REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of October
18, 2005, is entered into by and between Airtrax, Inc., a New Jersey corporation
(the "COMPANY"), and the investors identified on the signature pages hereto (the
"INVESTOR").
WHEREAS:
A. In connection with the 8% Series C Unsecured Convertible Debenture
and Warrants Purchase Agreement by and between the parties hereto of even date
herewith (the "PURCHASE AGREEMENT"), the Company has agreed, upon the terms and
subject to the conditions of the Purchase Agreement (the "OFFERING"), to issue
and sell to the Investor (i) an 8% Series C Unsecured Convertible Debenture (the
"DEBENTURE") convertible into shares of the Company's common stock, no par value
per share (the "COMMON STOCK") (as issued upon conversion of the Debentures, the
"CONVERSION SHARES"), and (ii) warrants ("WARRANTS") to purchase shares of
Common stock (as issued upon exercise of the Warrants, the "WARRANT SHARES");
B. To induce the Investor to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows.
1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means the Investor, any permitted transferee or
assignee thereof to whom the Investor assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 of this Agreement and any permitted transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 of this Agreement.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or ordering
of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. "REGISTRABLE SECURITIES" means (i) the Common Stock issued or
issuable pursuant to the Purchase Agreement, including the Conversion Shares and
the Warrant Shares, whether issued or issuable, (ii) any shares of capital stock
issued or issuable with respect to the foregoing as a result of any stock split,
stock dividend, recapitalization, anti-dilution adjustment, exchange or similar
event or otherwise, without regard to any limitation on conversion of the
Debenture or exercise of the Warrants, (iii) shares of Common Stock set forth on
Schedule 1(d) annexed hereto, (iv) shares of Common Stock to issuable by the
Company, at the sole option of the Company, to make any payments of interest
upon the Debentures; (v) shares of Common Stock to be issued pursuant to the
Second Closing; and (vi) shares of Common Stock which may be issued by the
Company between the date hereof and the filing of the Registration Statement
with the SEC in an amount not to exceed the difference between the gross
proceeds of securities sold in the Offering and $5,000,000 of gross proceeds .
e. "REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act.
2. REGISTRATION.
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a. Mandatory Registration. The Company shall prepare, and, as
soon as practicable, but in no event later than one hundred fifty (150) days
after the date hereof (the "SCHEDULED FILING DATE"), file with the SEC a
separate Registration Statement on Form SB-2 covering the resale of all of the
Registrable Securities issued and issuable in connection with the Closing. In
the event that Form SB-2 is unavailable for such registration, the Company shall
use such other form as is available for such registration, subject to the
provisions of Section 2.e of this Agreement. The Registration Statement prepared
pursuant hereto shall register for resale that number of shares of Common Stock
equal to at least 200% of the number of Registrable Securities (both issued and
issuable) as of the Closing Date. The Company shall use its best efforts to have
the Registration Statement declared effective by the SEC as soon as practicable,
but in no event later than thirty five (35) days after the Scheduled Filing Date
(the "SCHEDULED EFFECTIVE DATE").
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b. Piggy-Back Registrations. If, at any time prior to the
expiration of the Registration Period (as hereinafter defined) that there is not
an effective Registration Statement covering all of the Registrable Securities,
the Company proposes to file with the SEC a Registration Statement for its own
account or the account of others under the 1933 Act of any of its securities
(other than a Registration Statement on Form S-4 or Form S-8 (or their
equivalents at such time) relating to securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans), the
Company shall promptly send to the Investor written notice of the Company's
intention to file a Registration Statement and of the Investor's rights under
this Section 2.b and, if within five (5) days after receipt of such notice, the
Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities the
Investor requests to be registered for resale, subject to the priorities set
forth in this Section 2.b below. No right to registration of Registrable
Securities under this Section 2.b shall be construed to limit any registration
required under Section 2.a. The obligations of the Company under this Section
2.b may be waived by holders of a majority of the Registrable Securities. In the
event that the Registration Statement being filed by the Company under this
Section 2(b) is for an underwritten offering, the Investor whose Registrable
Securities are included in such Registration Statement shall, unless otherwise
agreed to by the Company, offer and sell such Registrable Securities in an
underwritten offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering. If the managing
underwriter(s) advise the Company, in writing, that in their reasonable good
faith opinion, marketing or other factors dictate that a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the proposed
offering, then the Company shall include in such registration:
(1) first, all securities the Company proposes to sell for its own
account;
(2) second, up tothe full number of securities proposed to be
registered for the account of the holders of securities entitled to inclusion of
their securities in the Registration Statement by reason of demand or mandatory
registration rights; and
c. Allocation of Registrable Securities. The initial number
of Registrable Securities included in the Registration Statement and each
increase in the number of Registrable Securities included therein shall be
allocated pro rata among multiple Investors, if applicable, based on the number
of Registrable Securities held by each Investor at the time the Registration
Statement covering such number of Registrable Securities or increase thereof is
declared effective by the SEC. In the event that an Investor sells or otherwise
transfers any of such Investor's Registrable Securities, each transferee shall
be allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor. Any
shares of Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors.
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d. Legal Counsel. Subject to Section 5 hereof, the Investor
holding a majority of the Registrable Securities shall have the right to select
one legal counsel to review and oversee as their counsel any offering pursuant
to this Section 2 ("LEGAL COUNSEL"), which shall be Xxxxxxxxx & XxXxxxx LLP as
their counsel or such other counsel as thereafter designated by the holders of a
majority of Registrable Securities. The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations under this Agreement.
e. Sufficient Number of Shares Registered. If the number of
shares available under the Registration Statement filed pursuant to Section 2.a
is insufficient to cover all of the Registrable Securities which such
Registration Statement is required to cover, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefore, if applicable), or both, as soon as practicable, but in any
event not later than thirty (30) days after the necessity therefore arises and
the Company is so requested by the Investor (such date, an "ADDITIONAL SCHEDULED
FILING DATE"). The Company shall use it best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof, but in no event later than seventy five (75) days
after the Additional Scheduled Filing Date (each such date, an "ADDITIONAL
SCHEDULED EFFECTIVE DATE").
3. RELATED OBLIGATIONS.
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Whenever the Investor has requested that any Registrable Securities
be registered pursuant to Section 2.b or at such time as the Company is
obligated to file a Registration Statement with the SEC pursuant to Section 2.a
or 2.e, the Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:
a. The Company shall keep each of the Registration Statements
required to be filed hereunder effective pursuant to Rule 415 at all times until
the earlier of (i) eighteen (18) months after the Effective Date; (ii) the date
as of which the Investor may sell all of the Registrable Securities covered by
such Registration Statement pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (iii) the date on which (A) the Investor shall
have sold all of the Registrable Securities covered by such Registration
Statement and (B) none of the Debenture or Warrants is outstanding (the
"REGISTRATION PERIOD"), each of which Registration Statements (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
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Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.
c. The Company shall (a) permit Legal Counsel to review and
comment upon the Registration Statement at least two (2) days prior to its
filing with the SEC.
d. The Company shall (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
"blue sky" laws of such jurisdictions in the United States as Legal Counsel or
the Investor reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.d, (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and the Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.
e. As promptly as practicable after becoming aware of such
event, the Company shall notify Legal Counsel and the Investor in writing of the
happening of any event as a result of which the prospectus included in a
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, in light of the circumstances under
which they were made, not misleading, and promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or
omission, and deliver one (1) copy of such supplement or amendment to Legal
Counsel and the Investor (or such other number of copies as Legal Counsel or the
Investor may reasonably request). The Company shall also promptly notify Legal
Counsel and the Investor as soon as practicable (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and the
Investor by facsimile on the same day of such effectiveness), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
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f. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and the Investor who
holds Registrable Securities being sold (and, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose (such notice to be delivered by facsimile on
the same day such notice of the initiation or threat of such proceeding, such
order or suspension is received by the Company and by overnight mail).
g. The Company shall use its best efforts either to (i) cause
all the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange or market on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
market, or (ii) secure the inclusion for quotation on the over-the-counter
market on the electronic bulletin board for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. ("NASD"), as such with respect to such Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its obligation
under this Section 3.h.
h. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.
i. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
j. Within two (2) business days after a Registration Statement
which covers applicable Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Investor) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
k. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investor of Registrable
Securities pursuant to a Registration Statement.
l. Each of the following events shall constitute a "REGISTRATION
DEFAULT" for purposes of this Agreement:
(i) the Company's failure to file a Registration Statement by the
Scheduled Filing Date or Additional Scheduled Filing Date thereof, as
appropriate;
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(ii) the SEC's failure to declare a Registration Statement
effective on or before the Scheduled Effective Date or Additional Scheduled
Effective Date thereof, as appropriate, except where the failure to meet such
deadline is the result solely of actions by the holders of Registrable
Securities;
(iii) the Company's failure to request acceleration of the
effectiveness of a Registration Statement within two (2) business days after the
SEC has notified the Company that it may file such an acceleration request as
required by Section 3.a hereof, except where the failure to meet such deadline
is a result solely of actions by the holders of Registrable Securities;
Upon the occurrence of a Registration Default, the Company shall pay the
Investor liquidated damages in cash, or in Common Stock, at the election of the
Company, in an amount equal to two percent (2%) of the amount invested by the
Investor on a pro rata basis for each 30-day period of such Registration
Default, commencing on the date of the Registration Default. The Company shall
only be required pay liquidated damages to the Investor for a total of nine (9)
months, either in the aggregate or for 9 consecutive months.
If a Registration Default is cured before the end of a 30-day period, the amount
payable to the Investor pursuant to such Registration Default shall be
pro-rated. The Company shall pay such amount in cash within ten (10) days of
written demand by the Investor made at any time during the continuance or after
termination of such Registration Default. The Investor's right to demand such
payment shall be in addition to any other rights it may have under this
Agreement, the Purchase Agreement or otherwise.
4. OBLIGATIONS OF THE INVESTOR.
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a. The Company shall notify the Investor in writing of the
information the Company requires from the Investor if the Investor elects to
have any of the Investor's Registrable Securities included in such Registration
Statement. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of the Investor that the Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.
b. The Investor by its acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any Registration Statement
hereunder, unless the Investor has notified the Company in writing of the
Investor's election to exclude all of the Investor's Registrable Securities from
such Registration Statement.
c. In the event the Investor elects to participate in an
underwritten public offering pursuant to Section 2.b, the Investor agrees to
enter into and perform the Investor's obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities.
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d. The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.e or
the first sentence of Section 3.f, the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3.e or Section
3.f.
e. The Investor may not participate in any underwritten offering
pursuant to a registration hereunder unless the Investor (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Investor entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements, and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions.
f. The Investor agrees not to take any action to cause the
Investor to become a registered broker-dealer as defined under the 1934 Act or
to effect any change to the Investor's status that would preclude the Company
from using Form SB-2 for the Registration Statement.
5. EXPENSES OF REGISTRATION.
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All reasonable expenses (other than expenses incurred pursuant to Section
3.j(iv) and (v) and underwriting discounts and commissions) incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees.
6. INDEMNIFICATION.
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In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls the Investor within
the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint
or several, (collectively, "CLAIMS") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency or body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto ("INDEMNIFIED
DAMAGES"), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
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arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered ("BLUE SKY FILING"), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any material violation
of this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "VIOLATIONS").
The Company shall reimburse the Investor and each such underwriter
or controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or reasonable other expenses incurred by them in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.a: (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person or underwriter for such Indemnified
Person expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.d;
(ii) with respect to any preliminary prospectus, shall not inure to the benefit
of any such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, if such prospectus was timely made available by
the Company pursuant to Section 3.d, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; and (iii) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company, if such prospectus was timely made available by
the Company pursuant to Section 3.d. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investor pursuant to Section 9 of this Agreement.
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b. In connection with any Registration Statement in which the
Investor is participating, the Investor agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6.a, the Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by the Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6.d, the
Investor will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6.b and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6.b for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to the Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investor pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6.b with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus and such prospectus was provided to Investor
as required, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
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and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the Investor, and
such legal counsel shall be selected by the Investor holding a majority of the
issued or issuable Registrable Securities included in the Registration Statement
to which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to entry of
any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to applicable law.
7. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no
seller of Registrable Securities guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
11
8. REPORTS UNDER THE 1934 ACT.
------------------------------
With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investor to sell securities of the Company
to the public without registration ("RULE 144"), during the Registration Period,
the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144; and
b. 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 so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144.
c. provide, at its cost and expense, any opinions of counsel
required by the Company's transfer agent to allow for the removal of any legends
in connection with sales of the securities under Rule 144 and to pay any
transfer agent fees in connection therewith.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
------------------------------------
The rights under this Agreement shall be automatically assignable by the
Investor to any transferee of all or any portion of Registrable Securities if:
(i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing to be bound by all of the provisions
contained herein; and (v) such transfer shall have been made in accordance with
the applicable requirements of the Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
-----------------------------------
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Investor who
then holds or has the right to acquire a majority of the Registrable Securities.
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon the Investor and the Company. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Registrable
Securities.
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11. MISCELLANEOUS.
-------------
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
b. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Airtrax, Inc.
000 Xxxxxxx Xxxxx, Xxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor, to its address and facsimile number on the signature page
attached hereto, with copies to the Investor's Legal Counsel as set forth on the
in the Purchase Agreement or to such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party at least five days prior
to the effectiveness of such change. Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B)
mechanically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, overnight or courier delivery or transmission by facsimile
in accordance with clause (i), (ii) or (iii) above, respectively.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
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d. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule that would cause the application of the
laws of any jurisdictions other than the State of New York. If any provision of
this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction. Any
dispute under this Agreement shall be governed by and resolved pursuant to
Section 10.2 of the Purchase Agreement.
e. This Agreement and the Purchase Agreement (and the exhibits
thereto) constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party.
k. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of day and year first above written.
COMPANY: INVESTOR(S):
------- -----------
AIRTRAX, INC.
By: /s/ Xxxxx Xxxxx By:_____________________________
-------------------
Name: Xxxxx Xxxxx Name:
Its: President
15
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
ATTN:
Re: AIRTRAX, INC.
-------------
Ladies and Gentlemen:
We are counsel to Airtrax, Inc., a New Jersey corporation (the "COMPANY"),
which has entered into that certain 8% Series C Unsecured Convertible Debenture
and Warrants Purchase Agreement (the " PURCHASE AGREEMENT") by and among the
Company and the Investor named therein pursuant to which the Company issued to
the Investor a Debenture, convertible into shares of its common stock, no par
value per share (the "COMMON STOCK"), and Warrants to purchase Common Stock.
Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Investor (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "1933 ACT"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 2005, the Company filed a Registration Statement
on Form S-___ (File No. 333-_____________) (the "REGISTRATION STATEMENT") with
the Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names the Investor as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:________________________
cc:
