EXHIBIT 4.6
FORM OF REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of February 22, 2000 (this
"Agreement"), is entered into by and between AIRTECH INTERNATIONAL GROUP, INC.,
a Wyoming corporation (the "Company") and PK Investors LLC, a Delaware limited
liability company (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of
February 22, 2000, by and between the Purchaser and the Company (the "Securities
Purchase Agreement"), the Company has agreed to issue and sell to the Purchaser
(i) $2,500,000 principal amount of the Company's 6% Convertible Debentures due
2002 (the "Initial Debentures"); (ii) five year Warrants to purchase 250,000
shares of common stock, par value $.05 per share (the "Common Stock") of the
Company (the "Initial Warrants"); a Supplemental Warrant to purchase up to an
additional $2,500,000 principal amount of the Company's 6% Convertible
Debentures (the "Additional Debentures," together with the Initial Debentures,
the "Debentures") and warrants to purchase up to two hundred fifty thousand
(250,000) shares of Common Stock (the "Additional Warrants," together with the
Initial Warrants, the "Warrants"; the Debentures and Warrants collectively, the
"Securities");
WHEREAS, pursuant to the terms of the Debentures and the Warrants, (i)
upon the conversion of, or in lieu of interest payments on the Debentures and
(ii) upon exercise of the Warrants, the Company will issue to the Purchaser
shares of the Company's Common Stock (the shares of Common Stock issued or
issuable to the Purchaser upon the conversion the Debentures and/or upon the
exercise of the Warrants are collectively referred to herein as the "Shares");
and
WHEREAS, to induce the Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities 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
Purchaser hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Minimum Conversion Shares" on any date
means a number of shares equal to at least the sum of: (x) two (2) times the
number of shares of Common Stock that are issuable upon conversion of the
Debentures on such date, without regard to any limitation on any holder's
ability to convert the Debentures and (y) the number of shares of Common Stock
issuable
upon exercise of the Warrants.
(ii) "Register," "Registered," and "Registration
refer to a registration effected by preparing and filing one or more
Registration Statement or Statements in compliance with the Securities Act and
pursuant to Rule 415 under the Securities 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 by the Securities
and Exchange Commission (the "Commission").
(iii) "Registrable Securities" means
collectively, the Shares and the Warrants.
(iv) "Registration Statement" means a
registration statement of the Company under the Securities Act.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Securities Purchase Agreement, the Debentures
or the Warrants, as the case may be.
2. REGISTRATION.
(a) Mandatory Registration. The Company shall prepare and, as
soon as practicable but in no event later than thirty (30) days after the
Initial Closing Date (the "Required Filing Date"), file with the Commission a
Registration Statement on Form SB-2, or an amendment to any pending Registration
Statement on Form SB-2 of the Company, covering resales of (a) the Warrants and
(b) the Minimum Conversion Shares on the filing date. In the event that Form
SB-2 is unavailable for such a registration, the Company shall use such other
form as is available for such a registration. Such Registration Statement or
amended Registration Statement, as the case may be, shall state that, in
accordance with Rule 416 under the Securities Act, it also covers such
indeterminate number of additional Shares as may become issuable upon conversion
of the Debentures and exercise of the Warrants (i) to prevent dilution resulting
from stock splits, stock dividends or similar transactions and (ii) to the
extent consistent with the interpretations of the Commission of such rule at
such time, resulting from any adjustment in the applicable Conversion Price of
such Debentures or the Current Warrant Price of such Warrants. If on any date
the Minimum Conversion Shares exceed the total number of Shares so registered,
the Company shall (i) if such Registration Statement has not been declared
effective by the Commission at that time, amend the Registration Statement filed
by the Company pursuant to the preceding portions of this paragraph, to register
all of such Minimum Conversion Shares, or (ii) if such Registration Statement
has been declared effective by the Commission at that time, file with the
Commission an additional Registration Statement on SB-2 (or, in the event that
Form SB-2 is unavailable for such a registration, on such other form as is
available) to register all of such Minimum Conversion Shares that have not
already been so registered. The Company shall use its best efforts to cause any
such Registration Statement or amended Registration Statement, as the case may
be, to become effective within the earliest to occur of (i) ninety (90) days
following the Initial Closing Date or in the event the Commission reviews the
Registration Statement, no longer than 120 days from the Initial Closing Date;
or (ii) if the Commission elects not to conduct a review of the Registration
Statement or has indicated that they
have no further comments to the Registration Statement, the date which is
three (3) business days after the date upon which either the Company or its
counsel is so notified, whether orally or in writing. The earliest of such
dates is referred to herein as the "Required Effective Date." Notwithstanding
the use of the terms "Required Filing Date" and "Required Effective Date"
herein, the Company shall at all times use its best efforts to file each
required Registration Statement or amendment to a Registration Statement as
soon as possible after the Initial Closing Date or after the date the Company
becomes obligated to file such Registration Statement or amendment, as the
case may be, and to cause each such Registration Statement or amendment to
become effective as soon as possible thereafter. No securities of the Company
other than the Registrable Securities shall be included in any such
Registration Statement. The Company shall keep each Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier
of (i) the date on which all of the Registrable Securities have been sold and
(ii) the date on which the Registrable Securities (in the opinion of counsel
to the Purchaser) may be immediately sold without restriction (including
without limitation as to volume by each holder thereof) without registration
under the Securities Act (the "Registration Period").
(b) PAYMENTS BY THE COMPANY.
(i) (A) If the Registration Statement covering
the Registrable Securities is not filed in proper form with the Commission on or
prior to the Required Filing Date, (B) if the Registration Statement covering
the Registrable Securities is not effective on or prior to the Required
Effective Date, (C) if the number of Shares qualified for trading on the OTC
Bulletin Board, NASDAQ SmallCap Stock Market or reserved by the Company for
issuance shall be insufficient for issuance upon the conversion of the
outstanding Debentures and the exercise of the Warrants, or (D) upon the
occurrence of a Blackout Event (as described in Section 3(f) or Section 3(g)
below) (each of the events described in clauses (A) through (D) of this
paragraph are referred to herein as a "Registration Default"), the Company will
make payments to the Purchaser in such amounts and at such times as shall be
determined pursuant to this Section 2(b).
(ii) The amount (the "Periodic Amount") to be paid by
the Company to the Purchaser for each thirty (30) day period, or portion
thereof, during which a Registration Default shall be in effect (each such
period, a "Default Period") shall be equal to two percent (2%) of the sum of (a)
the principal amount of Debentures outstanding and (b) the principal amount of
Debentures converted into shares of Common Stock (the "Purchase Price");
PROVIDED, with respect to any Default Period during which the relevant
Registration Defaults shall have been cured, the Periodic Amount shall be PRO
RATED for the number of days during such period during which the Registration
Defaults were pending; and PROVIDED FURTHER, that the payment of such Periodic
Amounts shall not relieve the Company from its continuing obligations to
register the Registrable Securities pursuant to Section 2(a).
(iii) Each Periodic Amount shall be payable by the
Company, in cash or other immediately available funds, to the Purchaser on the
last day of each month during which a Registration Default occurred or was
continuing, without demand therefor by the Purchaser. If the Company shall not
remit the Periodic Amounts payable to the Purchaser as set forth in paragraph
(ii) above, the Company will pay the Purchaser reasonable costs of collection,
including attorneys'
fees, in addition to the Periodic Amounts.
(iv) The parties acknowledge that the damages which
may be incurred by the Purchaser if the Registration Statement is not filed by
the Required Filing Date, if the Registration Statement has not been declared
effective by the Required Effective Date, if an insufficient number of shares of
Common Stock shall be qualified for trading or reserved for issuance, or if the
provisions of Section 3(f) or 3(g) become applicable, may be difficult to
ascertain. The parties agree that the Periodic Amount represents a reasonable
estimate on the part of the parties, as of the date of this Agreement, of the
amount of such damages.
(c) PIGGYBACK REGISTRATION. (i) If at any time or from time to time,
the Company shall determine to register any of its securities, for its own
account or the account of any of its shareholders, other than a Registration
Statement relating solely to employee share option plans or pursuant to an
acquisition transaction on Form S-4, the Company will:
(A) provide to the Purchaser written notice thereof as soon as
practicable prior to filing the Registration Statement; and
(B) include in such Registration Statement and in any underwriting
involved therein, all of the Registrable Securities specified in a
written request by the Purchaser made within fifteen (15) days after
receipt of such written notice from the Company.
(ii) If the Registration is for a registered
public offering involving an underwriting, the Company shall so advise the
Purchaser as a part of the written notice given pursuant to this Section. In
such event, the rights of the Purchaser hereunder shall include participation in
such underwriting and the inclusion of the Registrable Securities in the
underwriting to the extent provided herein. To the extent that the Purchaser
proposes to distribute its securities through such underwriting, the Purchaser
shall (together with the Company and any other securityholders of the Company
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section, if the managing underwriter of such underwriting
determines that marketing factors require a limitation of the number of shares
to be offered in connection with such underwriting, the managing underwriter may
limit the number of Registrable Securities to be included in the Registration
and underwriting (PROVIDED, HOWEVER, that (a) the Registrable Securities shall
not be excluded from such underwritten offering prior to the exclusion of any
securities held by officers and directors of the Company or their affiliates,
(b) the Registrable Securities shall be entitled to at least the same priority
in an underwritten offering as any securities included in such offering by any
of the Company's other existing securityholders, and (c) the Company shall not
enter into any agreement that would provide any securityholder with priority in
connection with an underwritten offering greater than the priority granted to
the Purchaser hereunder). The Company shall so advise any of its other
securityholders who are distributing their securities through such underwriting
pursuant to their respective piggyback registration rights, and the number of
shares of Registrable Securities and other securities that may be included in
the registration and underwriting shall be allocated among the Purchaser and all
other
securityholders of the Company in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by the Purchaser and
such other securityholders at the time of the filing of the registration
statement. If the Purchaser disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company. Any Registrable Securities so excluded or withdrawn from such
underwriting shall be withdrawn from such Registration.
(d) ELIGIBILITY FOR FORM SB-2. The Company represents and warrants that
it meets all of the requirements for the use of Form SB-2 for the Registration
of the sale by the Purchaser and any transferee who purchases the Registrable
Securities, and the Company shall file all reports required to be filed by the
Company with the Commission in a timely manner, and shall take such other
actions as may be necessary to maintain such eligibility for the use of Form
SB-2.
(e) PRIORITY IN FILING. The Company covenants that beginning on the
Initial Closing Date and ending on the date that is one hundred and eighty (180)
days after the Registration Statement filed pursuant to Section 2(a) of this
Agreement becomes effective (PROVIDED that if, after the effective date of such
Registration Statement, the Purchaser shall be unable to sell Registrable
Securities pursuant to such Registration Statement for any number of days, the
provisions of this Section 2(e) shall apply for an additional number of days
equal to the number of days during which any Purchaser is unable to sell
Registrable Securities pursuant to such Registration Statement), the Company
will not file any Registration Statement, other than a Registration Statement
required by Section 2(a) hereof, without the written consent of the Purchaser.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall do each of the following:
(a) Prepare and file with the Commission the Registration
Statements required by Section 2 of this Agreement and such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectuses used in connection with such Registration
Statements, each in such form as to which the Purchaser and its counsel shall
not have objected, as may be necessary to keep the Registration Statements
effective at all times during the Registration Period, and, during the
Registration Period, comply with the provisions of the Securities Act with
respect to the disposition of all of the Registrable Securities of the Company
covered by the Registration Statements until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statements;
(b) Furnish to the Purchaser and its legal counsel identified
to the Company, promptly after the same is prepared and publicly distributed,
filed with the Commission, or received by the Company, a copy of the
Registration Statement, each preliminary prospectus, each final prospectus, and
all amendments and supplements thereto and such other documents, as the
Purchaser may reasonably request in order to facilitate the disposition of its
Registrable Securities;
(c) Furnish to the Purchaser and its counsel copies of any
correspondence
between the Company and the Commission with respect to any Registration
Statement or amendment or supplement thereto filed pursuant to this Agreement;
(d) Use all reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statements under such other
securities or blue sky laws of such jurisdictions as the Purchaser may
reasonably request, (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 at all
times 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 that in connection therewith, the Company shall not be
required to qualify as a foreign corporation or to file a general consent to the
service of process in any jurisdiction;
(e) Qualify such securities for trading on the Nasdaq OTC
Bulletin Board and list such securities on all the other national securities
exchanges on which any securities of the Company are then listed, and file any
filings required by Nasdaq and/or such other exchanges;
(f) As promptly as practicable after becoming aware thereof,
notify the Purchaser of any need to suspend use of the prospectus included in
the Registration Statement, including as a result of the occurrence of any
event, as a result of which the prospectus included in any 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 in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and to use its best efforts to promptly prepare a
supplement or amendment to such Registration Statement or other appropriate
filing with the Commission to allow the resumption of the use of such prospectus
and to deliver a number of copies of such supplement or amendment to the
Purchaser as the Purchaser may reasonably request;
(g) As promptly as practicable after becoming aware of such
event, notify the Purchaser (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the Commission or any stop order or
other suspension of the effectiveness of any Registration Statement at the
earliest possible time, and to use its best efforts to promptly obtain the
withdrawal of such stop order or other suspension of effectiveness (the
occurrence of any of the events described in paragraphs (f) and (g) of this
Section 3 is referred to herein as a "Blackout Event");
(h) During the period commencing upon (i) the Purchaser's
receipt of a notification pursuant to Section 3(f) above or (ii) the entry of a
stop order or other suspension of the effectiveness of the Registration
Statement described in Section 3(g) above, and ending at such time as (x) the
Company shall have completed the applicable filings (and if applicable, such
filings shall have been declared effective) and shall have delivered to the
Purchaser the documents required pursuant to Section 3(f) above or (y) such stop
order or other suspension of the effectiveness of the Registration Statement
shall have been removed, the Company shall be liable to remit the payments
required to be paid to the Purchaser pursuant to Section 2(b) above;
(i) Suspend the use of any prospectus used in connection with
any Registration
Statement only in the event, and for such period of time as, such a
suspension is required by the rules and regulations of the Commission;
(j) Enter into such customary agreements for secondary
offerings (including a customary underwriting agreement with the underwriter or
underwriters, if any) and take all such other actions reasonably requested by
the Purchaser in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities. Whether or not an underwriting
agreement is entered into and whether or not the Registrable Securities are to
be sold in an underwritten offering the Company shall:
(i) make such representations and warranties to the Purchaser and
the underwriter or underwriters, if any, in form, substance and
scope as are customarily made by issuers to selling stockholders and
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable Securities
and the underwriter or underwriters, if any, opinions of independent
counsel to the Company (which counsel and opinions shall be
reasonably satisfactory in form, scope and substance to Purchaser
and the underwriter(s), if any, and their counsel), (A) on and dated
as of the effective day of the applicable Registration Statement
(and in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto)
stating that (x) such Registration Statement complies in all
material respects with the requirements of the Securities Act and
the rules and regulations of the Commission thereunder, (y) such
Registration Statement does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and (z) the documents incorporated by reference in the prospectus
accompanying such Registration Statement, at the time they were
filed with the Commission or as amended, complied in all material
respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations
thereunder and, when read together with the other information in
such prospectus, do not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (B)
within fifteen (15) days following the filing of the Company's
Annual Report on Form 10-K for each fiscal year thereafter for a
period not to exceed three (3) years, an opinion of independent
counsel to the Company, updating the opinion referred to in clause
(A) of this paragraph;
(iii) cause to be delivered, immediately prior to the effectiveness
of the applicable Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), and at the beginning of each
fiscal year for a period not to exceed three (3) years following a
year during which the Company's independent certified public
accountants shall have reviewed any of the Company's books or
records, a "comfort" letter from the Company's independent certified
public accountants addressed to the Purchaser and each underwriter,
if any, stating that such accountants are independent public
accountants within the meaning of the Securities Act and the
applicable published rules and regulations thereunder, and otherwise
in customary form and covering
such financial and accounting matters as are customarily covered by
letters of the independent certified public accountants delivered in
connection with secondary offerings; such accountants shall have
undertaken in each such letter to update the same during each such
fiscal year in which such books or records are being reviewed so
that each such letter shall remain current, correct and complete
throughout such fiscal year; and each such letter and update
thereof, if any, shall be reasonably satisfactory to the Purchaser;
(iv) if an underwriting agreement is entered into, the same shall
include customary indemnification and contribution provisions to and
from the underwriters and procedures for secondary underwritten
offerings;
(v) deliver such documents and certificates as may be reasonably
requested by any purchaser of the Registrable Securities being sold
or the managing underwriter or underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement, if any; and
(vi) deliver to Purchaser on the effective day of the applicable
Registration Statement (and, in the case of an underwritten
offering, on the date of delivery of any Registrable Securities sold
pursuant thereto), and at the beginning of each fiscal quarter
thereafter, a certificate in form and substance as shall be
reasonably satisfactory to Purchaser, executed by an executive
officer of the Company and to the effect that all the
representations and warranties of the Company contained in the
Securities Purchase Agreement are still true and correct except as
disclosed in such certificate; the Company shall, as to each such
certificate delivered at the beginning of each fiscal quarter,
update or cause to be updated each such certificate during such
quarter so that it shall remain current, complete and correct
throughout such quarter; and such updates received by Purchaser
during such quarter, if any, shall have been reasonably satisfactory
to Purchaser.
(k) Make available for inspection by Purchaser, its
representative(s), any underwriter participating in any disposition pursuant
to a Registration Statement, and any attorney or accountant retained by the
Purchaser or underwriter all to be paid by Purchaser, all financial and other
records customary for purposes of Purchaser's and underwriters' due diligence
examination of the Company and review of any Registration Statement, all
filings made with the Commission subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration Statement, provided that such parties agree
to keep such information confidential;
(l) Cooperate with the Purchaser to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to any Registration Statement and to enable such
certificates for the Registrable Securities to be in such denominations or
amounts, as the case may be, as the Purchaser may reasonably request, and
registered in such names as the Purchaser may request; and, within five (5)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the Commission, the Company shall deliver,
and shall cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to the Purchaser)
an appropriate instruction and opinion of such
counsel; and
(m) Permit counsel to Purchaser to review the Registration
Statement and all amendments and supplements thereto within a reasonable period
of time (but not less than five (5) business days) prior to each filing, and to
incorporate those changes, if provided to the Company or its counsel within such
five (5) business day period, suggested by such counsel.
4. OBLIGATIONS OF THE PURCHASER.
In connection with the registration of the Registrable Securities, the
Purchaser shall have the following obligations:
(a) 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. The intended method or methods of
disposition and/or sale (Plan of Distribution) of the Registrable Securities as
so provided by the participating Purchaser shall be included without alteration
in any Registration Statement covering the Registrable Securities and shall not
be changed without written consent of the Purchaser. At least five (5) business
days prior to the first anticipated filing date of any Registration Statement,
the Company shall notify the Purchaser of the information the Company requires
from the Purchaser if the Purchaser elects to have any of its Registrable
Securities included in such Registration Statement; and
(b) The Purchaser agrees that, upon receipt of any notice from
the Company of the happening of any Blackout Event of the kind described in
Section 3(f) or 3(g) above, it will immediately discontinue disposition of its
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(g) shall be furnished to the
Purchaser.
5. EXPENSES OF REGISTRATION.
Other than underwriting discounts and commissions, all expenses
incurred in connection with registrations, filings or qualifications pursuant to
this Agreement, including, without limitation, all registration, listing, and
qualification fees, printing and accounting fees, and the fees and disbursements
of counsel for the Company, and the fees of one counsel to the Purchaser with
respect to each Registration Statement filed pursuant hereto, the total expense
including any expenses of this Agreement or as contemplated under this Agreement
shall not exceed one percent (1%) of the aggregate purchase price of the Initial
Debentures purchased by the Purchaser, shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) The Company will indemnify and hold harmless the
Purchaser, each of its
officers, shareholders, members, directors and partners, and each person, if
any, who controls the Purchaser within the meaning of the Securities Act or
the Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred (collectively,
"Claims") to which any of them may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon: (i) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement or any post-effective
amendment thereof or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading, (ii) any untrue or alleged 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 Commission) or the omission or alleged omission
to state therein any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state or foreign securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state or
foreign securities law (the matters in foregoing clauses (i) through (iii)
being, collectively, "Violations"). The Company shall, subject to the
provisions of Section 6(b) below, reimburse each Purchaser, promptly as such
expenses are incurred and are due and payable, for any legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise, including without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing
or defending any such action, suit, proceeding or investigation (whether or
not in connection with litigation in which the Purchaser is a party),
incurred by it in connection with the investigation or defense of any such
Claim, except that the obligation of the Company to reimburse any and all
legal or related costs shall be for only one counsel selected by the
Purchaser. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not (i) apply
to any Claim 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 or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof supplement thereto; (ii) with respect to any preliminary
prospectus, 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 final prospectus, as then amended
or supplemented, if such final prospectus was timely made available by the
Company pursuant to Section 3(b) hereof; (iii) be available to the extent
that such Claim is based upon a failure of the Purchaser 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(b)
hereof; or (iv) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. 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 Purchaser pursuant to Section 9. The Purchaser will
indemnify the Company and its officers and directors against any Claims
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 or on behalf of the Purchaser,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions as are applicable to
the Indemnification provided by the Company in this Section 6.
(b) Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person 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 that the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person; PROVIDED, HOWEVER, that an Indemnified Person shall have the right to
retain its own counsel with the reasonable 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
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding. In such event, the Company shall
pay for only one separate legal counsel for the Purchaser, and such legal
counsel shall be selected by the Purchaser. The failure to deliver written
notice to an indemnifying party within a reasonable time after the commencement
of any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person under this Section 6, except to the extent that the
indemnifying party is materially prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
(c) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of an unconditional and irrevocable release from all
liability in respect of such claim or litigation.
(d) Notwithstanding the foregoing, to the extent that any
provisions relating to indemnification or contribution contained in the
underwriting agreements entered into among the Company, the underwriters and the
Purchaser in connection with an underwritten public offering are in conflict
with the foregoing provisions, the provisions in such underwriting agreements
shall be controlling as to the Registrable Securities included in the public
offering; PROVIDED, HOWEVER, that if, as a result of this Section 6(d), any
Purchaser, its officers, shareholders, members, directors, partners or any
person controlling such Purchaser is or are held liable with respect to any
Claim for which they would be entitled to indemnification hereunder but for this
Section 6(d) in an amount which exceeds the aggregate proceeds received by such
Purchaser from the sale of Registrable Securities included in a registration
pursuant to such underwriting agreement (the "Excess Liability"), the Company
shall reimburse such Purchaser for such Excess Liability.
7 CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited under applicable law, the indemnifying party agrees to
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the Indemnified Person on the other hand in connection with the
statements or omissions which resulted in such Claim, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the Indemnified Person shall be determined by reference to, among other
things, whether the untrue statement of a material fact or the omission to state
a material fact on which such Claim is based relates to information supplied by
the indemnifying party or by the Indemnified Person, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the forgoing, (a) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation and (b) contribution by any seller of
Registrable Securities shall be limited in amount to the net proceeds received
by such seller from the sale of such Registrable Securities. The Company and the
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by PRO RATA allocation (even if the Purchaser
and any other party were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in this Section.
8 REPORTS UNDER EXCHANGE ACT.
With a view to making available to the Purchaser the benefits
of Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Purchaser to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
(i) make and keep public information available,
as those terms are understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
(iii) furnish to the Purchaser, so long as Purchaser
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
periodic 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 to
permit such Purchaser to sell such securities pursuant to Rule 144 without
registration.
9 ASSIGNMENT OF THE REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assigned by any Purchaser to any
transferee of all or any portion of the
Securities or Shares held by such Purchaser if: (a) such Purchaser 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; (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee and (ii) the Securities or Shares with
respect to which such registration rights are being transferred or assigned;
(c) at or before the time the Company receives the written notice
contemplated by clause (b) of this sentence, the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained herein; and (d) the transferee of the relevant Securities or Shares
complies with the restrictions on the Purchaser set forth in Section 4 of the
Securities Purchase Agreement.
10 AMENDMENT OF REGISTRATION RIGHTS.
Any provision 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 holders of 75% of the dollar value of the Registrable Securities from time
to time. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon the Purchaser and the Company.
11 MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of the
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be effective upon
personal delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.
COMPANY: Airtech International Group, Inc. 00000 Xxxxx Xxxxx, Xxxxx #000 Xxxxxx,
Xxxxx 00000 Attention: X.X. Comu, CEO Tel: (000) 000-0000 x000 Fax: (972)
000-0000 PURCHASER: PK Investors LLC c\o WEC Asset Management LLC 000 Xxxxxxxxx
Xxxx Xxxx Xxxxxx-xx-Xxxxxx, Xxx Xxxx 00000 Attention: Xxxxxx X. Xxxx Tel: (914)
000-0000 Fax: (000) 000-0000 WITH A COPY TO:Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxx Xxxx, Esq. Tel: (212)
000-0000 Fax: (000) 000-0000
(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.
(d) This Agreement shall be governed by and interpreted in
accordance with the
laws of the State of New York, except for provisions with respect to internal
corporate matters of the Company which shall be governed by the corporate
laws of the State of Wyoming. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions. This Agreement may be signed in one or
more counterparts, each of which shall be deemed an original. The headings of
this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. This Agreement has been
entered into freely by each of the parties, following consultation with their
respective counsel, and shall be interpreted fairly in accordance with its
terms, without any construction in favor of or against either party. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such validity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement
supersedes all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof.
(e) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth,
or referred to herein and in the other Primary Documents. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(h) The Company acknowledges that any failure by the Company
to perform its obligations under Section 2(a), or any delay in such performance
could result in direct damages to the Purchaser, and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay.
[SIGNATURE PAGE FOLLOWS, REMAINDER OF PAGE INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of February 22, 2000.
AIRTECH INTERNATIONAL GROUP, INC.
By:_______________________________
Name:
Title:
PK INVESTORS LLC
By: WEC Asset Management LLC, Manager
By:_______________________________
Name: Xxxxxx X. Xxxx
` Title: Managing Director
