Exhibit 4.2
GRANT
OF
REGISTRATION RIGHTS
OF
COMMON STOCK AND WARRANT STOCK
BY
MARCH MOTORS INTERNATIONAL, INC.
WHEREAS, March Motors International, Inc., a Minnesota corporation
("March"), and Norton Motorcycles Limited, a company incorporated under the laws
of Great Britain ("Norton") have entered into an Asset Purchase Agreement dated
March 15, 1998 (the "Asset Purchase Agreement"); and
WHEREAS, a portion of the purchase price to be paid by March under
such agreement is to be paid by delivery to Norton (or its nominees, as the case
may be) of: (i) a certain number of shares of common stock of March, par value
$.01 per share ("Common Stock"), as provided in Paragraph 2 of the Asset
Purchase Agreement; and (ii) certain warrants to acquire 550,000 additional
shares of Common Stock, exercisable at $3.00 per share (the "Warrants"); and
WHEREAS, such shares of Common Stock issued to Norton pursuant to
the Asset Purchase Agreement or which may be acquired upon exercise of the
Warrants will be "restricted securities"; and
WHEREAS, as a condition of closing of the transactions contemplated
by the Asset Purchase Agreement, March has agreed to grant to Norton (or its
nominees) certain registration rights with respect to some of the shares of
Common Stock to be issued pursuant to the Asset Purchase Agreement and all
shares of Common Stock to be acquired upon exercise of the Warrants; and
WHEREAS, Pursuant to the Asset Purchase Agreement, ▇▇▇▇▇▇ has the
right to assign its shares of the Company to nominees of ▇▇▇▇▇▇'▇ choosing; and
WHEREAS, ▇▇▇▇▇▇ has assigned a certain number of the "Registrable
Shares" (as defined below) to Cataract N.V., a Netherlands Antilles company
("Cataract")and Global Coin Corporation, a British Columbia company ("Global");
NOW, THEREFORE, it is hereby agreed as follows:
AGREEMENT
1.) Definitions.
(a) As used herein, "Registrable Shares" shall mean 495,000 and
55,000 shares of the Common Stock issued to Cataract and Global (or their
respective assignees), respectively, at the Closing, and any and all shares
of Common Stock issuable to Cataract or Global (or their respective
assignees) upon exercise of the Warrants, which shares (i) have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), and
(ii) are not eligible for resale by the holder thereof pursuant to Rules
144(k) (or any successor provision thereto).
(b) The determination of a "majority of Registrable Shares" or
similar term used herein shall be made by reference to the 550,000 shares
issued to Cataract and Global pursuant to the Asset Purchase Agreement and
having rights hereunder, together with shares issued or issuable to
Cataract and Global (or their respective assignees) upon exercise of the
Warrants, computed by reference only to all such shares as a single group
but without reference to any other shares of March which may have, either
at Closing or thereafter, registration rights.
(c) All other capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Asset Purchase Agreement.
2.) Required Registration.
(a) Following a registration relating to an initial public offering
(an "Initial Public Offering") of March's equity securities under Section 5
of the Securities Act and upon request of holders of at least a majority of
Registrable Shares March shall prepare and file a registration statement
under the Securities Act covering the Registrable Shares which are the
subject of such requests and shall use its best efforts to cause such
registration statements to become effective; provided, however:
(1) All Registrable Shares covered by such registration
statement shall be converted into Common Stock
prior to effectiveness of such registration
statement;
(2) March shall not be obligated to cause a
registration statement to become effective prior to
ninety (90) days following the effective date of a
Company-initiated registration (other than a
registration effected solely to qualify an employee
benefit plan or to effect a business combination
pursuant to Rule 145);
(3) March shall not be obligated to prepare and file
such registration statement until March becomes
eligible to use Securities Act Form S-3 or until
twenty-four (24) months following the effective
date of the registration statement for the Initial
Public Offering, whichever first occurs; and
(4) March shall not be obligated to effect more than
one such registration pursuant to which the holders
of Registrable Shares have been provided with the
opportunity to register their Registrable Shares
under this Section 2, such registration has been
declared or ordered effective and the securities
offered pursuant to such registration have been
sold.
(b) Upon the receipt of a request from holders of Registrable
Shares described in Section 2(a), March shall promptly give written notice
to all other record holders of Registrable Shares that such registration is
to be effected. March shall include in such
2.
registration statement such Registrable Shares for which is has received
written requests to register by such other record holders within fifteen
(15) days after March's written notice to such other record holders.
(c) In the event that the holders of a majority of Registrable
Shares for which registration has been requested pursuant to this Section
determine for any reason not to proceed with a registration at any time
before the registration statement has been declared effective by the
Securities and Exchange Commission (the "Commission"), and such holders
thereafter request March to withdraw such registration statement, the
holders of such Registrable Shares agree to bear their own expenses
incurred in connection therewith and to reimburse March for the expenses
incurred by it attributable to such registration statement, and in such
event, the holders of such Registrable Shares shall not be deemed to have
exercised their right to require March to register Registrable Shares
pursuant to this Section 2.
3.) Incidental Registration.
(a) If March shall determine to register any of its equity
securities pursuant to a registration statement to be filed with the
Commission on or prior to August 15, 1999, either for its own account or
the account of a security holder or holders, other than: (i) March's
Initial Public Offering; (ii) a registration relating solely to employee
benefit plans; or (iii) a registration solely to effect a business
combination pursuant to Rule 145 promulgated under the Securities Act,
March shall:
(1) promptly give to each record holder of Registrable
Shares written notice thereof; and
(2) use its best efforts to include in such
registration (and any related qualification under
blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable
Shares specified in a written request or requests,
made within fifteen (15) days after March's written
notice to record holders of Registrable Shares;
provided, however, that all such Registrable Shares
to be so registered shall be converted into Common
Stock prior to sale pursuant to such registration
statement, and that for purposes of this sentence,
"best efforts" shall not require March to reduce
the amount of sale price of the securities it
proposes to distribute for its own account.
(b) If any registration pursuant to this section shall be
underwritten in whole or in part, March may require that the Registrable
Shares requested for inclusion pursuant to this Section 3 be included in
the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters (including, without
limitation, provisions requiring indemnification differing from or in
addition to the provisions requiring indemnification hereunder). In
addition, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of Registrable Shares to be
included in the registration and underwriting. In such event, March shall
so advise all
3.
holders of Registrable Shares which would otherwise be registered and
underwritten pursuant hereto, and the number of shares of securities that
may be included in the registration and underwriting shall be allocated
among all holders of Registrable Shares requesting inclusion in the
registration in proportion, as nearly as practicable, to the respective
amounts of Registrable Shares originally requested by such holders to be
included in the registration statement. Those securities which are thus
excluded from the underwritten public offering, and any other Common Stock
owned by such holders, shall be withheld from the market by the holders
thereof for a period, not to exceed one hundred eighty (180) days, which
the managing underwriter reasonably determines is necessary in order to
effect the underwritten public offering.
(c) If any holder of Registrable Shares to be included disapproves
of the terms of any such underwriting, such holder may elect to withdraw
therefrom by written notice to March and the managing underwriter. Any
Registrable Shares excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
(d) March shall have the right to terminate or withdraw any
registration initiated by it under this Section 3 prior to the
effectiveness of such registration whether or not any holder of Registrable
Shares has elected to include securities in such registration.
4.) Registration Procedures. If and whenever March is required by
the provisions of Section 2 or Section 3 of this Grant to effect the
registration of any Registrable Shares under the Securities Act, March will:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Shares, and with respect to a registration
under Section 2, use its best efforts to cause such registration statement
to become and remain effective for a period of twelve (12) months or such
lesser time if all such Registrable Shares have been sold pursuant to such
registration statement;
(b) With respect to registrations under Section 2, prepare and file
with the Commission such amendments to such registration statement and
supplements to the prospectus contained therein as may be necessary to keep
such registration statement effective for at least twelve (12) months or
such lesser time if all such Registrable Shares have been sold pursuant to
such registration statement;
(c) Furnish to the security holders participating in such
registration and to the underwriters of the Registrable Shares being
registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
security holders and underwriters may reasonably request in order to
facilitate the public offering of such Registrable Shares;
` (d) Use its best efforts to register or qualify the Registrable
Shares covered by such registration statement under such state securities
or blue sky laws of such jurisdictions as such participating holders may
reasonably request within ten (10) days following the original filing of
such registration statement, except that March shall not for any purpose
4.
be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified;
(e) Notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
and
(f) Prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when the prospectus relating to
such securities is required to be delivered under the Securities Act, any
event shall have occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading.
5.) Expenses. With respect to any registration requested pursuant
to Section 2 (except as otherwise provided in such section with respect to
registrations voluntarily terminated at the request of the requesting security
holders) and with respect to each inclusion of securities in a registration
statement pursuant to Section 3, March shall bear the following fees, costs and
expenses: all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for March, fees and disbursements of
counsel for the underwriter or underwriters of such securities (if March is
required by the underwriter or underwriters to bear such fees and
disbursements), all internal Company expenses, the premiums and other costs of
policies of insurance of March against liability arising out of the public
offering, and all legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security holders,
underwriting discounts and commissions and transfer taxes for selling security
holders and any other expenses incurred by the selling holders not expressly
included above shall be borne by the selling security holders.
6.) Indemnification.
(a) March will indemnify each holder of Registrable Shares to be
included in a registration pursuant to Section 2 or 3 hereof, each of its
officers, directors and partners and such holder's legal counsel and
independent accountants, and each person controlled by or controlling such
holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected
pursuant to Section 2 or 3 hereof, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto,
incident to any such registration, qualification
5.
or compliance, or based on any omission (or alleged omission) to state
therein 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, or any violation by March of the Securities Act or
the Securities Exchange Act of 1934, as amended, or securities act of any
state or any rule or regulation thereunder, and relating to action or
inaction required by March in connection with any such registration,
qualification or compliance, and will reimburse each such holder, each of
its officers, directors and partners and such holder's legal counsel and
independent accountants, and each person controlled by or controlling such
holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that March will not be liable in any
such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to March by an instrument
duly executed by such holder or underwriter and stated to be specifically
for use therein; and provided, further, that March will not be liable to
any such person or entity with respect to any such untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus that is corrected in the final prospectus filed with the
Commission pursuant to Rule 424(b) promulgated under the Securities Act (or
any amendment or supplement to such prospectus) if the person asserting any
such loss, claim, damage or liability purchased securities but was not sent
or given a copy of the prospectus (as amended or supplemented) at or prior
to the written confirmation of the sale of such securities to such person
in any case where such delivery of the prospectus (as amended or
supplemented) is required by the Securities Act, unless such failure to
deliver the prospectus (as amended or supplemented) was a result of March's
failure to provide such prospectus (as amended or supplemented).
(b) Each holder will, if shares held by such holder are included in
the securities as to which such registration, qualification or compliance
is being effected, indemnify March, each of its directors and officers and
its legal counsel and independent accountants, each underwriter, if any, of
March's securities covered by such a registration statement, each person
who controls March or such underwriter within the meaning of Section 15 of
the Securities Act, and each other such holder, each of its officers,
directors and partners and each person controlling such holder within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse March, such
holders, such directors, officers, legal counsel, independent accounts,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
6.
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to March
by an instrument duly executed by such holder and stated to be specifically
for use therein; provided, however, that the obligations of such holders
hereunder shall be limited to an amount equal to the gross proceeds before
expenses and commissions to each such holder of shares to be registered
sold as contemplated herein.
(c) Each party entitled to indemnification under this section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting thereof, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement, except to the extent, but only to the extent, that the
Indemnifying Party's ability to defend against such claim or litigation is
impaired as a result of such failure to give notice. 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 Party
of a release from all liability in respect to such claim or litigation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 31st day of March, 1998.
MARCH:
MARCH MOTORS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Chairman
CATARACT:
CATARACT, N.V.,
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Its: Managing Director
GLOBAL:
GLOBAL COIN CORPORATION,
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Its: President