REGISTRATION RIGHTS AGREEMENT
by and between
HOST FUNDING, INC.
and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, INC.
Dated: December 21, 1999
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of December 21, 1999, by and between Host Funding, Inc., a
Maryland corporation (the "Company"), and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc., a
California corporation ("MPI"), for the benefit of the Designated Holders (as
defined herein). This Agreement is entered into pursuant to that certain Stock
Purchase Agreement of even date herewith, between the Company and MPI (the
"Purchase Agreement"). The execution of this Agreement is a condition to the
closing of the transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions.
As used in this Agreement the following terms have the
meanings indicated:
"Affiliate" shall mean, with respect to any Person, any other
Person who controls, is controlled by or is under common control with
such Person.
"Approved Underwriter" has the meaning set forth in Section
(f) of this Agreement.
"Common Stock" means the Class A Common Stock, $.01 par value
per share, of the Company.
"Company" means Host Funding, Inc., a Maryland corporation.
"Company Underwriter" has the meaning set forth in Section
4(a) of this Agreement.
"Demand Registration" has the meaning set forth in Section
3(a) of this Agreement.
"Demand Registration Statement" has the meaning set forth in
Section 3(a) of this Agreement.
"Designated Holder" means each record owner of any Registrable
Securities, including MPI and its Affiliates, and any transferee to
whom Registrable Securities have been transferred, other than a
transferee to whom such securities have been transferred pursuant to a
Registration Statement under the Securities Act or Rule 144 under the
Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
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"Holders' Counsel" has the meaning set forth in Section
6(a)(i) of this Agreement.
"Incidental Registration" has the meaning set forth in
Section 4(a) of this Agreement.
"Indemnified Party" has the meaning set forth in Section 7(c)
of this Agreement.
"Indemnifying Party" has the meaning set forth in Section 7(c)
of this Agreement.
"Initiating Holders" has the meaning set forth in Section 3(a)
of this Agreement.
"Inspector" has the meaning set forth in Section 6(a)(viii) of
this Agreement.
"NASD" has the meaning set forth in Section 6(a)(xiv) of this
Agreement.
"MPI" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc., a California
corporation.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any kind,
and shall include any successor (by merger or otherwise) of such
entity.
"Preferred Stock" means the Series A Convertible Preferred
Stock, $.01 par value per share, liquidation preference $4.00 per
share, of the Company, issued to MPI pursuant to the terms of the
Purchase Agreement.
"Purchase Agreement" means the Stock Purchase Agreement of
even date herewith between the Company and MPI.
"Records" has the meaning set forth in Section 6(a)(viii) of
this Agreement.
"Registrable Securities" means the Underlying Common Stock,
upon original issuance thereof and at all times subsequent thereto
except as provided in this Agreement.
"Registration Expenses" has the meaning set forth in Section
6(d) of this Agreement.
"Registration Statement" means a registration statement filed
pursuant to the Securities Act.
"SEC" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
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"Underlying Common Stock" means the shares of the Common Stock
issuable upon conversion of the Preferred Stock and the shares of
Common Stock issuable upon exercise of the Warrants.
"Warrants" means the warrants issued by the Company to MPI
pursuant to the Purchase Agreement and the Warrant Agreement.
"Warrant Agreement" means the Warrant Agreement dated
effective as of December 21, 1999 between the Company and MPI.
2. General; Securities Subject to this Agreement.
(a) Grant of Rights. The Company hereby grants registration
rights to the Designated Holders upon the terms and conditions set forth in this
Agreement.
(b) Registrable Securities. For the purposes of this
Agreement, Registrable Securities will cease to be Registrable Securities when
(i) a Registration Statement covering the resale of such Registrable Securities
by the Designated Holders has been declared effective under the Securities Act
by the SEC and such Registrable Securities have been disposed of pursuant to
such effective Registration Statement, (ii) the entire amount of Registrable
Securities proposed to be sold by a Designated Holder in a single sale, in the
opinion of counsel satisfactory to the Company and the Designated Holder, each
in their reasonable judgment, may be distributed to the public without any
limitation as to volume or manner of sale pursuant to Rule 144(k) (or any
successor provision then in effect) under the Securities Act or (iii) the
Registrable Securities are proposed to be sold or distributed by a Person not
entitled to the registration rights granted by this Agreement.
(c) Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns of record
Registrable Securities, or holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities,
whether or not such acquisition or conversion has actually been effected and
disregarding any legal restrictions upon the exercise of such rights. If the
Company receives conflicting instructions, notices or elections from two or more
Persons with respect to the same Registrable Securities, the Company may act
upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities. Registrable Securities issuable
upon exercise of an option or upon conversion of another security shall be
deemed outstanding for the purposes of this Agreement.
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3. Demand Registration.
(a) Request for Demand Registration. At any time after the
date of this Agreement, one or more Designated Holders holding at least 25% of
the Registrable Securities (the "Initiating Holders") may make, in the
aggregate, up to four (4) written requests to the Company to register, under the
Securities Act and under the securities or "blue sky" laws of any jurisdictions
designated by such holders (a "Demand Registration"), the number of Registrable
Securities stated in such request. Each request for a Demand Registration
by the Initiating Holders shall state the amount of the Registrable Securities
proposed to be sold and the intended method of disposition thereof and may
include the resale from time to time of Registrable Securities by the Designated
Holders in market transactions or other methods specified in the notice. Upon a
request for a Demand Registration, the Company shall promptly take such steps as
are reasonably necessary or appropriate to prepare and file with the SEC and to
be declared effective a registration statement (a "Demand Registration
Statement") to effect the registration and/or resale of the Registrable
Securities in the amounts and in the manner described in such request, including
a shelf registration on Form S-3 or any successor thereto with respect to the
resale of the Registrable Securities by the Designated Holders.
(b) Incidental or "Piggy-Back" Rights with Respect to a Demand
Registration. Each of the Designated Holders (other than the Initiating Holders)
may offer its Registrable Securities under any Demand Registration Statement
pursuant to this Section 3. Within ten (10) days after the receipt from the
Initiating Holders of a request for a Demand Registration, the Company shall (i)
give written notice thereof to all of the Designated Holders (other than the
Initiating Holders) and (ii) subject to Section 3(e), include in such
registration all of the Registrable Securities held by such Designated Holders
from whom the Company has received a written request for inclusion therein
within ten (10) days following receipt by such Designated Holders of the written
notice referred to in clause (i) above (which Designated Holders shall be deemed
Initiating Holders for purposes of this Section 3). Each such request by such
Designated Holders shall specify the number of Registrable Securities proposed
to be registered and the intended method of disposition thereof. The failure of
any Designated Holder to respond within such ten (10) day period referred to in
clause (ii) above shall be deemed to be a waiver of such Designated Holder's
rights under this Section 3, provided that any Designated Holder may waive its
rights under this Section 3 prior to the expiration of such ten (10) day period
by giving written notice to the Company, with a copy to the Initiating Holders.
(c) Effective Demand Registration. The Company shall use its
best efforts to cause any such Demand Registration Statement to become and
remain effective as soon as practicable, but in any event not later than ninety
(90) days after it receives a request under Section 3(a) hereof and shall
maintain the effectiveness of the Demand Registration Statement until the
earlier to occur of (i) the date on which all Registrable Securities included in
the Demand Registration Statement become freely tradeable without restriction
pursuant to Rule 144(k) under the Securities Act, or any successor provision,
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(ii) the date on which the Initiating Holders sell all of the Registrable
Securities, and (iii) two (2) years from the effective date of the Demand
Registration Statement. A registration shall not constitute a Demand
Registration until it has become effective and remains continuously effective in
accordance with the terms of the preceding sentence; provided, however, that a
registration shall neither constitute a Demand Registration nor a written
request for registration pursuant to Section 3(a), if (x) after such Demand
Registration has become effective, such registration or the related offer, sale
or distribution of Registrable Securities thereunder is interfered with in any
way by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason not attributable to the
Initiating Holders and such interference is not thereafter eliminated, (y) the
conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such Demand Registration are not satisfied or
waived, other than by reason of a failure by the Initiating Holders or (z) if
the request for such Demand Registration is withdrawn by the Initiating Holders,
in which event such Initiating Holders shall immediately reimburse the Company
upon demand for all Registration Expenses incurred by the Company in relation to
such Demand Registration.
(d) Expenses. In any registration initiated as a Demand
Registration, the Company shall pay all Registration Expenses (other than
underwriting discounts, commissions and applicable transfer taxes with respect
to Registrable Securities) in connection therewith, whether or not such Demand
Registration becomes effective, unless the Demand Registration fails to become
effective due to a withdrawal by the Initiating Holders or by reason of any
failure attributable to the Initiating Holders, in which latter event the
Initiating Holders shall immediately reimburse the Company upon demand for all
Registration Expenses incurred by the Company in connection with such Demand
Registration.
(e) Underwriting Procedures. If the Initiating Holders holding
a majority of the Registrable Securities held by all of the Initiating Holders
to which the requested Demand Registration relates so elect, the offering of
such Registrable Securities pursuant to such Demand Registration shall be in the
form of a firm commitment underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved Underwriter (as
hereinafter defined) selected in accordance with Section 3(f). In connection
with any Demand Registration under this Section 3 involving an underwritten
offering, none of the Registrable Securities held by any Designated Holder
making a request for inclusion of such Registrable Securities pursuant to
Section 3(b) hereof shall be included in such underwritten offering unless such
Designated Holder accepts the terms of the underwriting as agreed upon by the
Company, the Initiating Holders and the Approved Underwriter, and then only in
such quantity as will not, in the opinion of the Approved Underwriter,
jeopardize the success of such offering by the Initiating Holders. If the
Approved Underwriter advises a Designated Holder in writing that in its opinion
the aggregate amount of Registrable Securities requested to be included in such
offering is sufficiently large to have a material adverse effect on the success
of the underwritten offering, then the Company shall include in such
registration only the aggregate amount of Registrable Securities that in the
opinion of the Approved Underwriter may be sold without any such material
adverse effect and shall reduce, first as to the Designated Holders (who are not
original Initiating Holders and who requested to participate in such
registration pursuant to Section 3(b) hereof) as a group, if any; and second as
to the Initiating Holders as a group, pro rata within each group based on the
number of Registrable Securities included in the request for Demand
Registration.
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(f) Selection of Underwriters. If any Demand Registration of
Registrable Securities is in the form of an underwritten offering, the Company
shall select and obtain an investment banking firm to act as the managing
underwriter of the offering (the "Approved Underwriter"). If the Company fails
to select and obtain an Approved Underwriter, the Initiating Holders holding a
majority of the Registrable Securities held by all such Initiating Holders shall
select and obtain an Approved Underwriter, subject to the reasonable approval of
the Company.
4. Incidental or "Piggy-Back" Registration.
(a) Request for Incidental Registration. If the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account (other than a Registration
Statement on Form S-4 or Form S-8 or any successor thereto) or an offering on
behalf of other securities holders of the Company (other than the Designated
Holders), then the Company shall give written notice of such proposed filing to
each of the Designated Holders of Registrable Securities at least thirty (30)
days before the anticipated filing date of the Registration Statement, and such
notice shall describe the proposed registration and distribution and offer such
Designated Holders the opportunity to register the number of Registrable
Securities as each such holder may request (an "Incidental Registration"). The
Company shall use its reasonable best efforts (within ten (10) days of the
notice provided for in the preceding sentence) to cause the managing underwriter
or underwriters of a proposed underwritten offering (the "Company Underwriter")
to permit each Designated Holder which has requested in writing to include
Registrable Securities in the Incidental Registration to participate in such
offering on the same terms and conditions as the securities of the Company
included therein. In connection with any Incidental Registration under this
Section 4(a) involving an underwritten offering, the Company shall not be
required to include any Registrable Securities in such underwriting unless the
Designated Holders thereof accept the terms of the underwriting as agreed upon
between the Company and the Company Underwriter, and then only in such quantity
as will not, in the opinion of the Company Underwriter, jeopardize the success
of the offering by the Company. If in the written opinion of the Company
Underwriter the registration of all or part of the Registrable Securities which
the Designated Holders have requested to be included in the underwritten
offering by the Company would materially adversely affect such offering, then
the Company shall be required to include in such Incidental Registration, to the
extent of the amount that the Company Underwriter believes may be sold without
causing such adverse effect, first, all of the securities to be offered for the
account of the Company; second, the Registrable Securities to be offered for the
account of the Designated Holders pursuant to this Section 4, pro rata based on
the amount recommended by the Company Underwriter; and third, any other
securities requested to be included in such underwriting.
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(b) Expenses. The Company shall bear all Registration Expenses
(other than underwriting discounts, commissions and applicable transfer taxes
with respect to Registrable Securities) in connection with any Incidental
Registration pursuant to this Section 4, whether or not such Incidental
Registration becomes effective.
5. Holdback Agreements.
(a) Restrictions on Public Sale by Designated Holders. Each of
the Designated Holders agrees not to effect any public sale or distribution
(including, without limitation, any sales or distributions pursuant to an
effective shelf registration statement) of any Registrable Securities being
registered or of any securities convertible into or exchangeable or exercisable
for such Registrable Securities, including a sale pursuant to Rule 144 under the
Securities Act, during the sixty (60) day period beginning on the effective date
of such Registration Statement (except as part of such
registration), (i) in the case of a non-underwritten public offering, if and to
the extent requested by the Initiating Holders (in the event of a Demand
Registration pursuant to Section 3) or the Company (in the event of an
Incidental Registration pursuant to Section 4(a)), as the case may be, or (ii)
in the case of an underwritten public offering, if and to the extent requested
by the Approved Underwriter (in the event of a Demand Registration pursuant to
Section 3) or the Company Underwriter (in the event of an Incidental
Registration pursuant to Section 4(a), as the case may be.
(b) Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any of its securities,
or any securities convertible into or exchangeable or exercisable for such
securities (except pursuant to registrations on Form S-4 or S-8 or any successor
thereto), during the period beginning on the effective date of any Registration
Statement in which the Designated Holders of Registrable Securities are
participating and ending on the earlier of (i) the date on which all Registrable
Securities registered on such Registration Statement are sold and (ii) ninety
(90) days after the effective date of such Registration Statement.
6. Registration Procedures.
(a) Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Section 3 or Section 4 of
this Agreement, the Company shall use its reasonable best efforts to effect the
registration and sale of such Registrable Securities in accordance with the
Designated Holders' intended method of distribution thereof as quickly as
practicable, and in connection with any such request, the Company shall, as
expeditiously as possible:
(i) prepare and file with the SEC a Registration
Statement on any form for which the Company then qualifies or which counsel for
the Company and the Designated Holders shall deem appropriate and which form
shall be available for the sale of such Registrable Securities in accordance
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with the intended method of distribution thereof, and use its reasonable
best efforts to cause such Registration Statement to become and remain
effective; provided, however, that (A) before filing a Registration Statement or
prospectus or any amendments or supplements thereto, the Company shall provide
counsel selected by the Designated Holders holding a majority of the Registrable
Securities being registered in such registration ("Holders' Counsel") and any
other Inspector with an adequate and appropriate opportunity to review such
Registration Statement and each prospectus included therein (and each amendment
or supplement thereto) to be filed with the SEC, and will not file any
Registration Statement or prospectus or any amendment or supplement thereto to
which the Designated Holders whose Registrable Securities are being registered
or sold pursuant thereto shall reasonably object, and (B) the Company shall
notify the Holders' Counsel and each seller of Registrable Securities of any
stop order issued or threatened by the SEC and take all reasonable action
required to prevent the entry of such stop order or to remove it if entered as
soon as possible;
(ii) prepare and file with the SEC such amendments
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for the periods described herein;
(iii) as soon as reasonably possible, furnish to each
seller of Registrable Securities, prior to filing a Registration Statement,
copies of such Registration Statement as is proposed to be filed, and thereafter
such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus
included in such Registration Statement (including each preliminary prospectus)
and such other documents as each such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;
(iv) register or qualify such Registrable Securities
under such other securities or "blue sky" laws of such jurisdictions as any
seller of Registrable Securities may reasonably request (and to notify each
Designated Holder of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose), and to continue
such qualification in effect for the periods described herein, and do any and
all other acts and things which may be reasonably necessary or advisable to
enable any such seller to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such seller; provided, however, that the
Company shall not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 6(a)(iv), (B) subject itself to taxation in any such jurisdiction solely
as a result of this Section 6(a)(iv) or (C) consent to general service of
process in any such jurisdiction solely as a result of this Section 6(a)(iv);
(v) use its reasonable best efforts to cause the
Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company or
otherwise to enable the seller or sellers of Registrable Securities to
consummate the disposition of such Registrable Securities;
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(vi) notify each seller of Registrable Securities
at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
and promptly prepare and file a supplement or amendment to such prospectus and
furnish to each seller of Registrable Securities a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, upon delivery to the purchasers of such Registrable Securities, such
prospectus shall not contain an 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 in light of the circumstances under which they
were made;
(vii) enter into and perform customary agreements
(including an underwriting agreement in customary form with the Approved
Underwriter or Company Underwriter, if any, selected as provided in Section 3 or
Section 4, as the case may be) and take such other actions as are prudent and
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities;
(viii) make available for inspection by any seller of
Registrable Securities, any managing underwriter participating in any
disposition pursuant to such Registration Statement, Holders' Counsel and any
attorney, accountant or other agent retained by any such seller or any managing
underwriter (each, an "Inspector" and collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement. Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (A)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the Registration Statement, (B) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or (C) the information in such Records was known to the Inspectors
on a non-confidential basis prior to its disclosure by the Company or has been
made generally available to the public. Each seller of Registrable Securities
agrees that it shall, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(ix) if such sale is pursuant to an underwritten
offering, use its best efforts to obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as Holders'
Counsel or the managing underwriter reasonably request;
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(x) use its best efforts to furnish, at the
request of any seller of Registrable Securities on the date such securities
are delivered to the underwriters for sale pursuant to such registration or, if
such securities are not being sold through underwriters, on the date the
Registration Statement with respect to such securities becomes effective, an
opinion, dated such date, of counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and to the seller
making such request, covering such legal matters with respect to the Registrable
Securities and the registration thereof in respect of which such opinion is
being given as such seller may reasonably request and are customarily included
in such opinions;
(xi) otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable but no later than
fifteen (15) months after the effective date of the Registration Statement, an
earnings statement covering a period of twelve (12) months beginning after the
effective date of the Registration Statement, in a manner which satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xii) cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by
the Company are then listed (provided that the applicable listing requirements
are satisfied) and direct the Company's transfer agent to cooperate with the
Designated Holders to facilitate the timely preparation and delivery of
certificates not bearing any securities laws restrictive legends representing
the Registrable Securities to be sold and in such denominations and names as the
Designated Holders may request;
(xiii) keep Holders' Counsel advised in writing as to
the initiation and progress of any registration under Section 3 or Section 4
hereunder;
(xiv) cooperate with each seller of Registrable
Securities and each underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc. (the "NASD");
(xv) file, when due, all reports and other filings
required to be made by the Company pursuant to the Exchange Act so as to
enable the Designated Holders to comply with the current public information
requirements contained in paragraph (c) of Rule 144 under the Securities Act (or
any successor provisions) and to qualify the Company for the use of a
Registration Statement on Form S-3 for the resale of the Registrable Securities
by the Designated Holders (if the Company otherwise meets the eligibility
requirements for the use of Form S-3);
(xvi) use best efforts to take all other steps
reasonably necessary to effect the registration of the Registrable
Securities contemplated hereby; and
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(xvii) make any effort to obtain the withdrawal of
any order suspending the effectiveness of any Registration Statement at the
earliest possible time.
(b) Seller Information. 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 seller's distribution of
Registrable Securities as the Company may from time to time reasonably request
in writing.
(c) Notice to Discontinue. Each Designated Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
of the happening of any event of the type described in Section 6(a)(vi), such
Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Designated Holder's receipt of copies of the supplemented
or amended prospectus contemplated by Section 6(a)(vi) and, if so directed by
the Company, such Designated Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Designated Holder's possession, of the prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to
this Agreement (including, without limitation, the period referred to in Section
6(a)(ii)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 6(a)(vi) to and including the date
when the Designated Holder shall have received the copies of the supplemented or
amended prospectus contemplated by and meeting the requirements of Section
6(a)(vi).
(d) Registration Expenses. The Company shall pay all expenses
(other than as set forth in Sections 3(d) and 4(b)) arising from or incident to
the performance of, or compliance with, this Agreement, including, without
limitation, (i) SEC, stock exchange and NASD registration and filing fees, (ii)
all fees and expenses incurred in complying with securities or "blue sky" laws
(including reasonable fees, charges and disbursements of counsel in connection
with "blue sky" qualifications of the Registrable Securities), (iii) all
printing, messenger and delivery expenses, (iv) the fees, charges and expenses
of counsel to the Company and of its independent public accountants and any
other accounting fees, charges and expenses incurred by the Company (including,
without limitation, any expenses arising from any special audits or comfort
letters incident to or required by any registration or qualification) and the
reasonable legal fees, charges and expenses of one counsel engaged by the
Initiating Holders to represent their interests in connection with a Demand
Registration and (v) any liability insurance or other premiums for insurance
obtained by the Company in connection with any Demand Registration or Incidental
Registration pursuant to the terms of this Agreement, regardless of whether such
Registration Statement is declared effective (all such expenses being
"Registration Expenses").
7. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless and to reimburse upon request, to the fullest extent
permitted by law, each Designated Holder, its officers, directors, trustees,
partners, employees, advisors and agents and each Person who controls (within
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the meaning of the Securities Act or the Exchange Act) such Designated Holder
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and counsel) arising out of or
based upon any untrue, or allegedly untrue, statement of a material fact
contained or incorporated by reference in any Registration Statement, prospectus
or preliminary prospectus or notification or offering circular (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) 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 contained
in any information concerning such Designated Holder furnished in writing to the
Company by such Designated Holder expressly for use therein. The Company shall
also provide customary indemnities to any underwriters of the Registrable
Securities, their officers, directors and employees and each Person who controls
such underwriters (within the meaning of the Securities Act and the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Designated Holders.
(b) Indemnification by Designated Holders. In connection with
any Registration Statement in which a Designated Holder is participating
pursuant to Section 3 or Section 4 hereof, each such Designated Holder shall
furnish to the Company in writing such information with respect to such
Designated Holder as the Company may reasonably request or as may be required by
law for use in connection with any such Registration Statement or prospectus and
each Designated Holder agrees to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors, officers, employees and
each Person who controls the Company (within the meaning of the Securities Act
and the Exchange Act) to the same extent as the foregoing indemnity from the
Company to the Designated Holders, but only with respect to any such information
with respect to such Designated Holder furnished in writing to the Company by
such Designated Holder expressly for use therein.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder (the "Indemnified Party") agrees to give
prompt written notice to the indemnifying party (the "Indemnifying Party") after
the receipt by the Indemnified Party of any written notice of the commencement
of any action, suit, proceeding or investigation or threat thereof made in
writing for which the Indemnified Party intends to claim indemnification or
contribution pursuant to this Agreement; provided, however, that the failure so
to notify the Indemnified Party shall not relieve the Indemnifying Party of any
liability that it may have to the Indemnified Party hereunder. If notice of
commencement of any such action is given to the Indemnifying Party as above
provided, the Indemnifying Party shall be entitled to participate in and, to the
extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and reasonably satisfactory to such Indemnified Party. The
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Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable costs of investigation) shall be paid by the
Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii)
the Indemnifying Party fails to assume the defense of such action with counsel
reasonably satisfactory to the Indemnified Party in its reasonable judgment or
(iii) the named parties to any such action (including any impleaded parties)
have been advised by such counsel that either (x) representation of such
Indemnified Party and the Indemnifying Party by the same counsel would be
inappropriate under applicable standards of professional conduct or (y) there
may be one or more legal defenses available to the Indemnified Party which are
different from or additional to those available to the Indemnifying Party. In
either of such cases, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of such Indemnified Party but shall pay, or
promptly reimburse the Indemnified Party upon request for, the Indemnified
Party's counsel fees and expenses and all losses, claims, costs, liabilities and
expenses, as incurred by the Indemnified Party arising out of or based upon the
matters described in Section 7(a). No Indemnifying Party shall be liable for any
settlement entered into without its written consent, which consent shall not be
unreasonably withheld.
(d) Contribution. If the indemnification provided for in this
Section 7 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party 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 faults of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Sections 7(a), 7(b) and 7(c), any legal
or other fees, charges or expenses reasonably incurred by such party in
connection with any investigation or proceeding; provided that the total amount
to be contributed by a Designated Holder shall be limited to the net proceeds
received by such Designated Holder from the sale of Registrable Securities
pursuant to the Registration Statement, prospectus, notification or offering
circular alleged to contain such untrue statement of material fact or omission
of a material fact.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person.
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8. Rule 144.
The Company covenants that it shall (a) file any reports
required to be filed by it under the Exchange Act and (b) take such further
action as each Designated Holder of Registrable Securities may reasonably
request (including providing any information necessary to comply with Rule 144
under the Securities Act), all to the extent required from time to time to
enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted by
the SEC. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
9. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to (i)
the Registrable Securities and (ii) any and all equity securities of the Company
or any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of, in conversion
of, in exchange for or in substitution of, the Registrable Securities and shall
be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date hereof.
The Company shall cause any successor or assign (whether by merger,
consolidation or otherwise) to enter into a new registration rights agreement
with the Designated Holders having the same substantive terms of this Agreement
as a condition of any such transaction.
(b) No Inconsistent Agreements. The Company shall not enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Designated Holders in this Agreement or grant any
additional registration rights to any Person or with respect to any securities
which are not Registrable Securities which are prior in right to or inconsistent
with the rights granted in this Agreement.
(c) Remedies. The Designated Holders, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
shall be entitled to specific performance of their 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 the provisions of this
Agreement and hereby agrees to waive in any action for specific performance the
defense that a remedy at law would be adequate.
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(d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless consented to in writing by (i) the Company and (ii) the
Designated Holders holding Registrable Securities representing (after giving
effect to any adjustments) at least 75% of the aggregate value of Registrable
Securities owned by all of the Designated Holders. Any such written consent
shall be binding upon the Company and all of the Designated Holders. A copy of
any such amendment together with an executed signature page shall be timely
distributed to all Designated Holders.
(e) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be made
by registered or certified first-class mail, return receipt requested,
telecopier, courier service, overnight mail or personal delivery:
(i) if to the Company:
Host Funding, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: 925/376-7983
Attention: President
(ii) if to MPI:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: 925/376-7983
Attention: ▇▇▇▇ ▇▇▇▇▇▇
(iii) if to any other Designated Holder,
at its address as it appears on the
stock record books of the Company.
All such notices and communications shall be deemed to have
been duly given when delivered, if personally delivered by hand or delivered by
commercial courier service or overnight mail; two (2) Business Days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
mechanically acknowledged, if telecopied.
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(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties hereto. The Company may not assign its rights or obligations under
this Agreement without the prior written consent of each Designated Holder.
Notwithstanding the foregoing, no assignee of the Company shall have any of the
rights granted under this Agreement until such assignee of the Company shall
acknowledge its rights and obligations under this Agreement by a signed written
agreement for the benefit of the Designated Holders pursuant to which such
assignee accepts such rights and obligations.
(g) Third Party Beneficiaries. No Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of any of the rights granted hereunder.
(h) 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 shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(k) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, it being
intended that all of the rights and privileges of the Designated Holders shall
be enforceable to the fullest extent permitted by law.
(l) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and in the Purchase Agreement. This Agreement supersedes all other prior
agreements and understandings between the parties with respect to such subject
matter.
(m) Further Assurances. Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
(n) Forms. All references in this Agreement to particular
forms of registration statements, rules and laws are intended to include any
successor forms, rules or laws which are intended to replace, or to apply to
similar transactions, as the forms, rules or laws herein referenced.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement on the date first written above.
HOST FUNDING, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, INC.
By:/s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇
Title: President
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