REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
_________________________, 1998, between U.S. Automotive Manufacturing, Inc., a
Delaware corporation (the "Company"), and the person whose name and address
appear on the signature page of this Agreement (individually, a "Holder" or
collectively with the holders of the Units issued in the Offering, each as
defined below, the "Holders").
RECITALS
WHEREAS, simultaneously with the execution and delivery of this Agreement,
the Company has accepted the subscription of the Holder in connection with the
offering by the Company (the "Offering") of up to ten (10) units (the "Units"),
each Unit consisting of (i) an unsecured non-negotiable promissory note of the
Company in the principal amount of $100,000 and (ii) warrants (the "Warrants")
to purchase up to an aggregate of 25,000 shares (the "Warrant Shares") of common
stock, $.001 par value, of the Company (the "Common Stock"), all upon the terms
set forth in the Company's Confidential Private Offering Memorandum dated
February 28, 1998, as amended or supplemented;
WHEREAS, the Company has agreed to grant to the Holder certain piggyback
registration rights with respect to the Warrants Shares (the "Registrable
Shares"), upon the terms and conditions herein set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Piggyback Registration.
(a) If at any time any time prior to the sixth (6th) year anniversary of
the final closing of the Offering, the Company proposes to prepare and file with
the Securities and Exchange Commission a registration statement covering equity
or debt securities of the Company, or any such securities of the Company held by
its stockholders, other than in connection with a merger, acquisition or
pursuant to a registration statement on Form S-4 or Form S-8 or any successor
form (for purposes of this Section 1, collectively, a "Registration Statement"),
the Company will give written notice of its intention to do so by registered or
certified mail ("Notice"), at least 15 days prior to the filing of each such
Registration Statement, to Holder. Upon the written request of Holder, made
within 10 days after receipt of the Notice, that the Company include any of the
Registrable Shares in the Registration Statement, the Company shall, as to
Holder, use reasonable efforts to effect the registration under the Securities
Act of 1933, as amended (the "Act"), of the Registrable Shares which it has been
so requested to register ("Piggyback Registration"), at the Company's sole cost
and expense and at no cost or expense to Holder (other than any underwriting or
other commissions, discounts or fees of any counsel or advisor to the Holder
which shall be payable by the Holder, as further provided in Section 2(b)
hereof); provided, however, that if, the Piggyback Registration is in connection
with an underwritten public offering and in the written opinion of the Company's
underwriter or managing underwriter of the underwriting group, if any, for such
offering, the inclusion of all or a portion of the Registrable Shares requested
to be registered, when added to the securities being registered by the Company
or the selling stockholder(s), if any, will exceed the maximum amount of the
Company's securities which can be marketed (i) at a price reasonably related to
their then current market value, or (ii) without otherwise having a material
adverse effect on the entire offering, then the Company may, subject to the
allocation priority set forth in the next paragraph, exclude from such offering
all or a portion of the Registrable Shares which it has been requested to
register. Without limiting the generality of the foregoing, such underwriter or
managing underwriter may condition its consent to the inclusion of all or a
portion of the Registrable Shares requested to be registered upon the
participation by Holder in the underwritten public offering on the terms and
conditions thereof.
(b) If securities are proposed to be offered for sale pursuant to such
Registration Statement by other security holders of the Company and the total
number of the Registrable Shares to be offered by Holder and such other selling
security holders is required to be reduced pursuant to a request from the
underwriter or managing underwriter (which request shall be made only for the
reasons and in the manner set forth above), the aggregate number of Registrable
Shares to be offered by Holder pursuant to such Registration Statement shall
equal the number which bears the same ratio to the maximum number of securities
that the underwriter or managing underwriter believes may be included for all
the selling security holders (including Holder) as the original number of
securities proposed to be sold by Holder bears to the total original number of
securities proposed to be offered by Holder and the other selling
securityholders.
(c) Notwithstanding the preceding provisions of this Section, the Company
shall have the right at any time after it shall have given written notice
pursuant to this Section (irrespective of whether any written request for
inclusion of such securities shall have already been made) to elect not to file
any proposed Registration Statement, or to withdraw the same after the filing
but prior to the effective date thereof.
(d) For purposes of this Agreement, the term "Registrable Shares" shall
mean each of the shares of Common Stock of the Company acquired and beneficially
owned by Holder upon the exercise of the Warrants granted in connection with the
Offering and any securities issued or issuable with respect to such shares of
Common Stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. Once issued, any such securities shall cease to be
Registrable Shares registerable hereunder upon the earlier of (a) the sale of
such securities pursuant to an effective registration statement under the Act,
(b) the distribution thereof to the public pursuant to Rule 144 (or any
successor provision) under the Act, (c) a transfer pursuant to which new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Act or any similar state
law then in force, (d) they shall have ceased to be outstanding, or (e) any and
all legends restricting transfer thereof have been removed in accordance with
the provisions of Rule 144(k) (or any successor provision) under the Act.
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2. Covenants of the Company With Respect to Registration. The Company
hereby covenants and agrees as follows:
(a) Following the effective date of a Registration Statement, the Company
shall, upon the request of Holder, forthwith supply such reasonable number of
copies of the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Act, and other documents necessary or incidental
to the public offering of the Registrable Shares as shall be reasonably
requested by Holder to permit Holder to make a public distribution of the
Registrable Shares. The obligations of the Company hereunder with respect to the
Registrable Shares are expressly conditioned on Holder's furnishing to the
Company such appropriate information concerning Holder, the Registrable Shares
and the terms of Holder's offering of such shares as the Company may request.
(b) The Company will pay all costs, fees and expenses in connection with
all Registration Statements filed pursuant to Section 1, including, without
limitation, the Company's legal and accounting fees, printing expenses and blue
sky fees and expenses; provided, however, that Holder shall be solely
responsible for the fees of any counsel or advisor retained by Holder in
connection with such registration and any transfer taxes or underwriting
discounts, selling commissions or selling fees applicable to the Registrable
Shares sold by Holder pursuant thereto.
(c) The Company will use reasonable efforts to qualify or register the
Registrable Shares included in a Registration Statement for offering and sale
under the securities or blue sky laws of such states as are reasonably requested
by Holder, provided that the Company shall not be obligated to execute or file
any general consent to service of process (unless the Company is already then
subject to service in such jurisdiction) or to qualify as a foreign corporation
to do business under the laws of any such jurisdiction.
(d) Notwithstanding anything contained in this Agreement to the contrary,
the Company shall not be obligated to register the Registrable Shares under the
Act or maintain the effectiveness of any registration statement filed under
Section 1 hereof if it receives an opinion of counsel to the Company that any of
the Registrable Shares may be freely traded without registration under the Act,
under Rule 144 of the Act or otherwise. Nothing contained in this Agreement
shall require the Company to undergo an audit, other than in the ordinary course
of business.
3. Covenant of Holder.
(a) Holder, upon receipt of notice from the Company that an event has
occurred which requires a post-effective amendment to the Registration Statement
or a supplement to the prospectus included therein, shall promptly discontinue
the sale of the Registrable Shares until Holder receives a copy of a
supplemented or amended prospectus from the Company, which the Company shall
provide as soon as practicable after such notice.
(b) Holder agrees to fully cooperate with the Company and to furnish to the
Company such information regarding Holder as the Company may from time to time
deem reasonably necessary in connection with the preparation and filing of the
Registration Statement.
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4. Indemnification.
(a) In the event of any registration of any the Registrable Shares under
the Act, the Company shall indemnify and hold harmless the holder of the
Registrable Shares covered by such registration statement, its directors and
officers, against any losses, claims, damages or liabilities to which such
holder or any such director or officer may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities caused by or
arising out of any untrue statement of a material fact contained in any
registration statement under which such securities were registered under the
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or 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, provided that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished or required to be furnished to the Company by
such holder for use in the preparation thereof.
(b) As a condition to including any of the Registrable Shares in any
registration statement filed pursuant to this Agreement, the Holder of the
Registrable Shares, as a prospective seller of the Registrable Shares hereby
agrees to indemnify and hold harmless (in the same manner and to the same extent
as set forth in subdivision (a) of this Section 4) the Company, each director of
the Company, each officer, employee or agent of the Company and each underwriter
of the Registrable Shares and each other person or entity, if any, which
controls the Company or such underwriter within the meaning of the Act, with
respect to any statement or alleged statement in, or omission or alleged
omission from, such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Holder for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by Holder.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding subdivisions of this Section 4, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 4, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled
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to participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement of any such action which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability, or a covenant not to xxx, in respect to such
claim or litigation. No indemnified party shall consent to entry of any judgment
or enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying party.
5. Amendments. This Agreement may only be amended by a written instrument
executed by the Company and the Holder.
6. Notices. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any person provided for hereunder shall be
in writing and shall be given to such person (a) in the case of the Holder,
addressed to such party at the address set forth on the signature page of this
Agreement or such other address as the Holder shall specify to the Company in
writing, or (b) in the case of the Company, at the address set forth on the
signature page hereto, to the attention of its President, or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to the Holder in writing with a copy to: Xxxxxx Xxxxxxxxxx LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: J. Xxxxxxx Xxxxxxxx, Esq.
Each such notice, request or other communication shall be effective (i) if given
by mail, 48 hours after such communication is deposited in the mails (except as
otherwise provided in Section 1) by first class postage prepaid, addressed as
aforesaid or (ii) if given by any other means (including, without limitation, by
fax or air courier), when delivered at the address specified above, provided
that any such notice, request or communication shall not be effective until
received.
7. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto. In addition, and whether or
not any express assignment shall have been made, the provisions of this
Agreement which are for the benefit of Holder shall also be for the benefit of
and enforceable by any subsequent holder of the Registrable Shares. Holder
agrees, by accepting any portion of the Registrable Shares after the date
hereof, to the provisions of this Agreement.
8. Governing Law.
(a) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
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(b) Each of the Company and Holder hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States located in the County of New York, State of
New York (the "New York Courts") for any litigation arising out of or relating
to this Agreement and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the New York Courts
and agrees not to plead or claim that such litigation brought in any New York
Courts has been brought in an inconvenient forum.
9. Counterparts. This Agreement may be executed by facsimile and may be
signed simultaneously in any number of counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute one and
the same instrument.
10. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
11. Severability. If any provision of this Agreement, or the application of
such provisions to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
U.S. AUTOMOTIVE MANUFACTURING, INC.
By:
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Xxxx X. Xxxxx, Chairman of the Board
Address: Xxxxx 000, Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Telephone: (___)__________
Telecopier: (___)__________
HOLDER:
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Address: ______________________________
______________________________
______________________________
______________________________
Telephone: ( ) ______________________
Telephone: ( ) ______________________
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