EXHIBIT 10.28
AURA SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of May ____, 2002
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of May ___, 2002, is made by
and among AURA SYSTEMS, INC., a Delaware corporation (the "Company"), and THE
INVESTORS LISTED ON THE SIGNATURE PAGE HEREOF (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:
In connection with the Subscription Agreement dated as of March 22, 2002
(the "Subscription Agreement"), by and among the Company and the Investors, and
as a condition to the closing of the transactions contemplated therein, this
Agreement is to 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 Stock (as
defined in the Subscription Agreement), (ii) the shares of the Company's
Common Stock (as defined in the Subscription Agreement) issuable on
exercise of the Registration Warrants (as defined in Section 1.3(c)), and
(iii) any other shares of 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) and (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) Other Terms: Any other capitalized term not defined herein shall
have the meaning set forth in the Subscription Agreement.
1.2 [Intentionally Omitted].
1.3 Agreed Registration.
(a) Within one hundred twenty (120) 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, other than the shares issuable upon
exercise of the Registration Warrants. In the event that any Registration
Warrants are issued, the Company shall promptly amend such registration
statement to also include the shares issuable upon exercise of such
Registration Warrants. The Company shall use best efforts to obtain the
effectiveness of such registration statement as soon as possible
thereafter. 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 by the Holders in an open market transaction and
(ii) can be sold by the Holders (and any affiliate of the Holders with whom
the Holders must aggregate their 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 such Holder's 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 eighty (180) 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 (including without limitation any suspension of use under the
circumstances described in Section 1.6(f) hereof), the Company, unless
waived by the Investors, 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 Registrable Stock sold to such Investor pursuant to the
Subscription Agreement. The exercise price of each such Registration
Warrant per share shall be $.20 per share, subject to adjustment as set
forth in the Registration Warrant.
(d) If at any time during the first thirty (30) day period after the
initial one hundred eighty (180) 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
(including without limitation any suspension of use under the circumstances
described in Section 1.6(f) hereof), the Company shall, unless waived by
the Investors, 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 Registrable Stock sold to such
Investor pursuant to the Subscription Agreement. The exercise price of each
such Registration Warrant shall be $.20 per share, subject to adjustment as
set forth in the Registration Warrant.
(e) If at any time during of each subsequent thirty (30) day period
after the first thirty (30) day period after the initial one hundred eighty
(180) 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 (including without limitation any
suspension of use under the circumstances described in Section 1.6(f)
hereof), the Company shall, unless waived by the Investors, 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 Registrable Stock sold to such Investor pursuant to the
Subscription Agreement. The exercise price of each such Registration
Warrant will be $.20 per share, subject to adjustment as set forth in 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, upon
effectiveness of a registration statement with respect to the Registrable
Securities, 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 (A) 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 (B) the period of any suspension of use of such
registration statement under the circumstances described in Section 1.6(f); 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 Holders with whom the Holders must aggregate
their 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, immediately notify each Holder of Registrable Securities covered by
such registration statement in writing at any time when (i) a prospectus
relating thereto is required to be delivered under the 1933 Act or (ii) 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, and in the case of clause (ii) above, the Holder
shall suspend the use of the prospectus until its receipt of the written notice
referred to in the last sentence of this Section 1.6(f). Notwithstanding the
provisions of this Section 1.6, the Company may, during the period a
registration statement is required to remain effective hereunder, suspend the
use of the prospectus for a period not to exceed sixty (60) days (whether or not
consecutive) in any 12-month period if the Board of Directors of the Company
determines in good faith that because of valid business reasons, including
pending mergers or other business combination transactions, the planned
acquisition or divestiture of assets, pending material corporate developments
and similar events, it is in the best interests of the Company to suspend such
use, and prior to or contemporaneously with suspending such use the Company
provides the Holders of Registrable Securities with written notice of such
suspension (which notice need not specify the nature of the event giving rise to
such suspension), and the Holder shall suspend the use of the prospectus until
its receipt of the written notice referred to in the last sentence of this
Section 1.6(f). At the end of any suspension period referred to in the first or
second sentence of this Section 1.6(f), the Company shall immediately provide
the Holders with written notice of the termination of such suspension.
(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) 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 of one counsel
for the selling Holders selected by the Holders, not to exceed $5,000 for each
registration statement or each amendment thereto (provided that there are not
more than two drafts thereof), 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 50,000
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. 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 Section 1.3 or any other Section of this Agreement.
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 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 (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.
2.2 Confidential Information. 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 and shall
xxxx such information as "confidential" or "non-public." If a Holder notifies
Company that it does not desire to receive such confidential or non-public
information, then the Company shall not deliver such information to such Holder.
Whether or not a Holder has so notified the Company, such Holder may, in its
sole discretion, decline to receive from the Company such confidential or
non-public information, and as a result thereof shall not be deemed to have
received or have any knowledge of such confidential or non-public information;
provided that it has not received the same or promptly returns the same upon
receipt by such Holder.
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 arising out of or in connection with this Agreement or the
Registrable Securities, 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. Notwithstanding the
foregoing, any party obtaining an order or judgment in any of the
above-referenced courts may bring an action in a court in another jurisdiction
in order to enforce such order or judgment.
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 business 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 for such party indicated on the signature page hereof or at such
other address as such party may designate by advance written 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 disbursements in addition to
any other relief to which such party may be entitled. In addition, the Company
shall pay the reasonable attorneys' fees, costs and disbursements of the
Investors in enforcing any terms of this Agreement, whether or not any action at
law or in equity is brought.
3.7 Entire Agreement: Amendments and Waivers. This Agreement constitutes
the full and entire understanding and agreement among the parties with regard to
the subject matter hereof. 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 Section 3.7 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.
[Remainder of page intentionally left blank]
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: ________________
Fax: _________________
"Investors"
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
Fax: (000) 000-0000
[Signature page to Registration Rights Agreement]
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
Fax: (000) 000-0000
RAVEN 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
Fax: (000) 000-0000
[Signature page to Registration Rights Agreement]
EXHIBIT A
Form of Registration Warrant
[Separate document - need to attach]
