EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Agreement is entered February 26, 1999, between Hospitality Design
& Supply, Inc., a Delaware corporation ("HDS") and the stockholders of HDS named
on the signature pages hereof ("Stockholders").
WHEREAS, the Stockholders have acquired prior to the date hereof ___
shares of Common Stock, .001 par value, of HDS ("HDS Stock").
WHEREAS, HDS is entering into acquisition agreements with six companies
("Founding Companies") for HDS' acquisition of such companies in conjunction
with HDS' initial public offering, and these agreements contemplate that the
Stockholders will have registration rights in respect of their HDS Stock similar
to those granted to the Founding Company shareholders in such acquisition
agreements.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Piggyback Registration Rights. At any time following one year
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after the closing date of HDS' initial public offering of HDS Stock ("Closing
Date"), whenever HDS proposes to register any HDS Stock for its own or others'
account under the 1933 Act for a public offering, other than (i) registrations
of shares to be used as consideration for acquisitions of additional businesses
by HDS and (ii) registrations relating to employee benefit plans, HDS shall give
each of the Stockholders prompt written notice of its intent to do so. Upon the
written request of any of the Stockholders given within thirty (30) days after
receipt of such notice, HDS shall cause to be included in such registration all
of the HDS Stock issued to the Stockholder prior to the Closing Date which any
such Stockholder requests. In addition, if HDS is advised in writing in good
faith by any managing underwriter of an underwritten offering of the securities
being offered pursuant to any registration statement under this Section 1 that
the number of shares to be sold by persons other than HDS is greater than the
number of such shares which can be offered without adversely affecting the
offering, HDS may reduce the number of shares offered for the accounts of such
persons to a number deemed satisfactory by such managing underwriter; provided
that such reduction shall be made first by reducing the number of shares to be
sold by persons other than HDS, the Stockholders, the stockholders of the
Founding Companies (the "Founding Stockholders"), and any person or persons who
have required such registration pursuant to "demand" registration rights granted
by HDS; thereafter, if a further reduction is required, it shall be made first
by reducing the number of shares to be sold by the Stockholders and the Founding
Stockholders, with such further reduction being made so that to the extent any
shares can be sold by Stockholders and the Founding Stockholders, each such
stockholder will be permitted to sell a number of shares proportionate to the
number of shares of HDS Stock owned by such stockholder immediately after the
Closing Date, provided that if any stockholder does not wish to sell all shares
such stockholder is permitted to sell, the opportunity to sell additional shares
shall be
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reallocated in the same manner to those Stockholders and the Founding
Stockholders who wish to sell more shares until no more shares can be sold by
such stockholders.
2. Demand Registration Rights. At any time after the date one year
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after the Closing Date, Stockholders holding shares of HDS Stock issued to the
Stockholder prior to the Closing Date which shares have (i) not been previously
registered or sold, (ii) which are not entitled to be sold under Rule 144(k) (or
any similar or successor provision) and (iii) which have an aggregate market
value in excess of $5 million (based on the average closing price on the five
days prior to the date of such request) may request in writing that HDS file a
registration statement under the 1933 act covering such shares of HDS Stock then
held by such Stockholders (a "Demand Registration"); provided that the aggregate
value of HDS Stock proposed to be sold under such registration statement is not
less than $5 million (based on the average closing price on the five days prior
to the date of such request). Within ten (10) days of the receipt of such
request, HDS shall give written notice of such request to all other Stockholders
and shall, as soon as practicable, file and use its best efforts to cause to
become effective a registration statement covering all such shares. HDS will use
its best efforts to keep such Demand Registration current and effective for one
hundred twenty (120) days (or such shorter period during which holders shall
have sold all HDS Stock which they requested to be registered). HDS shall be
obligated to effect only two (2) Demand Registrations for all Stockholders, and
the second request may not be made until at least one (1) year after the
effective date of the registration statement for the first Demand Registration.
Notwithstanding the foregoing paragraph, following such a demand a
majority of the Company's disinterested directors (i.e., directors who have not
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demanded or elected to sell shares in any such public offering) may postpone the
filing of the registration statement for a period of up to thirty (30) days.
If at the time of any request by the Founding Stockholders for a Demand
Registration HDS has fixed plans to file within sixty (60) days after such
request a registration statement covering the sale of any of its securities, no
registration of the Stockholders' HDS Stock shall be filed under this Section 2
until ninety (90) days after the effective date of such registration unless HDS
is no longer proceeding diligently to effect such registration; provided that
HDS shall provide the Stockholders the right to participate in such public
offering pursuant to, and subject to, Section 1 hereof.
3. Registration Procedures. All expenses incurred in connection with
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the registrations under this Agreement (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts) shall be borne by HDS. In connection with
registrations under Sections 1 and 2, HDS shall (i) prepare and file with the
SEC as soon as reasonably practicable, a registration statement with respect to
the HDS Stock and use its best efforts to cause such registration to promptly
become and remain effective for a period of at least one hundred twenty (120)
days (or such shorter period during which holders shall have sold all HDS Stock
which they requested to be registered); (ii) use its best efforts to register
and qualify the HDS Stock covered by such registration statement under
applicable state securities laws
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as the holders shall reasonably request for the distribution for the HDS Stock;
and (iii) take such other actions as are reasonable and necessary to comply with
the requirements of the 1933 Act and the regulations thereunder.
4. Underwriting agreement. In connection with each registration
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pursuant to sections 1 and 2 covering an underwritten registered public
offering, HDS and each participating holder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such managing underwriters and companies of HDS's size and investment
stature, including indemnification. In a registration under section 1, the
managing underwriters shall be selected by HDS (or, if required by a "demand"
registration right of a stockholder requiring such registration, by such
requiring stockholder), and in a registration under Section 2, may be selected
by the holders of a majority of the shares that have demanded to be included in
such registration pursuant to Section 2, provided the managing underwriters so
selected by such majority are reasonably acceptable to HDS.
5. HDS Stock. For the purposes of this Agreement, HDS Stock issued
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prior to the Closing Date shall include shares issued as a stock dividend or
stock split, or otherwise distributed by HDS to its stockholders without
consideration, in respect of shares of HDS Stock previously issued prior to the
Closing Date.
6. Availability of Rule 144. HDS shall not be obligated to register
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shares of HDS Stock held by any Stockholder at any time when the resale
provisions of Rule 144(K) (or any similar or successor provision) promulgated
under the 1933 act are available to enable such Stockholder to sell all shares
of HDS Stock issued prior to the Closing Date and then held by such Stockholder
within a consecutive 90 day period.
7. Survival. The provisions of this Agreement shall survive the
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until December 31, 2002.
8. Counterparts. This Agreement may be executed simultaneously in two
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(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
9. Notices. All notices and other communications required or permitted
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hereunder shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered by depositing the same in United States mail, addressed
to the party to be notified, postage prepaid and registered or certified with
return receipt requested, by delivering the same in person to such party or to
an officer or agent of such party or by facsimile transmission (followed by
delivery by United States mail). The address of the Company shall be that of
its principal executive offices and that of each respective stockholder shall be
as set forth in the records of the Company or its transfer agents as the case
may be.
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10. Governing Law. This Agreement shall be governed by and construed
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in accordance with the provisions of the laws of the State of California,
without giving effect to laws concerning choice of law or conflicts of the law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HOSPITALITY DESIGN & SUPPLY, INC.
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STOCKHOLDERS
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