EXHIBIT 10(ae)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of February 26, 2002, by and between UNIVERSAL AUTOMOTIVE
INDUSTRIES, INC., a Delaware corporation (the "Company"), and each of the
persons executing this Agreement in the space provided on the signature page
hereto (each a "Holder" and collectively, the "Holders").
RECITALS
A. Holder has agreed to purchase units (the "Units") comprised of one
share of the Company's common stock, par value $.01 per share (the "Shares"),
and one warrant (the "Warrant") to purchase one share of the Company's common
stock, par value $.01 per share (the "Conversion Shares") pursuant to a
Subscription Agreement between the Company and Holder in connection with a
private placement of the Units by the Company to which this form of Agreement
has been appended as an exhibit.
B. The Warrants are exercisable, in whole or in part, from time to
time, commencing one (1) year from the date of the Company's first closing in
the offering of the Units (the "Initial Exercise Date"), and prior to 5:00 p.m.
Central Time, on the date which four (4) years from the date of the last closing
in the offering of the Units. If a Warrant is not exercised on or before the
expiration date, the unexercised portion of the Warrant will lapse and the
Warrant shall have no more force or effect.
C. As additional consideration for the purchase of the Units by Holder,
the Company desires to grant to Holder registration rights with respect to the
Shares and the Conversion Shares.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. (a) Registration Rights. Within six (6) months from the date of the
last closing in the offering of the Units, the Company agrees to file with the
U.S. Securities and Exchange Commission (the "Commission") a registration
statement for resale of the Shares and the Conversion Shares by the Holders and
will use its best efforts to have the registration statement declared effective
as soon as possible and thereafter to remain effective until the latest date
that all of the Shares or Conversion Shares held or to be held by the Holder can
be sold without restrictions under Rule 144(k) of the Securities Act.
As used herein, "Registrable Securities" shall mean the Shares and the
Conversion Shares.
(b) The Company shall use its best efforts to cause the
Registrable Securities so registered to be registered or qualified for sale
under the securities or Blue Sky Laws of such jurisdictions as the Holders may
reasonably request; provided, however, that the Company shall not be required to
qualify to do business in any state by reason of this Section 1(b) in which it
is not otherwise required to qualify to do business.
(c) The Company shall furnish to each Holder copies of the
registration statement and of each amendment and supplement thereto (in each
case, including all exhibits), such reasonable number of copies of each
prospectus contained in such registration statement and each supplement or
amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder, and such other
documents, as any Holder may reasonably request.
(d) The Company agrees that until all the Registrable
Securities have been sold under a registration statement or pursuant to Rule 144
under the Securities Act, it shall use its best efforts to keep current in
filing all reports, statements and other materials required to be filed with the
Commission.
(e) The Company shall notify the Holders promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
(f) The Company shall promptly notify the Holders 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, would include an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and, at the reasonable request
of the Holders of the Registrable Securities, prepare and furnish to them such
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 Registrable
Securities or securities, 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 in the light
of the circumstances under which they were made.
(g) The Company shall prepare and file with the Commission,
promptly upon the request of the Holders, any amendments or supplements to such
registration statement or prospectus which, in the reasonable opinion of the
Holders (and reasonably concurred in by the Company), is required under the
Securities Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities.
(h) The Company shall advise the Holders promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement under the Act or the initiation or threatening of any proceeding for
such purpose, and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued.
(i) The Company shall use its best efforts to cause all such
Registrable Securities to be listed or included on each securities exchange or
over-the-counter market on which similar securities issued by the Company are
then listed or included and file all required listing applications and pay all
required fees in connection with such listings.
(j) The Company shall cooperate with Holders in effecting the
transfer of any shares sold pursuant to a registration effected hereunder.
(k) The Company shall pay all expenses incident to its
performance of or compliance with its obligations under this Agreement to effect
the registration of Registrable Securities required hereunder, including,
without limitation, all registration, filing, Nasdaq Stock Market fees, all
underwriting fees, expenses, discounts and commissions, all registration,
filing, qualification and other fees and expenses of complying with state
securities or "blue-sky" laws, all word processing, duplicating and printing
expenses, messenger, shipping and delivery expenses, but excluding any legal
fees and expenses of counsel retained by the Holders of the Registrable
Securities being registered, and further excluding any fees and disbursement of
underwriters, underwriting discounts and commissions and
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transfer taxes, if any, in respect of Registrable Securities, which fees,
expenses, discounts, commissions and taxes in respect of Registrable Securities
shall be incurred by the Holders in connection with any transfer or other
disposition and their shares of the Company's stock after such registration
shall have been effected by the Company.
2. Indemnification. (a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Holder, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all loss, liability, charge, claim,
damage, and expense (including all reasonable costs associated with
investigating and defending any such loss, liability, charge or claim)
whatsoever, as and when incurred, arising out of, based upon, or in connection
with:
(i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any registration statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, relating to the sale of any of the
Registrable Securities or (B) in any application or other document or
communication (in this Section 2 collectively called an "Application") executed
by or on behalf of the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to register or
qualify any of the Registrable Securities under the securities or Blue Sky Laws
thereof or filed with the Commission or any securities exchange; or any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading, unless (x) such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to such Holder by or on behalf
of such person expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any Application, as the case may be, or (y) such loss, liability,
charge, claim, damage or expense arises out of such Holder's failure to comply
with the terms and provisions of this Agreement; or
(ii) any breach of any representation, warranty, covenant, or
agreement of the Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may otherwise have,
including liabilities arising under this Agreement.
If any action is brought against any Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability other than pursuant to this Section 2(a)) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties), provided that
the indemnified party shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall be
borne by the Company and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties.
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Anything in this Section 2 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent of each indemnified party
that is not released as described in this sentence, settle or compromise any
action, or permit a default or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, in respective of which
indemnity may be sought hereunder (whether or not any indemnified party is a
party thereto), unless such settlement, compromise, consent, or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify Holders of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the same of any Registrable Securities
or any preliminary prospectus, prospectus, registration statement, or amendment
or supplement thereto, or any Application relating to any sale of any
Registrable Securities.
(b) Each Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
such Holder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and its or their respective counsel, to the same extent as the foregoing
indemnify from the Company to such Holder in Section 2(a), but only with respect
to statements or omissions, if any, made in any registration statement,
preliminary prospectus, or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any Application, in
reliance upon and in conformity with written information furnished to the
Company with respect to such Holder by or on behalf of such Holder, for
inclusion in any such registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any Application, as
the case may be. If any action shall be brought against the Company or any other
person so indemnified based on any such registration statement, preliminary
prospectus, or final prospectus or any amendment or supplement thereto, or in
any Application, and in respect of which indemnity may be sought against such
Holder pursuant to this Section 2(b), such Holder shall have the rights and
duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified parties,
by the provisions of Section 2(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Sections 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Holders of the Registrable
Securities, included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Holders in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omissions, or alleged omission
shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by the
Company or by such Holders, and the parties' relative intent, knowledge, access
to information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission.
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The Company and Holders agree that it would be unjust and inequitable
if the respective obligations of the Company and the Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if each Holder and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 2(c). In no case shall any Holder be responsible for a
portion of the contribution obligation imposed on all Holders in excess of its
pro rata share based on the number of Shares owned by him, her or it and
included in such registration as compared to the number of Shares owned by all
Holders and included in such registration. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
For purposes of this Section 2(c), each person, if any, who controls
any Holder within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act and each officer, director, partner, employee, agent,
and counsel of Holder or control person shall have the same rights to
contribution as such Holder or control person 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 Exchange Act, each officer of the Company who shall have
signed any such registration statement, each director of the Company, and its or
their respective counsel shall have the same rights to contribution as the
Company, subject in each case to the provision of this Section 2(c). Anything in
this Section 2(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 2(c) is intended to supersede any
right to contribution under the Securities Act, the Exchange Act or otherwise.
3. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing delivered by hand-delivery,
registered first-class mail, or telecopier, initially to the address set forth
below, and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 3(c):
IF TO THE COMPANY: WITH A COPY TO:
Universal Automotive Industries, Inc. Xxxxxxx & Xxxxxxxx Ltd.
00000 Xxxxx Xxxxxxx Xxxxxx 000 Xxxxx Xxxxxxxx Avenue - Suite 2500
Alsip, Illinois 60803 Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Chief Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Executive Officer Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
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IF TO THE HOLDERS:
At the address set forth in each Holder's
Subscription Agreement for the Units
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two (2) business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of the Registrable Shares subject to the terms
hereof.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without reference
to its conflicts of law provisions.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions contained herein shall not be affected or
impaired thereby.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of this agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, concerning the registration rights granted by the Company
pursuant to this Agreement.
(j) Recitals. The Recitals to this Agreement are hereby
incorporated by reference into this Agreement as if fully set forth herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC. HOLDER:
By: By:_________________________
Xxxxx Xxxxx, Chief Executive Officer ____________________________
[Print Name]
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