Investor Rights Agreement Dated as of June 21, 2007 among Titanium Asset Management Corp. Sunrise Securities Corp. and Seymour Pierce Limited
EXHIBIT 4.5
Dated as of June 21, 2007
among
Sunrise Securities Corp.
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited
This Investor Rights Agreement (this “Agreement”) is made and entered into as of June
21, 2007 by and among Titanium Asset Management Corp. (the “Company”), and
Sunrise Securities Corp. (“Sunrise”) and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited (“▇▇▇▇▇▇▇
▇▇▇▇▇▇”), for the benefit of the holders from time to time of the Company’s common stock, par
value $0.0001 per share (the “Shares”) and warrants (the “Warrants”), each Warrant
for the purchase of one (1) Share, which shall include Sunrise Securities Corp. and/or its
designees from time to time holding rights to subscribe Shares and Warrants issued by the Company
pursuant to the Purchase Option (as defined below) (collectively, the “Holders”).
Reference
is made to the Company’s Offering Circular, dated
June ,
2007 (the “Offering Circular”), relating to the offer and sale of twenty million
(20,000,000) units (the “Units”), each Unit consisting of one (1) Share and one (1)
Warrant. For the benefit of the Holders and in consideration of Sunrise and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
entering into a Placing Agreement (as defined below) with the Company for the placing of the
Units, the Company has agreed to provide the investor rights set forth in this Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the following meanings:
Commission: The U.S. Securities and Exchange Commission.
Demanding Holder: As defined in Section 3(a) hereof.
Demand Registration: As defined in Section 3(a) hereof.
Exchange Act: The U.S. Securities Exchange Act of 1934, as amended.
Form S-3: As defined in Section 3(f) hereof.
Liquidated Damages: As defined in Section 5(a) hereof.
Maximum Number of Shares: As defined in Section 3(d) hereof.
NASD: National Association of Securities Dealers, Inc.
Offering: The offering of the Units pursuant to the Offering Circular.
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Person: An individual, partnership, corporation, limited liability company,
unincorporated organization, association, joint-stock company, trust, joint venture, government or
any agency or political subdivision thereof or any other entity.
Placing Agreement: The placing agreement between the Company, Sunrise, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and the Company’s directors dated on or about the date of this Agreement.
Purchase
Option: That certain Unit purchase option dated
June , 2007
issued by the Company to Sunrise and/or its designees.
Qualified Business Combination: A business combination which, when combined with the
Company’s previous business combinations, results in the release of 70% of the initial amount of
the trust fund (as more fully described in the Offering Circular).
Qualified Business Combination Deadline: the date which is 12 months from the
Admission Date or the date which is (i) 18 months from the Admission Date if, within such 12 month
period, the Company has signed a letter of intent, agreement in principle or definitive agreement
in respect of a proposed Qualified Business Combination; or (ii) an extended date approved by a
majority of the New Shareholders (as such term is defined in the Offering Circular).
Registration Date: As defined in Section 2(a) hereof.
Registration Default: As defined in Section 5(a) hereof.
Registration Statement: A registration statement of the Company on Form 10 (or such
other form which it is appropriate to use to register the Shares under the Exchange Act),
including all amendments and supplements thereto and all exhibits and material incorporated by
reference therein. A Registration Statement of the Company under the Securities Act on Form S-l,
Form SB-2 or such other form which results in the Company filing reports under the Exchange Act
will also constitute a Registration Statement hereunder.
Registration Trigger: The date of consummation of a Qualified Business Combination
or, alternatively, in the case where no Qualified Business Combination shall have occurred but one
or more business combinations shall have been completed, the Qualified Business Combination
Deadline.
Registrable Securities: All of the Shares or rights to subscribe Shares and Warrants
pursuant to the Purchase Option owned or held by Holders. Registrable Securities include any
warrants, shares in the share capital or other securities of the Company issued as a dividend or
other distribution with respect to or in exchange for or in replacement of such Common Shares. As
to any particular Registrable Securities, such securities shall cease to be Registrable Securities
when: (a) a Registration Statement with
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respect to the sale of such securities shall have become effective under the Securities Act and
such securities shall have been sold, transferred, disposed of or exchanged in accordance with
such Registration Statement; (b) such securities shall have been otherwise transferred and new
certificates for them not bearing a legend restricting further transfer shall have been delivered
by the Company; (c) such securities shall have ceased to be issued and outstanding, or (d) the
Securities and Exchange Commission makes a definitive determination or US securities counsel to
the Company delivers an opinion to the Company that the Registrable Securities are salable under
Rule 144(k).
Reporting Date: The date on which the Company has become obligated to file reports
under the Exchange Act.
Securities Act: The U.S. Securities Act of 1933, as amended.
Underwriter: A securities dealer who purchases any Registrable Securities as
principal in an underwritten offering and not as part of such dealer’s market-making activities.
SECTION 2. EXCHANGE ACT REGISTRATION AND LISTING
(a) The Company shall (i) no later than the date that is one hundred twenty (120) days (or one
hundred fifty (150) days if the Qualified Business Combination is completed in the fourth quarter
of the applicable fiscal year) following the Registration Trigger (the “Filing Deadline”)
cause to be filed with the Commission a Registration Statement , and (ii) use its commercially
reasonable efforts to cause such Registration Statement to be declared effective on or prior to the
date that is two hundred seventy (270) days following the Registration Trigger (the
“Registration Date”). The Registration Date may be extended with the approval of the
holders of a majority of the shares of Common Stock sold in the Offering.
(b) As promptly as practicable after the Registration Statement shall have been declared
effective, the Company shall use its commercially reasonable efforts to cause the Shares to be
authorized to be quoted and/or listed (to the extent applicable) on the American Stock Exchange,
the New York Stock Exchange, the NASDAQ Global Market or the NASDAQ Capital Market (or, in each
case, a successor thereto) or a similarly recognized national trading platform, if the Shares so
qualify.
SECTION 3. DEMAND REGISTRATIONS
(a) Request for Registration. At any time and from time to time on or after the
Reporting Date, the holders of at least 40% of the Registrable Securities held by the Holders may
make a written demand for registration under the Securities Act of all or part of their
Registrable Securities (a “Demand Registration”). Any demand for a Demand Registration
shall specify the number of shares of Registrable Securities proposed to be sold and the intended
method(s) of distribution thereof. The Company will notify all holders of Registrable Securities
of the demand, and each holder of
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Registrable Securities who wishes to include all or a portion of such holder’s Registrable
Securities in the Demand Registration (each such holder including shares of Registrable Securities
in such registration, a “Demanding Holder”) shall so notify the Company within fifteen
(15) days after the receipt by the holder of the notice from the Company. Upon any such request,
the Demanding Holders shall be entitled to have their Registrable Securities included in the
Demand Registration, subject to Section 3(d) and the provisos set forth in Section 3.1.1 of the
Registration Rights Agreement (as defined in the Offering Circular). The Company shall not be
obligated to effect more than an aggregate of two (2) Demand Registrations under this Section 3(a)
in respect of Registrable Securities.
(b) Effective Registration. A registration will not count as a Demand Registration
until the Registration Statement filed with the Commission with respect to such Demand Registration
has been declared effective and the Company has complied with all of its obligations under this
Agreement with respect thereto; provided, however, that if, after such Registration
Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand
Registration is interfered with by any stop order or injunction of the Commission or any other
governmental agency or court, the Registration Statement with respect to such Demand Registration
will be deemed not to have been declared effective, unless and until, (i) such stop order or
injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the
Demanding Holders thereafter elect to continue the offering; provided, further,
that the Company shall not be obligated to file a second Registration Statement until a
Registration Statement that has been filed is counted as a Demand Registration or is terminated.
(c) Underwritten Offering. If a majority-in-interest of the Demanding Holders so elect
and such holders so advise the Company as part of their written demand for a Demand Registration,
the offering of such Registrable Securities pursuant to such Demand Registration shall be in the
form of an underwritten offering. In such event, the right of any holder to include its Registrable
Securities in such registration shall be conditioned upon such holder’s participation in such
underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the
extent provided herein. All Demanding Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such underwriting by a majority-in-interest of the holders initiating the
Demand Registration.
(d) Reduction of Offering. If the managing Underwriter or Underwriters for a Demand
Registration that is to be an underwritten offering advises the Company and the Demanding Holders
in writing that the dollar amount or number of shares of Registrable Securities which the
Demanding Holders desire to sell, taken together with all other Shares or other securities which
the Company desires to sell and the Shares, if any, as to which registration has been requested
pursuant to written contractual piggy-back registration rights held by other shareholders of the
Company who desire to sell, exceeds the maximum dollar amount or maximum number of snares that can
be sold in such offering without adversely affecting the proposed offering price,
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the timing, the distribution method, or the probability of success of such offering (such maximum
dollar amount or maximum number of shares, as applicable, the “Maximum Number of Shares”),
then the Company shall include in such registration: (i) first, the Registrable Securities as to
which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with
the number of shares of Registrable Securities which such Demanding Holder has requested be
included in such registration, regardless of the number of shares of Registrable Securities held by
each Demanding Holder) that can be sold without exceeding the Maximum Number of Shares; (ii)
second, to the extent that the Maximum Number of Shares has not been reached under the foregoing
clause (i), the Shares or other securities that the Company desires to sell that can be sold
without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number
of Shares has not been reached under the foregoing clauses (i) and (ii), the Shares for the account
of other persons that the Company is obligated to register pursuant to written contractual
arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares;
and (iv) fourth, to the extent that the Maximum Number of Shares have not been reached under the
foregoing clauses (i), (ii), and (iii), the Shares that other shareholders desire to sell that can
be sold without exceeding the Maximum Number of Shares.
(e)
Withdrawal. If a majority-in-interest of the Demanding Holders disapprove of the
terms of any underwriting or are not entitled to include all of their Registrable Securities in any
offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such
offering by giving written notice to the Company and the Underwriter or Underwriters of their
request to withdraw prior to the effectiveness of the Registration Statement filed with the
Commission with respect to such Demand Registration. If the majority-in-interest of the Demanding
Holders withdraws from a proposed offering relating to a Demand Registration, then such
registration shall not count as a Demand Registration provided for in Section 3(a).
(f) Registrations on Form S-3. The holders of at least 40% of the Registrable
Securities may at any time and from time to time, request in writing that the Company register the
resale of any or all of such Registrable Securities on Form S-3 or any similar short-form
registration which may be available at such time
(“Form S-3”); provided, however,
that the Company is eligible to use such form and provided further that the Company shall not be
obligated to effect such request through an underwritten offering. Upon receipt of such written
request, the Company will promptly give written notice of the proposed registration to all other
holders of Registrable Securities, and, as soon as practicable thereafter, effect the registration
of all or such portion of such holder’s or holders’ Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any other holder or
holders joining in such request as are specified in a written request given within fifteen (15)
days after receipt of such written notice from the Company;
provided, however, that
the Company shall not be obligated to effect any such registration pursuant to this Section 3(f):
(i) if Form S-3 is not available for such offering; or (ii) if the holders of the Registrable
Securities, together with the holders of any other securities of the Company entitled to
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inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at any aggregate price to the public of less than $2,000,000. Registrations effected
pursuant to this Section 3(f) shall not be counted as Demand Registrations effected pursuant to
this Section 3.
SECTION 4. “PIGGYBACK” REGISTRATIONS
(a) If at any time the Company shall propose to register under the Securities Act (other than
pursuant to Section 3 of this Agreement) any of the Shares for the account of the Company or its
Founding Shareholders (as defined in the Offering Circular), it will promptly give written notice
to all Holders of the Shares that are (i) Holders of the Shares bearing a restrictive legend that
are not freely saleable in the United States under Rule 144(k) of the Securities Act, and (ii)
that are known by the Company to be affiliates of the Company (other than officers and directors
of the Company) (such Shares hereinafter referred to as “Registrable Shares”) of its
intention so to do. Upon the written request of any such Holder, received by the Company within 20
days after the giving of any such notice by the Company, to register any or all of its Registrable
Shares, the Company will use its reasonable best efforts to cause the Registrable Shares as to
which registration shall have been so requested to be included in the securities to be covered by
the registration statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition by the Holder (in accordance with its written request) of
such Registrable Shares so registered.
(b) If the registration of which the Company gives notice as provided above is for a
registered public offering involving an underwriting, the Company shall so advise the Holders of
Registrable Shares as a part of the written notice given pursuant to this Section 4. In such
event, the right of any Holder of Registrable Shares to registration pursuant to this Section 4
shall be conditioned upon such Holder’s participation in such underwriting to the extent provided
herein. All Holders of Registrable Shares proposing to distribute their securities through such
underwriting shall (together with the Shares to be registered by the Company in such registration
(the “Other Shareholders”)) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for underwriting by the Company. If any Holder of
Registrable Shares disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Registrable Shares or other
securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.
(c) If the managing Underwriter or Underwriters for a piggy-back registration that is to be an
underwritten offering advises the Company and the holders of Registrable Securities in writing that
the dollar amount or number of Shares which the Company desires to sell, taken together with
Shares, if any, as to which registration has been demanded pursuant to written contractual
arrangements with persons other than the holders of Registrable Securities hereunder, the
Registrable Securities as to which registration has been requested under this Section 4, and the
Shares, if any, as to which
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registration has been requested pursuant to the written contractual piggy-back registration rights
of other shareholders of the Company, exceeds the maximum dollar amount or maximum number of
shares that can be sold in such offering without adversely affecting the proposed offering price,
the timing, the distribution method, or the probability of success of such offering (such maximum
dollar amount or maximum number of shares, as applicable, the “Maximum Number of Shares”),
then the Company shall include in any such registration:
(i) if the registration is undertaken for the Company’s account: (A) first, the Shares or
other securities that the Company desires to sell that can be sold without exceeding the Maximum
Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached
under the foregoing clause (A), the Shares, if any, including the Registrable Securities, as to
which registration has been requested pursuant to written contractual piggy-back registration
rights of security holders (pro rata in accordance with the number of Shares which each such
person has actually requested to be included in such registration, regardless of the number of
Shares with respect to which such persons have the right to request such inclusion) that can be
sold without exceeding the Maximum Number of Shares; and
(ii) if the registration is a “demand” registration undertaken at the demand of persons
pursuant to written contractual arrangements with such persons, (A) first, the Shares for the
account of the demanding persons that can be sold without exceeding the Maximum Number of Shares;
(B) second, to the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the Shares or other securities that the Company desires to sell that can be
sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (A) and (B), the Registrable
Securities as to which registration has been requested under this Section 4 (pro rata in
accordance with the number of shares of Registrable Securities held by each such holder); and (D)
fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing
clauses (A), (B) and (C), the Shares, if any, as to which registration has been requested pursuant
to written contractual piggy-back registration rights which other shareholders desire to sell that
can be sold without exceeding the Maximum Number of Shares.
(d) The Company shall so advise all Holders of securities requesting registration of any
limitations on the number of shares to be underwritten and the number of shares of securities that
are entitled to be included in the registration; provided, that the number of shares to be
underwritten shall be allocated pro rata among all Holders of Registrable Shares and the Other
Shareholders in proportion, as nearly as practicable, to the respective amounts of Registrable
Shares owned by them.
SECTION 5. LIQUIDATED DAMAGES
(a) If either:
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(i) No Registration Statement is filed before the Filing Deadline; or
(ii) the Registration Statement shall not have been declared effective on or prior to the
date that is ninety (90) days following the Registration Date; provided that the
provisions of this Section 5(a)(ii) shall only apply in the event that the Company has received
comments from the U.S. Securities and Exchange Commission with respect to the Registration
Statement and the proposal to submit it and the Company has been responding to such comments in
good faith throughout the period from the Registration Trigger;
(each a “Registration Default”),
the Company shall, as promptly as practicable and in no event later than two (2) days
following the end of the month in which such Registration Default occurred, pay to each Holder
liquidated damages in the form of Shares in an amount equal to 1% of the number of such Holder’s
Shares or rights to subscribe for Shares (which shall include rights pursuant the Purchase Option)
(as the case may be) held on the date of such Registration Default upon payment by such relevant
person to the Company of the par value of such Securities, subject to compliance with applicable
securities laws (“Liquidated Damages”);
provided, that a Holder shall be paid
Liquidated Damages only with respect to (i) any Shares that were acquired by such Holder upon the
consummation of the Offering or subsequent to the Offering (if such Shares were originally offered
as part of the Offering) and (ii) any Shares that were acquired by such Holder pursuant to the
exercise of the Purchase Option. The Company shall pay additional Liquidated Damages within two
days of the end of each month until the Registration Default shall have been cured; provided that a
pro rata portion of the Liquidated Damages shall be paid with respect to any month in which the
Company shall have been in Registration Default for a portion of such month; and provided, further,
that Liquidated Damages shall be payable for a maximum period of six (6) months following the
occurrence of the Registration Default.
(b) Notwithstanding any other provision of this Agreement, the liquidated damages
contemplated in this Section 5 shall be the sole and exclusive remedy available to the Holders in
the event of any failure by the Company to comply with the terms of this Agreement.
SECTION 6. CURRENT PUBLIC INFORMATION
(a) From and after the date hereof and until the Exchange Act Registration Statement shall
have become effective, the Company shall furnish to the Holders: annual and semi-annual reports
which shall contain audited financial statements prepared in accordance with U.S. generally
accepted accounting principles and containing non-financial information substantially equivalent to
the non-financial information that would be contained in an Annual Report on Form 20-F within 120
days after the end of each year, including a “Management’s Discussion and Analysis of
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Financial Condition and Results of Operation”; provided, however that save to the extent required
by law to be included in the Commission reports referred to above, the reports set forth above
shall not be required to (i) contain any certification required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, (ii)
include any exhibits, (iii) include separate financial statements for any acquired businesses or
(iv) any pro forma financial information.
(b) With respect to any proxy statement required to be prepared by the Company in connection
with a business combination, such proxy statement shall contain substantially the same information
as would be required in a proxy statement for an acquisition filed with the Commission provided,
however, such materials will contain or include (i) at least one year of historical financial
statements of the acquired business (if such financial statements would have been required by law)
which, if permitted by the applicable AIM requirements, may be unaudited, (ii) if available, two
or three years of historical financial statements (if such second or third year of financial
statements would have been required by law) which may be unaudited, and (iii) summaries of
material agreements to the extent applicable.
(c) In addition to the rights above and for so long as Clal Finance Ltd. or any affiliate of
Clal Finance Ltd. (“Clal Finance”) owns at least 35% of the then issued and outstanding
Common Stock of the Company, or , if later, for as long as Clal Finance has any requirement
pursuant to Israeli securities laws or IFRS to attach the Corporation’s accounts to Clal Finance’s
own accounts, the Company shall (i) provide to Clal Finance the reviewed quarterly consolidated
financial reports, prepared in accordance with IFRS and in accordance with Clal Finance accounting
policy, within 25 days after the end of each calendar quarter; and (ii) provide to Clal Finance the
audited year end consolidated financial reports prepared in accordance with IFRS and in accordance
with Clal Finance accounting policy, within 40 days after the end of each calendar year. For as
long as Clal Finance owns at least 10% of the then issued and outstanding Common Stock of the
Company, the Company shall provide to Clal Finance promptly upon its request such information as
Clal Finance reasonably requires to comply with the applicable securities laws and regulations of
such exchange on which the shares in Clal Finance are traded and the Company will, subject to the
constraints of applicable law, use its best efforts to provide Clal Finance with advance notice of
the timing and contents of public announcements and to coordinate them with Clal Finance. Unless
Clal Finance notifies the Company otherwise in writing, the Company shall send all information to
be provided to Clal Finance under this Section 6(c) to such address as set forth in Section 10(c).
SECTION 7. REGISTRATION PROCEDURES.
(a) Filings; Information. Whenever the Company is required to effect the registration
of any Registrable Securities pursuant to Sections 3 or 4, the Company shall use commercially
reasonable efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended method(s) of distribution thereof as expeditiously as practicable,
and in connection with any such request:
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(A) Filing Registration Statement. The Company shall, as expeditiously as possible
and in any event within sixty (60) days after receipt of a request for a Demand Registration
pursuant to Section 3, prepare and file with the Commission a Registration Statement on any form
for which the Company then qualifies or which counsel for the Company shall deem appropriate and
which form shall be available for the sale of all Registrable Securities to be registered
thereunder in accordance with the intended method(s) of distribution thereof, and shall use
commercially reasonable efforts to cause such Registration Statement to become and remain
effective for the period required by Subsection (iii) below;
provided, however, that the
Company shall have the right to defer any Demand Registration for up to sixty (60) days, and any
piggy-back registration for such period as may be applicable to deferment of any demand
registration to which such piggy-back registration relates, in each case if the Company shall
furnish to the holders a certificate signed by the Chief Executive Officer of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company and its shareholders for such Registration Statement to be effected at
such time; provided further, however, that the Company shall not have the right to
exercise the right set forth in the immediately preceding proviso more than once in any 365-day
period in respect of a Demand Registration hereunder.
(B) Copies. The Company shall, prior to filing a Registration Statement or prospectus,
or any amendment or supplement thereto, furnish without charge to the holders of Registrable
Securities included in such registration that have so requested in writing, and such holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each amendment and
supplement to such Registration Statement, the prospectus included in such Registration Statement
(including each preliminary prospectus), and such other documents as the holders of Registrable
Securities included in such registration or legal counsel for any such holders may request in order
to facilitate the disposition of the Registrable Securities owned by such holders.
(C) Amendments and Supplements. The Company shall prepare and file with the
Commission such amendments, including post-effective amendments, and supplements to such
Registration Statement and the prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective and in compliance with the provisions of the Securities Act
until all Registrable Securities and other securities covered by such Registration Statement have
been disposed of in accordance with the intended method(s) of distribution set forth in such
Registration Statement (which period shall not exceed the sum of one hundred twenty (120) days
plus any period during which any such disposition is interfered with by any stop order or
injunction of the Commission or any governmental agency or court) or such securities have been
withdrawn.
(D) Notification. After the filing of a Registration Statement, the Company shall
promptly, and in no event more than two (2) business days after such filing, notify the holders of
Registrable Securities included in such Registration Statement
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of such filing, and shall further notify such holders promptly and confirm such advice in writing
in all events within two (2) business days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective amendment to such
Registration Statement becomes effective; (iii) the issuance or threatened issuance by the
Commission of any stop order (and the Company shall take all actions required to prevent the entry
of such stop order or to remove it if entered); and (iv) any request by the Commission for any
amendment or supplement to such Registration Statement or any prospectus relating thereto or for
additional information or of the occurrence of an event requiring the preparation of a supplement
or amendment to such prospectus so that, as thereafter delivered to the purchasers of the
securities covered by such Registration Statement, such prospectus will not contain an untrue
statement of material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and promptly make available to the holders
of Registrable Securities included in such Registration Statement any such supplement or amendment;
except that before filing a Registration Statement or prospectus or any amendment or supplement
thereto with the Commission, the Company shall furnish to those holders of Registrable Securities
included in such Registration Statement who have so requested in writing and to the legal counsel
for any such holders copies of all such documents proposed to be filed sufficiently in advance of
filing to provide such holders and legal counsel with a reasonable opportunity to review such
documents and comment thereon, and the Company shall not file any Registration Statement or
prospectus or amendment or supplement thereto, including documents incorporated by reference, to
which such holders or their legal counsel shall reasonably object.
(E) State Securities Laws Compliance. The Company shall use
commercially reasonable efforts to (i) register or qualify the Registrable Securities
covered by the Registration Statement under such securities or “blue sky” laws of such
jurisdictions in the United States as the holders of Registrable Securities included in such
Registration Statement (in light of their intended plan of distribution) may request and
(ii) take such action necessary to cause such Registrable Securities covered by the
Registration Statement to be registered with or approved by such other governmental
authorities as may be necessary by virtue of the business and operations of the Company
and do any and all other acts and things that may be necessary or advisable to enable the
holders of Registrable Securities included in such Registration Statement to consummate
the disposition of such Registrable Securities in such jurisdictions; provided,
however,
that the Company shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this paragraph
3.1.5 or subject itself to taxation in any such jurisdiction.
(F) Agreements for Disposition. The Company shall enter into
customary agreements (including, if applicable, an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities. The representations, warranties
and covenants of the Company in any underwriting agreement which are made to or for
the benefit of any Underwriters, to the extent applicable, shall also be made to and for the
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benefit of the holders of Registrable Securities included in such registration statement. No
holder of Registrable Securities included in such registration statement shall be required to make
any representations or warranties in the underwriting agreement except, if applicable, with
respect to such holder’s organization, good standing, authority, title to Registrable Securities,
lack of conflict of such sale with such holder’s material agreements and organizational documents,
and with respect to written information relating to such holder that such holder has furnished in
writing expressly for inclusion in such Registration Statement.
(G) Cooperation. The principal executive officer of the Company, the principal
financial officer of the Company, the principal accounting officer of the Company and all other
officers and members of the management of the Company shall cooperate fully in any offering of
Registrable Securities hereunder, which cooperation shall include, without limitation, the
preparation of the Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with Underwriters, attorneys,
accountants and potential investors.
(H) Records. The Company shall make available for inspection by the holders of
Registrable Securities included in such Registration Statement, any Underwriter participating in
any disposition pursuant to such registration statement and any attorney, accountant or other
professional retained by any holder of Registrable Securities included in such Registration
Statement or any Underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to supply all information
requested by any of them in connection with such Registration Statement.
(I) Opinions and Comfort Letters. The Company shall furnish to each holder of
Registrable Securities included in any Registration Statement a signed counterpart, addressed to
such holder, of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii)
provided that such holder has furnished customary representations and certifications, any comfort
letter from the Company’s independent public accountants delivered to any Underwriter.
(J) Listing. The Company shall use its best efforts to cause all Registrable
Securities included in any registration to be listed on such exchanges, admitted to trading or
otherwise designated for trading in the same manner as similar securities issued by the Company
are then listed, admitted to trading or designated.
(b) Obligation to Suspend Distribution. Upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 7(a)(D) (iv), or, in the case of a
resale registration on Form S-3 pursuant to Section 3(f) hereof, upon any suspension by the
Company, pursuant to a written ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ compliance program adopted by the Company’s Board
of Directors, of the ability of all “insiders”
13
covered by such program to transact in the Company’s securities because of the existence of
material non-public information, each holder of Registrable Securities included in any
registration shall immediately discontinue disposition of such Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until such holder receives the
supplemented or amended prospectus contemplated by Section 7(a)(D)(iv) or the restriction on the
ability of “insiders” to transact in the Company’s securities is removed, as applicable, and, if
so directed by the Company, each such holder will deliver to the Company all copies, other than
permanent file copies then in such holder’s possession, of the most recent prospectus covering
such Registrable Securities at the time of receipt of such notice.
(c) Registration Expenses. The Company shall bear all costs and expenses incurred in
connection with any registration pursuant to this Agreement, and all expenses incurred in
performing or complying with its other obligations under this Agreement, whether or not the
Registration Statement becomes effective, including, without limitation: (i) all registration and
filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including
fees and disbursements of counsel in connection with blue sky qualifications of the Registrable
Securities); (iii) printing expenses; (iv) the Company’s internal expenses (including, without
limitation, all salaries and expenses of its officers and employees); (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities; (vi) National Association of
Securities Dealers, Inc. fees; (vii) fees and disbursements of counsel for the Company and fees and
expenses for independent certified public accountants retained by the Company (including the
expenses or costs associated with the delivery of any opinions or comfort letters requested
pursuant to Subsection 7(a)(I)); (viii) the fees and expenses of any special experts retained by
the Company in connection with such registration; and (ix) the fees and expenses of one legal
counsel selected by the holders of a majority-in-interest of the Registrable Securities included in
such registration. The Company shall have no obligation to pay any underwriting discounts or
selling commissions attributable to the Registrable Securities being sold by the holders thereof,
which underwriting discounts or selling commissions shall be borne by such holders. Additionally,
in an underwritten offering, all selling shareholders and the Company shall bear the expenses of
the underwriter pro rata in proportion to the respective amount of shares each is selling in such
offering.
(d) Information. The holders of Registrable Securities shall provide such information
as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection
with the preparation of any Registration Statement, including amendments and supplements thereto,
in order to effect the registration of any Registrable Securities under the Securities Act and in
connection with the Company’s obligation to comply with federal and applicable state securities
laws.
SECTION 8. INDEMNIFICATION
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(a) The Company shall indemnify and hold harmless each Holder, its officers and employees and
each Person, if any, who controls any such Holders, within the meaning of the Securities Act, from
and against any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which that Holder, officer, employee or controlling Person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement filed pursuant hereto or in any amendment or supplement
thereto; (ii) the omission or alleged omission to state in any registration statement filed
pursuant hereto or in any amendment or supplement thereto 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, and shall reimburse each Holder and each such officer, employee or
controlling Person promptly upon demand for any legal or other expenses reasonably incurred by that
Holder, officer, employee or controlling Person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as such expenses are
incurred provided that no Holder shall be indemnified for misstatements or omissions arising from
information provided by the Holder in writing for inclusion in any registration statement filed
pursuant hereto. The foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to any Holder or to any officer, employee or controlling Person of that
Holder.
(b) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim
or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to
be made against the Company under this Section 8, notify the Company in writing of the claim or the
commencement of that action; provided, however, that the failure to notify the Company shall not
relieve it from any liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure; and provided, further; that the failure to notify the
Company shall not relieve it from any liability which it may have to an indemnified party otherwise
than under this Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the Company thereof, the Company shall be entitled to participate
therein and, to the extent that it wishes to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the Company to the indemnified party of
its election to assume the defense of such claim or action, the Company shall not be liable to the
indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, any 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 expenses of
such counsel shall be at the expense of the indemnified party unless (i) the employment of such
counsel has been specifically authorized by the Company in writing, or (ii) such indemnified party
shall have been advised by such counsel that there may be one or more legal defenses available to
it which are different from or additional to those available to the Company and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
15
separate counsel or (iii) the Company has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such indemnified party
notifies the Company in writing that it elects to employ separate counsel at the expense of the
Company, the Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to one local counsel) at any time for all such indemnified
parties, which firm shall be designated in writing by the Holders of a majority in principal amount
of the outstanding Shares and the Shares issuable upon exercise of the Warrants. The Company shall
not (i) without the prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding or (ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if settled with the
consent of the Company or if there be a final judgment of the plaintiff in any such action, the
Company agrees to indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(c) If the indemnification provided for in this Section 8 shall for any reason be unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) in respect of any
loss, claim, damage or liability, or any action in respect thereof, referred to therein, then the
Company shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or liability, or action
in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Holders on the other, from the sale of
the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but any other relevant equitable considerations. The Company and the Holders
agree that it would not be just and equitable if contributions pursuant to this Section 8(c) were
to be determined by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof, referred to above in this
Section 8 shall be deemed to include, for purposes of this Section 8(c), any legal or other
expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this Section 8(c), no Holder
shall be required to contribute any amount in excess of the amount by which the net proceeds
received by it in connection with its sale of Shares exceeds the amount of any damages which such
16
Holder has otherwise paid or become liable to pay by reason of the untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to
contribute as provided in this Section 8(c) are several and not joint.
SECTION 9. UNDERWRITING AND DISTRIBUTION.
Rule 144. The Company covenants that it shall file any reports required to be filed by
it under the Securities Act and the Exchange Act and shall take such further action as the holders
of Registrable Securities may reasonably request, all to the extent required from time to time to
enable such holders to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such
Rules may be amended from time to time, or any similar Rule or regulation hereafter adopted by the
Commission.
SECTION 10. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company shall not, 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 Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except as disclosed in the Offering Circular, the Company has not previously entered into any
agreement granting any registration rights with respect to its Shares to any Person except for the
registration rights given to the initial investors and Sunrise. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the rights granted to the
holders of the Company’s Shares under any agreement in effect on the date hereof.
(b) Amendments and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the provisions hereof may
not be given unless the Company has obtained the written consent of the holders of 85% of the
shares of Common Stock acquired in the Offering; provided, that the rights of Clal Finance
set out in Section 6(c) of this Agreement may not be amended, modified or supplemented, and waivers
or consents to or departures from the such rights may not be given unless the Company has obtained
the written consent of Clal Finance.
(c) Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, facsimile or air courier guaranteeing overnight delivery:
17
(i) if to a Holder, at the address set forth in the record books of the
Company; and
if to the Company to:
Titanium Asset Management Corp.
ComCenter at Lakewood Ranch
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
ComCenter at Lakewood Ranch
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
and
Sunrise Securities Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited
Bucklersbury House
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇
Bucklersbury House
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇
Any such notices and communications shall take effect at the time of receipt thereof.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute
one and the same agreement.
18
(f) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
(h) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the investor rights granted by the Company herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such subject matter.
[Remainder of page intentionally left blank]
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
| Very truly yours, TITANIUM ASSET MANAGEMENT CORP. |
||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Title: | DIRECTOR | |||
| SUNRISE SECURITIES CORP. |
||||
| By: | /s/ SUNRISE SECURITIES CORP. | |||
| Name: | ||||
| Title: | ||||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LIMITED |
||||
| By: | /s/ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇. ▇▇▇▇▇▇ | |||
| Title: | Director | |||