Exhibit C
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of April 12, 2005, by and among Cycle Country
Accessories Corp., a Nevada corporation (the "Company"), and the
investors signatory hereto (each an "Investor" and collectively, the
"Investors").
This Agreement is made pursuant to the Agreement and Plan of
Merger, dated as of the date hereof among the Company and the Investors
(the "Merger Agreement").
The Company and the Investors hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Merger Agreement will have the meanings
given such terms in the Merger Agreement. As used in this Agreement, the
following terms have the respective meanings set forth in this Section 1:
"Commission" means the U.S. Securities and Exchange
Commission.
"Effective Date" means the date that the Registration
Statement filed pursuant to Section 2 is first declared effective by the
Commission.
"Effectiveness Date" means the earlier of: (i) the 90th day
following the Closing, and (ii) the third day following the date on which
the Company is notified by the Commission that the Registration Statement
will not be reviewed or is no longer subject to further review and
comments.
"Effectiveness Period" has the meaning set forth in Section 2.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the 30th day following the Closing.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c).
"Indemnifying Party" has the meaning set forth in Section
5(c).
"Losses" has the meaning set forth in Section 5(a).
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a 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 a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated
by reference in such Prospectus.
"Registrable Securities" means the Shares, together with any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event.
"Registration Statement" means the registration statement
required to be filed in accordance with Section 2, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock of the Company
issued or issuable to the Investors pursuant to the Merger Agreement.
2. Registration. On or prior to the Filing Date, the Company
shall prepare and file with the Commission a Registration Statement
covering the resale of all Registrable Securities for an offering to be
made on a continuous basis pursuant to Rule 415, on Form S-3 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on
another appropriate form for such purpose). The Company shall cause such
Registration Statement to be declared effective under the Securities Act
as soon as possible but, in any event, no later than its Effectiveness
Date, and shall use its reasonable best efforts to keep the Registration
Statement continuously effective under the Securities Act until the date
which is the earlier of (i) five years after its Effective Date, (ii)
such time as all of the Registrable Securities covered by such
Registration Statement have been publicly sold by the Holders, or (iii)
such time as all of the Registrable Securities covered by such
Registration Statement may be sold by the Holders pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company's transfer
agent and the affected Holders (the "Effectiveness Period").
3. Registration Procedures.
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration
Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement continuously effective as
to the Registrable Securities for its Effectiveness Period; (ii) cause
the related Prospectus to be amended or supplemented by any required
prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably possible to
any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement that would not result in the disclosure to the Holders of
material and non-public information concerning the Company; and (iv)
comply in all material respects with the provisions of the Securities Act
and the Exchange Act with respect to the Registration Statement and the
disposition of all Registrable Securities covered by the Registration
Statement.
(b) Use its reasonable best efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(c) Furnish to each Holder, without charge, at least one
conformed copy of the Registration Statement and each amendment thereto
and all exhibits promptly after the filing of such documents with the
Commission.
(d) Upon notification by the Commission that a Registration
Statement will not be reviewed or is no longer subject to further review
and comments, the Company shall request acceleration of such Registration
Statement such that it becomes effective at 4:00 p.m. (Central time) on
such Effective Date.
(e) Deliver to each Holder, on the day following the
Effective Date, without charge, a copy of the Prospectus and each
amendment or supplement thereto. The Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the
Registrable Securities covered by the Prospectus and any amendment or
supplement thereto.
(f) Prior to any public offering of Registrable Securities,
to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from such
registration or qualification) of the Registrable Securities for offer
and sale under the securities or Blue Sky laws of the jurisdictions
within the United States reasonably requested by such Holders, including,
but not limited to, the State of Iowa, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement.
(g) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to the Registration
Statements, which certificates shall be free of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may request.
(h) Upon the occurrence of any event or passage of time that
makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the
Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or the Prospectus, as the case may be, it will not contain any
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, in light of the circumstances under which they were made, not
misleading, as promptly as reasonably possible, prepare and file a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered,
neither the Registration Statement nor any Prospectus will contain 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, in light of the circumstances under which they were made, not
misleading.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be
borne by the Company whether or not any Registrable Securities are sold
pursuant to the Registration Statement.
5. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, investment
advisors, partners, members and employees of each of them, each person
who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, to the
fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and reasonable attorneys'
fees) and expenses (collectively, "Losses"), as incurred, arising out of
or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or amendment or
supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that
(1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or (2) the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of
the Advice or the amended or supplemented Prospectus the misstatement or
omission giving rise to such Loss would have been corrected. The Company
shall notify the Holders promptly of the institution, threat or assertion
of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of
such controlling persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, arising solely out of or
based solely upon: (x) such Holder's failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent that, (1) such untrue
statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for
use therein, or (2) the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such
Holder of an Advice or an amended or supplemented Prospectus, but only if
and to the extent that following the receipt of the Advice or the amended
or supplemented Prospectus the misstatement or omission giving rise to
such Loss would have been corrected. In no event shall the liability of
any selling Holder hereunder be greater in amount than the dollar amount
of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party
shall promptly notify the person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding
and to employ counsel reasonably satisfactory to such Indemnified Party
in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel
at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and such counsel shall
be at the expense of the Indemnifying Party). It being understood,
however, that the Indemnifying Party shall not, in connection with any
one such Proceeding be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties, which
firm shall be appointed by the Indemnified Parties that hold a majority
of the Shares then outstanding. The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such settlement
includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party payable by an
Indemnifying Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within ten business days of
written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may
require such Indemnified Party to undertake to reimburse all such fees
and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, 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, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or
relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such
party in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 5(d), no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages
that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by
a Holder, of any of their obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) Compliance. Each Holder covenants and agrees that it
will comply with the prospectus delivery requirements of the Securities
Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.
(c) Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of any event of the kind described in
Section 3(h), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such
Holder's receipt of copies of the supplemented Prospectus and/or amended
Registration Statement or until it is advised in writing (the "Advice")
by the Company that the use of the Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference
in such Prospectus or Registration Statement.
(d) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities, other
than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other
employee benefit plans, then the Company shall send to each Holder
written notice of such determination and, if within fifteen days after
receipt of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of
such Registrable Securities such holder requests to be registered,
subject to customary underwriter cutbacks applicable to all holders of
registration rights.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this Section 6(e), may not be
amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of no less than a
majority in interest of the then outstanding Registrable Securities.
(f) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a)
the date of transmission, if such notice or communication is delivered
via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number
specified in this Section prior to 5:30 p.m. (Central time) on a business
day, (b) the next business day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a business day or
later than 5:30 p.m. (Central time) on any business day, (c) the business
day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices
and communications shall be as follows:
If to the Company: Cycle Country Accessories Corp.
0000 Xxxxxxx 00
Xxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
With a copy to: Attn: Xxxxxxx X. Xxxxxxxxx
Xxxxxxxxx Law Xxxxxx
000 - 0xx Xxx. X.
Xxxxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
If to an Investor: To the address set forth under such Investor's
nameon the signature pages hereof;
If to any other person who is then the registered Holder:
To the address of such Holder as it appears in
the stock transfer books of the Company or such
other address as may be designated in writing
hereafter, in the same manner, by such person.
(g) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder.
The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign its
respective rights hereunder in the manner and to the persons as permitted
under the Merger Agreement.
(h) Execution and Counterparts. This Agreement may be
executed in any number of 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. In the event that any signature
is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(i) Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement
shall be governed by and construed and enforced in accordance with the
internal laws of the State of Iowa, without regard to the principles of
conflicts of law thereof.
(j) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(l) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
CYCLE COUNTRY ACCESSORIES CORP.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Principal Executive Officer, President and Director
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGES OF
INVESTORS TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this
Registration Rights
Agreement as of the date first written above.
NAME OF INVESTOR
/s/ Xxxx Xxxxxx
----------------
Xxxx Xxxxxx
ADDRESS FOR NOTICE
c/o: Xxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000 Tel:
000-000-0000
NAME OF INVESTOR
/s/ Xxxx Xxxxxx
----------------
Xxxx Xxxxxx
ADDRESS FOR NOTICE
c/o: Xxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000 Tel:
000-000-0000
NAME OF INVESTOR
/s/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx
ADDRESS FOR NOTICE
c/o: Xxxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000 Tel:
000-000-0000
NAME OF INVESTOR
/s/ Xxxx Xxxxxx
----------------
Xxxx Xxxxxx
ADDRESS FOR NOTICE
c/o: Xxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000 Tel:
000-000-0000
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