AURA SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of March 16, 2001
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of March 16, 2001, by and
among Aura Systems, Inc., a Delaware corporation (the "Company"), and the
Investors listed on Schedule A hereto (each of whom is herein called
individually, a "Investor" and all of whom are herein called, collectively, the
"Investors"), with reference to the following facts:
The Investors are parties to the Subscription Agreement, dated as of
March 16, 2001 (the "Subscription Agreement"), by and among the Company and the
Investors, which provides that as a condition to the closing of the transactions
contemplated therein, pursuant to which the Company will issue and sell a total
of 5,750,000 shares of the Company's Common Stock, par value $.005 per share
(the "Common Stock"), to the Investors, this Agreement must be executed and
delivered by the Investors and the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and for other consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto further agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) "Form S-3" means such form under the 1933 Act as in effect on the
date hereof or any registration form under the 1933 Act
subsequently adopted by the SEC that permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(b) "Holder" means any person owning or having the right to acquire
Registrable Securities or any assignee thereof in accordance with
Section 1.11 hereof.
(c) "1933 Act" means the Securities Act of 1933, as amended.
(d) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(e) "register", "registered", and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and the declaration or ordering of effectiveness of such
registration statement or document.
(f) "Registrable Securities" means (i) the shares of the Company's
Common Stock issued pursuant to the Subscription Agreement, (ii)
shares of the Company's Common Stock issuable on exercise of the
Registration Warrants (as defined in Section 1.3(c)), and (iii)
any Common Stock of the Company issued as (or issuable on the
conversion or exercise of any warrant, right or other security
that is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the shares
referenced in clauses (i) - (ii) above; provided that there shall
be excluded any Registrable Securities sold by a person in a
transaction in which that person's rights under this Section 1
are not assigned.
(g) The number of shares of "Registrable Securities" outstanding
shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities
that are, Registrable Securities.
(h) "SEC" means the Securities and Exchange Commission.
(i) Any other capitalized term not defined herein shall have the
meaning set forth in the Subscription Agreement.
1.2 [Intentionally Omitted].
1.3 Required Registration.
(a) Within thirty (30) days after the Closing Date, the Company shall
prepare and file with the SEC a registration statement on Form
S-3 (or, if Form S-3 is not then available, on such form of
registration statement that is then available to effect a
registration of all Registrable Securities, subject to consent of
the Investors holding at least a majority of the Registrable
Securities) covering the registration of all of the Registrable
Securities. The Company shall use best efforts to obtain the
effectiveness of the Registration Statement as soon as possible
after the Closing Date. The Company shall keep such registration
statement effective at all times until the earlier of the date on
which all the Registrable Securities (i) are sold and (ii) can be
sold by the Holders (and any affiliate of the Holder with whom
such Holder must aggregate its sales under Rule 144) in any
three-month period without volume limitation and without
registration in compliance with Rule 144 under the 0000 Xxx.
(b) If the Holders intend to distribute the Registrable Securities by
means of an underwriting, they shall so advise the Company. The
underwriter will be selected by a majority in interest (as
determined by the number of Registrable Securities held) of the
Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include his, her or its
Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in
interest of the Holders) to the extent provided herein. All
Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in
Section 1.6(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section
1.3, if the underwriter advises the Holders in writing that
marketing factors require a limitation of the number of shares to
be underwritten, then the Holders shall so advise all Holders of
Registrable Securities that would otherwise be underwritten
pursuant hereto, provided that the number of shares of
Registrable Securities to be included in such underwriting shall
not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) If on the date one hundred twenty (120) days after the Closing
Date either (i) the registration statement described in Section
1.3(a) is not declared effective or (ii) the registration
statement described in Section 1.3(a) is no longer deemed to be
effective after initial effectiveness, the Company, unless waived
by the Investors who purchased at least 10% of the Common Stock
sold pursuant to the Subscription Agreement, shall issue to each
Investor a warrant in the form attached hereto as Exhibit A
(each, a "Registration Warrant" and, collectively, the
"Registration Warrants") to acquire the number of shares of
Common Stock equal to (i) 5% multiplied by (ii) the aggregate
number of shares of Common Stock sold to such Investor under the
Subscription Agreement. The exercise price of each such
Registration Warrant per share of Common Stock issuable on
exercise of the Registration Warrant will be $.34 per share.
(d) If on the end of the first thirty (30) day period after the
initial one hundred twenty (120) day period referred to in
Section 1.3(c) either (i) the registration statement described in
Section 1.3(a) is not declared effective or (ii) the registration
statement described in Section 1.3(a) is no longer deemed to be
effective after initial effectiveness, the Company shall, unless
waived by the Investors who purchased at least 10% of the Common
Stock sold pursuant to the Subscription Agreement, issue to each
Investor an additional Registration Warrant to acquire the number
of shares of Common Stock equal to (i) 5% multiplied by (ii) the
aggregate number of shares of Common Stock sold to such Investor
pursuant to the Subscription Agreement. The exercise price of
each such Registration Warrant will be $.34 per share of Common
Stock issuable on exercise of the Registration Warrant.
(e) If at the end of each subsequent thirty (30) day period after the
first thirty (30) day period after the initial one hundred twenty
(120) day period referred to in Section 1.3(c) either (i) the
registration statement described in Section 1.3(a) is not
declared effective or (ii) the registration statement described
in Section 1.3(a) is no longer deemed to be effective after
initial effectiveness, the Company shall, unless waived by the
Investors who purchased at least 10% of the Common Stock sold
pursuant to the Subscription Agreement, issue to each Investor an
additional Registration Warrant to acquire the number of shares
of Common Stock equal to (i) 2.5% multiplied by (ii) the
aggregate number of shares of Common Stock sold to such Investor
pursuant to the Subscription Agreement. The exercise price of
each such Registration Warrant will be $.34 per share of Common
Stock issuable on exercise of the Registration Warrant.
(f) The Company shall execute such other and further certificates,
instruments and other documents as may be reasonably requested by
the Investors or reasonably necessary or proper to implement,
complete and perfect the Investors' rights under this Section 1.3
and to freely trade the Registrable Securities without limitation
or restriction imposed or created by the Company or securities
law.
(g) The terms and covenants set forth in this Section 1.3 shall
terminate as to each Holder and be of no further force and effect
on the earlier of the date on which all the Registrable
Securities beneficially owned by that Holder (i) are registered
pursuant to this Section 1.3 and sold by that Holder in an open
market transaction or (ii) can be sold by that Holder (and any
affiliate of the Holder with whom such Holder must aggregate its
sales under Rule 144) in any three-month period without volume
limitation and without registration in compliance with Rule 144
under the 1933 Act.
1.4 Company Registration.
(a) If (but without any obligation to do so) the Company proposes to
register any of its stock (including a registration effected by
the Company for stockholders other than the Holders) or other
securities under the 1933 Act in connection with the public
offering of such securities, the Company shall, at such time,
promptly give each Holder notice of such registration. On the
request of each Holder given within thirty (30) days after such
notice by the Company, the Company shall, subject to the
provisions of Section 1.4(c), cause to be registered under the
1933 Act all of the Registrable Securities that each such Holder
has requested to be registered.
(b) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 1.4 prior to the
effectiveness of such registration, whether or not any Holder
shall have elected to include securities in such registration.
The expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 1.8 hereof.
(c) In connection with any offering involving an underwriting of
shares of the Company's capital stock, the Company shall not be
required under this Section 1.4 to include any requesting
Holder's securities in such underwriting, unless such Holder
accepts the terms of the underwriting as agreed between the
Company and the underwriters selected by it (or by other persons
entitled to select the underwriters) and enters into an
underwriting agreement in customary form with the underwriter or
underwriters selected by the Company, and then only in such
quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company.
If the total amount of securities, including Registrable
Securities, requested to be included in such offering by the
Company, the Holders and other security holders to whom
registration rights have been granted exceeds the amount of
securities that the underwriters determine in their sole
discretion is compatible with the success of the offering, then
the Company shall be required to include in the offering only
that number of securities (including Registrable Securities) that
the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the Registrable
Securities so included to be apportioned pro rata among the
selling Holders according to the total amount of Registrable
Securities requested to be included therein owned by each selling
Holder or in such other proportions as shall mutually be agreed
to by such selling Holders); provided, that the amount of
Registrable Securities requested by the Holders to be included in
such offering pursuant to this Section 1.4 and all other
securities requested by other holders to be included in such
offering pursuant to other "piggyback" registration rights shall
be reduced first (the Registrable Securities and other securities
so reduced to be apportioned pro rata among the selling Holders
and other holders according to the total amount of Registrable
Securities and other securities requested to be included therein
by each selling Holder and other holder) before any reduction of
any (i) securities requested to be included in such offering by
any holders exercising "demand" registration rights or (ii) any
securities sold by the Company to be included in such offering.
For purposes of such apportionment among Holders, for any selling
stockholder that is a Holder of Registrable Securities and that
is a partnership or corporation, the partners, retired partners
and stockholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons shall be deemed
to be a single "selling Holder", and any pro rata reduction with
respect to such "selling Holder" shall be based on the aggregate
amount of Registrable Securities requested to be included in such
offering by all such related entities and individuals.
1.5 Form S-3 Registration. If the Company shall receive from one or more
Holders a request or requests that the Company effect a registration
on Form S-3 and any related blue sky or similar qualification or
compliance with respect to at least 25% (or a lesser percentage if the
requirements of Section 1.5(b)(i) are met) of the Registrable
Securities owned by such Holder or Holders, the Company shall:
(a) promptly give notice of the proposed registration, and any
related blue sky or similar qualification or compliance, to all
other Holders; and
(b) cause, as soon as practicable, such Registrable Securities to be
registered for offering and sale on Form S-3 and cause such
Registrable Securities to be qualified in such jurisdictions as
such Holders may reasonable request, together with all or such
portion of the Registrable Securities of any other Holders
joining in such request as are specified in a request given
within fifteen (15) days after receipt of such notice from the
Company; provided that the Company shall not be obligated to
effect any such registration, qualification or compliance,
pursuant to this Section 1.5:
(i) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and
such other securities (if any) at an aggregate price to the
public of less than $500,000;
(ii) if the Company has, within the twelve month period preceding
the date of such request, already effected two registrations
on Form S-3 for the Holders pursuant to this Section 1.5;
(iii)if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than sixty
(60) days after receipt of the request of the Holder or
Holders under this Section 1.5; provided that the Company
shall not utilize this right more than once in any twelve
(12) month period; provided, further, that the Company shall
not register shares for its own account during such sixty
(60) day period, but such prohibition shall not apply to the
registration of Company shares in connection with (x) a
merger or (y) registration of shares relating to a stock
option, stock purchase or similar plan; or
(iv) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general
consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable
after receipt of the request or requests of the Holders.
1.6 Obligations of the Company. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) except as otherwise provided in Section 1.3, prepare and file
with the SEC a registration statement with respect to such
Registrable Securities and use best efforts to cause such
registration statement to become effective, and keep such
registration statement effective for a period of up to two
hundred seventy (270) days or, if earlier, until the distribution
contemplated in the registration statement has been completed;
provided that (i) such two hundred seventy (270) day period shall
be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or
other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 (or any other
Form, to the extent permitted by law) that are intended to be
offered on a continuous or delayed basis, such two hundred
seventy (270) day period shall be extended, if necessary, to keep
the Registration Statement effective until all such Registrable
Securities are sold, except to the extent that the Holders (and
any affiliate of the Holder with whom such Holder must aggregate
its sales under Rule 144) of such Registrable Securities may sell
those Registrable Securities in any three-month period without
regard to the volume limitation and without registration in
compliance with Rule 144 under the 1933 Act;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply
with the 1933 Act with respect to the disposition of all
securities covered by such registration statement during the
period of time such registration statement remains effective;
(c) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they
may reasonably request to facilitate the disposition of
Registrable Securities owned by them;
(d) use best efforts to register and qualify the securities covered
by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be
required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions;
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such
offering;
(f) during the period of time such registration statement remains
effective, notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act
or the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing.
(g) cause all such Registrable Securities registered hereunder to be
listed on each securities exchange on which securities of the
same class issued by the Company are then listed;
(h) provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective
date of such registration; and
(i) (i) furnish, at the request of any Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Section 1, if
such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date
that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration
of Registrable Securities, and (ii) a "comfort" letter signed by
the independent public accountants who have certified the
Company's financial statements included in the registration
statement, covering substantially the same matters with respect
to the registration statement (and the prospectus included
therein) and with respect to events subsequent to the date of the
financial statements, as are customarily covered in accountants'
letters delivered to the underwriters in underwritten public
offerings of securities addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable
Securities.
1.7 Information from Holder. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section
1 with respect to the Registrable Securities of any selling Holder
that such Holder shall furnish to the Company such information
regarding such Holder, the Registrable Securities held by such Holder,
and the intended method of disposition of such securities as shall be
required to effect the registration of such Registrable Securities.
1.8 Expenses of Registration. All expenses incurred in connection with
registrations, filings or qualifications pursuant to this Section 1,
including (without limitation) all registration, filing and
qualification fees, printing fees and expenses, accounting fees and
expenses, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements (in an amount not exceeding $5,000)
of one counsel for the selling Holders selected by the Holders, shall
be borne by the Company. Notwithstanding the foregoing, the Company
shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Sections 1.3 and 1.5 if the registration
request is subsequently withdrawn at the request of the Holders of a
majority of the Registrable Securities to be registered (in which case
all participating Holders shall bear such expenses pro rata based on
the number of Registrable Securities that were requested to be
included in the withdrawn registration); provided that, if at the time
of such withdrawal, the Holders shall have learned of a material
adverse change in the condition, business, or prospects of the Company
from that known to the Holders at the time of their request and shall
have withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall
retain their rights pursuant to Sections 1.3 and 1.5. Anything herein
to the contrary notwithstanding, all underwriting discounts and
commissions incurred in connection with a sale of Registrable
Securities shall be borne and paid by the Holder thereof, and the
Company shall have no responsibility therefor.
1.9 Indemnification. If any Registrable Securities are included in a
registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners or officers, directors
and stockholders of such Holder, legal counsel and accountants
for such Holder, any underwriter (as defined in the 0000 Xxx) for
such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the 1933 Act, the
1934 Act or any other federal or state securities law, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based on any of the
following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act,
any state securities law or any rule or regulation promulgated
under the 1933 Act, the 1934 Act or any state securities law; and
the Company will reimburse such Holder, underwriter or
controlling person for any legal or other expenses incurred, as
incurred, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided that the
indemnity agreement in this Section 1.9(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld or delayed), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based on a Violation that
occurs in reliance on and in conformity with written information
furnished expressly for use in connection with such registration
by such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors,
each of its officers who shall have signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, legal counsel and accountants for
the Company, any underwriter, any other Holder selling securities
in such registration statement and any controlling person of any
such underwriter or other Holder, against any losses, claims,
damages or liabilities to which any of the foregoing persons may
become subject, under the 1933 Act, the 1934 Act or any other
federal or state securities law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based on any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance on and
in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each
such Holder will reimburse any person intended to be indemnified
pursuant to this Section 1.9(b), for any legal or other expenses
reasonably incurred, as incurred, by such person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided that the indemnity agreement in
this Section 1.9(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which
consent shall not be unreasonably withheld or delayed); and
provided further that in no event shall any indemnity by such
Holder under this Section 1.9(b), when aggregated with amounts
contributed, if any, pursuant to Section 1.9(d), exceed the net
proceeds from the sale of Registrable Securities hereunder
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party
under this Section 1.9, deliver to the indemnifying party notice
of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent that the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided that an indemnified party (together with all other
indemnified parties that may be represented without conflict by
one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to notify the indemnifying party within a
reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party
under this Section 1.9, but the omission so to notify the
indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this
Section 1.9.
(d) If the indemnification provided in this Section 1.9 is held by a
court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage or expense referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim,
damage or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and
of the indemnified party on the other in connection with the
statements or omissions that shall have resulted in such loss,
liability, claim, damage or expense, as well as any other
relevant equitable considerations; provided that in no event
shall any contribution by a Holder under this Section 1.9(d),
when aggregate with amounts paid, if any, pursuant to Section
1.9(b), exceed the net proceeds from the sale of Registrable
Securities hereunder received by such Holder. The relative fault
of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
(f) The obligations of the Company and Holders under this Section 1.9
shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and
otherwise.
1.10 Reports under 1934 Act. With a view to making available to the Holders
the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or
pursuant to a registration statement (including, without limitation,
Form S-3), the Company agrees to:
(a) make and keep public information available, as those terms are
used in SEC Rule 144, at all times;
(b) take such action as is necessary to enable the Holders to utilize
Form S-3 for the sale of their Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934
Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith on request, (i) a written statement by the
Company that it has complied with the reporting requirements of
SEC Rule 144, the 1933 Act and the 1934 Act, or that it qualifies
as a registrant whose securities may be resold pursuant to Form
S-3, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the
SEC that permits the selling of any such securities without
registration or pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such Registrable Securities that (i) is a
subsidiary, parent, current or former partner, current or former
limited partner, current or former member, current or former manager
or stockholder of a Holder, (ii) is an entity controlling, controlled
by or under common control with a Holder, including without limitation
a corporation or limited liability company that is a direct or
indirect parent or subsidiary of the Holder, (iii) is a transferee or
assignee of a Holder and the number of shares representing or
underlying the Registrable Securities (whether in the form of shares,
warrants to purchase shares, or a combination of the foregoing)
transferred or assigned constitute at least 100,000 shares of
Registrable Securities held by such Holder (as adjusted for stock
split, combinations, dividends and the like); provided that: (a) the
Company is, within a reasonable time after such transfer, notified of
the name and address of such transferee or assignee and the
Registrable Securities with respect to which such registration rights
are being assigned; (b) such transferee or assignee agrees in writing
to be bound by and subject to the terms and conditions of this
Agreement; (c) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by
the transferee or assignee is restricted under the 1933 Act; and (d)
such assignment is not made pursuant to a registration statement
effected pursuant to this Agreement.
1.12 Duplicative Registration Rights and Special Adjustment of Registration
Rights. The rights of the Investors under Section 1.4 or Section 1.5
shall not apply to the extent that Registrable Securities then held by
the Investors are already covered by an effective registration
statement under another Section of this Agreement. In addition,
notwithstanding the provisions of Sections 1.3, 1.4 and 1.5, the
Company shall not be obligated to include the portion of the
Registrable Securities consisting of the shares of Common Stock
issuable on exercise of the Registration Warrants in any registration
statement which becomes effective on or before April 17, 2001.
1.13 Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided in this Section 1 with respect to a
Registrable Security (i) after the date on which that Registrable
Security has been sold under a registration statement filed in
accordance with this Agreement or (ii) if all Registrable Securities
held by such Holder (and any affiliate of the Holder with whom such
Holder must aggregate its sales under Rule 144) can be sold in any
three-month period without volume limitation and without registration
in compliance with Rule 144 under the 1933 Act.
2. Covenants.
2.1 Delivery of SEC Reports. The Company shall deliver to each Holder
holding Registrable Securities all reports and other documents of the
Company that the Company is required to file with the SEC under the
1933 Act or the 1934 Act within twenty-four hours of the time such
reports or other documents are filed with the SEC.
2.2 Confidential Information.
(a) The Company shall provide to each Holder not less than ten days'
prior written notice of its intention to deliver to such Holder
confidential or non-public information relating to the Company
which shall be marked as "confidential" or "non-public." If a
Holder notifies the Company that it does not desire to receive
such confidential or non-public information, then the Company
shall not deliver such confidential or non-public information to
such Holder.
(b) Each Holder covenants with the Company that, subject to the
Company's compliance with the provision of Section 2.2(a) hereto,
the Holder confirms, acknowledges, and covenants that information
which is marked "confidential" or "non-public", and is received
by it with respect to the Company pursuant to this Agreement, or
with respect to the transactions described herein or in the
Subscription Agreement, or in connection with the participation
by the Holder or its employee or agent as a stockholder of the
Company, is and shall be confidential and for the Holder's use
only, and the Holder will not use such information in violation
of the securities laws, or any other laws, or reproduce, disclose
or disseminate such information to any other person (other than
the Holder's employees, directors or agents having a need to know
the contents of such information and the Holder's attorneys),
except in connection with the exercise of rights under this
Agreement, unless (i) the Company has made such information
available to the public generally, (ii) such information has
otherwise been made generally or publicly available, or (iii) the
Holder is required to disclose such information by a governmental
body or pursuant to legal process, in which case the Holder shall
provide at least three days' prior notice of such proposed
disclosure or such lesser notice as the Holder shall have
received. The Company acknowledges no information contained in
this Agreement and the Subscription Agreement is confidential or
non-public information. Notwithstanding the foregoing, the Holder
may, in its sole discretion, decline to receive from the Company
information which is marked "confidential" or "non-public", and
as a result thereof shall not be deemed to have received or have
any knowledge of such information marked "confidential" or
"non-public", provided the Holder has declined delivery of such
information or promptly returned to the Company such information
upon delivery.
2.3 Reserve for Exercise Shares. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common
Stock such number of shares of Common Stock (the "Exercise Shares") as
shall be sufficient to enable it to comply with its exercise
obligations under the Registration Warrants. If at any time the number
of Exercise Shares shall not be sufficient to effect the exercise of
the Registration Warrants, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number as will be sufficient
for such purposes. The Company will obtain authorization, consent,
approval or other action by, or make any filing with, any
administrative body that may be required under applicable state
securities laws in connection with the issuance of Exercise Shares.
2.4 Termination of Covenants. The covenants set forth in Sections 2.1
through 2.3 shall terminate as to each Holder and be of no further
force and effect at the time the Holders no longer hold any
Registrable Securities.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided herein, this Agreement
shall inure to the benefit of and bind the respective successors and
assigns of the parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended to
confer on any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.
3.2 Governing Law. This Agreement 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.
3.3 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
3.4 Headings. The headings of sections and subsections in this Agreement are
used for convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Any request, consent, notice or other communication required or
permitted under this Agreement 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 applicable
signature page hereof, or at such other address as such party may designate
by ten days' advance notice to the other parties.
3.6 Expenses. If any action at law or in equity is necessary to enforce or
interpret any of the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
3.7 Entire Agreement: Amendments and Waivers. This Agreement (including the
Schedule and Exhibit hereto) constitutes the full and entire understanding
and agreement among the parties with regard to the subjects hereof and
thereof. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with
the consent of the Company and the holders of more than 50% of the
Registrable Securities; provided that no amendment shall be effective
unless approved by the holder or holders of Registrable Securities that
shall be affected adversely, or affected differently from the Holders
generally, by such amendment. Any amendment or waiver effected in
accordance with this paragraph shall be binding on the Company, each holder
of any Registrable Securities and each future holder of all such
Registrable Securities.
3.8 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
[Signatures appear on the following page]
IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by or on behalf of the parties hereto as of the date first above
written.
"Company"
AURA SYSTEMS, INC.
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
-------------------------------------------------------
0000 Xxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Attn: Zvi (Xxxxx) Xxxxxxxx
"Investor"
KOYAH LEVERAGE PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By:
------------------------------------------------
Name:
-------------------------------------
Title:
---------------------------------------------
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxx, Esq.
KOYAH PARTNERS, L..P.
By: Koyah Ventures LLC, its general partner
By:
------------------------------------------------
Name:
-------------------------------------
Title:
---------------------------------------------
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxx, Esq.
------------------------------------------
XXXXX X. XXXXXXX
------------------------------------------
XXXXXXX XXXXX
------------------------------------------
XXXXXXX XXXXXX
SCHEDULE A TO REGISTRATION RIGHTS AGREEMENT
Schedule of Investors
Name
Koyah Leverage Partners, L.P.
Koyah Partners, L.P.
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
Xxxxxxx Xxxxxx
EXHIBIT A TO THE REGISTRATION RIGHTS AGREEMENT
Form of Registration Warrant
[Need to attach]
