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Exhibit 4.2
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
TITAN MOTORCYCLE CO. OF AMERICA
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and
valuable consideration, the receipt of which is hereby acknowledged by TITAN
MOTORCYCLE CO. OF AMERICA, a Nevada corporation (the "Company"), XXXXXXX TRUST
REG or registered assigns (the "Holder") is hereby granted the right to purchase
at any time until 5:00 P.M., New York City time, on August 31, 2005 (the
"Expiration Date"), Five Hundred Twelve Thousand Five Hundred Eighty (512,580)
fully paid and nonassessable shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock") at an exercise price per share of $.61 (the
"Exercise Price"), subject to further adjustment as set forth herein. This
Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement, dated as of August 11, 2000 (the "Securities Purchase
Agreement"), to which the Company and Holder (or Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Securities Purchase Agreement.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in
whole or in part at any time and from time to time. Such exercise shall be
effectuated by submitting to the Company (either by delivery to the Company or
by facsimile transmission as provided in Section 8 hereof) a completed and duly
executed Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph. The date such Notice of Exercise is
faxed to the Company shall be the "Exercise Date," provided that the Holder of
this Warrant tenders this Warrant Certificate to the Company within five (5)
business days thereafter. The Notice of Exercise shall be executed by the Holder
of this Warrant and shall indicate the number of shares then being purchased
pursuant to such exercise. Upon surrender of this Warrant Certificate, together
with appropriate payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased. If the Notice of Exercise elects a
"cash" exercise, the Exercise Price per share of Common Stock for the shares
then being exercised shall be payable in cash or by certified or official bank
check. If the Notice of Exercise elects a "cashless" exercise, the Holder shall
thereby be entitled to receive a number of shares of Common Stock equal to (x)
the excess of the Current Market Value (as defined below) over the total cash
exercise price of the
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portion of the Warrant then being exercised, divided by (y) the Market Price of
the Common Stock as of the trading day immediately prior to the Exercise Date.
For the purposes of this Warrant, the terms (Q) "Current Market Value" shall
mean an amount equal to the Market Price of the Common Stock as of the trading
day immediately prior to the Exercise Date, multiplied by the number of shares
of Common Stock specified in such Notice of Exercise, and (R) "Market Price of
the Common Stock" shall an amount equal to the closing price of the Common Stock
as reported by Bloomberg, LP or, if not so reported, as reported by the
securities exchange or automated quotation system on which the Common Stock is
listed or on the over-the-counter market for the relevant date. The Holder shall
be deemed to be the holder of the shares issuable to it in accordance with the
provisions of this Section 2.1 on the Exercise Date.
2.2 Limitation on Exercise. Notwithstanding
the provisions of this Warrant, the Securities Purchase Agreement or of the
other Transaction Agreements, in no event (except (i) as specifically provided
in this Warrant as an exception to this provision, (ii) while there is
outstanding a tender offer for any or all of the shares of the Company's Common
Stock, or (iii) on at least sixty-five (65) days' advance written notice from
the Holder) shall the Holder be entitled to exercise this Warrant, or shall the
Company have the obligation to issue shares upon such exercise of all or any
portion of this Warrant, to the extent that, after such exercise the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of any unconverted portion of the Debentures or
unexercised portion of the Warrants), and (2) the number of shares of Common
Stock issuable upon the exercise of the Warrants with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 9.99% of the outstanding
shares of Common Stock (after taking into account the shares to be issued to the
Holder upon such exercise). For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, except as
otherwise provided in clause (1) of such sentence. The Holder, by its acceptance
of this Warrant, further agrees that if the Holder transfers or assigns any of
the Warrants to a party who or which would not be considered such an affiliate,
such assignment shall be made subject to the transferee's or assignee's specific
agreement to be bound by the provisions of this Section 2.2 as if such
transferee or assignee were the original Holder hereof.
3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification and affidavit, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor and date and any such lost,
stolen, destroyed or mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder
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are limited to those expressed in this Warrant and are not enforceable against
the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment
of the Exercise Price is required pursuant to this Section 6, the Holder shall
be entitled to purchase such number of additional shares of Common Stock as will
cause (i) the total number of shares of Common Stock Holder is entitled to
purchase pursuant to this Warrant, multiplied by (ii) the adjusted Exercise
Price per share, to equal (iii) the dollar amount of the total number of shares
of Common Stock which the Holder is entitled to purchase before adjustment,
multiplied by the total Exercise Price before adjustment.
6.2 Capital Adjustments. In case of any stock
split or reverse stock split, stock dividend, reclassification of the Common
Stock, recapitalization, merger or consolidation, or like capital adjustment
affecting the Common Stock of the Company, the provisions of this Section 6
shall be applied as if such capital adjustment event had occurred immediately
prior to the date of this Warrant and the original Exercise Price had been
fairly allocated to the stock resulting from such capital adjustment; and in
other respects the provisions of this Section shall be applied in a fair,
equitable and reasonable manner so as to give effect, as nearly as may be, to
the purposes hereof. A rights offering to stockholders shall be deemed a stock
dividend to the extent of the bargain purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any
reason, prior to the exercise of this Warrant in full, the Company spins off or
otherwise divests itself of a part of its business or operations or disposes all
or a part of its assets in a transaction (the "Spin Off") in which the Company
does not receive compensation for such business, operations or assets, but
causes securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
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(a) the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and
number of Spin Off Securities to be issued to security holders of the
Company (the "Outstanding Warrants") been exercised as of the close of
business on the trading day immediately before the Record Date (the
"Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares
multiplied by (y) a fraction, of which (I) the numerator is the amount
of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying
the Exercise Price by a fraction (if, but only if, such fraction is
less than 1.0), the numerator of which is the average Market Price of
the Common Stock for the five (5) trading days immediately following
the fifth trading day after the Record Date, and the denominator of
which is the average Market Price of the Common Stock on the five (5)
trading days immediately preceding the Record Date; and such adjusted
Exercise Price shall be deemed to be the Exercise Price with respect to
the Outstanding Warrants after the Record Date.
7. Transfer to Comply with the Securities Act; Registration
Rights.
7.1 Transfer. This Warrant has not been registered
under the Securities Act of 1933, as amended, (the "Act") and has been issued to
the Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 Registration Rights. (a) Reference is
made to the Registration Rights Agreement. The Company's obligations under the
Registration Rights Agreement and the other terms and conditions thereof with
respect to the Warrant Shares, including, but not necessarily limited to, the
Company's commitment to file a registration statement including the Warrant
Shares, to have the registration of the Warrant Shares completed and effective,
and to maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred
to in the preceding provisions of Section 7.2(a), effective after the expiration
of the effectiveness of the Registration Statement as contemplated by the
Registration Rights Agreement, the Holder shall have piggy-back registration
rights with respect to the Warrant Shares then held by the Holder or then
subject to issuance upon exercise of this Warrant (collectively, the "Remaining
Warrant Shares"), subject to the conditions set forth below. If, at any time
after the Registration Statement
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has ceased to be effective, the Company participates (whether voluntarily or by
reason of an obligation to a third party) in the registration of any shares of
the Company's stock (other than a registration on Form S-4 or Form S-8), the
Company shall give written notice thereof to the Holder and the Holder shall
have the right, exercisable within ten (10) business days after receipt of such
notice, to demand inclusion of all or a portion of the Holder's Remaining
Warrant Shares in such registration statement. If the Holder exercises such
election, the Remaining Warrant Shares so designated shall be included in the
registration statement at no cost or expense to the Holder (other than any costs
or commissions which would be borne by the Holder under the terms of the
Registration Rights Agreement), subject to the following condition: if there is
a managing underwriter of the offering of shares referred to in the registration
statement and such managing underwriter advises the Company in writing that the
number of shares proposed to be included in the offering will have an adverse
effect on its ability to successfully conclude the offering and, as a result,
the number of shares to be included in the offering is to be reduced, the number
of Remaining Warrant Shares of the Holder which were to be included in the
registration (before such reduction) will be reduced pro rata with the number of
shares included for all other parties whose shares are being registered. The
Holder's rights under this Section 7 shall expire at such time as the Holder can
sell all of the Remaining Warrant Shares under Rule 144 without volume or other
restrictions or limit.
8. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two days after the date of deposit in the United
States mails, as follows:
(i) if to the Company, to:
TITAN MOTORCYCLE CO. OF AMERICA
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxx LLP
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to the Holder, to:
Xxxxxxx Trust Reg
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x/x Xxxxxxx-Xxxxxxxx-Xxxxxxx
Xxxxxxxxxxx 0
Furstentume 9496
Balzers, Liechtenstein
ATTN:
Telephone No.: ( ) -
Telecopier No.: ( ) -
with a copy to:
Xxxxxxx & Prager LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a
contract made under 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 Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. Counterparts. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
12. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 11th day of August, 2000.
TITAN MOTORCYCLE CO. OF AMERICA
By:
Name:
Its:
Attest:
Name:
Title:
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of , , to purchase
shares of the Common Stock, par value $.001 per share, of TITAN MOTORCYCLE CO.
OF AMERICA and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
With the exercise effected hereby, the Holder represents to the Company
that the Holder is in compliance with the provisions of Section 2.2 of this
Warrant.
Dated:
[Name of Holder]
By:
_ CASH: $
_ CASHLESS EXERCISE
