REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement ("Agreement") dated as of August 29, 1997,
among RT Industries, Inc., a Delaware corporation (the "Company"), and the
stockholders listed on the signature pages (each a "Holder" and collectively the
"Holders").
RECITALS
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
WHEREAS, the Company issued to the Holders on the date hereof pursuant to
the merger of Quality Automotive Company with and into a wholly-owned subsidiary
of the Company (the "Merger") an aggregate of 1,838,731 shares (the "Shares") of
the Company's common stock, par value $.001 per share (the "Common Stock"), as
more particularly provided for in a certain Agreement and Plan of Merger dated
June 6, 1997, among the Company, its subsidiary and each of the Holders (the
"Merger Agreement"); and
WHEREAS, it is a condition to the performance of the Holders' obligations
under the Merger Agreement that the Company enter into this Agreement with the
Holder;
NOW, THEREFORE, in consideration of the foregoing recitals and mutual
covenants herein contained, the parties hereto do hereby agree as follows:
1. Piggyback Registration.
(a) If, at any time after the first anniversary of the consummation of the
Merger the Company proposes to prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement, or post-effective
amendment to a previously filed registration statement, covering equity or debt
securities of the Company, or any such securities of the Company held by its
shareholders, 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 Article 1, collectively, a "Registration Statement"), the
Company will give written notice of its intention to do so by certified mail
("Notice"), at least 20 days prior to the filing of each such Registration
Statement, to the Holder. Upon the written request of the Holder, made within 10
days after receipt of the Notice, that the Company include any of the Holder's
Shares in the proposed Registration Statement, the Company shall, as to the
Holder, use reasonable efforts to effect the registration under the Securities
Act of the 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
the Holder (other than any commission, discounts or counsel fees payable by the
Holder, as further provided in Section 3(c) 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 Shares requested to be registered, when added to the securities
being registered by the Company or the selling shareholder(s), 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 Stock 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 Shares requested to be registered upon the participation by the
holders of such Shares 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 securities to be offered by the 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 Shares to be offered by the
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 the Holder) as the original number of Shares proposed to be
sold by the Holder bears to the total original number of securities proposed to
be offered by the Holder and the other selling security holders. Incidental
registration rights may be granted by the Company to other persons after the
date of this Agreement provided that, unless the Holder waives its rights
hereunder, such rights granted to such other persons are to be exercised pro
rata with, and not superior or prior to, the rights afforded to the Holder under
this Agreement.
(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.
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2. Demand Registration.
(a) At any time after the first anniversary of the consummation of the
Merger, the Holder(s) of Shares representing a "Majority" (as hereinafter
defined), of such securities shall have the right (which right is in addition to
the Piggyback Registration rights provided for under Section 1 hereof),
exercisable by written notice to the Company, which may be given ten (10) months
from the date hereof (a "Demand Registration Request"), to have the Company
prepare and file with the Commission, at the sole expense of the Company (except
as hereinafter provided), in respect of up to the aggregate number of Shares
held by the Holders having an aggregate value based upon the average bid and ask
price for the five (5) trading days proceeding the effective date of the
registration statement equal to $2,500,000 (the "Demand Shares"), a Registration
Statement so as to permit a public offering and sale of the Demand Shares;
provided however, that the Company is then eligible to register the Demand
Shares on Form S-3 (or successor form) and, if the Holder intends to distribute
the Demand Shares by means of an underwriting, then the Holder shall so notify
the Company in the Demand Registration Request. The underwriter shall be
selected by the Holder and be reasonably acceptable to the Company.
The Company and other stockholders may, at the Company's sole discretion,
have other shares of the Company's common stock included in such Registration
Statement, provided that in the event that an underwriter requires a limitation
in the total number of shares in the offering for marketing purposes, then only
the shares of the Company proposed to be offered by the Company and such other
stockholders shall be cutback, and the Holder's Demand Shares shall not be
subject to such cut-back.
For purposes of this Agreement, the term "Majority" in reference to the
Holders shall mean in excess of sixty-five percent (65%) of the then outstanding
Shares held by Holders that have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.
(b) The Company will use reasonable efforts to file the Registration
Statement as expeditiously as reasonably possible, but in no event later than 60
days following receipt of such Demand Registration Request; provided that
nothing herein shall require the Company to undergo an audit, other than in the
ordinary course of business; and provided further that no Registration Statement
shall become effective before the one (1) year anniversary of the consummation
of the Merger. In connection with any underwritten Demand Registration Request
and subject to Section 3(c) hereof, the Company will enter into any underwriting
agreement reasonably necessary to effect such offering, provided such
underwriting agreement (i) is with an underwriter selected by the Holder and
reasonably acceptable to
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the Company and (ii) contains customary underwriting provisions for offerings by
selling stockholders.
(c) Notwithstanding any provision of this Section 2 to the contrary, if, at
the time a Demand Registration Request is given to the Company under Section 2
hereof, the Company is negotiating a merger, consolidation, acquisition or sale
of all or substantially all of its assets or a similar transaction and if in the
opinion of counsel to the Company, the Registration Statement would be required
to include information concerning such transactions or the parties thereto which
is not reasonably available at the time, the Company shall promptly inform the
holders of the Demand Shares by written notice of such circumstances (a
"Postponement Notice") and, at the Company's election to be set forth in the
Postponement Notice, the filing of the Registration Statement may be postponed
for one (and not more than one) period not to exceed 180 days from the date on
which the Demand Registration Request is given to the Company under this Section
2 (notwithstanding any provisions herein to the contrary); provided that in the
event of such postponement, the Holder may withdraw the Demand Registration
Request during the 90 day period following the date on which the Notice of
Postponement was given by the Company, and thereafter the Holder will continue
to be entitled to a Demand Registration Request pursuant to this Section 2 until
such time as the Holder no longer possesses any Shares.
3. Covenants of the Company With Respect to Registration. The Company
hereby covenants and agrees as follows; provided, however, that any Registration
Statement for the Company filed subsequent to the consummation of the Merger
will not be declared effective by the Commission without the required
presentation under the Commission's Regulation S-B of an audited balance sheet
as at the end of the most recent fiscal year of the business acquired and
audited statements of income, cash flows and changes in stockholders' equity for
such business for each of the two fiscal years preceding the date of such
balance sheet:
(a) The Company shall use reasonable efforts to cause the Registration
Statement to become effective as promptly as possible under the circumstances at
the time prevailing and, if any stop order shall be issued by the Commission in
connection therewith, to use its reasonable efforts to obtain the removal of
such order.
(b) Following the effective date of a Registration Statement, the Company
shall, upon the request of the Holder, forthwith supply such reasonable number
of copies of the Registration Statement, preliminary prospectus and prospectus
meeting the requirements of the Securities Act, and other documents necessary or
incidental to the public offering of the Shares or Demand Shares, as shall be
reasonably requested by the
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Holder to permit the Holder to make a public distribution of the Holder's Shares
or Demand Shares. The obligations of the Company hereunder with respect to the
Holder's Shares or Demand Shares are expressly conditioned on the Holder's
furnishing to the Company such appropriate information concerning the Holder,
the Holder's Shares or Demand Shares and the terms of the Holder's offering of
such shares as the Company may request.
(c) The Company will pay all costs, fees and expenses in connection with
all Registration Statements filed pursuant to Sections 1 and 2 hereof,
including, without limitation, the Company's legal and accounting fees, printing
expenses and blue sky fees and expenses; provided, however, that the Holder
shall be solely responsible for the fees of any counsel retained by the Holder
in connection with such registration and any transfer taxes or underwriting
discounts, selling commissions or selling fees applicable to the Shares sold by
the Holder pursuant thereto.
(d) The Company will use reasonable efforts to qualify or register the
Shares included in a Registration Statement for offering and sale under the
securities or blue sky laws of such states as are requested by the 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, except as may be required by
the Securities Act and its rules and regulations.
4. Covenant of the Holder.
The 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 Shares until the 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.
5. Indemnification.
(a) The Company shall indemnify, defend and hold harmless the Holder and
such person who controls such Holder within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as
amended, from and against any and all losses, claims, damages and liabilities
caused by or arising out of any untrue statement (or alleged untrue statement)
of a material fact contained in the Registration Statement, any other
registration statement filed by the Company under the Securities Act, any
post-effective amendment to such registration statements, or any prospectus
included therein, or caused by or arising out of any omission to
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state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission based
upon information furnished or required to be furnished in writing to the Company
by the Holder or the trustees thereof expressly for use therein, or arising out
of or caused by any violation by the Company of the Securities Act of any rule
or regulation thereunder applicable to the Company in connection with any such
registration; provided, however, that the indemnification in this Section 5(a)
with respect to any prospectus shall not inure to the benefit of the Holder on
account of any such loss, claim, damage or liability arising from the sale of
Shares or Demand Shares by the Holder, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to the Holder by the Company prior to the subject sale and the
subsequent prospectus was not delivered or sent by the Holder to the purchaser
prior to such sale. The Holder(s) and their successors and assigns shall at the
same time, severally and jointly, indemnify the Company, its directors, each
officer signing the Registration Statement and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any and
all losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in the Registration Statement, any other registration
statement filed by the Company under the Securities Act, any post-effective
amendments to such registration statements, or any prospectus included therein,
or caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission based upon information furnished in writing to the Company by the
Holder expressly for use therein; provided, however, that the obligation of
indemnity made by the Holder shall be limited to an amount equal to the proceeds
to the Holder of the Shares or Demand Shares sold in such registered offering.
(b) If for any reason the indemnification provided for in the preceding
Section 5(a) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
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(c) (i) Each party entitled to indemnification under this Agreement (each,
an "Indemnified Party") shall give notice to each party required to provide
indemnification (each, an "Indemnifying Party") promptly after such Indemnified
Party has knowledge of any claim for loss as to which indemnity may be sought,
and, in the event of any claim or demand asserted against an Indemnified Party
by a third party, shall permit the Indemnifying Party to assume the defense of
any such claim (and litigation resulting therefrom) as provided in Section
5(c)(ii) hereof. Notwithstanding anything to the contrary contained herein, any
failure by an Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its indemnity obligations under this Agreement
except to the extent that such failure materially and adversely affects the
Indemnifying Party due to the inability to defend such action timely.
(ii) The Indemnifying Party shall have ten (10) business days after the
aforesaid notice is given to elect, by written notice given to the Indemnified
Party, to undertake, conduct and control, through counsel of their own choosing
(subject to the consent of the Indemnified Party, which consent is not to be
unreasonably withheld or delayed) and at their sole risk and expense, the good
faith settlement or defense of such claim, and the Indemnified Party shall
cooperate with the Indemnifying Party in connection therewith; provided that:
(i) all settlements shall be made only upon the prior reasonable consultation
with the Indemnified Party and the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed, and (ii) the
Indemnified Party shall be entitled to participate in such settlement or defense
through counsel chosen by the Indemnified Party (provided that the fees and
expenses of such counsel shall be borne by the Indemnified Party). So long as
the Indemnifying Party are contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim; provided, however,
that notwithstanding the foregoing, the Indemnified Party shall have the right
to pay or settle any such claim at any time, provided that in such event they
shall waive any right of indemnification therefor by the Indemnifying Party. If
the Indemnifying Party does not make a timely election to undertake the good
faith defense or settlement of the claim as aforesaid, or if the Indemnifying
Party fails to proceed with the good faith defense or settlement of the matter
after making such election, then, in either such event, the Indemnified Party
shall have the right to contest, settle or compromise (provided that all
settlements or compromises require the prior reasonable consultation with the
Indemnifying Party and the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed) the claim at their
exclusive discretion, at the risk and expense of the Indemnifying Party.
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(d) The Indemnified Party shall furnish such information regarding
themselves or the claim in question as the Indemnifying Parties may reasonably
request in writing and as shall be reasonably required in connection with
defense of such claim and litigation resulting therefrom.
6. Governing Law.
(a) This Agreement shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal substantive laws
of the State of New York, without giving effect to the choice of law rules
thereof.
(b) Each of the Company and the 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.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand, sent by telecopy (receipt confirmed), or mailed by express, registered or
certified mail, postage prepaid, return receipt requested, as follows:
If to the Company, at:
RT Industries, Inc.
c/o U.S. Automotive Manufacturing, Inc.
Xxxxx 000, Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: President
Telefax: 000-000-0000
with a copy of the same to:
Frankfurt, Garbus, Xxxxx & Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Telefax: 212-593-9175
If to the Holder(s), at that address set forth under their name on the
signature page.
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with a copy of the same to:
XxXxxxxxx, Xxxxxx & Xxxxx, PC
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Telefax: 000-000-0000
Or such other address as has been indicated by either party in accordance
with a notice duly given in accordance with the provisions of this Section.
8. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION, OR SIMILAR PROCEEDING
BROUGHT RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.
9. Amendment. This Agreement may only be amended by a written instrument
executed by the Company and the Holders.
10. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
11. Assignment; Binding Effect; Benefits. Except as otherwise provided
below, the Holder may not assign the Holder's rights hereunder without the prior
written consent of the Company, which consent may be given or withheld for any
reason and any attempted assignment without having obtained such prior written
notice shall be void and of no force and effect. This Agreement shall inure to
the benefit of, and be binding upon, the parties hereto and the permitted
assigns, heirs and legal representatives of the Holder and the Company and its
successors. Nothing herein contained, express or implied, is intended to confer
upon any person other than the parties hereto and their respective heirs, legal
representatives and successors, any rights or remedies under or by reason of
this Agreement.
12. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
13. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the
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remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
14. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
Company: RT INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: President
Holders: /s/ Xxxxxx Xxxxxxxxx
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XXXXXX XXXXXXXXX
Address: 00 Xxxxxxxxxx Xxxxx
Xxxx Xxxxx Xxxx Xxxxxxx
Tappahannock, VA 22560
Telefax:
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
XXXXXXX X. XXXXXXXXX
Address: 00 Xxxxxxxxxx Xxxxx
Xxxx Xxxxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Telefax:
/s/ Xxxx X. Xxxxx
------------------------------
XXXX X. XXXXX
Address: 00 X. 00xx Xxxxxx
Xxxxxxxxx #00X
Xxx Xxxx, XX 00000
Telefax:
/s/ Xxxxx X. Ram
------------------------------
XXXXX X. RAM
Address: 00 X. 00xx Xxxxxx
Xxxxxxxxx #00X
Xxx Xxxx, XX 00000
Telefax:
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