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Exhibit 4.9
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of September 9, 1997
By and Between
▇▇▇▇▇▇▇ REALTY OF WINSTON-SALEM, INC.,
a North Carolina Corporation
and
WINSTON HOTELS, INC., a North Carolina Corporation
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REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this "Agreement") is
made and entered into as of September 9, 1997, by and among WINSTON HOTELS,
INC., a North Carolina corporation (the "Company"), and ▇▇▇▇▇▇▇ REALTY OF
WINSTON-SALEM, INC., a North Carolina corporation (herein referred to as the
"Owner").
WHEREAS, on the date hereof, the Owner will become the owner of Units
(as defined below) in ▇▇▇▇ Limited Partnership, a North Carolina limited
partnership (the "Operating Partnership") in connection with the transactions
described in that certain Contribution and Exchange Agreement by and among the
Operating Partnership, the Company and the Owner dated as of February 5, 1997
(the "Exchange Agreement");
WHEREAS, in order to induce the Company to enter into the Exchange
Agreement, the Owner has agreed to the Lock-up (as defined below) set forth in
Section 2 hereof; and
WHEREAS, in order to induce the Owner to agree to the Lock-up end the
Exchange Agreement, the Company has agreed to provide the Owner and each of its
permissible successors, assigns and transferees as provided in Section 2(b)
hereof (herein referred to individually as a "Holder" and collectively as the
"Holders") with the registration rights set forth in Section 3 hereof.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Affiliate" shall mean a Person that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with the Company.
"Common Stock" shall mean the Common Stock, par value $.01 per share,
of the Company.
"Company" shall have the meaning set forth in the preamble and also
shall include the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Agreement" shall have the meaning set forth in the preamble.
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"Holder and "Holders" shall have the meanings set forth in the
preamble.
"Lock-up" shall have the meaning set forth in Section 2(a) hereof
"Lock-up Period" shall have the meaning set forth in Section 2(a)
hereof.
"Operating Partnership" shall have the meaning set forth in the
preamble and also shall including the Operating Partnership's successors.
"Partnership Agreement" shall mean the Agreement of Limited Partnership
of the Operating Partnership, as amended.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated. organization or other legal entity or a government agency or
agency or political subdivision thereof.
"Private Placement" shall mean the issuance and sale of the Units to
the Owner pursuant to the transactions described in the Exchange Agreement.
"Prospectus" shall mean the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and all amendments
and supplements thereto, including any supplement relating to the terms as of
the offering of any portion of the registrable Securities covered by the Shelf
Registration Statement, and in each case including all materials incorporated by
reference therein.
"Redemption Right" shall mean the right of a Partner under the
Partnership Agreement to cause his or her Units to be redeemed for cash or
Shares as more specifically described therein.
"Registrable Securities" shall mean the Shares, excluding (i) Shares
held by Owners who are not Affiliates which were issued in a public offering
pursuant to an effective registration statement and (ii) shares that have been
previously disposed of by a Holder, and (iii) Shares that counsel to the Company
has opined in writing to the Holders may be freely distributed to the public
free of the registration and prospectus delivery requirements of the Securities
Act and applicable State securities laws in transactions that upon consummation
will result in the delivery of Shares that are freely tradeable, by
nonaffiliates.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, or any registration or
qualification of any of the Shares, including, without limitation: (i) all SEC,
stock exchange or National Association of Securities Dealers, Inc. ("NASD")
registration and filing fees, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with qualification of any of the
Registrable Securities under any state securities or blue sky laws and the
preparation of a blue sky memorandum) and compliance with the rules of the NASD,
(iii) all expenses of any Persons in preparing, assisting in preparing, word
processing, printing and distributing the Shelf Registration Statement, any
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other registration statement, and any Prospectus, certificates and other
documents relating to the performance of and compliance with this Agreement,
(iv) all fees and expenses incurred in connection with the listing, if any, of
any of the Registrable Securities on any securities exchange or exchanges
pursuant to Section 4(a) hereof, and (v) the fees and disbursements of the
Company's counsel and of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance. Registration Expenses shall
specifically exclude underwriting discounts and commissions, the fees and
disbursements of counsel and other agents representing Holders and transfer
taxes, if any, relating to the sale or disposition of Registrable Securities by
a selling Holder, all of which shall be borne by such Holder in all cases.
"Registration Notice" shall have the meaning set forth in Section 3(a)
hereof.
"Registration Statement" or the "Shelf Registration Statement" shall
mean a registration statement of the Company (and any other entity required to
be a registrant with respect to such registration statement pursuant to the
requirements of the Securities Act) that covers all or any portion of the
Registrable Securities to be offered on a delayed or continuous basis pursuant
to Rule 415 tinder the Securities Act, or any similar rule that may be adopted
by the SEC, and all amendments (including post-effective amendments) to such
registration statement, all exhibits thereto and all materials incorporated by
referenced therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shares" shall mean any Common Stock issued or issuable to a Holder
upon redemption of such Holder's Units.
"Shelf Registration" shall mean a registration required to be effected
pursuant to Section 3 hereof.
"Suspension Event" shall have the meaning set forth in Section 5(a)
hereof
"Units" shall mean the units of limited partnership interest of the
Operating Partnership issued to the Owner in the Private Placement on the date
hereof, which interest may be transferred by Owner and any other Holder pursuant
to the terms of this Agreement, and which interests are redeemable for cash, or
at the option of the Company, in its capacity as the general partner of the
Operating Partnership, Common Stock.
2. LOCK-UP AGREEMENT.
(a) Lock-up Period. The Owner hereby agrees that, except as set forth
in this Section below, for the one-year period commencing on the date hereof
(the "Lock-up Period"), without the prior written consent of the Company, it
will not, directly or indirectly, sell, offer or contract to sell, grant any
option for the sale of, seek redemption of or otherwise dispose of or transfer,
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(collectively, "Dispose of"), any Units (the "Lock-up"). Thereafter, the Units
maybe submitted for redemption or otherwise Disposed of in accordance with the
provisions of the Partnership Agreement; provided, however, (a) that in the
event the Company, in its capacity as the general partner of the Operating
Partnership, elects to deliver shares in payment of the redemption price for
such Units, such Shares and any remaining unredeemed Units may be Disposed of
only in accordance with the terms of this Agreement, and (b) notwithstanding any
references to a shorter period in the Partnership Agreement, including but not
limited to Section 8.05, no Units held by the Owner on the date hereof may be
redeemed before the expiration of the Lock-up Period.
(b) Exceptions. The following transfers of Units or Shares shall not be
subject to the Lock-up set forth in Section 2(a):
(i) the Owner may dispose of Units or Shares to any of its current
shareholders provided they are accredited investors, as defined below, and
otherwise in accordance with the Exchange Agreement;
(ii) a Holder who is a natural person may Dispose of Units or
Shares to his or her spouse, siblings, parents or any natural or adopted
children or to any personal trust in which such family members or such Owner
retain the entire beneficial interest,
(iii) a Holder that is a corporation, partnership or other business
entity may Dispose of Units or Shares of one or more other entities that are
wholly owned and controlled, legally and beneficially, by such Owner or by a
Person or Persons that directly or indirectly wholly owns and controls such
Owner;
(iv) A Holder may Dispose of Units or Shares on his or her death to
such Owner's estate, executor, administrator or personal representative or to
such Holder's beneficiaries pursuant to a devise or bequest or by the laws of
descent and distribution; and
(v) a Holder may dispose of Units or Shares as a bona fide gift;
provided, however, that in the case of any transfer of Units or Shares pursuant
to clauses (i), (ii), (v) and (vi), the transferee or transferor shall each be
an "accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities Act. In the event any Holder Disposes of Units or Shares
described in this Section 2(b), such Units or Shares shall remain subject to
this Agreement and, as a condition of the validity of such disposition, the
transferee (and any transferee who acquires Units or Shares from a pledgee upon
foreclosure) shall be required to execute and deliver a counterpart of this
Agreement. Thereafter, such transferee shall be deemed to be a Holder for
purposes of this Agreement.
3. SHELF REGISTRATION UNDER THE SECURITIES ACT.
(a) Filing the Shelf Registration Statement. If the Company satisfies
the Redemption Right of a Holder under the Agreement of Limited Partnership (the
"Partnership Agreement) of the Operating Partnership through the issuance of
Shares, the Company shall have used its best
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efforts to cause such Shares to be freely tradeable by any Holder upon their
receipt. Unless the SEC staff lifts its current restriction on how soon the
Company may register the Shares for issuance, the Company shall have satisfied
its obligations under this paragraph 3(a) if it (i) files a registration
statement covering the issuance of the Shares within 54 weeks of the issuance of
the Units and (ii) uses its "best efforts" to cause such registration statement
to be declared effective promptly. If (at the advice of counsel to the Company)
securities law considerations dictate that it is in the best interest of the
Company to satisfy a Holder's Redemption Right through the issuance of
Registrable Securities, the Company will have satisfied its obligations under
this paragraph 3(a) if it promptly files after the issuance of the Registrable
Securities and the receipt by the Company of notice (the "Registration Notice")
that a Holder desires to sell its Registrable Securities (and in no event later
than 30 days thereafter) a Shelf Registration Statement providing for the sale
of the Registrable Securities by such Holder in accordance with the terms hereof
and uses its best efforts to cause such Shelf Registration Statement to be
declared effective by the SEC promptly, the Company agrees to use its best
efforts to keep the Shelf Registration Statement continuously effective for at
least the shorter of 60 days or the sale of all of the outstanding Registrable
Securities covered by the applicable Registration Notice. After the expiration
of such period, the Company will use its best efforts to cause the Registration
Statement to become effective again with 10 business days of receipt by the
Company of a subsequent Registration Notice as contemplated by the last
paragraph of Section 4 hereof.
(b) Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 3(a). Each Holder shall pay
all underwriting discounts and commissions, the fees and disbursements of
counsel representing such Holder and transfer taxes, if any, relating to the
sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement or Rule 144 under the Securities Act.
(c) Inclusion in Shelf Registration Statement. Each Holder agrees to
provide as promptly as practicable the information reasonably requested by the
Company in connection with the Registration Statement. Any Holder who does not
provide (i) a Registration Notice and (ii) the information reasonably requested
by the Company in connection with the then applicable Shelf Registration
Statement shall not be entitled to have its Registrable Securities included in
the Shelf Registration Statement, but may thereafter give a Registration Notice,
in which event the Company shall comply with the provisions of this Section 3.
(d) Unavailability of Rule 415. Notwithstanding anything herein to the
contrary, in the event the Company is ineligible under Rule 415 of the
Securities Act to register the Registrable Securities upon expiration of the
Lock-up Period pursuant to a continuous Shelf Registration Statement, the
Company shall use its best efforts to effectively register for public resale
each Holder's Registrable Securities at such time as such Holder elects to sell
any Registrable Securities.
4. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect to the
Shelf Registration Statement contemplated by Section 3 hereof, the Company
shall:
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(a) prepare and file with the SEC, within the time period set
forth in Section 3 hereof, the Shelf Registration Statement, which Shelf
Registration Statement (i) shall permit selling Holders to sell the Registrable
Securities in accordance with the intended method or methods of distribution by
the selling Holders thereof, and (ii) shall comply as to form and substance with
the requirements of the applicable form and include all financing statements
required by the SEC to be filed therewith;
(b) (i) prepare and file with the SEC such amendments to such
Registration Statement as may be necessary to keep such Registration Statement
effective until the Holders have sold all of the Registrable Securities; (ii)
cause the Prospectus to be amended or supplemented as required and to be filed
as required by Rule 424 or any similar Rule that may be adopted under the
Securities Act; (iii) respond as promptly as practicable to any comments
received from the SEC with respect to the Shelf Registration Statement or any
amendment thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Holders thereof, provided, however, that
the Company shall have 10 business days to prepare and file any such amendment
or supplement after receipt of a Registration Notice. Once a Holder has
delivered a Registration Notice to the Company, such Holder shall promptly
provide to the Company such information as the Company reasonably requests in
order to identify such Holder and the method of distribution in a post-effective
amendment to the Registration Statement or a supplement to the Prospectus. Such
Holder also shall notify the Company in writing up completion of such offer or
sale or at such time as such Holder no longer intends to make offer; or sales
under the Registration Statement;
(c) furnish to each Holder of Registrable Securities or its
designee that has delivered a Registration Notice to the Company, without
charge, as man copies of the Prospectus and my amendment or supplement thereto
and such other documents as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities;
(d) use its best efforts to, as applicable, either (i)
register or qualify the Registrable Securities by the time the Shelf
Registration Statement is declared effective by the SEC,
or (ii) make the notices required under all applicable state securities or blue
sky laws of such jurisdictions in the United States and its territories and
possessions as any Holder of Registrable Securities covered by the Shelf
Registration Statement shall reasonably request in writing, keep any such
registration or qualification effective during the period such Registration
Statement is required to be kept effective or during the period offers or sales
are being made by a Holder that has delivered a Registration Notice to the
Company, whichever is shorter, and do any and all other acts that may reasonably
be necessary to enable such Holder to dispose of such Registrable Securities
owned by such Holder in each such jurisdiction; provided, however, that in
connection therewith, the Company shall not be required to (i) qualify as a
foreign corporation to do business
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or to register as a broker or dealer in any such jurisdiction where it otherwise
would not be required to qualify or register but for this Section 4(d), (ii)
subject itself to taxation in any such jurisdiction, or (iii) file a general
consent to service of process in any such jurisdiction, wherein it is not
otherwise required to do so;
(e) notify each Holder of Registrable Securities that has
delivered a Registration Notice to the Company promptly and, if requested by
such Holder, confirm in writing (i) when the Registration Statement and any
post-effective amendment thereto have become effective, (ii) when any amendment
or supplement as to the Prospectus has been filed with the SEC, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of the Registration Statement or any part thereof
or the initiation of any proceedings for that purpose, (iv) if the Company
receives any notification with respect to the suspension of the qualification of
the Registrable Securities for offer or sale in any jurisdiction or the
initiation of any proceeding for such purpose, and (v) of the happening of any
event during the period the Registration Statement is effective as a result of
which (A) such Registration Statement contains any 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 or (B) the
Prospectus, as then amended or supplemented, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(f) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement, or any part
thereof, as promptly as possible;
(g) furnish to each Holder of Registrable Securities that has
delivered a Registration Notice to the Company, without charge, at least one
conformed copy of the Shelf Registration Statement and any post effective
amendment thereto (without documents incorporated therein by reference or
exhibits, thereof, unless requested);
(h) cooperate with the selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of certifications
representing Registrable Securities to be sold and not bearing any Securities
Act legend; and enable certificates for such Registrable Securities to be issued
for such numbers of shares and registered in such names as the selling Holders
may reasonable request at least two business days prior to any sale of
Registrable Securities;
(i) at any time when a Prospectus relating to the Registration
Statement is required to be delivered under the Securities Act, the Company
shall immediately notify each Holder of the happening of any event as a result
of which the Prospectus included in the Registration Statement, as then in
effect, includes 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, in light of the circumstances under which they were made, not
misleading. In such event, the Company shall as promptly as possible prepare and
furnish to each Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated
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therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
as promptly as possible to reflect such amendment or supplement;
(j) upon at least five (5) business days advance written
notice and during normal business hours, make available, for inspection by the
Holders of the Registrable Securities that have provided a Registration Notice
to the Company and any counsel, accountants or other representatives retained by
such Holders all financial and other records, pertinent corporate documents and
properties of the Company, and case the officers, directors and employees of the
Company to supply all such records, documents or information reasonable
requested by such Holders, counsel, accountants or representatives in connection
with the Shelf Registration Statement, provided, however, that such records,
documents or information which the Company determines in good faith to be
confidential and notifies such Holders, counsel, accountants or representatives
in writing that such records, documents or information are confidential shall
not be disclosed by such Holders, counsel, accountants or representatives unless
(i) such disclosure is necessary to avoid or correct a material misstatement or
omission, in a Registration Statement, (ii) such disclosure is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, or (iii)
such records, documents or information become generally available to the public
other than through a breach of this Agreement;
(k) use its best efforts to cause all Registrable Securities
to be listed on any securities exchange on which similar securities issued by
the Company are then listed or, if no such securities are then listed, on an
exchange selected by the Company, if such listing is then permitted under the
rules of such exchange; or if such listing is not practicable, to secure
designation of such security as a NASDAQ "National Market System Security"
within the meaning of Rule 11A under the Exchange Act; or, failing that, to
secure NASDAQ authorization for such securities; and, without limiting the
foregoing, to arrange for at least two market makers to register as such with
respect to such securities NASD; and to provide a transfer agent and registrar
for such Registrable Securities not later than the effective date of such
registration statement,
(1) provide a CUSIP number for all Registrable Securities not
later than the effective date of a Registration Statement; and
(m) Make available to its security holders, as soon as
reasonably practicable, an earnings statement covering at least 12 months, which
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
The Company may from time to time require each Holder of Registrable
Securities to furnish to the Company in writing such information regarding the
number of shares owned and the proposed method or methods of distribution by
such Holder of the Registrable Securities to be included in a Registration, as
the Company may from time to time reasonably request in writing.
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In connection with and as a condition to the Company's obligations with
respect to the Shelf Registration Statement pursuant to Section 3 hereof and
this Section 4, each Holder covenants and agrees that (i) it will not offer or
sell any Registrable Securities pursuant to the Shelf Registration Statement
until it has provided a Registration Notice pursuant to Section 3(a) and has
received copies of the Prospectus as then amended or supplemented as
contemplated by Section 4(c) and notice from the Company that the Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 4(e) and 4(i), (ii) upon receipt of any notice from the
Company contemplated by Section 5(a) or Section 4(e) (in respect of the
occurrence of an event contemplated by clause (v) of Section 4(e)), such Holder
shall not offer or sell any Registrable Securities pursuant to the Shelf
Registration Statement until such Holder receives copies of the supplemented or
amended Prospectus contemplated by Section 4(i) hereof and receives notice that
any post-effective amendment has become effective, and, if so directed by the
Company, such Holder will deliver to the Company (at the expense of the Company)
all copies in its possession, other than permanent file copies then in such
Holder's possession, of the Prospectus as amended or supplemented at the time of
receipt of the notice contemplated by Section 5(a) or clause (v) of Section
4(e); (iii) all offers and sales by such Holder under the Registration Statement
shall be completed within 60 days after the first date on which offers or sales
can be made pursuant to clause (i) above, and upon expiration of such 60-day
period, the Holder will not offer or sell any Registrable Securities under the
Registration Statement until it has again complied with the provisions of clause
(i) above; (iv) such Holder and any of its officers, directors or affiliates, if
any, will comply with the provisions of Rule 10b-6 and 10b-7 under the Exchange
Act as applicable to them in connection with sales of Registrable Securities
pursuant to the Shelf Registration Statement; and (v) such Holder and any of its
officers, director, or affiliates, if any, will enter into such written
agreements as the Company shall reasonably request to ensure compliance with
clause (iv) above.
5. SUSPENSION OF REGISTRATION RIGHTS: BLACK-OUT PERIOD.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to use its best efforts
to cause the Registration Statement and any filings with any state securities
commission to become effective or to amend or supplement the Registration
Statement shall be suspended in the event and during such period that unforeseen
circumstances (including without limitation (i) an underwritten primary offering
by the Company if the Company is advised by the underwriters that sale of
Registrable Securities under the Registration Statement would have a material
adverse effect, on the primary offering or (ii) pending negotiations relating
to, or consummation of, a transaction or the occurrence of an event that would,
require additional disclosure of material information by the Company in the
Registration Statement or such filing, as to which the Company has a bona fide
business purpose for preserving confidentiality or which renders the Company
unable, to comply with SEC requirements) (such unforeseen circumstances being
hereinafter referred to as a "Suspension Event") would make it impractical or
unadvisable to cause the Registration Statement or such filings to become
effective or to amend or supplement the Registration Statement. but such
suspension shall continue only for so long as such event or its effect is
continuing but in no event will that suspension exceed 90 days. The Company
shall notify the Holder of the existence and,
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in the case of circumstances referred to in clause (i) of this Section 5(a),
nature of any Suspension Event. The Company may deliver only two such notices
within any 2-month period.
(b) Following the effectiveness of the Registration Statement
and the filings with any state securities commission the Holders agree that they
will not effect any sales of the Registrable Securities pursuant to the
Registration Statement or any such filings at any time after they have received
notice from the Company to suspend sales as a result of the occurrence or
existence of any Suspension Event. The Holder may recommence effecting sales of
the Shares pursuant to the Registration Statement or such filings after the
earlier of 30 days or receipt of further notice to such effect from the Company,
which notice shall be given by the Company not later than five days after the
conclusion of any such Suspension Event. The Company may deliver only one such
notice within any 6-month period. The Company will use its best efforts to
conclude a Suspension Event and to correct or update the Registration Statement,
any such filings, and the Prospectus as promptly as possible.
6. INDEMNIFICATION: CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to
defend, indemnify and hold harmless each Holder and its officers and directors,
any underwriter (as defined in the Securities Act) for each selling Holder of
Registrable Securities, and each Person, if any, who controls any such Holder or
underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, to which such Holder, officer, director or controlling
Person may become subject under the Securities Act or otherwise (A) that arises
out of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement [(including all
documents incorporated therein by reference)] or any amendment thereto, or the
omission or alleged omission therein of a material fact required to be stated
therein or necessary to make the statements therein not misleading; (B) that
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in any Prospectus (including all documents
incorporated therein by reference) or any amendment or supplement thereto, or
the omission or alleged omission therein of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or (C) that arises out of or is based upon any
violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"), or
any State's securities law, or any rule or regulation promulgated under the
Securities Act, the Securities Exchange Act, or any State securities law.
(ii) subject to the limitations set forth in Section 6(c),
against any and all expense whatsoever, as incurred (including reasonable fees
and disbursements of counsel), reasonably incurred in investigating, preparing
or defending against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each case whether or
not a party, or any claim whatsoever based upon any such untrue statement
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or alleged untrue statement or omission or alleged omission, to the extent that
any such expense is not paid under Subparagraph (i) above;
provided, however, that the indemnity provided pursuant to this Section 6(a)
shall not apply to any Holder with respect to any loss, liability, claim, damage
or expense that arises out of or is based upon any untrue statement or omission
made in reliance upon and in conformity with written information furnished to
the Company by such Holder expressly for use in the Shelf Registration Statement
or any amendment thereto or the Prospectus or any amendment or supplement
thereto.
(b) Indemnification by Holders. Each Holder agrees to
indemnify and hold harmless the Company, the other selling Holders, each of
their respective directors and officers (including each director and officer of
the Company who signed the Registration Statement), any underwriter (as defined
in the Securities Act) for each of the Company or such other Holders and each
Person, if any, who controls the Company, any other selling Holder or
underwriter within the meaning of Section 15 of the Securities Act, to the same
extent as the indemnity contained in Section 6(a) hereof, but only insofar as
such loss, liability, claim, damage or expanse arises out of or is based upon
any untrue statement or omission made in the Shelf Registration Statement or any
amendment thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by such selling Holder expressly for use therein.
(c) Conduct of Indemnification Proceedings. Each indemnified
party shall give reasonably prompt notice to each indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party (i) shall not
relieve it from any liability that it may have under the indemnity agreement
provided in Section 6(a) or (b);above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
materially prejudices the indemnifying party or results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) shall not, in any
event, relieving the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided under Section 6(a) or
(b) above. After receipt of such notice, the indemnifying party shall be
entitled to participate in and, to the extent it wishes, jointly with any other
indemnifying party so notified, assume the defense of such action or proceeding
at such indemnifying party's own expense with counsel chosen by such
indemnifying party and approved by the indemnified party, which approval shall
not be unreasonably withheld; provided however, that if he defendants in any
such action or proceeding include both the indemnified party and the
indemnifying party and the indemnifying party and indemnified party reasonably
determine, upon advice of counsel, that a conflict of interest exists or that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
then the indemnifying party shall not be entitled to assume the defense of such
action or proceeding and the indemnified party shall be entitled to one separate
counsel, the reasonable fees and expenses of which shall be paid by the
indemnifying party. If the indemnifying party does not assume the defense of any
such action or proceeding, after having received the notice referred to in the
first sentence of this Paragraph, the indemnifying party will pay the reasonable
fees and expenses of
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counsel (which shall be limited to a single law firm) for the indemnified party.
If the indemnifying party assumes the defense of any such action or proceeding
in accordance with this Paragraph, such indemnifying party shall not be liable
for any fees and expenses of counsel for the indemnified party incurred
thereafter in connection with such action or proceeding, except as set forth in
the proviso in the second sentence of this Section 6(c).
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 6 is for any reason held to be unenforceable, the Company and the
selling Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company and the selling Holders, in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
selling Holders on the other (in such proportions that the selling Holders are
severally, not jointly, responsible for the balance), in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of the indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether the 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
the indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action and any other
equitable considerations appropriate under the circumstances. The parties hereto
agree that it would not be just or equitable if contribution pursuant to this
Section 6(d) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this Section 6(d), no
selling Holder shall be required to contribute any amount in excess of the
proceeds (less selling commissions) received by such selling Holder upon the
sale of Registrable Securities less the amount of any damages which such selling
Holder has otherwise been required to pay.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6(d), each Person, if
any, who controls a Holder within the meaning of Section 15 of the Securities
Act and directors and officers of a Holder shall have the same rights to
contribution as such Holder, and each director of the Company, each officer of
the Company who signed the Registration Statement and each Person, if any, who
controls he Company within the meaning of Section 15 of the Securities Act shall
have the same rights to contribution as the Company.
7. RULE 144 SALES. In connection with any sale, transfer or other
disposition by any Holder of any Registrable Securities pursuant to Rule 144
under the Securities Act, the Company shall reasonably cooperate with such
Holder to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any Securities
Act legend, and enable certificates for such Registrable Securities to be for
such number of shares and registered in such names as the selling Holders may
reasonably request at least two business days prior to any sale of Registrable
Securities.
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8. MISCELLANEOUS.
(a) Notwithstanding anything herein, in the Exchange Agreement
or any other document or instrument executed pursuant to the Exchange Agreement
under which the Holder(s) of the Units held by Owner on the date hereof evidence
its or their intent to be bound by the provisions of this Agreement or the
Partnership Agreement, Section 8.06 of the Partnership Agreement shall have no
applicability to such Holders or the Shares issued or issuable upon a redemption
of the Units held by them.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified,
supplemented or waived, nor may consent to departures therefrom be given,
without the written consent of the Company and the Holders of a majority of the
outstanding Registrable Securities hereunder (the Holders of Units being treated
as the Holders of Registrable Securities issuable upon redemption of such
Units); provided, however, that no amendment, modification, supplement or waiver
of, or consent to the departure from, the provisions of this Agreement hereof
shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder of Registrable Securities. Notice of any
such amendment, modification, supplement, waiver or consent adopted in
accordance with this Section 8(a) shall be provided by the Company to each
Holder of Registrable Securities at least 30 days prior to the effective date of
such amendment, modification, supplement, waiver or consent.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier or any courier guaranteeing overnight
delivery, (i) if to a Holder, at the most current address given by such Holder
to the Company by means of a notice given in accordance with the provisions of
this Section 8(b), which address initially is, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇; or (ii) if to
the Company, at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back if telexed; when receipt is acknowledged if telecopied; or at the time
delivered if delivered by an air courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successor, assigns and transferees of each of
the parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any successor, assignee or transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities, such Person shall (a) be entitled to receive the benefits hereof and
shall conclusively be deemed to have agreed to be bound by all of the terms and
provisions hereof; and (b) upon the request of the Company execute a counterpart
signature page to this Agreement sufficient to evidence such Persons intent to
be bound hereby.
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(e) 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.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina without
giving affect to the conflicts of law provisions thereof.
(h) 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. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
▇▇▇▇▇▇▇ REALTY OF WINSTON-SALEM,
INC., A NORTH CAROLINA CORPORATION
Attest: By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Secretary
WINSTON HOTELS, INC., a North Carolina
Corporation
Attest: By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Sr. Vice President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Asst. Secretary
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