EXHIBIT A
TO
REGISTRATION RIGHTS AGREEMENT
Form of Registration Warrant
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
Warrant To Purchase Common Stock
Of
AURA SYSTEMS, INC.
-------------, ---
No. W-__
This certifies that ____________________ (the "Holder") is entitled,
subject to the terms and conditions of this Warrant, to purchase from Aura
Systems, Inc., a Delaware corporation (the "Company"), all or any part of an
aggregate of _________ shares of the Company's authorized and unissued Common
Stock, par value $.005 (the "Warrant Stock"), at the Warrant Price (as defined
herein), upon surrender of this Warrant at the principal offices of the Company,
together with a duly executed subscription form in the form attached hereto as
Exhibit 1 and simultaneous payment of the Warrant Price for each share of
Warrant Stock so purchased in lawful money of the United States, unless
exercised in accordance with the provisions of Section 2.6 of this Warrant. The
Holder may exercise the Warrant at any time after the date of this Warrant and
prior to the second anniversary of the date hereof, subject to the provisions of
Section 2.5 hereof (the "Expiration Date").
This Warrant is issued pursuant to that certain Registration Rights
Agreement dated as of March 16, 2001 (the "Registration Rights Agreement"), by
and among the Company, the Holder and certain of the other investors listed on
the signature page of the Subscription Agreement ("Investors") by and among the
Company, the Holder and certain other Investors dated March 16, 2001 (the
"Subscription Agreement").
1. Definitions. The following definitions shall apply for purposes of this
Warrant:
1.1 "Acquisition" means any consolidation, merger or reorganization of the
Company with or into any other corporation or other entity or person, or any
other corporate reorganization, in which the stockholders of the Company
immediately prior to such consolidation, merger or reorganization, own less than
fifty percent of the Company's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions to which the Company is a party in which in excess of fifty percent
of the Company's voting power is transferred, excluding any consolidation,
merger or reorganization effected exclusively to change the domicile of the
Company.
1.2 "Asset Transfer" means a sale, lease or other disposition of all or
substantially all of the assets of the Company.
1.3 "Company" means the "Company" as defined above and includes any corporation
or other entity that succeeds to or assumes the obligations of the Company under
this Warrant.
1.4 "Fair Market Value" of a share of Warrant Stock means (i) if the Common
Stock is traded on a securities exchange, the average of the closing price each
trading day over the thirty consecutive day period ending three days before the
day the Fair Market Value of the securities is being determined, (ii) if the
Common Stock is actively traded over-the counter, the average of the closing bid
and asked prices quoted on the NASDAQ system (or similar system) each trading
day over the thirty consecutive day period ending three days before the day the
Fair Market Value of the securities is being determined, or (iii) if at any time
the Common Stock is not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, then the Fair Market Value
determined by the Company's Board of Directors in good faith.
1.5 "Holder" means the "Holder" as defined above and includes any transferee who
shall at the time be the registered holder of this Warrant.
1.6 "Warrant" means this Warrant and any warrant(s) delivered in substitution or
exchange therefor, as provided herein.
1.7 "Warrant Price" means $.34 per share of Warrant Stock. The Warrant Price is
subject to adjustment as provided herein.
1.8 "Warrant Stock" means the Common Stock of the Company. The number and
character of shares of Warrant Stock are subject to adjustment as provided
herein and the term "Warrant Stock" shall include stock and other securities and
property at any time receivable or issuable upon exercise of this Warrant in
accordance with its terms.
2. Exercise.
2.1 Method of Exercise. Subject to the terms and conditions of this Warrant, the
Holder may exercise the purchase rights represented by this Warrant in whole or
in part, at any time or from time to time, on or after the date hereof and
before the Expiration Date, by surrendering this Warrant at the principal
offices of the Company, with the subscription form attached hereto duly executed
by the Holder, and payment of an amount equal to the product obtained by
multiplying (i) the number of shares of Warrant Stock so purchased by (ii) the
Warrant Price, as specified in Section 2.2 below.
2.2 Form of Payment. Except as provided in Section 2.6, payment may be made by
(i) a check payable to the Company's order, (ii) wire transfer of funds to the
Company, or (3) any combination of the foregoing.
2.3 Partial Exercise. Upon a partial exercise of this Warrant, this Warrant
shall be surrendered by the Holder and replaced with a new Warrant or Warrants
of like tenor for the balance of the shares of Warrant Stock purchasable under
the Warrant surrendered upon such purchase. The Warrant or Warrants will be
delivered to the Holder thereof within a reasonable time.
2.4 No Fractional Shares. No fractional shares may be issued upon any exercise
of this Warrant, and any fractions shall be rounded down to the nearest whole
number of shares. If upon any exercise of this Warrant a fraction of a share
results, the Company will pay an amount equal to the such fraction multiplied by
the Fair Market Value of a share of Warrant Stock.
2.5 [Intentionally omitted.]
2.6 Net Exercise Election. If at any time the Holder elects to exercise this
Warrant there is not an effective registration statement which covers all of the
Warrant Stock as contemplated by the Registration Rights Agreement, the Holder
may elect to convert all or a portion of this Warrant, without the payment by
the Holder of any additional consideration, by the surrender of this Warrant or
such portion to the Company, with the net exercise election selected in the
subscription form attached hereto duly executed by the Holder, into up to the
number of shares of Warrant Stock that is obtained under the following formula:
X = Y (A-B)
A
where X = the number of shares of Warrant Stock to be issued
to the Holder pursuant to this Section 2.6.
Y = the number of shares of Warrant Stock purchasable under
this Warrant, or if only a portion of the Warrant is being
exercised, the number of shares of Warrant Stock represented
by the portion of the Warrant being exercised.
A = the Fair Market Value of one share of Warrant Stock as at
the time the net exercise election is made pursuant to this
Section 2.6.
B = the Warrant Price.
3. Issuance of Stock. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
soon as practicable, but in any event no later than three days after such date,
the Company shall issue and deliver to the person or persons entitled to receive
the same a certificate or certificates for the number of whole shares of Warrant
Stock issuable upon such exercise. The Company covenants and agrees that all
shares of Warrant Stock that are issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable and free from all preemptive rights of any
stockholder, free of all taxes, liens and charges with respect to the issue
thereof and free and clear of any restrictions on transfer (other than under the
Act and state securities laws).
4. Adjustment Provisions. The number and character of shares of Warrant Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price for the Common Stock are subject to adjustment
upon the occurrence of the following events between the date this Warrant is
issued and the date it is exercised:
4.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. The
Warrant Price of this Warrant and the number of shares of Warrant Stock issuable
upon exercise of this Warrant (or any shares of stock or other securities at the
time issuable upon exercise of this Warrant) shall each be appropriately and
proportionally adjusted to reflect any stock dividend, stock split, reverse
stock split, combination of shares, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of Warrant Stock (or
such other stock or securities).
4.2 Adjustment for Other Dividends and Distributions. In case the Company shall
make or issue, or shall fix a record date for the determination of eligible
holders entitled to receive, a dividend or other distribution payable with
respect to the Warrant Stock that is payable in (a) securities of the Company
(other than issuances with respect to which adjustment is made under Section
4.1), or (b) assets (other than cash dividends paid or payable solely out of
retained earnings), then, and in each such case, the Holder, upon exercise of
this Warrant at any time after the consummation, effective date or record date
of such event, shall receive, in addition to the shares of Warrant Stock
issuable upon such exercise prior to such date, the securities or such other
assets of the Company to which the Holder would have been entitled upon such
date if the Holder had exercised this Warrant immediately prior thereto (all
subject to further adjustment as provided in this Warrant).
4.3 Adjustment for Reorganization, Consolidation, Merger. In case of any
reorganization of the Company (or of any other corporation or entity, the stock
or other securities of which are at the time receivable on the exercise of this
Warrant), after the date of this Warrant, or in case, after such date, the
Company (or any such corporation or entity) shall consolidate with or merge into
another corporation or entity or convey all or substantially all of its assets
to another corporation or entity, then, and in each such case, the Holder, upon
the exercise of this Warrant (as provided in Section 2), at any time after the
consummation of such reorganization, consolidation, merger or conveyance, shall
be entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise of this Warrant prior to such consummation, the
stock or other securities or property to which the Holder would have been
entitled upon the consummation of such reorganization, consolidation, merger or
conveyance if the Holder had exercised this Warrant immediately prior thereto,
all subject to further adjustment as provided in this Warrant, and the successor
or purchasing corporation or entity in such reorganization, consolidation,
merger or conveyance (if other than the Company) shall duly execute and deliver
to the Holder a supplement hereto acknowledging such corporation's or entity's
obligations under this Warrant; and in each such case, the terms of this Warrant
shall be applicable to the shares of stock or other securities or property
receivable upon the exercise of this Warrant after the consummation of such
reorganization, consolidation, merger or conveyance.
4.4 Notice of Certain Events and Adjustments. The Company shall give thirty days
prior written notice of the record date fixed for any Acquisition, Asset
Transfer or event referred to in Section 4.2 or 4.3. The Company shall promptly
give written notice of (i) each adjustment or readjustment of the Warrant Price
or the number of shares of Warrant Stock or other securities issuable upon
exercise of this Warrant and (ii) each adjustment or readjustment of the price
per share of Common Stock triggering the call provisions set forth in Section
2.5. The notice shall describe the adjustment or readjustment and show in
reasonable detail the facts on which the adjustment or readjustment is based.
4.5 No Change Necessary. The form of this Warrant need not be changed because of
any adjustment in the Warrant Price or in the number of shares of Warrant Stock
issuable upon its exercise.
5. No Rights or Liabilities as Stockholder. This Warrant does not by itself
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. In the absence of affirmative action by the Holder to purchase Warrant
Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall cause the
Holder to be a stockholder of the Company for any purpose.
6. Attorneys' Fees. In the event any party is required to engage the services of
any attorneys for the purpose of enforcing this Warrant, or any provision
thereof, the prevailing party shall be entitled to recover its reasonable
expenses and costs in enforcing this Warrant, including attorneys' fees.
7. Transfer. This Warrant may be transferred or assigned by the Holder hereof in
whole or in part, if, on the Company's reasonable request, the Holder provides
an opinion of counsel reasonably satisfactory to the Company that such transfer
does not require registration under the Act and the applicable state securities
law, except that this Warrant may be transferred by a Holder which is a
partnership or limited liability company to a partner, former partner, member,
former member or other affiliate of such partnership or limited liability
company, as the case may be, if (a) the transferee agrees in writing to be
subject to the terms of this Warrant; and (b) the Holder delivers notice of such
transfer to the Company. The rights and obligations of the Company and the
Holder under this Warrant shall be binding upon and benefit their respective
permitted successors, assigns, heirs, administrators and transferees.
8. Loss or Mutilation. Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership and the loss, theft, destruction or
mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of like tenor.
9. Reservation of Warrant Stock. If at any time the number of authorized but
unissued shares of the Warrant Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take all such corporate action as may
be necessary to increase its authorized but unissued shares of Warrant Stock to
such number of shares of Warrant Stock as shall be sufficient for such purpose.
10. Governing Law. This Warrant shall be governed by and construed and
interpreted in accordance with the laws of the State of Washington, without
giving effect to its conflicts of law principles. All disputes between the
parties hereto, whether sounding in contract, tort, equity or otherwise, shall
be resolved only by state and federal courts located in Spokane, Washington, and
the courts to which an appeal therefrom may be taken. All parties hereto waive
any objections to the location of the above referenced courts, including but not
limited to any objection based on lack of jurisdiction, improper venue or forum
non conveniens.
11. Headings. The headings and captions used in this Warrant are used for
convenience only and are not to be considered in construing or interpreting this
Warrant. All references in this Warrant to sections and exhibits shall, unless
otherwise provided, refer to sections hereof and exhibits attached hereto, all
of which exhibits are incorporated herein by this reference.
12. Notices. Any request, consent, notice or other communication required or
permitted under this Warrant shall be in writing and shall be deemed duly given
and received when delivered personally or transmitted by facsimile, one business
day after being deposited for next-day delivery with a nationally recognized
overnight delivery service, or three days after being deposited as first class
mail with the United States Postal Service, all charges or postage prepaid, and
properly addressed to the party to receive the same at the address indicated for
such party on the signature pages of the Subscription Agreement. Any party may,
at any time, by providing ten days' advance notice to the other party hereto,
designate any other address in substitution of the an address established
pursuant to the foregoing.
13. Amendment; Waiver. Any term of this Warrant may be amended, and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder.
14. Severability. If one or more provisions of this Warrant are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
15. Terms Binding. By acceptance of this Warrant, the Holder accepts and agrees
to be bound by all the terms and conditions of this Warrant.
16. Valid Issuance; Taxes. All shares of Warrant Stock issued upon the exercise
of this Warrant shall be validly issued, fully paid and non-assessable, and the
Company shall pay all taxes and other governmental charges that may be imposed
in respect of the issue or delivery thereof. The Company shall not be required
to pay any transfer tax or other similar charge imposed in connection with any
transfer involved in the issuance of any certificate for shares of Warrant Stock
in any name other than that of the Holder of this Warrant.
17. Registration Rights. All shares of Warrant Stock issuable upon exercise of
this Warrant shall be deemed to be "Registrable Securities" or such other
definition of securities entitled to registration rights pursuant to the
Registration Rights Agreement, and are entitled, subject to the terms and
conditions of that agreement, to all registration rights granted to holders of
Registrable Securities thereunder.
18. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock issuable upon the
exercise of this Warrant above the amount payable therefor upon such exercise,
and (b) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and non-assessable
shares of Warrant Stock upon exercise of this Warrant.
[Signature appears on the following page.]
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
date and year set forth below.
Dated: _____________, ______ AURA SYSTEMS, INC.
By:
Name: ______________________________
Title: _______________________________
[Signature Page to Warrant]
Exhibit 1
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Aura Systems, Inc.
(1) Check the box that applies and the provide the necessary information:
|_| Cash Payment Election. The undersigned Holder hereby elects to purchase
shares of Common Stock of Aura Systems, Inc. (the "Warrant Stock"), pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price for such shares in full.
|_| Net Exercise Election. The undersigned Holder elects to convert the
Warrant into shares of Warrant Stock by net exercise election pursuant to
Section 2.6 of the Warrant. This conversion is exercised with respect to
__________ shares of Common Stock of Aura Systems, Inc. (the "Warrant Stock")
covered by the Warrant.
(2) In exercising the Warrant, the undersigned Holder hereby makes the
representations and warranties set forth on Appendix A hereto as of the date
hereof.
(3) Please issue a certificate or certificates representing such shares of
Warrant Stock in the name or names specified below:
(Name) (Name)
(Address) (Address)
(City, State, Zip Code) (City, State, Zip Code)
(Federal Tax Identification Number) (Federal Tax Identification Number)
(Date) (Signature of Holder)
Appendix A
INVESTMENT REPRESENTATION
The undersigned, _____________________ (the "Holder"), intends to acquire shares
of Common Stock (the "Common Stock") of Aura Systems, Inc. (the "Company") from
the Company pursuant to the exercise or conversion of a Warrant to purchase
Common Stock held by the Holder. The Common Stock will be issued to the Holder
in a transaction not involving a public offering and pursuant to an exemption
from registration under the Securities Act of 1933, as amended (the "Securities
Act"), and applicable state securities laws. In connection with such purchase
and in order to comply with the exemptions from registration relied upon by the
Company, the Holder represents, warrants and agrees as follows:
(a) The Holder is acquiring the Common Stock for its own account, to hold for
investment, and the Holder shall not make any sale, transfer or other
disposition of the Common Stock in violation of the Securities Act or the
General Rules and Regulations promulgated thereunder by the Securities and
Exchange Commission or in violation of any applicable state securities law. The
Holder is an "accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
(b) The Holder has been advised that the Common Stock has not been registered
under the Securities Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on the Holder's representations set forth
herein.
(c) The Holder has been informed that under the Securities Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the
Securities Act or unless an exemption from such registration (such as Rule 144)
is available with respect to any proposed transfer or disposition by the Holder
of the Common Stock. The Holder further agrees that the Company may refuse to
permit the Holder to sell, transfer or dispose of the Common Stock (except as
permitted under Rule 144) unless there is in effect a registration statement
under the Securities Act and any applicable state securities laws covering such
transfer, or unless the Holder furnishes an opinion of counsel reasonably
satisfactory to counsel for the Company to the effect that such registration-is
not required.
The Holder also understands and agrees that there will be placed on the
certificate(s) for the Common Stock or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. These shares have been
acquired for investment purposes and may not be sold or otherwise
transferred in the absence of an effective registration statement for
these shares under the Securities Act and applicable state securities
laws or an opinion of counsel satisfactory to the Company that
registration is not required and that an applicable exemption is
available."
