Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 3, 1998 (the
"AGREEMENT"), is made by and between EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY, a Minnesota corporation (the "COMPANY"), and the
investors named on the signature pages hereto (the "INITIAL INVESTORS").
W I T N E S S E T H :
WHEREAS, in connection with the Securities Purchase Agreement dated
September 3, 1998 between the Initial Investors and the Company (the
"PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to
the conditions of said Purchase Agreement, to issue and sell to the Initial
Investors Ten Million U.S. Dollars ($10,000,000) face amount of the Company's
Series B Convertible Preferred Stock ("SERIES B PREFERRED SHARES")
convertible into shares of the Company's common stock, par value $0.01 per
share (the "COMMON STOCK"), and Three Million U.S. Dollars ($3,000,000) Face
amount of the Company's Series C Convertible Preferred Stock ("SERIES C
PREFERRED SHARES" and, together with the Series B Preferred Shares, the
"PREFERRED SHARES"), convertible into shares of Common Stock, together with
Stock Purchase Warrants (the "WARRANTS") to purchase additional shares of
Common Stock. The shares of Common Stock of the Company issuable upon
conversion of or otherwise pursuant to the Preferred Shares are collectively
referred to herein as the "COMMON SHARES." The shares of Common Stock
issuable upon exercise or otherwise pursuant to the Warrants are collectively
referred to as the "WARRANT SHARES." The rights and privileges of the
holders of the Series B Preferred Shares are set forth in the Amended
Statement of Designation of Rights, Preferences and Limitations of Series B
Convertible Preferred Stock of the Company ("SERIES B CERTIFICATE OF
DESIGNATION"). The rights and privileges of the holders of the Series C
Preferred Shares are set forth in the Statement of Designation of Rights,
Preferences and Limitations of Series C Convertible Preferred Stock of the
Company ("SERIES C CERTIFICATE OF DESIGNATION"and, collectively with the
Series B Certificate of Designations, the "CERTIFICATES OF DESIGNATION").
WHEREAS, to induce the Initial Investors 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 with respect to the Common
Shares and Warrant Shares.
Page 2
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 Investors hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
(a) "HOLDERS" are stockholders of the Company who, by virtue of
agreements with the Company, are entitled to include their securities in
certain Registration Statements filed by the Company.
(b) "INVESTORS" means the Initial Investors and any transferees or
assignees of the Initial Investors who agree to become bound by the
provisions of this Agreement in accordance with Section 9 hereof.
(c) "REGISTRABLE SECURITIES" means the Common Shares and Warrant
Shares issued or issuable with respect to the Preferred Shares and the
Warrants (without regard to any limitations on conversion or exercise) and
any shares of capital stock issued or issuable, from time to time (with any
adjustments), on or in exchange for or otherwise with respect to the
foregoing.
(d) "REGISTRATION PERIOD" means the period between the date of
this Agreement and the earlier of (i) the date on which all of the
Registrable Securities have been sold and no further Registrable Securities
may be issued in the future, or (ii) the date on which all the Registrable
Securities relating to the Preferred Shares (in the opinion of Investors'
counsel) may be immediately sold without registration and without restriction
(including without limitation as to volume by each holder thereof) as to the
number of Registrable Securities to be sold pursuant to Rule 144 (as defined
herein) or otherwise.
(e) "REGISTRATION STATEMENT" means, collectively, each
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the 1933 Act pursuant to the terms hereof.
(f) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a Registration Statement
or Statements 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 applicable rules and regulations
thereunder, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
2. REGISTRATION.
Page 3
(a) MANDATORY REGISTRATION. The Company will file a Registration
Statement on Form S-3, with the SEC registering the Registrable Securities
and no other securities (other than (i) shares of Common Stock issuable upon
exercise of warrants issued to Shoreline (as defined below) in connection
with the transactions contemplated hereby and under the Securities Purchase
Agreement or (ii) issued or issuable to holders with registration rights
pursuant to previously granted stock purchase warrants as described on
Schedule 3.3 of the Purchase Agreement) for resale within twenty (20)
business days of the closing of the initial purchase of the Series B
Preferred Shares (the "CLOSING DATE"). To the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), the
Registration Statement shall include the Common Shares and the Warrant Shares
and such indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Preferred Shares and exercise of the
Warrants (i) to prevent dilution resulting from stock splits, stock dividends
or similar transactions, or (ii) by reason of changes in the conversion price
of the Preferred Shares in accordance with the terms thereof. The number of
shares of Common Stock initially included in such Registration Statement
shall be no less than (a) the number of shares of Common Stock issuable upon
exercise of the Warrants as if all of the Warrants were then issued plus (b)
two (2) times the number of Common Shares that would be issuable upon
conversion of the Series B Preferred Shares and the Series C Preferred Shares
(as if all of the Series C Preferred Shares were then issued) at the Market
Price (as defined in the Series B Certificate of Designations) on the Closing
Date. Notwithstanding the foregoing, if the SEC prohibits the Company from
registering the resale of the Common Shares issuable upon the conversion of
the Series C Preferred Shares (the "SERIES C CONVERSION SHARES") or exercise
of the Warrants issuable in connection with the Series C Preferred Shares
(the "SERIES C WARRANT SHARES"), the Company shall be entitled to amend the
Registration Statement so as to exclude such Series C Conversion Shares and
Series C Warrant Shares. In such event, the Company will, within twenty (20)
business days of the issuance of the Series C Preferred Shares, file a new
Registration Statement with respect to the Series C Conversion Shares and
Series C Warrant Shares, and such Registration Statement shall, together with
the Registration Statement with respect to the Common Shares issuable in
conversion of the Series B Preferred Shares, constitute a "Registration
Statement" subject to the terms and conditions of this Agreement; provided
that the Required Effective Date (as defined below) for such additional
Registration Statement shall be the 90th day following the Second Closing
(or, if (a) such Registration Statement is reviewed by the SEC, or (b) if the
SEC takes the position that registration of the resale of the Series C
Conversion Shares and Series C Warrant Shares by the Investors is not
available under applicable laws, rules and regulation and that the Company
must register the offering of such Registrable Securities as a primary
offering by the Company, the 120th day following the Second Closing).
The Company shall use its best efforts to cause such Registration Statement
to be declared effective by the SEC as soon as practicable after filing and
in any event no later than the ninetieth (90th) day following the Closing
Date (the "REQUIRED EFFECTIVE DATE"); provided, however, that so long as the
Company has filed such
Page 4
Registration Statement within twenty (20) business days of the Closing Date,
(a) if the SEC takes the position that registration of the resale of the
Registrable Securities by the Investors is not available under applicable
laws, rules and regulation and that the Company must register the offering of
the Registrable Securities as a primary offering by the Company, or (b) if
the Registration Statement receives SEC review, then the Required Effective
Date shall be the one hundred twentieth (120th) day after the Closing Date.
In the case of an SEC response described in clause (a), the Company shall,
within twenty (20) business days following the date the Company receives
such response from the SEC, file a registration statement as a primary
offering. Such best efforts shall include, but not be limited to, promptly
responding to all comments received from the staff of the SEC. Should the
Company receive notification from the SEC that the Registration Statement
will receive no action or no review from the SEC, the Company shall cause
such Registration Statement to become effective within five (5) business days
of such SEC notification. Once declared effective by the SEC, the Company
shall cause such Registration Statement to remain effective throughout the
Registration Period, except as permitted pursuant to Section 3(a).
If (i) at any time after effectiveness of the Registration Statement
sales cannot be made thereunder for any reason for a period of more than ten
(10) consecutive business days, or thirty (30) days in the aggregate, during
any twelve (12) month period or (ii) the Common Stock is not listed or
included for quotation on Nasdaq, Nasdaq SmallCap, the NYSE or AMEX for more
than an aggregate of ten (10) business days in any twelve month period, the
Company will thereafter make cash payments to the Investors as partial
compensation for such delay in an amount equal to one percent (1%) of the
Outstanding Face Amount (as defined below) for the first month that sales
cannot be made under the effective Registration Statement or the Common Stock
is not listed or included for quotation on Nasdaq, Nasdaq SmallCap, the NYSE
or AMEX, two percent (2%) of said Outstanding Face Amount for the second
month thereafter, and three percent (3%) of said Outstanding Face Amount for
each month thereafter, continuing through the date that sales can be made
under the effective Registration Statement or the Common Stock is not listed
or included for quotation on Nasdaq, Nasdaq SmallCap, the NYSE or AMEX
("ILLIQUIDITY PAYMENTS"). "OUTSTANDING FACE AMOUNT" shall mean the sum of
(x) the Face Amount of the then-outstanding Preferred Shares and (y) in the
case of Registrable Securities issued upon conversion of Preferred Shares and
not previously sold by such Investor, the Face Amount of the Preferred Shares
from which such Registrable Securities were converted. Such payments will be
prorated on a daily basis for partial months and will be paid to each
Investor in cash within five (5) business days following the end of each
month during which Illiquidity Payments accrue or, at each Investor's option,
may be added to the Face Value of the Preferred Shares and thereafter be
convertible into Common Stock at the Conversion Price (as defined in the
Certificate of Designation).
(b) LATE REGISTRATION PAYMENTS. If the Registration Statement
required pursuant to Section 2(a) above has not been declared effective by
the Required Effective Date, the Company will make cash payments to each
Investor as
Page 5
partial compensation for such delay (the "LATE REGISTRATION PAYMENTS"). The
Late Registration Payments will be equal to one percent (1%) of the
Outstanding Face Amount for the first month following the Required Effective
Date, two percent (2%) of said Outstanding Face Amount for the second and
third months following the Required Effective Date, and three percent (3%) of
said Outstanding Face Amount for each month thereafter, continuing through
the date the Registration Statement is declared effective by the SEC. The
Late Registration Payments will be prorated on a daily basis for partial
months and will be paid to the Initial Investors in cash within five (5)
business days following the earlier of: (i) the end of each month following
the Required Effective Date, or (ii) the effective date of the Registration
Statement. Nothing herein shall limit the Investors' right to pursue actual
damages for the Company's failure to file a Registration Statement or to have
it declared effective by the SEC on or prior to the Required Effective Date
in accordance with the terms of this Agreement.
(c) LIMITATION ON LATE REGISTRATION PAYMENTS AND ILLIQUIDITY
PAYMENTS. Notwithstanding anything in this Agreement or in the Certificate
of Designation with respect to the Series B Preferred Shares or the Series C
Preferred Shares to the contrary, (i) the aggregate Late Registration
Payments payable hereunder, if any, together with any Default Amounts (as
defined in the Certificates of Designation) payable with respect to any of
the Preferred Shares pursuant to the Certificates of Designation as a result
of a failure to timely obtain effectiveness of the Registration Statement,
shall not exceed 30% of the Face Amount of the Preferred Shares outstanding
on the date of payment, and (ii) the aggregate Illiquidity Payments payable
with respect to any period after effectiveness of the Registration Statement
during which sales cannot be made thereunder or during which the Common
Stock is not listed or included for quotation on Nasdaq, Nasdaq SmallCap, the
NYSE or AMEX, if any, together with any Default Amounts payable with respect
to any of the Preferred Shares as a result of such period of ineffectiveness
pursuant to the Certificates of Designation, shall not exceed 30% of the Face
Amount of the Preferred Shares outstanding on the date of payment. To the
extent the Late Registration Payments or Illiquidity Payments, as applicable,
together with any Default Amounts would exceed the respective limits
specified above in this Section 2(c), the aggregate Default Amounts will be
reduced so that the aggregate Late Registration Payments or Illiquidity
Payments, when added to the Default Amounts paid with respect to such event,
do not exceed such limits, and no further Late Registration Payments or
Illiquidity Payments, as applicable, will thereafter be payable with respect
to any such event.
(d) PIGGYBACK REGISTRATIONS. If, at any time prior to the
expiration of the Registration Period, the Registration Statement is not
effective with respect to all of the Registrable Securities and the Company
decides to register any of its securities for its own account or for the
account of others (excluding registrations by the Company on Form S-4 or S-8
or their equivalents relating to equity securities to be issued solely in
connection with an acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans),
the Company will promptly give the Investors written notice thereof, and will
use
Page 6
its best efforts to include in such registration all or any part of the
Registrable Securities so requested by such Investors (excluding any
Registrable Securities previously included in a Registration Statement).
Each Investor's request for registration must be given to the Company in
writing within fifteen (15) days after receipt of the notice from the
Company. If the registration for which the Company gives notice is a public
offering involving an underwriting, the Company will so advise the Investors
as part of the above-described written notice. In such event, if the
managing underwriter(s) of the public offering impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, such limitation would be
necessary to effect an orderly public distribution, then the Company will be
obligated to include only such limited portion, if any, of the Registrable
Securities with respect to which such Investors have requested inclusion
hereunder. Any exclusion of Registrable Securities shall be made pro-rata
among all Holders of the Company's securities seeking to include shares of
Common Stock in proportion to the number of shares of Common Stock sought to
be included by such Holders; provided, however, that the Company will not
exclude any Registrable Securities unless the Company has first excluded all
outstanding securities the Holders of which are not entitled by right to
inclusion of securities in such Registration Statement or are not entitled
pro rata inclusion with the Registrable Securities. No right to registration
of Registrable Securities under this Section 2(d) shall be construed to limit
in any way the registration required under Section 2(a) above. The
obligations of the Company under this Section 2(d) will expire upon the
earlier of: (i) the effectiveness of the Registration Statement filed
pursuant to Section 2(a) above; (ii) after the Company has afforded the
opportunity for the Investors to exercise registration rights under this
Section 2(d) for two registrations; provided, however, that any Investor who
shall have had any Registrable Securities excluded from any Registration
Statement in accordance with this Section 2(d) shall be entitled to include
in any additional Registration Statement filed by the Company the Registrable
Securities so excluded; or (iii) when all of the Registrable Securities held
by any Investor may be sold by such Investor under Rule 144 under the 1933
Act without being subject to any volume restrictions.
(e) ELIGIBILITY FOR FORM S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of
the sale by the Investors of the Registrable Securities. The Company shall
file all reports required to be filed by the Company with the SEC in a timely
manner so as to preserve its eligibility for the use of Form S-3.
3. ADDITIONAL OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall have the
following additional obligations:
(a) The Company shall keep the Registration Statement effective
pursuant to Rule 415 under the 1933 Act at all times during the Registration
Period as defined in Section 1(d) above; provided, however, that the
Investors agree that (i) use of the prospectus under the Registration
Statement may be suspended pursuant
Page 7
to Section 3(f) and (ii) upon receipt of any notice from the Company that, in
the judgment of the Company's Board of Directors, it is advisable to suspend
use of the prospectus for a discrete period of time due to pending corporate
developments, public filing with the SEC or similar events, the Investors
will forthwith discontinue, for a period of up to ten (10) consecutive
business days, disposition of such Registrable Securities covered by such
Registration Statement or prospectus until advised in writing by the Company
that use of the applicable prospectus may be resumed, and until each such
Investor has received copies of any additional or supplemented filings that
are incorporated or deemed to be incorporated by reference in such
prospectus. The Company shall use all reasonable efforts to ensure that the
use of the prospectus may be resumed as soon as practicable, and in any event
shall not be entitled to require the Investors to suspend use of any
prospectus for more than thirty (30) days in any twelve month period.
(b) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Company
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 Company shall 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 permit sales pursuant to the
Registration Statement at all times during the Registration Period, and,
during such period, shall comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until the termination of the
Registration Period, or if earlier, 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) The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
(i) promptly after the same is prepared and publicly distributed, filed with
the SEC or received by the Company, one copy of the Registration Statement
and any amendment thereto; each preliminary prospectus and final prospectus
and each amendment or supplement thereto; and, in the case of the
Registration Statement required under Section 2(a) above, each letter written
by or on behalf of the Company to the SEC and each item of correspondence
from the SEC or the staff of the SEC, in each case relating to such
Registration Statement (other than any portion of any item thereof which
contains information for which the Company has sought confidential
treatment); and (ii) such number of copies of a prospectus, including a
preliminary 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.
(d) The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under such other
Page 8
securities or blue sky laws of such jurisdictions as each Investor who holds
(or has the right to hold) Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations
and qualifications as may be necessary to maintain the effectiveness thereof
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. Notwithstanding the foregoing provision, the
Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (ii) subject
itself to general taxation in any such jurisdiction, (iii) file a general
consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause material expense or burden to the Company, or (v)
make any change in its charter or bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of
the Company and its stockholders.
(e) In the event Investors who hold a majority in interest of the
Registrable Securities being offered in an offering pursuant to a
Registration Statement or any amendment or supplement thereto under Section
2(a) or 3(b) select underwriters reasonably acceptable to the Company for
such 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
managing underwriter of such offering.
(f) The Company shall notify (by telephone and also by facsimile
and reputable overnight courier) each Investor who holds Registrable
Securities being sold pursuant to a Registration Statement 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 statements therein, in
light of the circumstances under which they were made, not misleading (a
"SUSPENSION EVENT"). The Company shall make such notification as promptly as
practicable after the Company becomes aware of such Suspension Event, shall
promptly use its best efforts (but in any event within five business (5)
days) to prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and shall deliver a number of
copies of such supplement or amendment to each Investor as such Investor may
reasonably request. Notwithstanding anything contained herein or in the
Securities Purchase Agreement, in the event that the use of the Registration
Statement is suspended by the Company, the Company shall promptly notify all
Investors whose securities are covered by the Registration Statement of such
suspension, and shall promptly notify each such Investor as soon as the use
of the Registration Statement may be resumed. Notwithstanding anything to
the contrary, the Company shall cause the Transfer Agent to deliver
unlegended shares of Common Stock to a
Page 9
transferee of an Investor in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities with respect
to which such Investor has entered into a contract for sale prior to receipt
of notice of such suspension and for which such Investor has not yet settled.
(g) Subject to the Company's rights under Section 3(a), the
Company shall use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of a Registration Statement and, if such
an order is issued, shall use its best efforts to obtain the withdrawal of
such order at the earliest possible time and to notify each Investor who
holds Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof.
(h) The Company shall permit a single firm of counsel designated
by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the
Registration Statement and all amendments and supplements thereto (as well as
all requests for acceleration or effectiveness thereof) a reasonable period
of time prior to their filing with the SEC, and shall not file any document
in a form to which such counsel reasonably objects, unless required by law in
the opinion of the Company's counsel. The sections of such Registration
Statement covering information with respect to the Investors, the Investors'
beneficial ownership of securities of the Company or the Investors' intended
method of disposition of Registrable Securities shall conform to the
information provided to the Company by each of the Investors.
(i) The Company shall make generally available to its security
Holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement in a form
complying with the provisions of Rule 158 under the 1933 Act.
(j) At the request of the Investors who hold a majority in
interest of the Registrable Securities being sold pursuant to such
registration, the Company shall furnish on the date that Registrable
Securities are delivered to an underwriter for sale in connection with the
Registration Statement (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (ii)
an opinion, dated such date, from counsel representing the Company for
purposes of such Registration Statement, in form and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and Investors.
(k) The Company shall make available for inspection by any
Investor whose Registrable Securities are being sold pursuant to such
registration, any underwriter participating in any disposition pursuant to
the Registration Statement, and any attorney, accountant or other agent
retained by any such Investor or underwriter (collectively, the
"INSPECTORS"), all pertinent financial and
Page 10
other records, pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by
each Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for
purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor)
of any Record or other information which the Company determines in good faith
to be confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from
a court or government body of competent jurisdiction, or (iii) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement (to the
knowledge of the relevant Investor). The Company shall not be required to
disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements
(in form and substance satisfactory to the Company) with the Company with
respect thereto, substantially in the form of this Section 3(k). Each
Investor agrees that it shall, upon learning that disclosure of such Records
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit the Investor's ability
to sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
(l) The Company shall hold in confidence and shall not make any
disclosure of information concerning an Investor provided to the Company
pursuant hereto 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 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 or any
other agreement or (v) such Investor consents to the form and content of any
such disclosure. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor prior to making such disclosure and allow
such Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
(m) The Company shall cause the listing and the continuation of
listing of all the Registrable Securities covered by the Registration
Statement on the Nasdaq National Market System, the Nasdaq Small Cap Market,
the New York Stock Exchange, the American Stock Exchange or any successor
national exchange or market, and cause the Registrable Securities to be
quoted or listed on each additional
Page 11
national securities exchange or quotation system upon which the Common Stock
is then listed or quoted.
(n) The Company shall 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.
(o) The Company shall cooperate with the Investors who hold
Registrable Securities being sold and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable
such certificates to be in such denominations or amounts as the case may be,
and registered in such names as the managing underwriter or underwriters, if
any, or the Investors may reasonably request, all in accordance with the
provisions set forth in Section V of the Purchase Agreement.
(p) At the request of any Investor, the Company shall promptly
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 the Registration Statement as may be necessary in
order to change the plan of distribution set forth in such Registration
Statement.
(q) The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the 1933 Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated by the SEC).
(r) The Company shall take all other reasonable actions as any
Investor or the underwriters, if any, may reasonably request to expedite and
facilitate disposition by such Investor of the Registrable Securities
pursuant to the Registration Statement.
(s) Subject to registration rights of holders of warrants referred
to in Section 2(a) hereof, from and after the date of this Agreement, the
Company shall not, and shall not agree to, allow the holders of any
securities of the Company to include any of their securities in any
Registration Statement under Section 2(a) hereof or any amendment or
supplement thereto under Section 3(b) hereof without the consent of the
holders of a majority-in-interest of the Registrable Securities.
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 each Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and
Page 12
the intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect the registration of the Registrable
Securities. At least ten (10) business 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
within three (3) 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.
(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)
or 3(g), 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) or 3(g) 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 (other
than a limited number of file copies), of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(d) Without limiting any Investor's rights under Sections 2(a)
hereof, no Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors 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 and other fees and
expenses of investment bankers and any manager or managers of such
underwriting and legal expenses of the underwriter applicable with respect to
its Registrable Securities, in each case to the extent not payable by the
Company pursuant to the terms of this Agreement.
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than
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, the fees and disbursements of counsel for
the Company, and the
Page 13
reasonable fees and disbursements of one counsel selected by the Initial
Investors pursuant to Section 3(e) hereof, shall be borne by the Company.
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 1933
Act or the Exchange Act, any underwriter (as defined in the 0000 Xxx) for the
Investors, the directors, if any, of such underwriter and the officers, if
any, of such underwriter, and each person, if any, who controls any such
underwriter within the meaning of the 1933 Act or the Exchange Act (each, an
"INDEMNIFIED PERSON"), against any losses, claims, damages, expenses or
liabilities (joint or several) (collectively together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened in respect thereof, "CLAIMS") to which any of
them become subject under the 1933 Act, the Exchange Act or otherwise,
insofar as such Claims 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 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 1933 Act, the Exchange Act or any
other law, including without limitation any state securities law or any rule
or regulation thereunder (the matters in the foregoing clauses (i) through
(iii) being, collectively, "VIOLATIONS"). Subject to the restrictions set
forth in Section 6(c) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each such underwriter or
controlling person and each such other Indemnified Person, 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): (A)
shall not 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 any 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(c) hereof; and (B) shall not
apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
Page 14
consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner 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 Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the 1933 Act or the Exchange Act (an "INDEMNIFIED PARTY"and,
collectively, "INDEMNIFIED PARTIES"), against any Claim to which any of them
may become subject, under the 1933 Act, the Exchange Act or otherwise,
insofar as such Claim arises out of or is 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 such Investor expressly for use in connection with such
Registration Statement, and subject to Section 6(c), such Investor will
promptly reimburse any legal or other expenses (promptly as such expenses are
incurred and due and payable) reasonably incurred by all Indemnified Parties
in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld; provided further, however, that the
Investor shall be liable under this Agreement (including this Section 6(b)
and Section 7) for only that amount of a Claim as does not exceed the net
proceeds actually received by such 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 Investors pursuant
to Section 9.
(c) 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 made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and this 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 parties and the Indemnified Person or the Indemnified Party,
as the case may be; provided, however, that such Indemnified Party shall
diligently pursue such defense and that such Indemnified Party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel, with the fees and
expenses to be paid
Page 15
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 conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by
such counsel in such proceeding or the actual or potential defendants in, or
targets of, any such action including both the Indemnified Person or the
Indemnified Party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in
addition to those available to such indemnifying party. The Company shall pay
for only one separate legal counsel for the Investors; such legal counsel
shall be selected by the Investors holding a majority in interest of the
Registrable Securities. 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 provided for
herein 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 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, (ii) 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 such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification
or other obligations under this Agreement) 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 EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 promulgated under the 1933 Act or any
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) File with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
1933 Act and the Exchange Act so long as the Company remains subject to such
requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 4.3 of the Securities Purchase Agreement)
and the filing
Page 16
and availability of such reports and other documents is required for the
applicable provisions of Rule 144; and
(b) Furnish to each Investor so long as such Investor holds
Preferred Shares, Warrants or 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 Exchange 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 of the Investors
hereunder, including the right to have the Company register Registrable
Securities pursuant to this Agreement shall be automatically assigned by the
Investors to transferees or assignees of all or any portion of such
securities only 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 the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
transferred or assigned, (iii) 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 received the written notice contemplated by
clause (ii) of this sentence, the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein, (v)
such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement including, but not limited to, the
covenant of each Investor that it will not transfer any of the Securities in
violation of federal and state securities laws, and (vi) such transferee
shall be an "ACCREDITED INVESTOR" as that term is defined in Rule 501 of
Regulation D promulgated under the 1933 Act.
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 Investors who hold a majority interest of
the Registrable Securities (but not an Investor who no longer owns any
Warrants or Registrable Securities and who is not affected by such amendment
or waiver). Any amendment or waiver effected in accordance with this Section
10 shall be binding upon each Investor and the Company. Notwithstanding the
foregoing, no amendment or waiver shall retroactively affect any Investor
without its comment or prospectively adversely affect any Investor who no
longer owns any Warrants or Registrable Securities without its consent.
Neither Article 6 nor Article 7 hereof may be amended or waived in a manner
adverse to an Investor without its consent.
Page 17
11. MISCELLANEOUS.
(a) CONFLICTING INSTRUCTIONS. 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. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(with return receipt requested) or delivered personally or by courier
(including a nationally recognized overnight delivery service) or by
facsimile transmission. Any notice so given shall be deemed effective three
days after being deposited in the U.S. Mail, or upon receipt if delivered
personally or by courier or facsimile transmission, in each case addressed to
a party at the following address or such other address as each such party
furnishes to the other in accordance with this Section 11(b):
IF TO THE COMPANY:
Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company
000 Xxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
in each case with a copy to:
Shoreline Pacific Institutional Finance
0 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
Page 18
If to an Investor: To the address set forth immediately below such
Investor's name on the signature pages hereto.
Each party shall provide written notice to the other parties of any change in
address.
(c) WAIVER. 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) GOVERNING LAW. This Agreement shall be enforced, governed by
and construed in accordance with the laws of the State of Delaware applicable
to the agreements made and to be performed entirely within such state,
without giving effect to rules governing the conflict of laws, and any
disputes arising hereunder will be adjudicated in federal or state court
situated in Delaware. Each party hereto consents to such venue in California
and to the personal and subject matter jurisdiction of said courts and, to
the extent permitted by applicable law, agrees to waive any objection as to
such jurisdiction or venue, and agrees not to assert any defense based on
lack of jurisdiction or venue.
(e) SEVERABILITY. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
(f) ENTIRE AGREEMENT. This Agreement, the Securities Purchase
Agreement, the Certificates of Designation, the Escrow Agreement and the
Warrant (including all schedules and 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 or therein. This Agreement
supersedes all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof.
(g) SUCCESSORS AND ASSIGNS. 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.
Notwithstanding anything to the contrary herein, including without
limitation, Section 9, the rights of an Investor hereunder shall be
assignable to and exercisable by a bona fide pledgee of the Registrable
Securities in connection with an Investor's margin or brokerage accounts.
(h) USE OF PRONOUNS. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
Page 19
(i) HEADINGS. The headings and subheadings in the Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) COUNTERPARTS. This Agreement may be executed in two 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 facsimile
transmission, and facsimile signatures shall be binding on the parties hereto.
(k) FURTHER ACTS. 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.
(l) CONSENTS. All consents and other determinations to be made by
the Investors pursuant to this Agreement shall be made by the Initial
Investors or the Investors holding a majority of the Registrable Securities,
determined as if all Preferred Shares and all Warrants then outstanding had
been converted into or exercised for Registrable Securities.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: CFO
INITIAL INVESTORS:
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P.
Investment Manager
By: RGC General Partner Corp.
By:
---------------------------------
Name:
Its: Managing Director
RESIDENCE: Cayman Islands
ADDRESS:
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attn: Xx. Xxxxx Xxxxx
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY
By:
-----------------------------------
Name:
Title:
INITIAL INVESTORS:
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P.
Investment Manager
By: RGC General Partner Corp.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Its: Managing Director
RESIDENCE: Cayman Islands
ADDRESS:
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx
