REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 31,
2005, is entered into by and between Airtrax, Inc., a New Jersey corporation
(the "Company"), and Excalibur Limited Partnership (the "Investor").
WHEREAS:
A. In connection with the 8% Series B 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, to issue and sell to the
Investor (i) an 8% Series B 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.
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, and (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.
e. "Registration Statement" means a registration statement or
registration statements of the Company filed under the 1933 Act.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, as soon as
practicable, but in no event later than seventy five (75) days after the date of
effectiveness of the Registration Statement of the Company filed on February 2,
2005 (the "Scheduled Filing Date"), file with the SEC a separate Registration
Statement on Form S-3 (or Form SB-2 or S-2) covering the resale of all of the
Registrable Securities issued and issuable in connection with the Closing. In
the event that Form S-3 (or 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 120% 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 (in the event of no SEC review of the Registration
Statement) and no later than seventy five (75) days after the Scheduled Filing
Date (in the event of SEC review of the Registration Statement)(the "Scheduled
Effective Date"). If the Registration Statement is not filed by the Scheduled
Filing Date for any reason, the Company agrees that no Person other than the
Investor will have the right, without consent of the Investor, to include any
securities of the Company in the Registration Statement to be filed in
accordance with this Section 2.a.
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 relating to an
underwritten offering 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. 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 to the 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
(3) third, the securities requested to be registered by the
Investor and other holders of securities entitled to participate in the
registration, as of the date hereof, drawn from them pro rata based on the
number each has requested to be included in such registration.
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. 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 Xxxxxx Xxxxxxx
Xxxxx & Xxxxxx 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.
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 Xxxxxx Xxxxxxx Xxxxx & Xxxxxx 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. Ineligibility for Form S-3. In the event that Form S-3 is
unavailable for any registration of Registrable Securities hereunder, the
Company shall (i) register the sale of the Registrable Securities on Form SB-2
or another appropriate form and (ii) undertake to register the Registrable
Securities on Form S-3, as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
f. 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
therefor, if applicable), or both, as soon as practicable, but in any event not
later than thirty (30) days after the necessity therefor 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 thirty five (35) days after the
Additional Scheduled Filing Date (in the event of no SEC review of the
Registration Statement) and no later than seventy five (75) days after the
Additional Scheduled Filing Date (in the event of SEC review of the Registration
Statement) (each such date, an "Additional Scheduled Effective Date"). For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if at any time the number of Investor's shares available
under a Registration Statement is less than ninety percent (90%) of the number
of all Registrable Securities issued or issuable at that time. For purposes of
the calculation set forth in the foregoing sentence, any restrictions on
conversion of the Debenture or the exercisability of the Warrants shall be
disregarded and such calculation shall assume that the Debenture is then
convertible into Conversion Shares at the then-applicable Conversion Price and
the Warrants are exercisable at the then-applicable Exercise Price.
3. RELATED OBLIGATIONS.
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.f,
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 promptly prepare and file with the SEC a separate
Registration Statement with respect to the Registrable Securities issued and
issuable in connection with the Closing (on or prior to the Scheduled Filing
Date) for the registration of Registrable Securities pursuant to Section 2.a and
use its best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as possible after such filing
(but, in no event later than the Scheduled Effective Date). 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 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. The term "best efforts" shall mean, among other
things, that the Company shall submit to the SEC, within two business days after
the Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on the
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request.
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 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 (i) the Registration Statement at least two (2) days prior to its filing
with the SEC and (ii) all other Registration Statements and all amendments and
supplements to all Registration Statements within a reasonable number of days
prior to the their filing with the SEC and (b) not file any document in a form
to which Legal Counsel reasonably objects. The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement or any
amendment or supplement thereto without the prior approval of Legal Counsel,
which approval shall not be unreasonably withheld. The Company shall furnish to
Legal Counsel, without charge, (i) any correspondence from the SEC or the staff
of the SEC to the Company or its representatives relating to any Registration
Statement, (ii) promptly after the same is prepared and filed with the SEC, one
copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration Statement
and all amendments and supplements thereto.
d. The Company shall furnish to the Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, all
exhibits filed with such Registration Statement and each preliminary prospectus,
(ii) upon the effectiveness of any Registration Statement, one (1) copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto and (iii) such other documents, including copies of any
preliminary or final prospectus, as the Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by the Investor.
e. 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.e, (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.
f. In the event Investor who holds a majority of the Registrable
Securities being offered in the offering select underwriters for the offering,
the Company shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering; provided, however, that the Company shall have the right to consent to
the selection of such underwriter, which consent shall not be unreasonably
withheld.
g. 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
(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.
h. 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).
i. The Company shall hold in confidence and not make any disclosure of
information concerning the Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to the Investor and allow the Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
j. 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.l.
k. The Company shall cooperate with the Investor who holds Registrable
Securities being offered and, to the extent applicable, any managing underwriter
or underwriters, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or, if there is no managing
underwriter or underwriters, the Investor may reasonably request and registered
in such names as the managing underwriter or underwriters, if any, or the
Investor may request.
l. The Company shall provide a transfer agent and registrar of all
such Registrable Securities, which may be the Company, not later than the
effective date of such Registration Statement.
m. If requested by the managing underwriters or the Investor, the
Company shall: (i) immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters and the
Investor agrees should be included therein relating to the sale and distribution
of Registrable Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and any other terms
of the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any Registration Statement
if requested by the Investor or any underwriter of such Registrable Securities.
n. 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.
o. The Company shall make generally available to its security holders
as soon as practical, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 0000 Xxx) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement.
p. 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.
q. 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.
r. 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.
s. Notwithstanding anything to the contrary in Section 3.g, at any
time after the Registration Statement has been declared effective, the Company
may delay the disclosure of material, non-public information concerning the
Company the disclosure of which at the time is not, in the good faith opinion of
the Board of Directors of the Company and its counsel, in the best interest of
the Company and, in the opinion of counsel to the Company, otherwise required (a
"Grace Period"); provided, that the Company shall promptly (i) notify the
Investor in writing of the existence of material, non-public information giving
rise to a Grace Period and the date on which the Grace Period will begin, and
(ii) notify the Investor in writing of the date on which the Grace Period ends;
and, provided further, that during any consecutive 365-day period, there shall
be only one Grace Period, such Grace Period not to exceed 30 days in the
aggregate (an "Allowable Grace Period"). For purposes of determining the length
of a Grace Period above, the Grace Period shall begin on and include the date
the Investor receives the notice referred to in clause (i) above and shall end
on and include the date the Investor receives the notice referred to in clause
(ii) above. Upon expiration of the Allowable Grace Period, the Company shall
again be bound by the first sentence of Section 3.g with respect to the
information giving rise thereto. Notwithstanding anything to the contrary
contained herein, the Investor may convert some or all of the Debenture or
exercise Warrants during a Grace Period.
t. 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;
(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;
(iv) the Investor's inability to sell all Registrable Securities
pursuant to an effective Registration Statement (whether because of a failure to
keep the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, subject
to the Allowable Grace Period, to register sufficient shares of Common Stock or
otherwise); or
(v) the aggregate days of Grace Period exceed the Allowable Grace
Period.
Upon the occurrence of a Registration Default, the Company shall pay the
Investor 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
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. If the Company does not remit payment
of the amount due to the Investor, the Company will pay the Investor's
reasonable costs of collection, including attorneys' fees. 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.
a. At least seven (7) business days prior to the first anticipated
filing date of a Registration Statement, 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.
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.h or
the first sentence of Section 3.g, 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.h or the
first sentence of Section 3.g.
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
S-3 for the Registration Statement.
5. EXPENSES OF REGISTRATION.
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, and fees and disbursements of
counsel for the Company and reasonable fees and disbursements of Legal Counsel,
shall be paid by the Company; provided, however that any such expenses of Legal
Counsel shall be subject to a cap of $2,500.
6. INDEMNIFICATION.
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)
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.
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
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.
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;
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; and
c. furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
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.
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.
000X Xxxxxxx Xxxxxx
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.
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.
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:
Airtrax, Inc. /s/ Excalibur Limited Partnership
---------------------------------
By: Excalibur Capital Management, Inc.
Its General Partner
By: /s/ Xxxxx Xxxxx By:/s/ Xxxxxxx Xxxxxxx
------------------- ----------------------
Name: Xxxxx Xxxxx Name: Xxxxxxx Xxxxxxx, President
Its: President
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 B 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: Excalibur Limited Partnership
c/o Will Hechter
