Exhibit 10.12






Exhibit 10.12




 





REGISTRATION RIGHTS AGREEMENT




by and between




MORGANS HOTEL GROUP CO.




and




YUCAIPA AMERICAN ALLIANCE FUND II, L.P.,




YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, L.P.,




and




YUCAIPA AMERICAN ALLIANCE FUND II, LLC




 






Dated as of October 15, 2009




 






 


 









 









TABLE OF CONTENTS




	 	 	 	 	 
	1. Certain Definitions
	 	 	1	 
	2. Demand Registrations
	 	 	3	 
	(a) Right to Request Registration
	 	 	3	 
	(b) Number of Demand Registrations
	 	 	3	 
	(c) Participation Rights of Holders
	 	 	3	 
	(d) Priority on Demand Registrations
	 	 	4	 
	(e) Restrictions on Demand Registrations
	 	 	4	 
	(f) Selection of Underwriters
	 	 	4	 
	(g) Other Registration Rights
	 	 	5	 
	(h) Effective Period of Demand Registrations
	 	 	5	 
	3. Piggyback Registrations
	 	 	5	 
	(a) Right to Piggyback
	 	 	5	 
	(b) Priority on Primary Piggyback Registrations
	 	 	6	 
	(c) Priority on Secondary Registrations
	 	 	6	 
	(d) Selection of Underwriters
	 	 	6	 
	(e) Other Registration Rights
	 	 	6	 
	4. S-3 Registrations
	 	 	7	 
	(a) Right to Request Registration
	 	 	7	 
	(b) Priority on Shelf Takedowns
	 	 	7	 
	(c) Selection of Underwriters
	 	 	7	 
	(d) Other Registration Rights
	 	 	8	 
	5. Holdback Agreements
	 	 	8	 
	6. Registration Procedures
	 	 	9	 
	7. Registration Expenses
	 	 	13	 
	8. Indemnification
	 	 	13	 
	9. Participation in Underwritten Registrations
	 	 	15	 
	10. Rule 144
	 	 	15	 






 


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	11. Miscellaneous
	 	 	16	 
	(a) Notices
	 	 	16	 
	(b) No Waivers
	 	 	17	 
	(c) Expenses
	 	 	17	 
	(d) Successors and Assigns
	 	 	17	 
	(e) Governing Law
	 	 	17	 
	(f) Jurisdiction
	 	 	17	 
	(g) Waiver of Jury Trial
	 	 	18	 
	(h) Counterparts; Effectiveness
	 	 	18	 
	(i) Entire Agreement
	 	 	18	 
	(j) Captions
	 	 	18	 
	(k) Severability
	 	 	18	 
	(l) Amendments
	 	 	18	 
	(m) Equitable Relief
	 	 	19	 
	(n) Construction
	 	 	19	 





 


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THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made and entered into as of
October 15, 2009, by and between Morgans Hotel Group Co., a Delaware corporation (the
“Company”), and Yucaipa American Alliance Fund II, L.P., a Delaware limited partnership
(“YAAF II”), Yucaipa American Alliance (Parallel) Fund II, L.P., a Delaware limited
partnership (“YAAF II-P” together with YAAF II, the “Investors”) and Yucaipa
American Alliance Fund II, LLC, a Delaware limited liability company (“Yucaipa Manager”
and, together with the Investors, the “Securityholders”).



Unless otherwise specified herein, capitalized terms used herein shall have the meanings
assigned to such terms in the Securities Purchase Agreement (the “Purchase Agreement”),
dated as of the date hereof, by and among the Company and the Investors.



In consideration of the mutual covenants and agreements herein contained and other good and
valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:




1. Certain Definitions.



In addition to the terms defined elsewhere in this Agreement, the following terms shall have
the following meanings:



“Affiliate” of any Person means any other Person which directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common control with, such
Person. The term “control” (including the terms “controlling,” “controlled by” and “under common
control with”) as used with respect to any Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.



“Agreement” means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Registration Rights Agreement as the same may be in effect at the time such reference
becomes operative.




“Blackout Period” has the meaning set forth in Section 6(f) hereof.




“Company” has the meaning set forth in the introductory paragraph.




“Delay Period” has the meaning set forth in Section 2(d) hereof.



“Commencement Date” means (a) as to the Investors, the “Commencement Date” as such
term is defined in the Warrants, and (b) as to Yucaipa Manager, the “Commencement Date” as such
term is defined in the REF Warrants.




“Demand Registration” has the meaning set forth in Section 2(a) hereof.



“Demand Registration Statement” has the meaning set forth in Section 2(a) hereof.


 


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“Form S-3” means a registration statement on Form S-3 under the Securities Act or such
successor form thereto permitting registration of securities under the Securities Act.



“Holder” means each Securityholder to the extent that such Securityholder is the
holder of record of Registrable Common Stock. For purposes of this Agreement, the Company may deem
and treat the registered holder of Registrable Common Stock as the absolute owner thereof, and the
Company shall not be affected by any notice to the contrary.



“Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, incorporated organization, association, corporation, institution,
public benefit corporation, Governmental Entity or any other entity.




“Piggyback Registration” has the meaning set forth in Section 3(a) hereof.



“Prospectus” means the prospectus or prospectuses included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Common Stock covered by such Registration Statement and
by all other amendments and supplements to the prospectus, including post-effective amendments and
all material incorporated by reference in such prospectus or prospectuses.



“Registrable Common Stock” means any shares of Common Stock issued to a Holder from
time to time upon exercise of the Warrants and REF Warrants and any securities of the Company
issued or issuable with respect to such shares of Common Stock by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise.




“Registration Expenses” has the meaning set forth in Section 7(a) hereof.



“Registration Statement” means any registration statement of the Company which covers
any of the Registrable Common Stock pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all materials incorporated by reference in such Registration
Statement.




“S-3 Registration” has the meaning set forth in Section 4 hereof.




“Securityholder” has the meaning set forth in the introductory paragraph hereof.




“Suspension Notice” has the meaning set forth in Section 6(f) hereof.



“Termination Date” means the date upon which all the Registrable Common Stock may be
sold in any three-month period without registration under the Securities Act.



“underwritten offering” means a registered offering in which securities of the Company
are sold to underwriters for reoffering to the public.


 


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2. Demand Registrations.



(a) Right to Request Registration. Subject to the provisions hereof, beginning on the
applicable Commencement Date, one or more Holders may at any time request registration for resale
under the Securities Act of all or part of the Registrable Common Stock separate from an S-3
Registration (a “Demand Registration”); provided, that (based on then current
market prices) the number of shares of Registrable Common Stock included in the Demand Registration
would yield gross proceeds to the Holder(s) requesting such Demand Registration of at least
$30,000,000 unless the aggregate value (based on then current market prices) of the Registrable
Common Stock held by the Holder(s) requesting such Demand Registration is less than $30,000,000 but
greater than $15,000,000, in which case the Demand Registration shall be for all of the Registrable
Common Stock of the Holder(s) requesting such Demand Registration. Subject to Section 2(d) below,
the Company shall use its reasonable best efforts (i) to file a Registration Statement (a
“Demand Registration Statement”) registering for resale such number of shares of
Registrable Common Stock as requested to be so registered within 30 days of a Holder’s request
therefor and (ii) to cause such Demand Registration Statement to be declared effective by the SEC
as soon as practicable thereafter.



(b) Number of Demand Registrations. Subject to the limitations of Section 2(a), the
Holders shall be entitled to request an aggregate of three Demand Registrations. A Registration
Statement shall not count as a permitted Demand Registration unless and until it has become
effective and the Holder(s) requesting such Demand Registration are able to register and sell at
least 50% of the Registrable Common Stock requested to be included in such registration.



(c) Participation Rights of Holders. Whenever the Company shall be requested by one
or more Holders to effect a Demand Registration pursuant to Section 2(a) hereof, the Company shall
promptly (but not later than 5 days after receiving such request) give written notice of such
requested Demand Registration to each other Holder that has provided contact information to the
Company prior thereto. Such notice shall inform Holders that they have 10 days to notify the
Company in writing as provided in Section 11(a) hereof that they wish to participate in such
proposed Demand Registration. The Company shall include in such Demand Registration the shares of
Common Stock of any Holder who irrevocably notifies the Company on or prior to such 10th day that
the Holder has elected to include such shares of Common Stock in such Demand Registration.


 


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(d) Priority on Demand Registrations. The Company may include Common Stock other than
Registrable Common Stock in a Demand Registration on the terms provided below, and, if such Demand
Registration is an underwritten offering, only with the consent of the managing underwriters of
such offering. If the managing underwriters of the requested Demand Registration advise the Company
and the Holder(s) requesting such Demand Registration that in their opinion the number of shares of
Common Stock
proposed to be included in the Demand Registration exceeds the number of shares of Common
Stock which can be sold in such underwritten offering and/or the number of shares of Common Stock
proposed to be included in such registration would adversely affect the price per share of the
Registrable Common Stock proposed to be sold in such underwritten offering, the Company shall
include in such Demand Registration (i) first, the number of shares of Common Stock that the
Holder(s) requesting such Demand Registration propose to sell, and (ii) second, the number of
shares of Common Stock proposed to be included therein by any other Persons (including shares of
Common Stock to be sold for the account of the Company and/or other holders of Common Stock)
allocated among such Persons in such manner as they may agree.



(e) Restrictions on Demand Registrations. The Company shall not be obligated to
effect any Demand Registration on behalf of a Holder within six months after the effective date of
any Demand Registration, Piggyback Registration wherein such Holder was permitted to register, and
actually sold, at least 50% of the shares of Registrable Common Stock requested to be included
therein or S-3 Registration. The Company may (i) withdraw a Registration Statement previously filed
(but not declared effective) pursuant to a Demand Registration or postpone for up to 90 days the
filing of a Registration Statement for a Demand Registration if, based on the good faith judgment
of the Company, such postponement or withdrawal would avoid premature disclosure of a matter the
Company has determined would not be in the best interest of the Company to be disclosed at such
time or (ii) postpone the filing of a Demand Registration in the event the Company shall be
required to prepare (A) audited financial statements as of a date other than its fiscal year end
(unless the Holder(s) requesting such registration agree to pay the reasonable expenses of such an
audit) or (B) pro forma financial statements that are required to be included in such Registration
Statement; provided, however, that in no event shall the Company withdraw a
Registration Statement under clause (i) after such Registration Statement has been declared
effective; and provided, further, however, that in any of the events
described in clause (i) or (ii) above, the Holder(s) requesting such Demand Registration shall be
entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall
not count as one of the permitted Demand Registrations. The Company shall provide written notice to
the Holder(s) requesting a Demand Registration of (x) any postponement or withdrawal of the filing
or effectiveness of a Registration Statement pursuant to this Section 2(d), (y) the Company’s
decision to file or seek effectiveness of such Registration Statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement, which notice, if it relates
to clause (x), shall include the reasons therefor if the Holder(s) requesting such Demand
Registration shall have previously executed a confidentiality agreement satisfactory to the Company
in respect thereof. The Company may defer the filing of a particular Registration Statement
pursuant to this Section 2(d) only once during any six-month period. The period during which
filing or effectiveness is so postponed hereunder is referred to as a “Delay Period”.



(f) Selection of Underwriters. If any of the Registrable Common Stock covered by a
Demand Registration is to be sold in an underwritten offering, the Company will select one joint
bookrunning managing underwriter from the list of investment banks set forth on Schedule I and the
Holder(s) participating in such Demand Registration will
select the other joint bookrunning managing underwriter from the list of investment banks set
forth on Schedule I. The list of investment banks on Schedule I may be amended from time to time
by mutual agreement of the Holders and the Company. Any additional underwriters shall be selected
by mutual agreement of the Holders, on the one hand, and the Company, on the other hand.


 


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(g) Other Registration Rights. The Company shall not grant to any Person the right to
request the Company (i) to register any shares of Common Stock in a Demand Registration unless such
rights are consistent with the provisions hereof, or (ii) to register any securities of the Company
(other than shares of Common Stock) in a Demand Registration.



(h) Effective Period of Demand Registrations. Upon the date of effectiveness of any
Demand Registration for an underwritten offering contemplated to be consummated at the time of
effectiveness of the Demand Registration, the Company shall use its reasonable best efforts to keep
such Demand Registration Statement effective for a period equal to 15 business days from such date
or such shorter period which shall terminate when all of the Registrable Common Stock covered by
such Demand Registration has been sold pursuant to such Demand Registration. If the Company shall
withdraw any Demand Registration pursuant to Section 2(d) or issue a Suspension Notice pursuant to
Section 6(f) within such 15 business day period and before all of the Registrable Common Stock
covered by such Demand Registration has been sold pursuant thereto, the Holder(s) requesting such
Demand Registration shall be entitled to a replacement Demand Registration which shall be subject
to all of the provisions of this Agreement.




3. Piggyback Registrations.



(a) Right to Piggyback. Whenever the Company proposes to register any of its Common
Stock under the Securities Act (other than a registration statement on Form S-8 or on Form S-4 or
any similar successor forms thereto), whether for its own account or for the account of one or more
stockholders of the Company and the form of registration statement to be used may be used for any
registration of Registrable Common Stock (a “Piggyback Registration”), the Company shall
give prompt written notice (in any event no later than 10 days prior to the filing of such
registration statement) to the Holders of its intention to effect such a registration and, subject
to Section 3(b), shall include in such registration statement all Registrable Common Stock with
respect to which the Company has received written requests for inclusion therein from the Holders
within 8 days after the Holders’ receipt of the Company’s notice. The Company may postpone or
withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole
discretion. A Piggyback Registration shall not be considered a Demand Registration for purposes of
Section 2 of this Agreement or a S-3 Registration for purposes of Section 4 of this Agreement.


 


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(b) Priority on Primary Piggyback Registrations. If a Piggyback Registration is
initiated as a primary underwritten offering on behalf of the Company and the managing underwriters
advise the Company and the Holders (if any Holders have elected
to include Registrable Common Stock in such Piggyback Registration) that in their opinion the
number of shares of Common Stock proposed to be included in such registration exceeds the number of
shares of Common Stock which can be sold in such offering and/or that the number of shares of
Common Stock proposed to be included in any such registration would adversely affect the price per
share of the Common Stock to be sold in such offering, the Company shall include in such
registration (i) first, the number of shares of Common Stock that the Company proposes to sell, and
(ii) second, the number of shares of Common Stock requested to be included therein by holders of
Common Stock, including the Holders (if any Holders have elected to include Registrable Common
Stock in such Piggyback Registration), pro rata among all such holders on the basis of the number
of shares of Common Stock requested to be included therein by all such holders or as such holders
may otherwise agree.



(c) Priority on Secondary Registrations. If a Piggyback Registration is initiated as
an underwritten registration on behalf of a holder of Common Stock other than Registrable Common
Stock, and the managing underwriters advise the Company that in their opinion the number of shares
of Common Stock proposed to be included in such registration exceeds the number of shares of Common
Stock that can be sold in such offering and/or that the number of shares of Common Stock proposed
to be included in any such registration would adversely affect the price per share of the Common
Stock to be sold in such offering, then the Company shall include in such registration (i) first,
the number of shares of Common Stock requested to be included therein by the holder(s) requesting
such registration, (ii) second, the number of shares of Common Stock requested to be included
therein by other holders of Common Stock, including the Holders (if any Holders have elected to
include Registrable Common Stock in such Piggyback Registration), pro rata among such holders on
the basis of the number of shares of Common Stock requested to be included therein by such holders
or as such holders may otherwise agree, and (iii) third, the number of shares of Common Stock that
the Company proposes to sell.



(d) Selection of Underwriters. If any Piggyback Registration is initiated as a
primary underwritten offering, the Company shall have the right to select the managing underwriter
or underwriters to administer any such offering.



(e) Other Registration Rights. The Company shall not grant to any Person the right to
request the Company (i) to register any shares of Common Stock in a Piggyback Registration unless
such rights are consistent with the provisions hereof, or (ii) to register any securities of the
Company (other than shares of Common Stock) in a Piggyback Registration.


 


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4. S-3 Registrations.



(a) Right to Request Registration. At any time that the Company is eligible to use
Form S-3 or any successor thereto, each Holder shall be entitled to request that the Company file a
Registration Statement on Form S-3 or any successor thereto for a public offering of all or any
portion of the Registrable Common Stock pursuant to Rule 415 promulgated under the Securities Act
or otherwise. Upon such request, the Company
shall use its reasonable best efforts (i) to file a Registration Statement covering the number
of shares of Registrable Common Stock specified in such request under the Securities Act on Form
S-3 or any successor thereto (an “S-3 Registration”) for public sale in accordance with the method
of disposition specified in such request within 30 days of the such Holder’s request therefor and
(ii) to cause such S-3 Registration to be declared effective by the SEC as soon as reasonably
practicable thereafter. A Holder shall be entitled, upon not less than 24 hours (given on a
business day and effect at the same time on the next business day) prior written notice to the
Company in the manner provided below, to sell such Registrable Common Stock as are then registered
pursuant to such Registration Statement (each, a “Shelf Takedown”). The Holder shall be
entitled to request that one such Shelf Takedown shall be an underwritten offering;
provided, that (based on then current market prices) the number of shares of Registrable
Common Stock included in such Shelf Takedown would yield gross proceeds to the Holder(s) requesting
such Shelf Takedown of at least $25,000,000. Each Holder shall also give the Company prompt
written notice of the consummation of such Shelf Takedown. A notice of a proposed Shelf Takedown
pursuant to this Section shall be given by e-mail and facsimile transmission to the Company’s Chief
Financial Officer, with a copy to designated counsel, as provided in Section 11(a) hereof, and
shall be effective when receipt of such notice has been confirmed telephonically. The Company
agrees to waive such 24-hour notice period if at the time such notice is effective, the Prospectus
included in the Registration Statement related to the Registrable Common Stock proposed to be sold
in the Shelf Takedown does not contain an untrue statement of a material fact and does not omit any
material fact necessary to make the statements therein not misleading.



(b) Priority on Shelf Takedowns. The Company may include Common Stock other than
Registrable Common Stock in a Shelf Takedown on the terms provided below, and, if such Shelf
Takedown is an underwritten offering, only with the consent of the managing underwriters of such
offering. If the managing underwriters of the requested Shelf Takedown advise the Company and the
Holder(s) participating in such Shelf Takedown that in their opinion the number of shares of Common
Stock proposed to be included in any Shelf Takedown (1) exceeds the number of shares of Common
Stock which can be sold in such underwritten offering or (2) would adversely affect the price per
share of the Registrable Common Stock proposed to be sold in such underwritten offering, the
Company shall include in such Shelf Takedown only the number of shares of Common Stock which in the
opinion of such managing underwriters can be sold. If the number of shares of Common Stock which
can be sold is less than the number of shares of Common Stock proposed to be registered, the amount
of Common Stock to be so sold shall be allocated pro rata among the holders of Common Stock
desiring to participate in such Shelf Takedown on the basis of the number of shares of Common Stock
initially proposed to be registered by such holders or as such holders may otherwise agree.



(c) Selection of Underwriters. If any of the Registrable Common Stock covered by an
S-3 Registration is to be sold in an underwritten offering, the Company will select one joint
bookrunning managing underwriter from the list of investment banks set forth on Schedule I and the
Holder(s) participating in such S-3 Registration will select the other joint bookrunning managing
underwriter the list of investment banks set forth
on Schedule I. Any additional underwriters shall be selected by mutual agreement of the
Holders, on the one hand, and the Company, on the other hand.


 


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(d) Other Registration Rights. The Company shall not grant to any Person the right to
request the Company (i) to register any shares of Common Stock in an S-3 Registration unless such
rights are consistent with the provisions hereof, or (ii) to register any securities of the Company
(other than shares of Common Stock) in an S-3 Registration.




5. Holdback Agreements.



As long as any Holder is the beneficial owner of five percent or more of the outstanding
Common Stock of the Company, such Holder agrees not to sell, transfer, hedge the beneficial
ownership of (but shall not be required to unwind any existing hedged position) or otherwise
dispose of any shares of Common Stock (or other securities of the Company) held by it for a period
equal to the lesser of (i) 90 days following the date of a prospectus or prospectus supplement, as
applicable, relating to a sale of shares of Common Stock (or other securities of the Company) in an
underwritten offering registered under the Securities Act or (ii) such shorter period as the
managing underwriters of such underwritten offering shall agree to. Such agreement shall be in
writing in form satisfactory to the Company and the managing underwriters. The Company may impose
stop-transfer instructions with respect to the shares of Registrable Common Stock (or other
securities) subject to the foregoing restriction until the end of said period. The foregoing
restrictions shall not apply to (i) the exercise of the Warrants, the REF Warrants or any other
warrants or stock options to purchase shares of capital stock of the Company (provided that such
limitation does not affect limitations on any actions specified in the first sentence of this
Section 5 with respect to the shares issuable upon such exercise), (ii) transfers to Affiliates
where the transferee agrees to be bound by the terms hereof, (iii) the participation in the filing
of a registration statement with the SEC, including, without limitation, any S-3 Registration
hereunder, or (iv) the shares of Registrable Common Stock included in the underwritten offering
giving rise to the application of this Section 5. Notwithstanding the foregoing, the holdback
arrangement set forth in this Section 5 shall not apply to sale shares of Common Stock that is
registered on Form S-8 or Form S-4.


 


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6. Registration Procedures.



(a) Whenever the Holder(s) requests that any Registrable Common Stock be registered pursuant
to this Agreement, the Company shall use its reasonable best efforts to effect the registration and
the sale of such Registrable Common Stock in accordance with the intended methods of disposition
thereof, and, pursuant thereto, the Company shall as soon as reasonably practicable use its
reasonable best efforts to:




(i) subject to Section 2(a) and Section 4, prepare and file with the SEC a
Registration Statement with respect to such Registrable Common Stock and cause such
Registration Statement to become effective as soon as reasonably practicable
thereafter; and before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
furnish to the Holders and the underwriter or underwriters, if any, copies of all
such documents proposed to be filed, including documents incorporated by reference
in the Prospectus and, if requested by the Holders, the exhibits incorporated by
reference, and the Holders shall have the opportunity to object to any information
pertaining to the Holders that is contained therein and the Company will make the
corrections reasonably requested by the Holders with respect to such information
prior to filing any Registration Statement or amendment thereto or any Prospectus
or any supplement thereto;




(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 a period of not less
than (A) 15 business days, in the case of a Demand Registration, or (B) the earlier
of 2 years or the Termination Date in the case of an S-3 Registration, and no
longer than is necessary to complete the distribution of the Common Stock covered
by such Registration Statement and comply with the provisions of the Securities Act
with respect to the disposition of all the Common Stock covered by such
Registration Statement during such period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement;




(iii) furnish to each seller of Registrable Common Stock the Prospectus
included in such Registration Statement (including each preliminary Prospectus) and
any supplement thereto and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Common Stock
owned by such seller;




(iv) register or qualify such Registrable Common Stock under such other
securities or blue sky laws of such jurisdictions as any seller reasonably requests
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such jurisdictions
of the Registrable Common Stock owned by such seller (provided, that the Company
will 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 subparagraph (iv),
(B) subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction);


 


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(v) notify each seller of such Registrable Common Stock, at any time when a
Prospectus relating thereto is required to be delivered under the Securities Act,
of the occurrence 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 any
fact necessary to make the statements therein not misleading, and, at the request
of any such seller, the Company shall prepare a supplement or amendment to such Prospectus so
that, as thereafter delivered to the purchasers of such Registrable Common Stock,
such Prospectus shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;




(vi) in the case of an underwritten offering on behalf of the Holder(s)
pursuant to a Demand Registration, Piggyback Registration or an S-3 Registration,
enter into such customary agreements (including underwriting and lock-up agreements
in customary form) and take all such other customary actions as the Holder(s) or
the managing underwriters of such offering reasonably request in order to expedite
or facilitate the disposition of such Registrable Common Stock (including, without
limitation, making members of senior management of the Company available to
participate in “road-show” and other customary marketing activities (including
one-on-one meetings with prospective purchasers of the Registrable Common Stock))
and cause to be delivered to the underwriters opinions of counsel to the Company in
customary form, covering such matters as are customarily covered by opinions for an
underwritten public offering as the managing underwriters may request and addressed
to the underwriters;




(vii) to the extent not prohibited by applicable law or pre-existing
applicable contractual restrictions, (A) make available, for inspection by the
Holders, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney retained by any such underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, (B) cause the Company’s officers and employees to supply all information
reasonably requested by the Holders or such underwriter or attorney in connection
with such Registration Statement, and (C) make the Company’s independent registered
public accounting firm available for any such underwriter’s due diligence;




(viii) cause all such Registrable Common Stock to be listed on each securities
exchange on which securities of the same class issued by the Company are then
listed or, if no such similar securities are then listed, on Nasdaq or a national
securities exchange selected by the Company;




(ix) provide a transfer agent and registrar for all such Registrable Common
Stock not later than the effective date of such Registration Statement;


 


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(x) if requested, cause to be delivered at the time of delivery of any
Registrable Common Stock sold pursuant to a Registration Statement, letters from
the Company’s independent registered public accounting firm addressed to each
selling Holder (unless such selling Holder does not provide to such accountants the appropriate representation letter required by
rules governing the accounting profession) and each underwriter, if any, stating
that such accountants are independent within the meaning of the Securities Act and
the applicable rules and regulations adopted by the SEC thereunder, and otherwise
in customary form and covering such financial and accounting matters as are
customarily covered by letters of independent registered public accounting firms
delivered in connection with primary or secondary underwritten public offerings, as
the case may be;




(xi) make generally available to its stockholders a consolidated earnings
statement (which need not be audited) for the 12 months beginning after the
effective date of a Registration Statement as soon as reasonably practicable after
the end of such period, which earnings statement shall satisfy the requirements of
an earnings statement under Section 11(a) of the Securities Act; and




(xii) promptly notify the Holders and the underwriter or underwriters, if any:




(1) when the Registration Statement, any pre-effective amendment, the
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement has been filed and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;




(2) of the notification to the Company by the SEC of its initiation of any
proceeding with respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and




(3) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any Registrable Common Stock for sale under the
applicable securities or blue sky laws of any jurisdiction.



(b) The Company represents and warrants that no Registration Statement (including any
amendments thereto) shall contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements therein not
misleading, and no Prospectus (including any supplements thereto) shall contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, in each case, except for any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact made in reliance on and in
conformity with written information furnished to the Company by or on behalf of the Holders
specifically for use therein.


 


11









 







(c) The Company shall make available to the Holders such number of copies of a Prospectus,
including a preliminary Prospectus, and all amendments and supplements thereto and such other
documents as the Holders may reasonably request in order to facilitate the disposition of the
Registrable Common Stock owned by the Holders. The Company will promptly notify the Holders
requesting registration for Registrable Common Stock of the effectiveness of each Registration
Statement or any post-effective amendment. The Company will promptly respond to any and all
comments received from the SEC, with a view towards causing each Registration Statement or any
amendment thereto to be declared effective by the SEC as soon as reasonably practicable and shall
file an acceleration request as soon as reasonably practicable following the resolution or
clearance of all SEC comments or, if applicable, following notification by the SEC that any such
Registration Statement or any amendment thereto will not be subject to review.



(d) At all times after the Company has filed a registration statement with the SEC pursuant to
the requirements of the Securities Act, the Company shall use its reasonable best efforts to file
all reports required to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder, and use its reasonable best efforts to take such
further action as the Holders may reasonably request, all to the extent required to enable the
Holders to be eligible to sell Registrable Common Stock pursuant to Rule 144 (or any similar rule
then in effect).



(e) The Company may require each seller of Registrable Common Stock as to which any
registration is being effected to furnish to the Company any other information regarding such
seller and the distribution of such securities as the Company may from time to time reasonably
request in writing.



(f) Each seller of Registrable Common Stock agrees by having its stock treated as Registrable
Common Stock hereunder that, upon written notice of 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 any material fact necessary to make the statements therein not misleading (a
“Suspension Notice”), such seller will forthwith discontinue disposition of Registrable
Common Stock for a reasonable length of time not to exceed 60 days until such seller is advised in
writing by the Company that the use of the Prospectus may be resumed and is furnished with a
supplemented or amended Prospectus as contemplated by Section 6(a)(v) hereof, and, if so directed
by the Company, such seller will deliver to the Company (at the Company’s expense) all copies,
other than permanent file copies then in such seller’s possession, of the Prospectus covering such
Registrable Common Stock current at the time of receipt of such notice; provided,
however, that such postponement of sales of Registrable Common Stock by the Holders shall
not exceed 150 days in the aggregate in any one year. If the Company shall give any notice to
suspend the disposition of Registrable Common Stock pursuant to a Prospectus, the Company shall
extend the period of time during which the Company is required to maintain the Registration
Statement effective pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such notice to and including the date such seller either is
advised by the Company that the use of the Prospectus may be resumed or receives the copies of the
supplemented or amended Prospectus contemplated by Section 6(a)(v) (a “Blackout
Period”). In any event, the Company shall not be entitled to deliver more than four Suspension
Notices in any one year.


 


12









 








7. Registration Expenses.



(a) All expenses incident to the Company’s performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, listing application fees, printing expenses, transfer agent’s and
registrar’s fees, cost of distributing Prospectuses in preliminary and final form as well as any
supplements thereto, and fees and disbursements of counsel for the Company and all independent
registered public accounting firms and other Persons retained by the Company (all such expenses
being herein called “Registration Expenses”) (but, not including any underwriting discounts
or commissions attributable to the sale of Registrable Common Stock or fees and expenses of counsel
representing the Holders), shall be borne by the Company. In addition, the Company shall pay its
internal expenses (including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for listing the securities
to be registered on each securities exchange on which they are to be listed.



(b) The obligation of the Company to bear the expenses described in Section 7(a) shall apply
irrespective of whether a registration, once properly demanded, if applicable, becomes effective,
is withdrawn or suspended, is converted to another form of registration and irrespective of when
any of the foregoing shall occur; provided, however, that Registration Expenses for
any Registration Statement withdrawn solely at the request of the Holders (unless withdrawn
following postponement of filing by the Company in accordance with Section 2(d) or Section 3(a)) or
any supplements or amendments to a Registration Statement or Prospectus resulting from a
misstatement furnished to the Company by the Holders shall be borne by such Holders. If any
Registration Statement is withdrawn (unless such withdrawal is solely at the request of the
Holders), the Company shall reimburse the Holders for their reasonable legal fees and related
disbursements in connection with such withdrawn Registration Statement.




8. Indemnification.



(a) The Company shall indemnify, to the fullest extent permitted by law, the Holders and each
Person who controls the Holders (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement, Prospectus, free writing
prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment thereof
or supplement thereto or any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except insofar as the same are
made in reliance and in conformity with information furnished in writing to the Company by a Holder
expressly for use therein or caused by a Holder’s failure to deliver to the Holder’s immediate
purchaser a copy of the Registration Statement, Prospectus, free writing prospectus (as
defined in Rule 405 promulgated under the Securities Act) or any amendments or supplements thereto
(if the same was required by applicable law to be so delivered) after the Company has furnished the
Holders with a sufficient number of copies of the same prior to any written confirmation of the
sale of Registrable Common Stock. In connection with an underwritten offering, the Company shall
indemnify such underwriters and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the indemnification of the
Holders.


 


13









 







(b) In connection with any Registration Statement in which a Holder is participating, such
Holder shall furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such Registration Statement or Prospectus or
free writing prospectus (as defined in Rule 405 promulgated under the Securities Act) and, shall
indemnify, to the fullest extent permitted by law, the Company, its officers, directors and each
Person who controls the Company (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue
statement of material fact contained in the Registration Statement, Prospectus, free writing
prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendment thereof
or supplement thereto or any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only to the extent that the
same are made in reliance and in conformity with information furnished in writing to the Company by
such Holder expressly for use therein or caused by such Holder’s failure to deliver to such
Holder’s immediate purchaser a copy of the Registration Statement, Prospectus, free writing
prospectus (as defined in Rule 405 promulgated under the Securities Act) or any amendments or
supplements thereto (if the same was required by applicable law to be so delivered) after the
Company has furnished such Holder with a sufficient number of copies of the same prior to any
written confirmation of the sale of Registrable Common Stock; provided, however,
that the liability of a Holder shall be in proportion to and limited to the net amount received by
such Holder from the sale of Registrable Common Stock pursuant to such Registration Statement.



(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit
such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to
the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to
any liability for any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is entitled to, and elects
to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than
one counsel for all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party there may be one or more legal or
equitable defenses available to such indemnified party which are in addition to or may conflict
with those available to another indemnified party with respect
to such claim. Failure to give prompt written notice shall not release the indemnifying party
from its obligations hereunder.


 


14









 







(d) The indemnification provided for under this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and shall survive the transfer of
securities.



(e) If the indemnification provided for in or pursuant to this Section 8 is due in accordance
with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified Person 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 on the one hand and of the indemnified party on the other in connection with the statements
or omissions which result in such losses, claims, damages, liabilities or expenses as well as any
other relevant equitable considerations. The relative fault of the indemnifying party on the one
hand and of the indemnified Person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the indemnifying party
or by the indemnified party, and by such party’s relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. Notwithstanding anything to the
contrary herein, in no event shall the liability of a Holder be greater in amount than the amount
of net proceeds received by such Holder upon such sale or the amount for which such indemnifying
party would have been obligated to pay by way of indemnification if the indemnification provided
for under Section 8(a) or 8(b) hereof had been available under the circumstances.




9. Participation in Underwritten Registrations.



No Person may participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and
(b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such underwriting
arrangements.




10. Rule 144.



The Company shall use its reasonable best efforts to file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and use its reasonable best efforts to take such further action as the Holders may
reasonably request to make available adequate current public information with respect to the
Company meeting the current public information requirements of Rule 144(c) under the Securities
Act, to the extent required to enable the
Holders to sell Registrable Common Stock without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the
SEC. Upon the request of a Holder, the Company will deliver to such Holder a written statement as
to whether it has complied with such information and requirements.


 


15









 








11. Miscellaneous.



(a) Notices. Except as otherwise provided herein, all notices, requests, consents and
other communications required or permitted hereunder shall be in writing and shall be hand
delivered or sent postage prepaid by a nationally recognized overnight courier service (with
tracking capability) or by facsimile transmission (with immediate telephone confirmation
thereafter),




If to the Company:




Morgans Hotel Group Co.

475 Tenth Avenue

New York, New York 10018

Attention: Chief Financial Officer

Facsimile: (212) 277-4201

E-mail: richard.szymanski@morganshotelgroup.com




with a copy to (which shall not constitute notice):




Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attention: Robert W. Downes, Esq.

Facsimile: (212) 558-3588

E-mail: downesr@sullcrom.com




If to a Securityholder:




c/o Yucaipa American Alliance Fund II, LLC

9130 W. Sunset Boulevard

Los Angeles, California 90069

Attention: Robert P. Bermingham





with a copy (which shall not constitute notice) to:




Munger, Tolles & Olson LLP

355 South Grand Avenue

35th Floor

Los Angeles, California 90071

Attention: Judith T. Kitano

Fax: (213) 683-4052

Email: judith.kitano@mto.com


 


16









 







or at such other address as such party each may specify by written notice to the others, and,
except as otherwise provided herein, each such notice, request, consent and other communication
shall for all purposes of the Agreement be treated as being effective or having been given when
delivered personally, upon receipt of facsimile confirmation if transmitted by facsimile, or, if
sent by a nationally recognized overnight courier service (with tracking capability), upon its
receipt.



(b) No Waivers. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.



(c) Expenses. Except as otherwise provided for herein or otherwise agreed to in
writing by the parties, all costs and expenses incurred in connection with the preparation of this
Agreement shall be paid by the Company.



(d) Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns, it
being understood that subsequent holders of the Registrable Common Stock are intended third party
beneficiaries hereof. Without limitation of the foregoing sentence, each Securityholder shall be
permitted to assign its registration rights as a Securityholder hereunder to any person to whom
such Securityholder transfers 2,000,000 shares or more of Registrable Securities (subject to
adjustment in accordance with Section 7.14 of the Purchase Agreement); provided, that (x)
the Company is given prior written notice of the assignment, stating the name and address of the
assignee and identifying the Registrable Securities with respect to which such registration rights
are being assigned, and (y) such assignee agrees in writing to be bound by subject to the
provisions of this Agreement mutatis mutandis as if the assignee were a party hereto.



(e) Governing Law. The internal laws of the State of New York shall govern the
enforceability and validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties.



(f) Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby must be brought in any federal or state court located in the County and State
of New York, and each of the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding in any such court or that any such
suit, action or proceeding which is brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party anywhere in
the world, whether within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided in Section 11(a)
shall be deemed effective service of process on such party.


 


17









 







(g) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.



(h) Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts (including by facsimile) and by different parties hereto in separate counterparts,
with the same effect as if all parties had signed the same document. All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and the same instrument.
This Agreement shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.



(i) Entire Agreement. This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes and replaces all other
prior agreements, written or oral, among the parties hereto with respect to the subject matter
hereof.



(j) Captions. The headings and other captions in this Agreement are for convenience
and reference only and shall not be used in interpreting, construing or enforcing any provision of
this Agreement.



(k) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.



(l) Amendments. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the prior written consent of the Company and the
Securityholders.


 


18









 







(m) Equitable Relief. The parties hereto agree that legal remedies would be
inadequate to enforce the provisions of this Agreement against the Company and that, in the event
of a breach of this Agreement by the Company, the Securityholders shall be
permitted to enforce the provisions of this Agreement against the Company by means of
equitable relief, including specific performance and injunctive relief.



(n) Construction. The parties hereto acknowledge that each party and its counsel have
participated in the negotiation and preparation of this Agreement. This Agreement shall be
construed without regard to any presumption or other rule requiring construction against the party
causing this Agreement to be drafted. Every covenant, term and provision of this Agreement shall
be construed according to its fair meaning and not strictly for or against any party hereto.



[Execution Page Follows]



 


19









 







IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by each of the
parties hereto as of the date first written above.



	 	 	 	 	 	 	 
	MORGANS HOTEL GROUP CO.	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Marc Gordon 	 	 
	 	 	 	 	 
	 

	 	Name:	 	Marc Gordon 	 	 
	 	 	 	 	 	 	 
	 

	 	Title:
	 	President 
	 	 
	 

	 	 	 	 

	 	 






[Securityholder signatures on following page.]




 












 









	 	 	 	 	 	 	 
	SECURITYHOLDERS:	 	 
	 
	 	 	 	 	 	 
	YUCAIPA AMERICAN ALLIANCE FUND II, L.P.	 	 
	 
	 	 	 	 	 	 
	By:	 	Yucaipa American Alliance Fund II, LLC	 	 
	Its:	 	General Partner	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Robert P. Bermingham 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Robert P. Bermingham	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, L.P.	 	 
	 
	 	 	 	 	 	 
	By:	 	Yucaipa American Alliance Fund II, LLC	 	 
	Its:	 	General Partner	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Robert P. Bermingham 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Robert P. Bermingham	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	YUCAIPA AMERICAN ALLIANCE FUND II, LLC	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ Robert P. Bermingham 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Robert P. Bermingham	 	 
	 

	 	Title:
	 	Vice President	 	 





(Registration
Rights Agreement)


 














 




Schedule I




Bank of America Securities LLC [Merrill Lynch]

Citigroup Global Markets Inc.

Deutsche Bank Securities Inc.

Goldman, Sachs & Co.

Jefferies & Company, Inc. [with respect to an offering with aggregate value less than $50 million]

Wells Fargo Securities, LLC [Wachovia]