Exhibit
10.3


 




 


 


REGISTRATION RIGHTS AGREEMENT





 


by
and between


 


MORGANS
HOTEL GROUP CO.


 


and


 


RSA
ASSOCIATES, L.P.


 






 


Dated
as of February 17, 2006


 




 





 

















 


TABLE
OF CONTENTS


 


	
  1.

  	
  Certain Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Demand Registrations

  	
  3

  
	
   

  	
  (a)

  	
  Right to Request Registration

  	
  3

  
	
   

  	
  (b)

  	
  Number of Demand
  Registrations

  	
  4

  
	
   

  	
  (c)

  	
  Priority on Demand
  Registrations

  	
  4

  
	
   

  	
  (d)

  	
  Restrictions on Demand
  Registrations

  	
  4

  
	
   

  	
  (e)

  	
  Selection of Underwriters

  	
  5

  
	
   

  	
  (f)

  	
  Other Registration Rights

  	
  5

  
	
   

  	
  (g)

  	
  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

  	
  8

  
	
   

  	
  (d)

  	
  Other Registration Rights

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Holdback Agreements

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Registration Procedures

  	
  8

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Registration Expenses

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Indemnification

  	
  14

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Participation in
  Underwritten Registrations

  	
  15

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Rule 144

  	
  16

  
	
   

  	
   

  	
   

  
	
  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

  
						



 


i

















 


	
   

  	
  (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

  



 


ii

















 


THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), is made and entered into as of February
17, 2006, by and between Morgans Hotel Group Co., a Delaware corporation (the “Company”),
and RSA Associates, L.P., a Delaware limited partnership (the “Securityholder”).


 


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.


 


“Common Stock” means
any shares of common stock issued by the Company.


 


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


 


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


 


“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.


 


“Exchange Act” means
the Securities Exchange Act of 1934, as amended.


 


“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.


 

















 


“Governmental Entity”
means any national, federal, state, municipal, local, territorial, foreign or
other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial,
administrative or arbitral body or public or private tribunal.


 


“Holder” means the
Securityholder to the extent that the Securityholder is the holder of record of
(1) Registrable Common Stock or (2) OP Units. For purposes of this Agreement,
the Company may deem and treat the registered holder of Registrable Common
Stock and OP Units as the absolute owner thereof, and the Company shall not be affected
by any notice to the contrary. In order to determine the number of shares of
Registrable Common Stock held by the Holder and the number of shares of
Registrable Common Stock outstanding, the OP Units held by the Securityholder
shall be deemed to have been redeemed for or exchanged into shares of Common
Stock.


 


“Morgans” means
Morgans Hotel Group LLC.


 


“Morgans Group LLC”
means Morgans Group LLC, a Delaware limited liability company, or the other
entity through which the Company owns its hotel properties.


 


“Nasdaq” means The
Nasdaq Stock Market, Inc. or any successor reporting system.


 


“OP Units” means any
units of membership interest in Morgans Group LLC that are issued to the
Securityholder.


 


“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 (1) any shares of Common Stock held of record by the Securityholder as of
the date hereof, (2) any shares of Common Stock held of record by Morgans as of
the date hereof that may be directly or indirectly issued or distributed to the
Securityholder by Morgans, (3) any shares of Common Stock that may be issued to
the Securityholder upon redemption or exchange of OP Units held of record by
the Securityholder as of the date hereof, (4) any shares of Common Stock that
may be issued upon redemption or exchange of OP Units held of record by Morgans
as of the date hereof to the extent such OP Units may be issued or distributed
to the Securityholder by Morgans, (5) any shares of Common Stock held by the
Holder from time to time, and (6) any securities of the Company issued or issuable
with respect to the shares of


 


2

















 


Common Stock referred to in clause (1)
through (5) above 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.


 


“SEC” means the
Securities and Exchange Commission.


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“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.


 


2.             Demand Registrations.


 


(a)           Right
to Request Registration.  Subject to
the provisions hereof, beginning six months after the date hereof and
continuing until the Termination Date, the Holder 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 of at least $25,000,000
unless the aggregate value (based on then current market prices) of the
Registrable Common Stock held by the Holder is less than $25,000,000 but
greater than $15,000,000, in which case the Demand Registration shall be for
all of the Holder’s Registrable Common Stock (other than Registrable Common
Stock which, as of the date of such demand, are in the form of OP Units and
either held directly by the Securityholder or that the Securityholder may be
entitled to receive from Morgans in a pro rata distribution of its OP Units,
which such Holder shall not be required to include in 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 the


 


3

















 


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 Holder shall be
entitled to request one Demand Registration. A Registration Statement shall not
count as the permitted Demand Registration unless and until it has become
effective and the Holder is able to register and sell at least 50% of the
Registrable Common Stock requested to be included in such registration.


 


(c)           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 in Section 2(g)
hereof, 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 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 proposes 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.


 


(d)           Restrictions on Demand Registrations.  The
Company shall not be obligated to effect any Demand Registration on behalf of
the Holder within six months after the effective date of any Demand
Registration, Piggyback Registration wherein the 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 ninety (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 agrees to pay the expenses of such an audit) or (B)
pro forma financial statements that are required to be included in the
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 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 of (x)
any postponement or withdrawal of the filing or effectiveness of a


 


4

















 


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 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”.


 


(e)           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 shall have the right to select
the managing underwriters to administer the offering subject to the consent of
the Holder for the book-running or lead managing underwriter, in its sole
discretion.


 


(f)            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.


 


(g)           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 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. 
Beginning six months after the date hereof, 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 Holder 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 request for
inclusion therein from the Holder within 8 days after the Holder’s receipt of


 


5

















 


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.


 


(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
Holder (if the Holder has 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 Holder (if the Holder has 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 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, 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 Holder (if the Holder has 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.


 


6

















 


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,
the 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 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.  The 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 of at least $25,000,000. The 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
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.


 


7

















 


(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 shall have the right to select
one of the co-managing underwriters and the Holder shall have the right to
select one of the co-managing underwriters to administer the offering subject
to the consent of the other for the book-running or lead managing underwriter,
in its sole discretion.


 


(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 the Holder is the
beneficial owner of five percent or more of the outstanding Common Stock of the
Company, the Holder agrees not to sell, transfer, hedge the beneficial
ownership of 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) ninety (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 any 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 Securities and Exchange
Commission, 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.


 


6.             Registration
Procedures.


 


(a)           Whenever the Holder 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:


 


8

















 


(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 Holder 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 Holder,
the exhibits incorporated by reference, and the Holder shall have the
opportunity to object to any information pertaining to the Holder that is
contained therein and the Company will make the corrections reasonably
requested by the Holder 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 (I) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph (iv), (II) subject itself to
taxation in any such jurisdiction or (III) consent to general service of
process in any such jurisdiction);


 


(v)           notify each seller of such Registrable Common
Stock, at any time when a Prospectus relating thereto is required to be delivered


 


9

















 


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 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 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 Holder, 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 Holder or such underwriter
or attorney in connection with such Registration Statement, and (C) make the
Company’s independent accountants 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;


 


10

















 


(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 certified public
accountants 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 public accountants 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 the
independent certified public accountants 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 earning statement under Section 11(a)
of the Securities Act; and


 


(xii)          promptly notify the Holder 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)           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


 


11

















 


and in conformity with written information furnished
to the Company by or on behalf of the Holder specifically for use therein.


 


(c)           The Company shall make available to the
Holder such number of copies of a Prospectus, including a preliminary
Prospectus, and all amendments and supplements thereto and such other documents
as the Holder may reasonably request in order to facilitate the disposition of
the Registrable Common Stock owned by the Holder. The Company will promptly
notify the Holder 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 Holder may reasonably
request, all to the extent required to enable the Holder 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
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 Holder shall
not exceed one hundred and fifty (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


 


12

















 


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 (4)
Suspension Notices in any one year.


 


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 certified public accountants 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
more than one counsel representing the Holder), 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)           In connection with one underwritten offering
initiated by the Holder pursuant to the Demand Registration or the S-3
Registration, the Company shall reimburse the Holder covered by such
registration or sale for the reasonable fees and disbursements of one law firm
chosen by the Holder, subject to a maximum of $15,000.


 


(c)           The obligation of the Company to bear the
expenses described in Section 7(a) and to reimburse the Holder for the
expenses described in Section 7(b) 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 Holder (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 Holder shall be borne by
the Holder.  In addition to the Company’s
expense reimbursement obligation under Section 7(b), if any Registration
Statement is withdrawn (unless such withdrawal is solely at the request of the
Holder), the Company shall reimburse the Holder for its reasonable legal fees
and related disbursements in connection with such withdrawn Registration
Statement.


 


13

















 


8.             Indemnification.


 


(a)           The Company shall indemnify, to the fullest
extent permitted by law, the Holder and each Person who controls the Holder
(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 the Holder expressly for use therein or caused by the
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 Holder 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 Holder.


 


(b)           In connection with any Registration Statement
in which the Holder is participating, the 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 the Holder expressly for use therein or
caused by the 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 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 the Holder
shall be in proportion to and limited to the net amount received by the Holder
from the sale of Registrable Common Stock pursuant to such Registration
Statement.


 


14

















 


(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.


 


(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. In no event shall
the liability of the Holder be greater in amount than the amount of net
proceeds received by the 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


 


15

















 


attorney, indemnities, underwriting
agreements and other documents 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 Holder 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 Holder 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 the Holder, the Company will deliver to the Holder a written
statement as to whether it has complied with such information and requirements.


 


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 mailed
postage prepaid by registered or certified mail 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):


 


NorthStar Capital Investment
Corp.

527 Madison Avenue

New York, New York

Attention:              Richard McCready

Facsimile:               (212) 319-4557


 


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


 


Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attention:              Robert W. Downes, Esq.


 


16

















 


Facsimile:               (212) 558-3588

E-mail:  downesr@sullcrom.com


 


If to the Securityholder:


 


c/o Ian Schrager Company LLC


818 Greenwich Street


New York, New York 10014


Facsimile:               (212) 898-1162


 


with a copy to:


 


Skadden, Arps, Slate,
Meagher & Flom LLP

Four Times Square

New York, New York  10036-6522

Attention:              Benjamin F. Needell, Esq.

Facsimile:               (212) 735-2000


 


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 mail, at the earlier of its receipt or
72 hours after the same has been deposited in a regularly maintained receptacle
for the deposit of United States mail, addressed and postage prepaid as
aforesaid.


 


(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.


 


(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


 


17

















 


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.


 


(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


 


18

















 


consents to departures from
the provisions hereof may not be given without the prior written consent of the
Company and the Holder.


 


(m)          Equitable Relief.  The
parties hereto agree that legal remedies may be inadequate to enforce the
provisions of this Agreement and that equitable relief, including specific
performance and injunctive relief, may be used to enforce the provisions of
this Agreement.


[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.


 


	
  RSA ASSOCIATES, L.P.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Ian Schrager

  	
   

  
	
   

  
	
   

  
	
  MORGANS HOTEL GROUP CO.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ W. Edward Scheetz

  	
   

  
	
   

  	
  Name:

  	
  W. Edward Scheetz

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
				



 


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