REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 12, 1997, is between Country Star Restaurants, Inc., a Delaware
corporation (the "Company"); and Cameron Capital Ltd. ("Cameron") and the other
parties who may execute and deliver counterpart signature pages to this
Agreement from time to time (who are referred to collectively with Cameron as
the "Investors").
RECITALS
A. The Investors have agreed to lend certain monies to the Company
pursuant to that certain Loan and Security Agreement dated as of February 12,
1997 (the "Loan Agreement") provided that, among other things, certain
registration rights are granted to the Investors.
B. Pursuant to the Loan Agreement, the Company: (i) has issued to Cameron
a Common Stock purchase warrant (the "Cameron Warrant") and a Term Loan Note
that is convertible into Common Stock (the "Convertible Note"); and (ii) is
obligated to issue additional Common Stock purchase warrants to Investors making
additional advances under the Loan Agreement (together with the Cameron Warrant,
the "Warrants").
C. The Company deems it desirable to grant certain securities registration
rights to the Investors in order to induce the Investors to lend it certain
monies pursuant to the Loan Agreement.
AGREEMENT
In consideration of the premises and the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. In addition to the capitalized terms defined elsewhere in
this Agreement, the following capitalized terms shall have the following
meanings when used in this Agreement:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock of the Company.
"Holders" means the holders of Registrable Shares who are parties to
this Agreement or successors or assigns or subsequent holders of the Registrable
Shares.
"Person" means a natural person, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated
organization or other entity, or a governmental entity or any department, agency
or political subdivision thereof.
"Registrable Shares" means, at any time, any shares of Common Stock
issued or issuable upon conversion of the Convertible Note or exercise of the
Warrants, and any shares of Common Stock issued as, or issued or issuable
directly or indirectly upon the conversion or exercise of other securities
issued as, a dividend or other distribution with respect to or in replacement of
the Convertible Note, Warrants or other Registrable Shares; provided, however,
that Registrable Shares shall not include any shares the sale of which has been
registered pursuant to the Securities Act or which have been sold to the public
pursuant to Rule 144, promulgated under the Securities Act. For purposes of this
Agreement, a Person will be deemed to be a holder of Registrable Shares whenever
such Person has the right to acquire such Registrable Shares (by conversion,
exercise or otherwise), whether or not such acquisition has actually been
effected.
"Registration Expenses" has the meaning ascribed to it in Section
2.6 of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
2. Securities Act Registration.
2.1. Registration of Registrable Shares. The Company shall register under
the Securities Act, at the Company's expense, all of the shares of Common Stock
issuable upon the conversion in full of the Convertible Note and upon exercise
of all of the Warrants (the "Registrable Shares") and in connection therewith
shall file a registration statement with respect to the Registrable Shares (the
"Registration Statement") with the Commission on or before the earlier of (i) 15
days after the Company files its annual report on Form 10-K or 10-KSB, and (ii)
May 1, 1997. The Company shall cause the Registration Statement to become
effective by no later than June 30, 1997. Notice of effectiveness of the
Registration Statement shall be furnished promptly to the Investors. The Company
shall maintain the effectiveness of the Registration Statement and from time to
time will amend or supplement such Registration Statement and the prospectus
contained therein as and to the extent necessary to comply with the Securities
Act. The effectiveness of the Registration Statement shall be maintained with
respect to the Registrable Shares until the later to occur of the second
anniversary of the date of the respective Warrants and Convertible Note or such
date as all of the Registrable Shares may be sold during any one period of three
(3) consecutive months pursuant to Rule 144 under the Securities Act or
otherwise without registration.
2.2. Amendments. The Company shall prepare and file with the Commission
such amendments and supplements to the Registration Statement and the prospectus
used in connection with such Registration Statement necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
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2.3. Notice. The Company shall notify each seller of Registrable Shares
covered by the Registration Statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or incomplete in light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include
any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in light
of the circumstances then existing.
2.4. Prospectus. The Company shall furnish to the Investors such number of
copies of a prospectus in conformity with the requirements of the Securities
Act, and such other documents as may reasonably be requested in order to
facilitate the disposition of the Registrable Shares owned by the Investors.
2.5. Blue Sky. The Company shall register and qualify the securities
covered by such Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Investors;
provided, however, that the Company shall not be required in connection
therewith, or as a condition thereto, to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act.
2.6. Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including, but not limited to,
all registration and filing fees, fees and expenses and compliance with federal,
state and foreign securities laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and its
independent certified public accountants, underwriters (excluding discounts and
commissions attributable to the Registrable Shares included in such
registration) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), will be borne by the Company. In
addition, the Company will pay its internal expenses (including, but not limited
to, 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 obtained by the Company and the expenses and
fees for listing the securities to be registered on each securities exchange or
quotation system.
2.7. Other Matters. (a) The Company shall provide a transfer agent and
registrar for all Registrable Shares to be registered hereunder and a CUSIP
number of all Registrable Shares, in each case not later than the effective date
of such registration.
(b) The Company will use its best efforts to cause the Registrable Shares
to be duly approved for listing on The Nasdaq Stock Market on or prior to the
effectiveness of the Registration Statement.
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(c) The Company will use its best efforts to maintain the listing of its
Common Stock on The Nasdaq Stock Market, for at least a sixty (60) month period
commencing on the Effective Date.
(d) The Company will make and keep public information regarding the
Company available as those terms are understood and defined in Rule 144 under
the Securities Act, at all times from and after the Effective Date;
(e) The Company will file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act.
3. Indemnification.
3.1. Indemnification by the Company. In the event that the Company
registers under the Securities Act any of the Registrable Shares held by the
Investors, the Company shall indemnify and hold harmless the Investors and each
underwriter (if any) of such shares (including any broker or dealer through whom
any of the shares may be sold) and each person, if any, who controls any of the
Investors or any such underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Securities Exchange Act from and against
any and all losses, claims, damages, expenses or liabilities, joint or several,
to which they or any of them become subject under the Securities Act or the
Securities Exchange Act or otherwise, and, except as hereinafter provided, shall
reimburse the Investors and each of the underwriters and each such controlling
person, if any, for any legal or other expenses reasonably incurred by them or
any of them in connection with investigating or defending any actions whether or
not resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or in the prospectus (or the Registration Statement or
prospectus as from time to time amended or supplemented by the Company) or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such untrue statement or omission was
made in such Registration Statement or prospectus in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by that specific Investor (insofar as indemnification of that specific
Investor is concerned) or any underwriter (insofar as indemnification of any
such underwriter is concerned) relating thereto expressly for use therein.
Promptly after receipt by the Investors or any underwriter or any person
controlling any of them, as the case may be, of notice of a claim to which the
foregoing indemnification applies, the Investors or such other persons shall
notify the Company in writing of the commencement thereof, and, subject to the
provisions hereinafter stated, the Company shall assume the defense of such
action (including the employment of counsel, who shall be counsel satisfactory
to the Investors or such underwriter or controlling person, as the case may be,
and the payment of expenses) insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Company. The
Investors or any underwriter or any such controlling persons shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall not be at the
expense of the Company unless: (i) the employment of such counsel has been
specifically authorized by the Company, (ii) the Company has failed to assume
the defense and employ counsel, or (iii) the named
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parties of any such action, suit or proceeding (including any impleaded parties)
include both the person or persons seeking indemnification (the "indemnified
person") and the Company and such indemnified person shall have been advised by
its counsel that representation of the indemnified person and the Company by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the Company shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such indemnified person). The Company shall not
be liable to indemnify any person for any settlement by such person of any such
action effected without the Company's consent.
3.2. Indemnification by the Investors. Each Investor, severally and not
jointly, shall indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Securities Exchange Act, against all
losses, claims, damages, expenses or liabilities or actions to which they or any
of them become subject under the Securities Act or the Securities Exchange Act
or otherwise, and shall reimburse the Company, its officers and directors and
each such controlling person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, insofar as such losses,
claims damages, expenses, liabilities or actions arise out of or are based upon
any information relating to that specific Investor furnished by or on behalf of
that specific Investor in writing specifically for inclusion in such
Registration Statement. Notwithstanding the above, the liability of each
Investor under this Section 3.2 shall not exceed the proceeds (net of
underwriting discounts or commissions) received by that Investor upon the sale
of the Registrable Shares.
3.3 Payment. Any losses, claims, damages, liabilities and reasonable
expenses for which an indemnified party is entitled to indemnification under
Sections 3.1 and 3.2 of this Agreement shall be paid by the indemnifying party
to the indemnified party as such losses, claims, damages, liabilities and
expenses are incurred.
4. Representations, Warranties and Covenants of the Company. The Company
hereby incorporates by reference all of its representations, warranties and
covenants as set forth in the Loan Agreement.
5. Representations and Warranties of the Investors. Each of the Investors
hereby incorporates by reference all of its respective representations,
warranties and covenants as set forth in the Loan Agreement.
6. Brokers. The Company hereby agrees to indemnify each Investor and holds
each Investor harmless from any liability for any brokers' or finders' fee with
respect to this Agreement or the transactions contemplated hereby for which the
Company is responsible.
7. Waiver, Amendment. Neither this Agreement nor any provisions hereof
shall be modified, changed, discharged or terminated except by an instrument in
writing, signed by the party against whom any waiver, change, discharge or
termination is sought.
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8. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their respective successors and assigns,
and no other person shall have any right or obligation hereunder. Neither this
Agreement nor any right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by the Company without the prior written
consent of the other party and any assignment in violation hereof shall be void.
This Agreement, and all of each Investor's rights, remedies, obligations or
liabilities arising hereunder or by reason hereof, may be assigned by that
specific Investor.
9. Governing Law; Choice of Forum. This Agreement shall be interpreted and
the rights and liabilities of the parties hereto determined in accordance with
the internal laws (as opposed to the conflict of laws provisions) of the state
of Illinois. The parties hereto hereby agree to the exclusive jurisdiction of
the United States District Court of the Northern District of Illinois and the
State Courts of Illinois located in Xxxx County, Illinois and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein, and agree that any dispute concerning the relationship
between the Investors on the one hand and the Company on the other hand or the
conduct of any party in connection with this Agreement or otherwise shall be
heard only in the courts described above.
10. Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
11. Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
will constitute one and the same instrument. However, in enforcing any party's
rights under this Agreement it will be necessary to produce only one copy of
this Agreement signed by the party to be charged.
12. Notices. All notices, consents, waivers, and other communications
under this Agreement must made in accordance with the terms of Section 12 of the
Loan Agreement.
13. Binding Effect. The provisions of this Agreement shall be binding upon
and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
14. Effect of Company's Noncompliance. Failure by the Company to comply
with any of the above provisions shall constitute a default under the Loan
Agreement.
[Signature Page Immediately Follows]
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This Agreement has been executed by the parties below to be effective as
of the date set forth on the first page of this Agreement.
COUNTRY STAR
RESTAURANTS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------------
Title: CEO
---------------------------
INVESTORS:
CAMERON CAPITAL LTD.
By: /s/ X. Xxxxxxxx
------------------------------
Name: X. Xxxxxxxx
----------------------------
Title: CEO
---------------------------
/s/ Xxx X. Xxxxx
----------------------------------
Name of Investor
By: /s/ Xxx Xxxxx
------------------------------
Name: ____________________________
Title: ___________________________
[Signature Page to Registration Rights Agreement]
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