an
Article or Section of this Agreement unless otherwise specifically indicated.
5.3. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with and governed by the law of New York, without regard to its
conflict of laws principles that would indicate the applicability of the laws of
any other jurisdiction.
5.4. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any legal
action or proceeding with respect to this Agreement or any matters arising out
of or in connection with this Agreement (other than the Investor Agreement,
which shall be governed solely by the analogous provisions thereof), and any
action for enforcement of any judgment in respect thereof shall be brought
exclusively in the state or federal courts located in the State of New York,
and, by execution and delivery of this Agreement, the Company and Shareholder
each irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express carrier or delivery service, to the Company or Shareholder at their
respective addresses referred to in this Agreement. The Company and Shareholder
each hereby irrevocably waives any objection which it may now or hereafter have
to the laying of venue of any of the aforesaid actions or proceedings arising
out of or in connection with this Agreement brought in the courts referred to
above and each hereby further irrevocably waives and agrees, to the extent
permitted by applicable law, not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing in this Agreement shall affect the right of any
party hereto to serve process in any other manner permitted by law.
5.5. AMENDMENTS. This Agreement may be amended only by an
instrument in writing executed by all of its parties.
5.6. ENTIRE AGREEMENT. This Agreement, and the Voting Agreement
constitute the entire agreement and understanding of the parties with respect to
the transactions contemplated hereby and thereby. This Agreement may be amended
only by a written instrument duly executed by the parties or their respective
successors or assigns; PROVIDED, HOWEVER, that any amendment or waiver by the
Company shall be made only with the prior approval of a majority of the entire
Board of Directors of the Company.
5.7. SEVERABILITY. The invalidity or unenforceability of any
specific provision of this Agreement shall not invalidate or render
unenforceable any of its other provisions. Any provision of this Agreement held
invalid or unenforceable shall be deemed reformed, if practicable, to the extent
necessary to render it valid and enforceable and to the extent permitted by law
and consistent with the intent of the parties to this Agreement.
5.8. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MERISTAR HOTELS & RESORTS INC.
By: /s/ Christopher L. Bennett
------------------------------
Name: Christopher L. Bennett
Title: Senior Vice President &
General Counsel
CGLH PARTNERS I LP
By: MK/CG-GP LLC
General Partner
By: CG Interstate Associates, LLC
a Managing Member
By: Continental Gencom Holdings, LLC
its Sole Member
By: /s/ Karim Alibhai
------------------------------
Name: Karim Alibhai
Title: Member
By: /s/ Sherwood M. Weiser
------------------------------
Name: Sherwood M. Weiser
Title: Member
By: KFP Interstate, LLC, a Managing Member
By: KFP Holdings, Ltd., its Sole Member
By: Grosvenor, L.C., its General Partner
By: /s/ Jaffer Khimji
------------------------------
Name: Jaffer Khimji
Title: Authorized Signatory
By: LB INTERSTATE GP LLC
General Partner
By: PAMI LLC
its Sole Member
By: /s/ Joseph J. Flannery
------------------------------
Name: Joseph J. Flannery
Title: Authorized Signatory
CGLH PARTNERS II LP
By: MK/CG-GP LLC
General Partner
By: CG Interstate Associates, LLC
a Managing Member
By: Continental Gencom Holdings, LLC
its Sole Member
By: /s/ Karim Alibhai
------------------------------
Name: Karim Alibhai
Title: Member
By: /s/ Sherwood M. Weiser
------------------------------
Name: Sherwood M. Weiser
Title: Member
By: KFP Interstate, LLC, a Managing Member
By: KFP Holdings, Ltd., its Sole Member
By: Grosvenor, L.C., its General Partner
By: /s/ Jaffer Khimji
------------------------------
Name: Jaffer Khimji
Title: Authorized Signatory
By: LB INTERSTATE GP LLC
General Partner
By: PAMI LLC
its Sole Member
By: /s/ Joseph J. Flannery
------------------------------
Name: Joseph J. Flannery
Title: Authorized Signatory