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EXHIBIT 4.5
ANNEX IV
TO
SECURITIES PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 20, 2000
(this "Agreement"), is made by and between TITAN MOTORCYCLE CO. OF AMERICA, a
Nevada corporation, with headquarters located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and each entity named on a signature page
hereto (each, an "Initial Investor") (each agreement with an Initial Investor
being deemed a separate and independent agreement between the Company and such
Initial Investor, except that each Initial Investor acknowledges and consents to
the rights granted to each other Initial Investor under such agreement).
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of June 20, 2000, between the Initial
Investor and the Company (the "Securities Purchase Agreement"), the Company has
agreed to issue and sell to the Initial Investor shares of Series C Convertible
Preferred Stock of the Company having an aggregate stated value of up to
$2,300,000 (the "Preferred Stock"); and
WHEREAS, the Company has agreed to issue the Warrants to the
Initial Investor in connection with the issuance of the Preferred Stock; and
WHEREAS, the Preferred Stock (which term, for purposes of this
Agreement, shall include Periodic Amount Shares, as defined below) is
convertible into shares of Common Stock (the "Converted Shares"; which term, for
purposes of this Agreement, shall include shares of Common Stock of the Company
issuable in lieu of accrued dividends through the second anniversary of the
relevant Closing Date as contemplated by the Certificate of Designations) upon
the terms and subject to the conditions contained in the Certificate of
Designations, and the Warrants may be exercised for the purchase of shares of
Common Stock (the "Warrant Shares") upon the terms and conditions of the
Warrants; and
WHEREAS, to induce the Initial Investor 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, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Converted Shares and the Warrant Shares;
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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
Initial Investor hereby agree as follows:
1. DEFINITIONS; APPLICABILITY.
(a) DEFINITIONS. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Securities Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Effective Date" means the date the SEC declares a
Registration Statement covering Registrable Securities and otherwise meeting the
conditions contemplated hereby to be effective.
(ii) "Investor" means the Initial Investor and any
permitted transferee or assignee who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 hereof and who holds Preferred
Stock, Warrants or Registrable Securities.
(iii) "Potential Material Event" means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company; or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information.
(iv) "Register," "Registered," and "Registration" refer to
a registration effected by preparing and filing a 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 United States Securities and Exchange
Commission (the "SEC").
(v) "Registrable Securities" means the Converted Shares
and the Warrant Shares.
(vi) "Registration Statement" means a registration
statement of the Company under the Securities Act covering Registrable
Securities on Form S-3, if the Company is then eligible to file using such form,
and if not so eligible, on Form SB-2 or other appropriate form.
(vii) "Required Effective Date" means the relevant Initial
Required Effective Date or Increased Required Effective Date (as those terms are
defined below).
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(b) APPLICABILITY. The provisions of this Agreement apply to
Registration Statements for Registrable Securities applicable to transactions
consummated on the Initial Closing Date and on the Additional Closing Date
independently, except as the context may otherwise require.
2. REGISTRATION.
(a) MANDATORY REGISTRATION.
(i) The Company shall prepare and file with the SEC, as
soon as possible after the Closing Date but no later than a date (the "Required
Filing Date") which is thirty (30) days after the Closing Date, either a
Registration Statement or an amendment to an existing Registration Statement, in
either event registering for resale by the Investor a sufficient number of
shares of Common Stock for the Initial Investors to sell the Registrable
Securities (or such lesser number as may be required by the SEC, but in no event
less than the number of shares equal to the sum of (A) two hundred percent
(200%) of the aggregate number of shares into which the Preferred Stock issued
on the Closing Date and all dividends thereon through the second anniversary of
the Closing Date would be convertible at the time of filing of such Registration
Statement (assuming for such purposes that all shares of such Preferred Stock
had been eligible to be converted, and had been converted, into Converted Shares
in accordance with their terms, whether or not such accrual of dividends,
eligibility or conversion had in fact occurred as of such date) and (B) the
number of shares which would be issued upon exercise of all of the Warrants
issued on the Closing Date (assuming for such purposes that all Warrants were
eligible to be exercised and had been exercised in accordance with their terms,
whether or not such eligibility or exercise had in fact occurred as of such
date). The Registration Statement (W) shall include only the Registrable
Securities and the shares specifically listed on EXHIBIT 1 annexed hereto, and
(X) shall also state that, in accordance with Rule 416 and 457 under the
Securities Act, it also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon conversion of the Preferred Stock and
the exercise of the Warrants to prevent dilution resulting from stock splits, or
stock dividends. The Company will use its reasonable best efforts to cause such
Registration Statement to be declared effective on a date (the "Initial Required
Effective Date") which is no later than the earlier of (Y) five (5) days after
oral or written notice by the SEC that it may be declared effective or (Z) one
hundred twenty (120) days after the Closing Date.
(ii) If at any time (an "Increased Registered Shares
Date"), the number of shares of Common Stock represented by the Registrable
Shares, issued or to be issued as contemplated by the Transaction Agreements,
exceeds the aggregate number of shares of Common Stock then registered, the
Company shall either (X) amend the relevant Registration Statement filed by the
Company pursuant to the preceding provisions of this Section 2, if such
Registration Statement has not been declared effective by the SEC at that time,
to register, in the aggregate, at least the number of shares (the "Increased
Shares Amount") equal to (A) (I) the number of shares previously issued on
conversion of the Preferred Stock (including any Converted Shares issued in lieu
of cash dividends) plus (II) two hundred percent (200%) of the number of shares
into which the unconverted Preferred Stock and all dividends thereon through the
second anniversary of the Closing Date would be convertible at the Increased
Registered Shares Date (assuming for such purposes that all such
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shares of Preferred Stock had been issued, had been eligible to be converted,
and had been converted, into Converted Shares in accordance with their terms,
whether or not such issuance, accrual of dividends, eligibility or conversion
had in fact occurred as of such date) and (B) the number of shares which would
be issued upon exercise of all of the Warrants (assuming for such purposes that
all Warrants had been issued, had been eligible to be exercised and had been
exercised in accordance with their terms, whether or not such issuance,
eligibility or exercise had in fact occurred as of such date), or (Y) if such
Registration Statement has been declared effective by the SEC at that time, file
with the SEC an additional Registration Statement (an "Additional Registration
Statement") to register the number of shares equal to two hundred percent (200%)
of the excess of the Increased Shares Amount over the aggregate number of shares
of Common Stock already registered. The Company will use its reasonable best
efforts to cause such Registration Statement to be declared effective on a date
(each, an "Increased Required Effective Date") which is no later than (Q) with
respect to a Registration Statement under clause (X) of this subparagraph (ii),
the Initial Required Effective Date and (R) with respect to an Additional
Registration Statement, the earlier of (I) five (5) days after notice by the SEC
that it may be declared effective or (II) thirty (30) days after the Increased
Registered Shares Date.
(b) PAYMENTS BY THE COMPANY.
(i) If the Registration Statement covering the
Registrable Securities is not filed in proper form with the SEC by the Required
Filing Date, the Company will make payment to the Initial Investor in such
amounts and at such times as shall be determined pursuant to this Section 2(b).
(ii) If the Registration Statement covering the
Registrable Securities is not effective by the relevant Required Effective Date
or if the Investor is restricted from making sales of Registrable Securities
covered by any previously effective Registration Statement at any time (the date
such restriction commences, a "Restricted Sale Date") after the relevant
Effective Date other than during a Permitted Suspension Period (as defined
below), then the Company will make payments to the Initial Investor in such
amounts and at such times as shall be determined pursuant to this Section 2(b).
(iii) The amount (the "Periodic Amount") to be
paid by the Company to the Initial Investor shall be determined as of each
Computation Date (as defined below) and such amount shall be equal to the
Periodic Amount Percentage (as defined below) of the Purchase Price for all
Preferred Stock for the period from the date following the relevant Required
Effective Date or Restricted Sale Date, as the case may be, to the first
relevant Computation Date, and thereafter to each subsequent Computation Date.
The "Periodic Amount Percentage" means (A) one and one-half percent (1.5%) of
the Purchase Price of all Preferred Stock previously purchased for the period
beginning on the date following the relevant Required Filing Date, Required
Effective Date or Restricted Sale Date, as the case may be, and continuing to
the first relevant Computation Date and (B) one and one-half percent (1.5%) of
the Purchase Price of all Preferred Stock to each Computation Date thereafter.
By way of illustration and not in limitation of the foregoing, if the
Registration Statement is not declared effective until one hundred ninety-five
(195) days after the
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Closing Date, the Periodic Amount will aggregate four and one-half percent
(4.5%) of the Purchase Price of the Preferred Stock theretofore issued (1.5% for
days 121-150, plus 1.5% for days 151-180, plus 1.5% for days 181-195).
(iv) Each Periodic Amount will be payable by the
Company, except as provided in the other provisions of this subparagraph (iv),
in cash or other immediately available funds to the Investor (1) on the day
after the Required Filing Date or the Required Effective Date, as the case may
be, and (2) on the earlier of (A) each thirtieth day thereafter, (B) the third
business day after the date the Registration Statement is filed or is declared
effective, or (C) the third business day after the Registration Statement has
its restrictions removed after the Effective Date, as the case may be, in each
case without requiring demand therefor by the Investor. Notwithstanding the
provisions of the first sentence of this subparagraph (iv), at the option of the
Investor, exercisable in its sole and absolute discretion by written notice to
the Company at any time before the Periodic Amount is paid (a "Periodic Amount
Shares Notice"), all or a portion of the Periodic Amount shall be paid by the
issuance to the Investor of additional shares of Common Stock ("Periodic Amount
Shares"). The number of Periodic Amount Shares shall be equal to the relevant
Periodic Amount divided by the Conversion Price which would have been applicable
to the first day after the relevant Computation Date, but only to the extent
that the Investor would have been entitled to effect a conversion into such
number of shares in accordance with the terms of the Certificate of
Designations. The Company must deliver the Periodic Amount Shares to the
Investor within three (3) business days after the Investor issues the Periodic
Amount Shares Notice, unless otherwise agreed to in writing by the Investor in
each instance (such third date or later date agreed to by the Investor, a
"Delivery Date" as contemplated by the Certificate of Designations and the
Securities Purchase Agreement). If the Periodic Amount Shares are not delivered
by such date, the Investor shall have the right to demand that the provisions of
Section 5(c) of the Securities Purchase Agreement shall apply to such issuance,
based on one hundred thirty three and thirty-three hundredths percent (133.33%)
of the Periodic Amount or having the Periodic Amount be paid in cash as
contemplated herein. On issuance, Periodic Amount Shares are deemed to be
Registrable Securities.
(v) The parties acknowledge that the damages
which may be incurred by the Investor if the Registration Statement is not filed
by the Required Filing Date or if the Registration Statement has not been
declared effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended, may be difficult to ascertain. The parties agree that the Periodic
Amounts represent a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of such damages.
(vi) Notwithstanding the foregoing, the amounts
payable by the Company pursuant to this provision shall not be payable (i) to
the extent any delay in the effectiveness of the Registration Statement occurs
because of an act of, or a failure to act or to act timely by the Initial
Investor or its counsel, (ii) in the event all of the Registrable Securities may
be sold pursuant to Rule 144 or another available exemption under the Act
without volume or other restrictions or limits or (iii) with respect to a
Permitted Suspension Period.
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(vii) "Computation Date" means (A) the date which
is the earlier of (1) thirty (30) days after the Required Filing Date, any
relevant Required Effective Date or a Restricted Sale Date, as the case may be,
or (2) the date after the Required Filing Date, such Required Effective Date or
Restricted Sale Date on which the Registration Statement is filed (with respect
to payments due as contemplated by Section 2(b)(i) hereof) or is declared
effective or has its restrictions removed (with respect to payments due as
contemplated by Section 2(b)(ii) hereof), as the case may be, and (B) each date
which is the earlier of (1) thirty (30) days after the previous Computation Date
or (2) the date after the previous Computation Date on which the Registration
Statement is filed (with respect to payments due as contemplated by Section
2(b)(i) hereof) or is declared effective or has its restrictions removed (with
respect to payments due as contemplated by Section 2(b)(ii) hereof), as the case
may be.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall do each of the
following:
(a) Prepare promptly, and file with the SEC by the
Required Filing Date a Registration Statement with respect to not less than the
number of Registrable Securities provided in Section 2(a) above, and thereafter
use its reasonable best efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earliest of (i) the date that is the
third anniversary of the relevant Effective Date, (ii) the date when the
Investors may sell all Registrable Securities under Rule 144 without volume or
other restrictions or limits or (iii) the date the Investors no longer own any
of the Registrable Securities, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement 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
Registrable Securities of the Company covered by the Registration Statement
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 Statement;
(c) Permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time (but not less than three (3)
business days) prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects;
(d) Notify each Investor and such Investor's legal
counsel identified to the Company and which has requested by written notice to
the Company that it receive such notification
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(which, until further notice, shall be deemed to be ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., which firm has requested to receive such notification)
(each, an "Investor's Counsel"), and any managing underwriters immediately (and,
in the case of (i)(A) below, not less than three (3) business days prior to such
filing) and (if requested by any such person) confirm such notice in writing no
later than one (1) business day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement including changes in the provisions relating to the Investor, the
Registrable Securities, or the transactions reflected in the Transaction
Agreements (collectively, "Investor Matters") is submitted to the SEC for its
consideration or review; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC in respect of a Registration Statement (copies or,
in the case of oral comments, summaries of such comments shall be promptly
furnished by the Company to the Investors); and (D) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose; and (v) of the occurrence of any event that to the best knowledge of
the Company makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any 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. In
addition, the Company shall furnish the Investor's Counsel with copies of all
intended written responses to the comments contemplated in clause (C) of this
Section 3(d) to the extent such responses relate to Investor Matters not later
than one (1) business day in advance of the filing of such responses with the
SEC so that the Investors shall have the opportunity to comment thereon;
(e) Furnish to each Investor and such Investor's Counsel
(i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
(f) As promptly as practicable after becoming aware
thereof, notify each Investor of the happening of any event of which the Company
has knowledge, as a result of which the prospectus included in the 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
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statements therein, in light of the circumstances under which they were made,
not misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement or other appropriate filing with the SEC
to correct such untrue statement or omission, and deliver a number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request;
(g) As promptly as practicable after becoming aware
thereof, notify each Investor who holds Registrable Securities being sold (or,
in the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of a Notice of Effectiveness or any notice of effectiveness
or any stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from
time to time after the date of effectiveness of the Registration Statement, the
Company notifies the Investors in writing of the existence of a Potential
Material Event, the Investors shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until such Investor receives written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that the Company may not so suspend the right to such holders of Registrable
Securities during the periods the Registration Statement is required to be in
effect other than during a Permitted Suspension Period (and the applicable
provisions of Section 2(b) shall apply with respect to any such suspension other
than during a Permitted Suspension Period) . The term "Permitted Suspension
Period" means one or more such suspension periods during any consecutive
12-month period, which suspension periods, in the aggregate, do not exceed
twenty (20) days, provided, however, that no one such suspension period shall
begin less than ten (10) business days after the last day of the preceding
suspension (whether or not such last day was during or after a Permitted
Suspension Period). ;
(i) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the Registration
Statement on the "Nasdaq/SmallCap Market" of the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") within the meaning of
Rule 11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the quotation of the Registrable Securities on The
Nasdaq/SmallCap Market; 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. as such with respect to such Registrable
Securities;
(j) Provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the Effective
Date of the Registration Statement;
(k) Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investors may
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reasonably request, and, within three (3) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
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 Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel; and
(l) Take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the Registrable
Securities pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) 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 a particular Investor that such
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. At
least ten (10) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement. If at least two (2) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non- Responsive Investor"), then the Company
may file the Registration Statement without including Registrable Securities of
such Non-Responsive Investor;
(b) Each Investor, by such Investor's 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 the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(f), 3(g) of 3(h), above, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f), 3(g) of
3(h), and, if so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
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5. EXPENSES OF REGISTRATION.
(a) All reasonable expenses (other than underwriting
discounts and commissions of the Investor) incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company shall
be borne by the Company. In addition, a fee for a single counsel for the
Investors (as a group and not individually) equal to $3,500 for each
Registration Statement contemplated hereby and $2,000 for each post-effective
amendment to an effective Registration Statement, shall be borne by the Company.
(b) Except as disclosed in the Company's SEC Documents,
(i) neither the Company nor any of its subsidiaries has entered into, as of the
date hereof, nor shall the Company nor any of its subsidiaries, on or after the
date of this Agreement, enter into, any agreement with respect to its securities
that is inconsistent with the rights granted to the Investors in this Agreement
or otherwise conflicts with the provisions hereof and (ii) neither the Company
nor any of its subsidiaries has previously entered into any agreement granting
any registration rights with respect to any of its securities to any person.
Without limiting the generality of the foregoing, without the written consent of
the Investors holding a a sixty-seven (67%) percent interest of the Registrable
Securities (as calculated by the stated value of the Preferred Stock without any
reference to the Warrant Shares), the Company shall not grant to any person the
right to request the Company to register any securities of the Company under the
Securities Act.
6. INDEMNIFICATION. In the event any Registrable
Securities are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such Registrable Securities,
the directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person" or
"Indemnified Party"), 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 any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement 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 to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact 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 or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the
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matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to clause (b) of this Section 6, the Company shall
reimburse the Investors, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable 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) shall not (I) apply to a 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 or supplement thereto,
after such prospectus was made available by the Company pursuant to Section 3(c)
hereof; (II) be available to the extent such Claim is based on a failure of the
Investor to deliver or cause to be delivered the prospectus made available by
the Company or the amendment or supplement thereto made available by the
Company; (III) be available to the extent such Claim is based on the delivery of
a prospectus by the Investor after receiving notice from the Company under
Section 3(f), (g) or (h) hereof (other than a notice regarding the effectiveness
of the Registration Statement or any amendment or supplement thereto), 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 or delayed. Each Investor will indemnify the Company and
its officers, directors and agents (each, an "Indemnified Person" or
"Indemnified Party") 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 such Investor, expressly for use in
connection with the preparation of the Registration Statement or the amendment
or supplement thereto, or resulting from a failure of the Investor to deliver or
cause to be delivered the prospectus made available by the Company or the
amendment or supplement thereto made available by the Company, subject to such
limitations and conditions as are applicable to the Indemnification provided by
the Company to this Section 6. 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
Investors pursuant to Section 9.
(b) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), 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. In case any such action is brought against any Indemnified Person
or Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently
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incurred by such Indemnified Person or Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
Indemnified Person or Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and reasonable out-of-pocket expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the Indemnified
Person or Indemnified Party provided such counsel is of the opinion that all
defenses available to the Indemnified Party can be maintained without
prejudicing the rights of the indemnifying party. 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. 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.
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 (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) 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 (c) except where the seller has committed fraud (other
than a fraud by reason of the information included or omitted from the
Registration Statement as to which the Company has not given notice as
contemplated under Section 3 hereof) or intentional misconduct, 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 EXCHANGE ACT. With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration ("Rule 144"), 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 Securities Act and the
Exchange Act; and
(c) furnish to each Investor so long as such 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 Securities Act and the Exchange Act, (ii) a copy of the most
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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 THE REGISTRATION RIGHTS. The rights to
have the Company register Registrable Securities pursuant to this Agreement
shall be automatically assigned by the Investors to any transferee of the
Registrable Securities (or all or any portion of any unconverted Preferred Stock
or unexercised Warrant) only if: (a) 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, (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 with respect to which such registration rights
are being transferred or assigned, (c) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, (d) at or before the time the Company received 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 (e) such transfer of Registrable Securities is completed and disclosed to
the Company prior to the Effective Date or involves the transfer of Registrable
Securities resulting from the conversion of Preferred Stock having a stated
value of at least $200,000. In the event of any delay in filing or effectiveness
of the Registration Statement as a result of such assignment, the Company shall
not be liable for any damages arising from such delay, or the payments set forth
in Section 2(b) hereof arising from such delay.
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 Investors who
hold a sixty-seven (67%) percent interest of the Registrable Securities (as
calculated by the stated value of the Preferred Stock without any reference to
the Warrant Shares). Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor 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
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Notices required or permitted to be given hereunder
shall be given in the manner contemplated by the Securities Purchase Agreement,
(i) if to the Company or to the Initial Investor, to their respective address
contemplated by the Securities Purchase Agreement, and (ii) if to any other
Investor, at such address as such Investor shall have provided in writing to the
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Company, or at such other address as each such party furnishes by notice given
in accordance with this Section 11(b).
(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 for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. 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 coveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Investor for any reasonable legal fees and disbursements incurred
by the Investor in enforcement of or protection of any of its rights under this
Agreement.
(e) 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 or
the validity or enforceability of this Agreement in any other jurisdiction.
(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 headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(i) This Agreement may be executed in one or more
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 telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(j) The Company acknowledges that any failure by the
Company to perform its obligations under Section 3(a) hereof, or any delay in
such performance could result in loss to the Investors, and the Company agrees
that, in addition to any other liability the Company may have by reason of such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay, unless the same is the result of force majeure.
Neither party shall be liable for consequential damages.
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(k) 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. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
COMPANY:
TITAN MOTORCYCLE CO. OF AMERICA
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
INITIAL INVESTOR:
--------------------------------------------
[Print Name of Initial Investor]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
17
EXHIBIT 1
Shares Permitted to Be Included in Registration Statement
---------------------------------------------------------
Shares of
Common
Shareholder Name Stock Owned/Description of Right to Acquire
---------------- ----- -------------------------------------
Advantage Fund II Ltd. 75,000 Warrants, issued June 20, 2000, with
c/o ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ piggy back registration rights
Genessee International, Inc.
▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 98004-
4332
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇ Investment Group Limited 25,000 Warrants, issued June 20, 2000, with
c/o Mr. ▇▇▇▇ ▇▇▇▇▇▇ piggy back registration rights
▇▇▇▇ Capital Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇