EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of March 28, 1997, by and between DCC COMPACT CLASSICS, INC., a
Colorado corporation (the "Company"), DAYSTAR PARTNERS, L.P., a California
limited partnership ("DayStar"), and each of the other persons ("Other
Purchasers") who are purchasers of Common Stock from the Company under a Stock
Purchase Agreement dated as of the date hereof (the "Purchase Agreement").
DayStar and the Other Purchasers are collectively referred to herein as the
"Purchasers."
FACTUAL BACKGROUND
A. The Company and the Purchasers have entered into Purchase
Agreements pursuant to which the Purchasers will acquire common stock of the
Company (the "Shares"); and
B. The Company and the Purchasers desire to provide for certain
arrangements with respect to the registration of the Shares under the Securities
Act of 1933, as amended.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 Act: The Securities Act of 1933, as amended, or any other statute
in effect from time to time corresponding to such act.
1.2 Holder: Any Purchaser who holds Registrable Securities or any
holder of Registrable Securities to whom registration rights have been
transferred in compliance with paragraph 9.1 hereof.
1.3 Initiating Holders: A H~der or Holders who in the aggregate holds
not less than 25% of the outstanding Registrable Securities.
1.4 Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
1.5 Participating Holders: Those Holders participating in any
registration pursuant to Article 2 or Article 3 hereof.
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1.6 Prospectus: The prospectus 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 Securities covered by
the 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.
1.7 Register, registered, and registration: A registration effected by
preparing and filing a Registration Statement in compliance with the Act and the
declaration or ordering of effectiveness of such Registration Statement by the
SEC.
1.8 Registrable Securities: All Shares owned by the Purchasers (and
their permitted transferees); provided that Shares cease to be Registrable
Securities when they are transferred other than pursuant hereto or if it is no
longer a Restricted Security. Shares are Restricted Securities unless, until and
for so long as:
1.8.1 they have been effectively registered under the Act and
may be disposed of in accordance with the Registration Statement covering it,
except for such registrations withdrawn pursuant hereto; or
1.8.2 as to any Holder, when all of the Common Stock owned by
such Holder may be distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Act within the succeeding ninety days
without regard to the volume of trading in the Company's securities.
1.9 Registration Statement: Any registration statement of the Company
which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement.
1.10 SEC: The Securities and Exchange Commission or any other agency
assuming or succeeding to the responsibilities thereof in connection with the
registration of securities.
ARTICLE 2
COMPANY REGISTRATION
2.1 COMPANY REGISTRATION. Subject to Article 5 hereof, if at any time
after the date of this Agreement the Company determines to register, either for
its own account or the account of any security holder or holders, any of its
common stock on a form that would also permit the registration of Registrable
Securities (expressly excluding any public offering relating solely to Form S-8
for employee benefit plans or Form S-4 for certain business combinations, or
their successor forms, or any form that does not permit secondary offerings),
the Company shall, each such time, promptly give each Holder written notice of
such determination which notice shall list those jurisdictions in which the
Company intends to attempt to qualify such securities under applicable blue sky
laws Upon the written request of
REGISTRATION RIGHTS AGREEMENT Page 2
every Holder electing to participate, with each such request given within twenty
(20) days after mailing of any such notice by the Company, the Company shall use
its best efforts to include in such registration (and any related qualification
under blue sky laws, and in any underwriting) all of the Registrable Securities
that the Participating Holders have requested be registered. The Company may
withdraw any registration pursuant to this Article 2 at any time prior to the
effectiveness of the Registration Statement whether or not any Holder has
elected to participate. Subject to the provisions of Article 8 hereof, each
Holder may participate in an unlimited number of registrations pursuant to this
Article 2.
2.2 MANDATORY REGISTRATION. Notwithstanding anything to the contrary
contained herein, not later than six months after the date hereof, the Company
shall register on any applicable form all of the Registrable Securities on a
shelf registration and keep such registration statement effective for not less
than 24 months. The Company shall deregister the shares at any time if so
requested by the Holders.
2.3 TIME IS OF THE ESSENCE. If the Company shall fail to perform its
obligations under this Paragraph 2.2, then, in addition to any other remedies
that shall be available to the Holders, the Company shall automatically issue to
each Holder on the first day of each calendar month until such registration
shall be effective a number of Shares equal to five percent of the number of
Shares such Holder owned immediately prior to such issuance. In the event of a
disagreement with respect to such number of Shares, the records of the Holder
shall be presumptively correct.
ARTICLE 3
DEMAND REGISTRATION
3.1 DEMAND REGISTRATION. Subject to the provisions of Article 5 hereof,
if at any time or from time to time after six (6) months following the date
hereof an Initiating Holder provides the Company with a written demand (the
"Demand") that the Company effect a registration under the Act of all or any
part of Registrable Securities having an aggregate offering price in excess of
$500,000, then the Company shall (i) give written notice of the Demand to all
other Holders within 10 days following its receipt of the Demand; and (ii) use
its best efforts to effect such registration (a "Demand Registration") as to all
Registrable Securities included in the Demand together with all or such portion
of the Registrable Securities of any other Holder joining in such Demand as
specified in a written notice received by the Company within 20 days following
such other Holder's receipt of the Demand from the Company. Subject to (i) the
provisions of Article 5 hereof and (ii) the absolute priority of the Holders,
the Company may include in any Demand Registration, other securities of the
Company whether being sold for the accounts of others or for the account of the
Company.
3.2 LIMITATIONS ON DEMAND REGISTRATIONS. The rights of the Holders to
effect a Demand Registration shall be limited as follows:
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3.2.1 Except as set forth in subparagraph 3.2.2, the Company
shall not be required to effect more than one Demand Registration.
3.2.2 Notwithstanding subparagraph 3.2.1 and subject to the
provisions of paragraph 3.3 hereof, the Holders shall be entitled to two (2)
Demand Registrations at the Company's expense on Form 5-3 or any similar
short-form registration, provided that the Company qualifies for such short-form
registration, and provided further that any Demand Registration pursuant to this
subparagraph 3.2.2 shall not be counted as one of the Demand Registrations
allowed under subparagraph 3.2.1 above.
3.2.3 Notwithstanding subparagraph 3.2.2, the Holders shall be
entitled to an unlimited number of Demand Registrations at their own expense on
any applicable form of registration.
3.2.4 The Company shall not be obligated to effect a
registration, qualification, or compliance under this Article 3 during the
period starting sixty (60) days prior to the Company's good faith estimate of
the date of filing of; and ending. on a date one hundred eighty (180) days
following the effective date of, a Company- initiated registration (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively and in good faith
employing all reasonable efforts to cause such registration to become effective
and to continue to be effective as set forth in Paragraph 4.1.1 hereof.
3.2.5 The Company will not be deemed to have provided a Demand
Registration hereunder unless, in addition to the satisfaction of any other
conditions required by this Agreement, such registration has become effective.
3.2.6 Any Demand Registration must be firmly underwritten by
underwriters selected by the Initiating Holders, subject to the approval of the
Company, which approval shall not be unreasonably withheld, and the Company and
the Initiating Holders shall obtain the commitment of such underwriter to firmly
underwrite the offering.
3.2.7 If the Company shall furnish to the Holders making such
Demand a certificate signed by the President of the Company stating that, in the
unanimous good faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its shareholders for such
Registration Statement to be filed at the date filing would be required
hereunder, then the Company shall have an additional period of not more than
ninety (90) days within which to file such Registration Statement.
3.3 REGISTRATION ON FORM S-3. If any Holder or Holders request that the
Company file a registration statement on Form S-3 (or any successor form) for a
public offering of Registrable Securities the reasonably anticipated aggregate
offering proceeds of which would exceed $500,000 and the Company is entitled to
use Form S-3 for such offering, then the Company shall use its best efforts to
cause such Registrable Securities to be registered on such form and to be
qualified in such jurisdictions as the Holder or Holders may
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reasonably request; provided, however, that the Company shall not be required to
effect more than one (1) registration pursuant to this paragraph in any nine (9)
month period or more than three (3) registrations in total pursuant to this
paragraph. The obligations of this paragraph shall be subject to the limitations
set forth in subparagraphs 3.2.6 and 3.2.7 above.
ARTICLE 4
OBLIGATIONS OF THE COMPANY
4.1 OBLIGATIONS OF THE COMPANY. Whenever required under Article 2 or
Article 3 to use its best efforts to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
4.1.1 Prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities as promptly as possible (but in no
event, in the case of a Demand Registration, if audited financial statements for
the immediately preceding year are available, later than seventy-five (75) days
following the Company's receipt of the Demand) and use its best efforts to cause
such Registration Statement to become and remain effective for a period of two
years or until the Participating Holders have completed the distribution
described in the Registration Statement, whichever first occurs; provided,
however, that in connection with any proposed registration intended to permit an
offering of any securities from time to time (i.e., a so-called "shelf
registration"), the Company shall in no event be obligated to cause any such
registration to remain effective for more than three years.
4.1.2 Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the Prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement;
4.1.3 Keep the Participating Holders advised as to the
progress of the registration and offering, and furnish to the Holders, at any
time and from time to time, such numbers of copies of a Prospectus, including a
preliminary prospectus, amendments or supplements, in conformity with the
requirements of the Act, and such other documents as any of them from time to
time may reasonably request in order to facilitate the disposition of
Registrable Securities owned by the Participating Holders; and
4.1.4 Notify each Participating Holder of the happening of any
event which might cause the Prospectus included in such Registration Statement,
as then in effect, to include an 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 or incomplete in the light of the
circumstances then existing, and at the request of any Holder, prepare and
furnish to such Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so
REGISTRATION RIGHTS AGREEMENT Page 5
that, as thereafter delivered to the purchasers of such shares, such Prospectus
shall not include an 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 or incomplete in the light of the circumstances than
existing.
4.1.5 Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
4.1.6 Provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such registration statement and a
CUSIP number of all such Registrable Securities, in each case not later than the
effective date of such registration.
4.1.7 Use its best efforts to 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 appropriate for the
distribution of the securities covered by the Registration Statement, provided
that the Company shall not be required to register or qualify the securities in
any jurisdiction where the Company, in connection with such registration or
qualification or as a condition thereto, is required to qualify to do business
or to file a general consent to service of process (unless the Company is
already subject to service in such jurisdiction and except as required by the
Act), and further provided that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if any jurisdiction in
which the securities shall be qualified shall require that expenses incurred in
connection with the qualification of the securities in that jurisdiction be
borne by selling shareholders, then such expenses shall be payable by the
Participating Holders, pro rata, to the extent required by such jurisdiction.
4.2 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to any Participating Holder that such person furnish to the Company such
information regarding it, the Registrable Securities held by it, and the
intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
4.3 EXPENSES OF REGISTRATION. Except as set forth in subparagraph 3.2.3
hereof, all expenses incurred in connection with any registration effected
hereunder (excluding underwriters' discounts and commissions and stock transfer
taxes), including without limitation all registration and qualification fees and
printers', legal and accounting fees and costs, shall be borne by the Company.
In addition, the Company shall bear the reasonable attorneys' fees and costs
incurred by the Participating Holders up to an aggregate amount of $10,000.
Further, the Company shall not be required to pay for any expenses of any
registration commenced pursuant to Article 3 hereof and subsequently withdrawn
at the request of the Participating Holders unless such withdrawal is based upon
either (i) adverse market conditions or (ii) material adverse information
relating to the Company that was unknown or unavailable to the Initiating
Holders at the time of making the Demand. If such
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withdrawn registration was a Demand Registration as provided in Section 3.1
hereof, then the Company may count such withdrawn registration as a Demand
Registration, notwithstanding the provisions of Subsection 3.2.6 hereof, unless
such withdrawal is based upon either (i) adverse market conditions or (ii)
material adverse information relating to the Company that was unknown or
unavailable to the Initiating Holders at the time of making the Demand.
4.4 CERTAIN LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF
REGISTRATION RIGHTS. From and after the date of this Agreement, the Company
shall not enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the granting of registration rights to
such holder unless (i) such agreement includes provisions substantially
equivalent to paragraph 9.1 hereof and (ii) such agreement requires that, in the
case of any public offering involving an underwritten registered offering under
Article 2 or Article 3 hereof, the Holders have priority as to registration over
any subsequent purchaser of the Company's Common Stock.
4.5 NON-EXCLUSIVE REMEDY. If any registration contemplated herein shall
not become effective as set forth herein, with time being of the essence, then,
in addition to any other remedies which may be available, for each whole or
partial month until the registration does become effective, the Company shall
issue to each Holder a stock certificate for 4% of the shares owned by such
Holder on the date of the issuance.
ARTICLE 5
UNDERWRITING REQUIREMENTS
5.1 UNDERWRITING. If any registration hereunder shall involve an
underwriting, then the Company and all Holders shall be so advised in writing.
In such event, the right of any Holder to participate in any registration
hereunder shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Company, together with all
Holders proposing to distribute their Registrable Securities through such
underwriting, shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company,
or in the case of a Demand Registration pursuant to Article 3 hereof, selected
pursuant to the terms hereof. Notwithstanding any other provisions of this
Agreement, if the underwriter or underwriters determine that marketing factors
require a limitation on the number of shares of Common Stock to be underwritten,
then the Company shall so advise all Participating Holders and the securities to
be included in such registration shall be allocated as follows:
5.1.1 In the event of a registration pursuant to Article 2
hereof, the Company shall be entitled to include all securities it proposed to
register for its own account in its notice to Holders, and the number of shares
of Registrable Securities which may thereafter be included in the registration
and underwriting shall be allocated first, as nearly as practical, among the
Participating Holders in proportion to the number of Registrable Securities held
by each such person at the time of the initial filing of the
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Registration Statement, and then to other participants, including the Company,
as may be agreed by such other participants.
5.1.2 In the event of a Demand Registration effected pursuant
to paragraph 3.1 hereof, the number of shares of Registrable Securities that may
be included in the registration and underwriting shall be allocated, as nearly
as practical, to the Participating Holders pro rata in proportion to the number
of shares of Registrable Securities held by each such person at the time of the
initial filing of the Registration Statement, and then to the other
participants, including the Company, as may be agreed by such participants.
5.1.3 No Registrable Securities excluded from the underwriting
by reason of this Article 5 shall be included in such registration. If any
person disapproves of the terms of the underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter or underwriters.
All Registrable Securities so withdrawn shall also be withdrawn from the
registration and shall not be transferred in a public distribution prior to one
hundred and twenty (120) days after the effective date of the Registration
Statement relating thereto or such other shorter period of time as the
underwriter or underwriters may require.
ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION BY COMPANY. To the extent permitted by law, the
Company will indemnify and hold harmless each of the Holders, each of the
Holder's respective partners, officers, directors, employees, heirs, successors,
assigns and agents, and each Person, if any, who controls any Holder within the
meaning of either Section 15 of the Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (each such person being sometimes
hereinafter referred to as an "Indemnified Holder"), from and against any and
all losses, claims, damages, liabilities and expenses (or actions, proceedings
or settlements with respect thereto) including reasonable costs of investigation
and legal fees and expenses, (i) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or in any amendment or supplement thereto
or in any preliminary prospectus) or any document relating thereto, or (ii)
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) arising out of or based upon any violation by
the Company of the Act or any rule or regulation thereunder applicable to the
Company and the relating action or inaction required of the Company in
connection therewith, and the Company will reimburse each Holder, each of its
partners, officers, directors, employees, heirs, successors, assigns and agents,
and each person controlling such Holder, for any and all legal and other
expenses reasonably incurred in connection with investigating, defending or
settling such loss, claim, damage or liability. Notwithstanding the above, this
indemnity and duty to defend shall not apply to any Holder to the extent that
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or allegation thereof based
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upon information furnished in writing to the Company by such Holder expressly
for use in any Registration Statement or Prospectus, or any amendment or
supplement thereto, or any preliminary prospectus, or given supplementally to
the SEC, the National Association of Securities Dealers, any exchange or state
securities regulators. Further, the Company shall not be liable nor have any
duty to defend in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if (i) such Indemnified Holder failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written confirmation of the sale
of Registrable Securities, and (ii) the Prospectus would have completely
corrected such untrue statement or omission. Further, the Company shall not be
liable nor have any duty to defend in any case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in the
Prospectus if such untrue statement or alleged untrue statement, omission or
alleged omission is completely corrected in an amendment or supplement to the
Prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such
Indemnified Holder thereafter fails to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of a Registrable Security
to the person asserting such loss, claim, damage, liability or expense who
purchased such Registrable Security which is the subject thereof from such
Indemnified Holder. This indemnity will be in addition to any liability which
the Company may otherwise have. This indemnify shall not apply to any amount
paid or incurred in settlement without the express written consent of the
Company, which consent shall not be unreasonably withheld.
Each Indemnified Holder shall give prompt written notice to the Company
after it has actual knowledge of any claim in respect of which indemnity may be
sought from the Company hereunder. In such notice, an Indemnified Holder may in
its discretion demand indemnification, in which case the Company shall assume
the defense thereof at the Company's expense, provided that counsel for the
Company shall be satisfactory to such Indemnified Holder (whose approval shall
not be unreasonably withheld). The failure of any Indemnified Holder to give
notice as provided herein shall not relieve the Company of any of its
obligations hereunder to the extent such failure is not prejudicial. If the
Company assumes the defense in such action, such Indemnified Holder shall retain
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 be the
expense of such Indemnified Holder unless (i) the Company has expressly agreed
in writing to pay such fees and expenses, or (ii) the Company shall have a duty
to assume the defense of such action or proceeding and has failed to do so and
failed to employ counsel satisfactory to such Indemnified Holder in any such
action or proceeding as required hereunder, or (iii) the named parties to any
such action or proceeding (including any impleaded parties) include both the
Indemnified Holder and the Company, and such Indemnified Holder shall have been
advised by counsel that there may be one or more legal defenses available to
such Indemnified Holder which are different from or additional to those
available to the Company and which conflict with those of the Company. In all
circumstances, if the Indemnified Holder notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company, the Company
shall not have the obligation to assume the defense of such action or proceeding
on behalf of such Indemnified Holder; it being understood, however, that the
Company shall not, in connection with any one
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such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for such Indemnified
Holder, which firm shall be designated in writing by such Indemnified Holder and
shall be subject to approval of the Company, which approval shall not be
unreasonably withheld. The Company shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, the Company agrees to indemnify and hold harmless
such Indemnified Holder from and against any loss or liability by reason of such
settlement or judgment.
6.2 INDEMNIFICATION BY HOLDERS. To the extent permitted by law, each of
the Holders agrees to indemnify and hold harmless the Company, its directors,
employees, officers and agents, and each person, if any, who controls the
Company within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, and each other Holder, and each other Holder's partners, officers,
directors, employees, heirs, successors, assigns and agents and each person
controlling such Holder, to the same extent as the foregoing indemnity from the
Company to the Indemnified Holders, but only with respect to information
relating to each Holder furnished in writing by such Holder expressly for use in
any Registration Statement or Prospectus, or any amendment or supplement
thereto, or any preliminary prospectus, or given supplementally to the SEC, the
National Association of Securities Dealers, any exchange or state securities
regulators. In case any action or proceeding shall be brought in respect of
which indemnity may be sought against any Holder hereunder, such Holder shall
have the rights and duties given the Company, and the Company and its directors,
officers, employees or agents and controlling persons, and each other Holder,
and each other Holder's partners, officers, directors, employees, heirs,
successors, assigns and agents and each Person controlling such Holder, shall
have the rights and duties given to each Indemnified Holder by paragraph 6.1. In
no event shall the liability of any Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
6.3 CONTRIBUTION. If the indemnification provided for in this Article 6
is unavailable to an indemnified party under paragraphs 6.1 or 6.2 hereof (other
than by reason of exceptions provided in those paragraphs) in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying xxxxx, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the Indemnified Holder or Holders on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the Indemnified Holder or Holders 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 Company or by
the Indemnified Holder or Holders and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses
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referred to above shall be deemed to include, subject to the limitations set
forth in paragraph 6.1, any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
The Company, and the Holders agree that it would not be just and equitable if
contribution pursuant to this paragraph 6.3 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to herein. Notwithstanding the provisions
of this paragraph 6.3, no Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such Holder and distributed to the public were offered to the
public exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
6.4 SURVIVAL. All provisions of this Article 6 shall survive the
expiration or termination of this Agreement for any reason.
ARTICLE 7
TERM AND TERMINATION
7.1 TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company's obligations
pursuant to Articles 2 and 3 shall expire December 31, 2005.
ARTICLE 8
RULE 144 REPORTING
8.1 REPORTS UNDER EXCHANGE ACT. With a view to making available to
Holders the benefits of Rule 144 promulgated under the Act ("Rule 144") and any
other rule or regulation of the SEC that may at any time permit the Holders to
sell securities of the Company to the public without registration, the Company
agrees to use its best efforts to:
8.1.1 at all times make and keep public information available,
as those terms are understood and defined in Rule 144;
8.1.2 file with the SEC, in a timely manner, all reports and
other documents required of the Company under the Act and the Exchange Act; and
8.1.3 so long as such person owns any Registrable Securities,
furnish to the Holders forthwith upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, and of
the Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents so filed by
the Company as may
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be reasonably requested in availing the Holders of any rule or regulation of the
SEC permitting the selling of any such securities without registration.
ARTICLE 9
OBLIGATIONS OF THE HOLDERS
9.1 NOTICE OF PROPOSED TRANSFERS. The rights to cause the Company to
register securities under Articles I and II hereunder shall be transferrable or
assignable only to a transferee or assignee of Registrable Securities (as
presently constituted and subject to adjustments for stock splits, stock
dividends, and the like) equal to not less than 0.5% of the Company's
outstanding common stock. Prior. to any proposed sale, assignment, transfer or
pledge of any Registrable Securities (other than a transfer not involving a
change in beneficial ownership) unless there is in effect a registration
statement under the Act covering the proposed transfer, the Holder thereof shall
give written notice to the Company of such Holder's intention to effect such
transfer, sale, assignment or pledge in sufficient detail, and, if requested by
the Company, such notice shall be accompanied, at such Holder's expense, by
either (i) an unqualified written opinion of legal counsel who shall be, and
whose legal opinion shall be, reasonably satisfactory to the Company, addressed
to the Company, to the effect that the proposed transfer of the Registrable
Securities may be effected without registration under the Act, or (ii) a "no
action" letter from the SEC to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the SEC
that action be taken with respect thereto, whereupon the Holder of such
Registrable Securities shall be entitled to transfer such Registrable Securities
in accordance with the terms of the notice delivered by the Holder to the
Company. It is agreed that the Company will not request an opinion of counsel
for the Holder for transactions made in reliance on Rule 144 under the Act, as
to which no notice shall be necessary. Each certificate evidencing the
Registrable Securities transferred as above provided shall bear the appropriate
restrictive legend except that such certificate shall not bear any restrictive
legend if in the opinion of counsel for such Holder and the Company such legend
is not required in order to establish compliance with any provision of the Act.
9.2 NO RIGHT TO DELAY. No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration as a result of
any controversy this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 ASSIGNMENT. The terms and conditions of this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto and shall be binding upon the parties with respect to
shares of capital stock subsequently acquired by any Holder.
REGISTRATION RIGHTS AGREEMENT Page 12
10.2 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including the
Exhibits hereto, if any) constitutes the fill and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated, except by a written instrument signed by the Company and the Holders
of at least 80% of the then outstanding Registrable Securities and any such
amendment, waiver, discharge or termination shall be binding on all the Holders,
but in no event shall the obligation of any Holder hereunder the materially
increased, except upon the written consent of such Holder.
10.3 INFORMATION CONFIDENTIAL. Each Holder acknowledges that the
information received by it pursuant hereto may be confidential and for its use
only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any other
person (other than its employees or agents having a need to know the contents of
such information, and its attorneys) or use such information to the detriment of
the Company, except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or such Holder is required to disclose such information by a
governmental body.
10.4 FURTHER ASSURANCES. The parties hereto shall use their best
efforts to do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements,
certificates, instruments or documents as any other party may reasonably request
in order to carry out the intent and purpose of this Agreement and the
consummation of the transactions contemplated hereby and thereby. Neither
Company nor any Holder shall voluntarily undertake any course of action
inconsistent with satisfaction of the requirements applicable to them set forth
in this Agreement and each shall promptly do all such acts and take all such
measures as may be appropriate to enable them to perform as early as practicable
the obligations herein and therein required to be performed by them.
10.5 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any Person, other than the parties hereto, the
Indemnified Holders, the Company's directors, controlling persons, employees,
officers, agents and their respective heirs, successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
executed by residents of California and wholly to be performed in California.
Each party hereby submits to the exclusive jurisdiction and venue of the
Superior Court of the State of California for the City and County of San
Francisco or the Federal District Court for the Northern District of California
for purposes of any legal or equitable action or proceeding arising out of this
Agreement. Each party agrees that service upon such party in any such action or
proceeding may be made by first class mail, certified or registered, return
receipt requested as provided by the giving of notices in Section 10.8.
10.7 TITLES AND SUBTITLES; FORM OF PRONOUNS. The titles of the
articles and sections of this Agreement are for convenience only and are not to
be considered in
REGISTRATION RIGHTS AGREEMENT Page 13
construing this Agreement. All pronouns used in this Agreement shall be deemed
to include masculine, feminine and neuter forms.
10.8 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon receipted personal
delivery (professional courier permissible), United States certified mail
delivery or confirmed facsimile transmission to the address set forth with
respect to such party on the signature pages of this Agreement (and with copies
as indicated thereon), or to such other address as such party shall have given
notice of pursuant hereto to the other xxxxx or parties.
10.9 RIGHTS; SEVERABILITY. Unless otherwise expressly set forth herein,
a Holder's rights and obligations hereunder are several rights, not rights
jointly held with the other Holders. If one or more provisions of this Agreement
are held to be invalid, illegal or unenforceable under applicable law, portions
of such provisions, or such provisions in their entirety, to the extent
necessary, shall be severed from this Agreement, and the balance of this
Agreement shall be enforceable in accordance with its terms.
10.10 DELAYS OR OMISSIONS. No delays or omissions to exercise any
right, power or remedy accruing to any xxxxx to this Agreement, upon any breach
or default of the other party, shall impair any such right, power or remedy of
such nonbreaching party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
10.11 ATTORNEYS' FEES. In the event of litigation hereunder, the
prevailing party or parties shall be entitled to recover its or their costs of
litigation, including reasonable attorneys' fees, in addition to all other
relief as may be granted.
10.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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REGISTRATION RIGHTS AGREEMENT Page 14
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
COMPANY: DCC COMPACT CLASSICS, INC., a Colorado
corporation
By:/s/Xxxxxxxx Xxxxxxxxx
----------------------------------
Xxxxxxxx Xxxxxxxxx, President
Address for Notice: DCC Compact Classics, Inc
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
With a copy to: Xxxxxxx Xxxxx
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
DAYSTAR: DAYSTAR PARTNERS, L.P., a California
limited partnership
By: XXXXX XXXXX CO., INC., its
General Partner
By:
-----------------------------
Xxxxx Xxxxx, President
Address for Notice: 00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
With a copy to: Xxxxx Xxxxx, Esq.
Coblentz, Cahen, XxXxxx & Breyer, LLP
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
REGISTRATION RIGHTS AGREEMENT Page 15
OTHER PURCHASERS:
-----------------------------
Xxxxx Xxxxx
Address for Notice: 00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
SUNDANCE VENTURE PARTNERS, L.P., a
Delaware limited partnership
By:
-----------------------------------
Its:
-----------------------------------
Address for Notice: 00000 X. XxXxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
REGISTRATION RIGHTS AGREEMENT Page 16
