STOCK PURCHASE AND SETTLEMENT AGREEMENT
Exhibit
10.1
THE
SHARES OFFERED HEREUNDER HAVE NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”) IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT. TRANSFER OF THESE
SHARES IN THE UNITED STATES OR TO U.S. PERSONS IS PROHIBITED, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATIONS S, PURSUANT TO REGISTRATION UNDER
THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.
HEDGING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THIS STOCK PURCHASE AND SETTLEMENT
AGREEMENT (THIS “Agreement”) is made as of September 30, 2008 (the “Effective
Date”) by and between Altair Nanotechnologies Inc., a Canadian corporation (the
“Company”), and Xx Xxxxxx, LLC, a United Arab Emirates limited liability company
(the “Investor”).
Recitals
A. The
Company and the Investor are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by the provisions of
Regulation S (“Regulation S”), as promulgated by the U.S. Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended;
and
B.
The Investor wishes to purchase from the Company, and the Company wishesto sell
and issue to the Investor, upon the terms and conditions stated in this
Agreement, common shares of the Company (“Common Stock”); and
C. The
Company and the Investor also wish to settle certain potential claims arising in
connection with the Purchase Agreement dated November 29, 2007 (the “2007
Purchase Agreement”) between the Company and Investor; and
D. Contemporaneous
with the sale of the Common Stock, the parties hereto will execute and deliver
An Amendment to Registration Rights Agreement, in the form attached hereto as
Exhibit A (the “Amendment”), pursuant to which the Company will agree that
certain rights set forth on the Registration Rights Agreement dated November 29,
2007 (as amended by the Amendment, the “Registration Rights Agreement”) between
the Company and the Investor shall apply to the Shares issued
hereunder.
Agreement
In consideration of the mutual promises
made herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
-1-
1.
Definitions. In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth below:
“Affiliate” means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is Controlled by, or is under
common Control with, such Person; provided, however, notwithstanding the
foregoing, the Investor shall not be deemed to be an Affiliate of the
Company.
“Battery Pack Issue”
means (a) any battery packs the Company supplied, or agreed to supply, to
Phoenix and the Company’s offer of a warranty replacement to Phoenix with
respect to such battery packs or components thereof, (b) the theory, concern or
problem that battery packs of the type supplied to Phoenix for use in vehicles
contain a design flaw that could create a thermal event under
certain circumstances, (c) any accounting adjustments, including
inventory write-offs, revenue adjustments, expense adjustments or increases to
warranty reserves, arising from (a) or (b) above; and (d) any representations,
warranties, statements, acts or omissions regarding (a), (b) or (c) above, the
Company’s relationship with Phoenix, orders from Phoenix or the potential for
any orders or revenues in the future from Phoenix.
“Business Day” means a
day, other than a Friday, Saturday or Sunday, on which banks in New York City,
New York and the United Arab Emirates are open for the general transaction of
business.
“Claim” means any and
all claims, liabilities, charges, demands, grievances, and causes of action of
any kind or nature whatsoever, including without limitation claims for breach of
contract, breach of fiduciary duty, fraud or indemnification, whether direct or
indirect, liquidated or unliquidated.
“Closing” has the
meaning set forth in Section 3(a).
“Closing Date” has the
meaning set forth in Section 3(a).
“Common Stock” has the
meaning set forth in the Recitals.
“Company’s Knowledge”
(including any derivation thereof such as “known” or “knowing”) means the actual
knowledge of the executive officers (as defined in Rule 405 under the 0000 Xxx)
of the Company, after due inquiry, including, but not limited to, reviewing this
Agreement.
“Compensation
Committee” means any committee of the Board of Directors of the Company
appointed to satisfy the requirements of NASDAQ Stock Market Rule 4350(c)(3), or
any successor rule, or that otherwise has been delegated the power, authority
and responsibility to make recommendations or decisions with respect to the
compensation of executive officers of the Company.
-2-
“Confidential
Information” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).
“Control” (including
the terms “controlling”, “controlled by” or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Final Closing” has
the meaning set forth in Section 3(c).
“Initial Closing” has
the meaning set forth in Section 3(b).
“Intellectual
Property” means all of the following: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; and (v) proprietary computer software (including but not limited
to data, data bases and documentation).
“Investor Shares”
means the Shares and any shares of Common Stock acquired pursuant to the 2007
Purchase Agreement.
A Claim
is a “Known
Claim,” with respect to any Person if the Person or any Affiliate of the
Person (including any executive officer (as defined in Rule 405 under the 1933
Act), manager, member or director of the Person) had actual knowledge of the
facts that would give rise to the Claim or notice of facts, which in the
exercise of reasonable diligence or following a reasonable inquiry, would have
led to actual knowledge of the facts that would give rise to the
Claim.
“Law” means all
constitutions, statutes, laws, treaties, codes, ordinances, regulations, rules,
orders, judgments, writs, injunctions, acts, determinations, directions or
decrees of any governmental entity with jurisdiction over the respective Person
or any stock exchange or market on which any securities of the Company are
listed.
“Material Adverse
Effect” means a material adverse effect on (i) the assets, liabilities,
results of operations, condition (financial or otherwise), prospects or business
of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the
Company to perform its obligations under the Transaction Documents; provided,
however, none of the following shall be deemed to constitute, and none of the
following shall be taken into account in determining whether there has been, a
Material Adverse Effect: any adverse change, event, development, or
effect to the extent arising from (a) changes in general business or
economic conditions occurring after the date of this Agreement, including such
conditions related to the business of such party but not unique for such party,
(b) changes in national or international political or social conditions
occurring after the date of this Agreement, including engagement, continuation
or escalation by the United States in hostilities, whether or not pursuant to
the declaration of a national emergency or war, or the occurrence of any
military or terrorist attack upon the United States or any of its territories,
possessions or diplomatic or consular offices or upon any military installation,
equipment or personnel of the United States, (c) any disruption in the
financial, banking, or securities markets, (d) changes resulting from the
execution, announcement or performance of this Agreement.
-3-
“New Securities” means
equity securities of the Company, or rights, options, or warrants to purchase
said equity securities, or securities of any type whatsoever that are, or may
become, convertible into or exchangeable into or exercisable for said equity
securities; provided, however, New Securities shall not include: (a) any
equity securities, rights, options, warrants or securities exchangeable into or
exercisable for equity securities to the extent outstanding on the Effective
Date; (b) securities issued upon the exercise or conversion of any debenture,
warrant, option, or other security exchangeable into or exercisable for any
equity securities; (c) securities issuable upon a stock split, stock
dividend, or any subdivision of the Common Stock; (d) shares of Common
Stock, options, stock appreciation rights and similar rights issued or issuable
to employees or directors of, or consultants to, the Company and its
subsidiaries pursuant to any plan approved by the Company’s Board of Directors;
(e) securities issued or issuable in transactions in which the Company is
purchasing, directly or through a merger, triangular merger, share exchange or
other transaction, substantially all of the assets or business of another
company, (f) any securities issued or issuable to banks, investment banks,
placement agents, finders or other consultants or advisors for their own account
and for services rendered; and (g) securities issued or issuable pursuant to
agreements entered into as part of a licensing, supply or development
transaction in which the consideration for the securities, or the vesting of the
securities, is entering into the transaction or the meeting of a milestone, a
certain level of orders or another performance-related event and is not cash, a
promissory note or other obligation to pay cash or a cash equivalent and to the
extent the aggregate number of securities issued or issuable pursuant to all
such agreements does not exceed one percent (1%) of the issued and outstanding
common shares of the Company as at the date of this Agreement.
“Person” means an
individual, corporation, partnership, limited liability company, trust, business
trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.
“Per Share Price”
means $1.70 per Share.
“Phoenix” means
Phoenix MC, Inc., Phoenix Motorcars, Inc. and/or its predecessors to, or
successors to, the business plan and assets of the foregoing.
“Predecessor” means,
with respect to the Company, an entity substantially all of whose assets and
business was acquired by the Company or one of its Subsidiaries, whether through
merger, consolidation, asset purchase, stock purchase or otherwise.
-4-
“Purchase Price” means
$10,000,000.10
“Purchase Shares”
means 5,882,353 shares of Common Stock.
“Release Shares” means 2,117,647 shares
of Common Stock.
“Rights Period” shall
mean the period between the Final Closing and the earliest to occur of (i) the
first date that the Investor Shares constitute no more than ten (10) percent of
the Company’s outstanding Common Stock (on a fully diluted basis assuming
exercise or conversion of all options, warrants, conversion rights and other
rights exercisable for or convertible into Common Stock), (ii) the first date
after January 1, 2010 that the market price of the Common Stock has exceeded
$4.50 (adjusted for stock splits, consolidations and similar transactions) for
60 consecutive trading days, and (iii) the closing of the sale of substantially
all of the assets of the Company, a merger involving the Company in which the
shareholders of the Company prior to the transaction own less than 50% of the
surviving entity or a similar change of control transaction.
“SEC Filings” has the
meaning set forth in Section 4.6.
“Shareholder Rights Plan
Agreement” means the Amended and Restated Shareholder Rights Plan
Agreement dated October 15, 1999 between the Company and Equity Transfer
Services, as rights agent, as amended by Amendment No. 1 to Amended and Restated
Shareholders Rights Plan Agreement dated September 30, 2008.
“Shares” means the sum
of the Purchase Shares and the Release Shares.
“Subsidiary” means a
Person of which the Company holds, directly or indirectly, more than 40% of the
outstanding equity interests.
“Transaction
Documents” means this Agreement and the Amendment.
“Transfer Agent” means
Equity Transfer Services and Trust Company or the successor transfer agent of
the Company.
“1933 Act” means the
Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.
“1934 Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute, and the
rules and regulations promulgated thereunder.
2.
Issuance of the
Release Shares and Purchase and Sale of the Purchase
Shares. Subject to the terms and conditions of this Agreement,
on the Initial Closing Date the Company shall issue to the Investor the Release
Shares, and on the Final Closing Date the Investor shall purchase, and the
Company shall sell and issue to the Investor, the Purchase Shares, in the case
of each such Closing Date in exchange for the consideration described
herein.
-5-
3.
Closing.
(a) Two Closings. The
closing of the purchase and sale of the Shares shall take place in two closings,
each of which is referred to as a “Closing” and each of
which shall be deemed to have occurred at the time (the “Closing Date”)
specified in this Section 3 with respect to such Closing.
(b) Initial
Closing. At the initial Closing (the “Initial Closing”),
the Company shall issue the Release Shares to the Investor, and the releases and
other provisions set forth in Section 9 of this Agreement shall become
irrevocably effective and binding. The Initial Closing shall be
deemed to have occurred, without any additional action on behalf of the parties,
on the Effective Date upon the execution of this Agreement by both the Company
and the Investor. Within three (3) Business Days of the execution of
this Agreement by both parties, the Company shall deliver to Xxxxx & LeBeouf
LLP, for the benefit of the Investor, at the following address, 000 Xxxxx Xxxxx
Xxxxxx Xxxxx 0000, Xxx Xxxxxxx, XX 00000, XXX, Attn: Xxxxxxx XxXxxxxxx,
Telephone (000) 000-0000, three certificates for the Release Shares registered
in the name of the Investor, each representing approximately one-third of the
Release Shares (consistent with Section 12.2) and with such legends as are
contemplated by this Agreement.
(c) Subsequent
Closing. At the subsequent Closing (the “Final Closing”), the
Investor shall purchase from the Company, and the Company shall sell to the
Investor, the Purchase Shares in exchange for the Purchase
Price. The Final Closing shall be deemed to have occurred at
the time on which the Company receives confirmation of the receipt of the
Purchase Price by the bank to which the Purchase Price is wire transferred. To
achieve the Final Closing, the Investor shall wire transfer the Purchase Price,
directly or through an intermediary bank, to the bank account of the Company in
accordance with the wire instructions provided by the Company. The Investor
shall also provide reference number information for the transfer to Xxxx
Xxxxxxx, via email at xxxxxxxx@xxxxxxxxxx.xxx. The parties shall cause the Final
Closing to occur no later than 15 calendar days after the Effective
Date. Within three (3) Business Days after the receipt by the Company
of the Purchase Price, the Company shall deliver to Xxxxx & XxXxxxx LLP, for
the benefit of the Investor, at the following address, 000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000, Xxx Xxxxxxx, XX 00000, XXX, Attn: Xxxxxxx XxXxxxxxx, Telephone (000)
000-0000, three certificates for the Purchase Shares registered in the name of
the Investor, each representing approximately one-third of the Purchase Shares
(consistent with Section 12.2) and with such legends as are contemplated by this
Agreement.
4. Representations and
Warranties of the Company. The Company hereby represents and
warrants to the Investor that, subject to the exceptions fully, fairly and
specifically disclosed in the disclosure letter (referencing the appropriate
section and paragraph numbers) delivered by Company to the Investor dated as of
the date hereof (the “Disclosure Letter”),
which exceptions shall be deemed to be representations and warranties as if made
hereunder, the following statements are true, accurate, complete and not
misleading as of the Effective Date, except where another date is specified in
the representation or warranty (for the avoidance of doubt, if any section in
the Disclosure Letter discloses an item or information in such a way as to make
its relevance to the disclosure required by another section of the Disclosure
Letter readily apparent based on the substance of such disclosure, such matter
shall be deemed to have been disclosed in such other section of the Disclosure
Letter, notwithstanding the omission). Except as set forth in
this last sentence of this paragraph, no other knowledge of the Investor
relating to the Company will prevent or limit a claim made by the Investor for
breach of any of the representations and warranties in this Section 4, and the
Company may not put forward the Investor’s knowledge (actual, constructive or
imputed) of any facts which might make any of the representations and warranties
in this Section 4 untrue, inaccurate, incomplete or misleading as a defense to a
claim for breach of any of the representations and
warranties. Notwithstanding the preceding sentence, the Investor
shall have deemed to have knowledge of all information in the SEC Filings, and
the Company may assert Investor’s knowledge of information in the SEC Filings to
prevent or limit a claim that the representations and warranties in Section 4
are untrue, inaccurate, incomplete or misleading.
-6-
4.
1 Organization, Good Standing
and Qualification. Each of the Company and its Subsidiaries is
a company duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite company power and
authority to carry on its business as now conducted and to own its
properties. Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign company and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property makes such qualification or leasing necessary.
4.
2 Authorization. The
Company has full power and authority and has taken all requisite action on the
part of the Company, its officers, directors and shareholders necessary for (i)
the authorization, execution and delivery of the Transaction Documents, (ii)
authorization of the performance of all obligations of the Company hereunder or
thereunder, and (iii) the authorization, issuance (or reservation for issuance)
and delivery of the Shares. The Transaction Documents constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.
-7-
4.3 Capitalization. Section
4.3 of the Disclosure Letter sets forth as of September 30, 2008 (a) the
authorized capital stock of the Company; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company’s stock plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Shares and options or other rights outstanding under the Company’s stock plans)
exercisable for, or convertible into or exchangeable for any shares of capital
stock of the Company. The Company has not issued any shares of
capital stock (other than upon the exercise of an option or warrant outstanding
on the Effective Date and disclosed in the Disclosure Letter) or any options,
warrants or other rights exercisable for, convertible into or exchangeable for
any shares of capital stock since September 30, 2008. All of the issued and
outstanding shares of the Company’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of pre-emptive rights
(other than as arise under this Agreement) and were issued in full compliance
with applicable state and federal securities law and any rights of third
parties. No Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company other than as
set forth in this Agreement. Except as described in the Company’s
Quarterly Report on Form 10-Q for the period ended June 30, 2008 (the “Most Recent Form
10-Q”), in the Disclosure Letter and in agreements with the Investor, (w)
there are no outstanding warrants, options, convertible securities or other
rights, agreements or arrangements of any character under which the Company or
any of its Subsidiaries is or may be obligated to issue any equity securities of
any kind and except as contemplated by this Agreement, (x) neither the Company
nor any of its Subsidiaries is currently in negotiations for the issuance of any
equity securities of any kind, (y) there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among the Company and any of the security holders of the Company
relating to the securities of the Company held by them, and (z) other than under
agreements to which the Investor is a party, no Person has the right to require
the Company to register any securities of the Company under the 1933 Act,
whether on a demand basis or in connection with the registration of securities
of the Company for its own account or for the account of any other Person
(except for such registration rights that have been satisfied or are being
satisfied by means of a currently effective registration statement filed by the
Company).
The
issuance and sale of the Shares hereunder will not obligate the Company to issue
shares of Common Stock or other securities to any other Person (other than the
Investor) and will not result in the adjustment of the exercise, conversion,
exchange or reset price of any outstanding security.
Except as
set forth in the Shareholder Rights Plan Agreement, the Company does not have
outstanding shareholder purchase rights or “poison pill” or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events. The
Company has authorized and executed the Amendment No. 1 to Amended and Restated
Shareholders Rights Plan Agreement dated September 30, 2008, pursuant to which
the Investor and its affiliates are excepted from the definition of “Acquiring
Person” in the Shareholder Rights Plan Agreement (provided that their ownership
does not subsequently increase by 1% and they do not initiate a “Take-over
Bid”), and the consummation of the transactions contemplated by this Agreement
shall not give rise to the ability for holders of Common Stock to exercise
“Rights” or otherwise precipitate the application of Section 3.1 of the
Shareholder Rights Plan Agreement. Terms set forth in
quotations marks in the preceding sentence have the meaning set forth in the
Shareholder Rights Plan Agreement.
4.4 Valid
Issuance. The Shares have been duly and validly authorized
and, when issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions (other than those created by the Investor), except
for restrictions on transfer set forth in the Transaction Documents or imposed
by applicable securities laws.
-8-
4.5 Consents. The
execution, delivery and performance by the Company of the Transaction Documents
and the offer, issuance and sale of the Shares require no consent of, action by
or in respect of, or filing with, any Person, governmental body, agency, or
official having jurisdiction over the Company or any of its Affiliates that has
not been obtained, including without limitation, the NASDAQ Capital Market (the
“NASDAQ Capital
Market”) and the Company’s shareholders, other than (a) filings that have
been made pursuant to applicable state securities laws and post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods, (b) a Notification Form
Listing Additional Shares to be filed with the NASDAQ Capital Market, which the
Company undertakes to file promptly following the Effective Date, (c) a Current
Report on Form 8-K describing the Transaction Documents and the transactions
contemplated by the Transaction Documents, which the Company undertakes to file
within four (4) Business Days after the Effective Date, and (d) filings required
by the Registration Rights Agreement. Subject to the accuracy
of the representations and warranties of the Investor set forth in Section 5
hereof, the Company has taken all action necessary to prevent the issuance and
sale of the Shares from triggering any rights or penalties under the provisions
of any shareholder rights plan or other “poison pill” arrangement (including for
the avoidance of doubt the Shareholder Rights Plan Agreement), any
anti-takeover, business combination or control share law or statute binding on
the Company or to which the Company or any of its assets and properties may be
subject and any provision of the Company’s Articles of Continuance or Bylaws
that is or could reasonably be expected to become applicable to the Investor as
a result of the transactions contemplated hereby, including without limitation,
the issuance of the Shares and the ownership, disposition or voting of the
Shares by the Investor or the exercise of any right granted to the Investor
pursuant to this Agreement or the other Transaction Documents.
4.6 Delivery of SEC Filings;
Business.
(i) The
Company has made available to the Investor through the XXXXX system, true and
complete copies of the Company’s most recent Annual Report on Form 10-K for the
fiscal year ended December 31, 2007, and all other reports filed by the Company
pursuant to the 1934 Act since December 31, 2007 and prior to the Effective Date
(collectively, together with all Exhibits thereto and incorporated by reference
therein, the “SEC
Filings”). The SEC Filings are the only filings required of
the Company pursuant to the 1934 Act for such period.
(ii) The
Company and its Subsidiaries are engaged in all material respects only in the
business described in the SEC Filings, and to the extent required by rules
governing the content of the SEC Filings, the SEC Filings contain a complete and
accurate description in all material respects of the business of the Company and
its Subsidiaries, taken as a whole.
4.7 Use of
Proceeds. The net proceeds of the sale of the Shares hereunder
shall be used by the Company for working capital, capital expenditures, and
general corporate purposes, which may include acquisitions of complementary
businesses, products or technologies.
4.8 No Material Adverse
Change. Since June 30, 2008, except as identified and
described in the SEC Filings and filings made by Affiliates of the Company on
XXXXX pursuant to the 1934 Act, there has not been:
-9-
(i) any
change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included
in the Most Recent Form 10-Q, except for changes in the ordinary course of
business which have not and could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate;
(ii) any
declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of the Company, or any redemption or
repurchase of any securities of the Company;
(iii) any
material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;
(iv) any
waiver, not in the ordinary course of business, by the Company or any Subsidiary
of a material right or of a material debt owed to it;
(v)
any satisfaction or discharge of any lien, claim or encumbrance or payment of
any obligation by the Company or a Subsidiary, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results prospects or business of the Company and its
Subsidiaries taken as a whole (as such business is presently
conducted);
(vi) any
change or amendment to the Company’s Articles of Continuance or Bylaws, or
material change to any material contract or arrangement by which the Company or
any Subsidiary is bound or to which any of their respective assets or properties
is subject;
(vii) any
labor union organizing activities or material labor difficulties with respect to
employees of the Company or any Subsidiary;
(viii) any
material transaction entered into by the Company or a Subsidiary other than in
the ordinary course of business;
(ix)
the loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company or any
Subsidiary;
(x)
any material changes in compensation arrangements with any key employee, senior
management or directors;
(xi) the
loss or threatened loss in writing of any customer which has had or could
reasonably be expected to have a Material Adverse Effect;
(xii) any
sale, assignment or exclusive license or transfer of the Company’s Intellectual
Property;
-10-
(xiii) any
material change in contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise; or
(xiv) to
the Company’s Knowledge any events, occurrences, changes, effects or conditions
of any character that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
4.9 SEC Filings; S-3
Eligibility.
(a) At
the time of filing thereof, the SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and, to the Company’s Knowledge,
did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
(b) The
Company is presently eligible to use Form S-3 to register the Registrable
Securities (as such term is defined in the Registration Rights Agreement) for
sale by the Investor as contemplated by the Registration Rights
Agreement.
(c) To
the Company’s Knowledge, the Company is in compliance in all material respects
with all provisions of the Xxxxxxxx-Xxxxx Act of 2002 that are applicable to it
as of the Effective Date.
4.10 No Conflict, Breach,
Violation or Default. The execution, delivery and performance
of the Transaction Documents by the Company and the issuance and sale of the
Shares will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under (i) the Company’s
Articles of Continuance or the Company’s Bylaws, both as in effect on the
Effective Date (true and complete copies of which have been made available to
the Investor through the XXXXX system), or (ii)(a) any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company, any Subsidiary or any of their respective
assets or properties, or (b) any agreement or instrument to which the Company or
any Subsidiary is a party or by which the Company or a Subsidiary is bound or to
which any of their respective assets or properties is subject.
4.11 Tax
Matters. The Company and each Subsidiary has timely prepared
and filed all tax returns, as amended, required to have been filed by the
Company or such Subsidiary with all appropriate governmental agencies and timely
paid all taxes shown thereon or otherwise owed by it. All such tax
returns are true, complete, and correct in all material respects. The
charges, accruals and reserves on the books of the Company in respect of taxes
for all fiscal periods are adequate in all material respects, and there are no
material unpaid assessments against the Company or any Subsidiary nor, to the
Company’s Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the
Company and its Subsidiaries, taken as a whole. All taxes and other
assessments and levies that the Company or any Subsidiary is required to
withhold or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party when due, except where
such failure to withhold or collect would not have a Material Adverse
Effect. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any Subsidiary or any of their
respective assets or property. There are no outstanding tax sharing
agreements or other such arrangements between the Company and any Subsidiary or
other corporation or entity. No audit in respect of
any tax liability is pending with respect to any tax liability shown on a tax
return filed by the Company or any Subsidiary.
-11-
4.12 Title to
Properties. Except as disclosed in the SEC Filings, the
Company and each Subsidiary has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in the SEC Filings, the Company and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 Inventory. Except
as disclosed in the SEC Filings, the Company’s inventory is of satisfactory
quality and saleable in the usual course of its business. Except as would be
covered by the warranty and other reserves set forth in the Company’s financial
statements, (a) the Company has not supplied, or agreed to supply, defective or
unsafe products or products which fail to comply with their terms of sale, and
(b) no products in a state ready for supply by the Company are defective or
unsafe or will fail to comply with their terms of sale. The Company’s level of
inventory is reasonable having regard to current and anticipated
demand.
4.14 Compliance with
Laws. The Company is in compliance with all laws of any
governmental body applicable to its business or operations, except where the
failure to be in compliance would not have a Material Adverse
Effect. The Company has not received any written notice of or been
charged with the violation of any laws, except where such violation would not
have a Material Adverse Effect.
4.15 Certificates, Authorities
and Permits. The Company and each Subsidiary possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, except where the
failure to have such certificates, authorities or permitted would not have a
Material Adverse Effect. Neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company or such Subsidiary, could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate. All such
certificates, authorities and permits are validly held by the
Company. The Company has complied with all material terms and
conditions thereof and the same will not be subject to suspension, modification,
revocation or nonrenewal as a result of the execution and delivery of this
Agreement or the consummation of the transaction contemplated
hereby.
-12-
4.16 Employees and Labor
Disputes. (a) No labor dispute with the employees of the
Company or any Subsidiary exists or, to the Company’s Knowledge, is imminent,
(b) to the Company’s Knowledge, no union organizational campaign is
in progress with respect to the employees of the Company, (c) the Company is not
engaged in any unfair labor practice, (d) there is no unfair labor practice
charge or complaint against the Company pending, or, to the Company’s Knowledge,
threatened, (e) there are no pending, or, to the Company’s Knowledge,
threatened, charges against the Company or any current or former employee of the
Company (in his or her capacity as such), (f) the Company has not received
written notice during the past two years of the intent of any governmental body
responsible for the enforcement of labor or employment laws to conduct an
investigation of the Company and, to the Company’s Knowledge, no such
investigation is in progress and (g) the Company is in compliance in all
material respects with all laws and orders relating to the employment of labor
and classification of persons as employees, including all such laws and orders
relating to wages, hours, discrimination, civil rights, safety and the
collection and payment of withholding and similar taxes and the provision of
employee benefits, except where any such noncompliance shall not have a Material
Adverse Effect.
4.17 Benefit
Plans. The Company is in compliance with all of its
obligations under any employee benefit plan within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
under which any employee or former employee of the Company has any present or
future right to benefits or under which the Company has or may have any present
or future liability. There is no multiemployer plan within the
meaning of Section 3(37) of ERISA under which the Company has or may have any
present or future liability.
4.18 Intellectual
Property.
(a) No
Intellectual Property of the Company or its Subsidiaries which is necessary for
the conduct of Company’s and each of its Subsidiaries’ respective businesses as
currently conducted has been or is now involved in any cancellation or
litigation, and, to the Company’s Knowledge, no such action is
threatened. No patent of the Company or its Subsidiaries is involved
in any interference, reissue, reexamination or opposition
proceeding.
(b) All
of the licenses and sublicenses and consent, royalty or other agreements
concerning Intellectual Property which are necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or currently planned to be conducted to which the Company or any
Subsidiary is a party or by which any of their assets are bound (other than
generally commercially available, non-custom, off-the-shelf software application
programs) (collectively, “License Agreements”) are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company’s Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally, and
there exists no event or condition which constitutes a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its Subsidiaries under any such License
Agreement.
-13-
(c) The
Company and its Subsidiaries own or have the valid right to use all of the
Intellectual Property that is necessary for the conduct of the Company’s and
each of its Subsidiaries’ respective businesses as currently conducted or
currently proposed to be conducted and for the ownership, maintenance and
operation of the Company’s and its Subsidiaries’ properties and assets, which
ownership or right is, except as disclosed in the SEC Filings, free and clear of
all liens, encumbrances, adverse claims or obligations to license (as licensor)
all such owned Intellectual Property, other than licenses entered into in the
ordinary course of the Company’s and its Subsidiaries’ businesses.
(d) To
the Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or
conflict with (collectively, “Infringe”) any Intellectual Property rights of any
third party or any confidentiality obligation owed to a third party, and, to the
Company’s Knowledge, the Intellectual Property and Confidential Information of
the Company and its Subsidiaries which are necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted are not being Infringed in any material respect by any third
party. There is no litigation or order pending or outstanding against
the Company or, to the Company’s Knowledge, threatened or imminent against the
Company, that seeks to limit or challenge or that concerns the ownership, use,
validity or enforceability of any Intellectual Property of the Company and its
Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual
Property owned by a third party, and, to the Company’s Knowledge, there is no
valid basis for the same.
(e) The
consummation of the transactions contemplated hereby and by the other
Transaction Documents will not result in the alteration, loss, impairment of or
restriction on the Company’s or any of its Subsidiaries’ ownership or right to
use any of the Intellectual Property or Confidential Information which is
necessary for the conduct of the Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted.
(f) All
software owned by the Company or any of its Subsidiaries, and, to the Company’s
Knowledge, all software licensed from third parties by the Company or any of its
Subsidiaries that is material to the conduct of the Company’s and its
Subsidiaries’ business as currently conducted (i) is free from any material
defect, bug, virus, or programming, design or documentation error; (ii) operates
and runs in a reasonable and efficient business manner; and (iii) conforms in
all material respects to the specifications and purposes thereof.
(g) The
Company and its Subsidiaries have taken reasonable steps to protect the
Company’s and its Subsidiaries’ rights in their Intellectual Property and
Confidential Information. Each employee, consultant and contractor
who has had access to Confidential Information, the continued confidentiality of
which is necessary for the conduct of the Company’s and each of its
Subsidiaries’ respective businesses as currently conducted, has executed an
agreement to maintain the confidentiality of such Confidential Information or is
subject to a fiduciary duty requiring that such confidentiality be
maintained. Except under confidentiality obligations, to the
Company’s knowledge, there has been no material disclosure by the Company of any
of the Company’s or its Subsidiaries’ Confidential Information to any third
party. The Company and its Subsidiaries have secured from all parties
(including employees thereof) who have created any portion of, or who would
otherwise have any ownership rights in or to, the Company’s and its
Subsidiaries’ Intellectual Property valid and enforceable written assignments of
any such work, invention, improvement or other rights to the Company and each
Subsidiary.
-14-
4.19 Environmental
Matters. Neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or, to the Company’s
knowledge, operates any real property contaminated with any substance that is
subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, and is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability or
claim has had or could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate; and there is no pending or, to the Company’s
Knowledge, threatened investigation that could reasonably be expected to lead to
such a claim. None of the following exists at any property or
facility owned or operated (whether by fee interest, leasehold interest, or
otherwise) by the Company: (a) under or above-ground storage tanks, (b) asbestos
containing material in any form or condition, (c) materials or equipment
containing polychlorinated biphenyls, or (d) landfills, surface impoundments, or
disposal areas. Neither the Company nor any of its Predecessors or
Affiliates has treated, recycled, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance, including any
Hazardous Materials, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner that has
given or would give rise to any claim for damages, including any damages for
response costs, corrective action costs, personal injury, property damage or
natural resources damages, pursuant to any Environmental Laws. For
this section “Hazardous Materials” means any substance, pollutant, contaminant,
material, or waste, or combination thereof, whether solid, liquid, or gaseous in
nature, subject to regulation, investigation, control, or remediation under any
Environmental Laws. Neither the Company nor any of its Predecessors
or Affiliates has, either expressly or by operation of law, assumed or
undertaken any liability, including any obligation for corrective or remedial
action, of any other person relating to Environmental Laws. No facts,
events or conditions relating to the past or present facilities, properties or
operations of the Company, nor any of its Predecessors or Affiliates, will
prevent, hinder, or limit continued compliance with any applicable Environmental
Laws or give rise to any damages or any other liabilities under any
Environmental Laws.
4.20 Litigation. There
are no pending actions, suits or proceedings against or affecting the Company,
its Subsidiaries or any of its or their properties that could, if decided
adversely to the Company, reasonably be expected to have a Material Adverse
Effect, and to the Company’s Knowledge, no such actions, suits or proceedings
are threatened or contemplated. There are no pending governmental or
other investigations or enquiries or proceedings concerning the Company, its
Subsidiaries or any of their properties that could, if decided adversely to the
Company, reasonably be expected to have a Material Adverse Effect, and to the
Company’s Knowledge, no such investigations, enquiries or proceedings are
threatened or contemplated.
-15-
4.21 Financial
Statements. The financial statements included in each SEC
Filing comply with the rules and regulations of the SEC with respect thereto
(including accounting requirements) as in effect at the time of filing of such
reports and present fairly, in all material respects, the consolidated financial
position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown. Such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”) (except as may be disclosed therein or in the notes thereto,
and, in the case of quarterly financial statements, as permitted by Form 10-Q
under the 1934 Act). Except as set forth in the financial statements
of the Company included in the SEC Filings filed prior to the Effective Date,
neither the Company nor any of its Subsidiaries has incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect. The Company recognizes revenue consistent with
GAAP.
4.22 Undisclosed
Liabilities. The Company has no liability that would be
required by GAAP to be set forth on a balance sheet other than (a) liabilities
reflected in the SEC Filings, (b) accounts payable and accrued expenses accruing
after June 30, 2008 in the ordinary course of business or in accordance with
this Agreement, or (c) liabilities otherwise reflected herein or in the
Disclosure Letter.
4.23 Insurance
Coverage. The Company and each Subsidiary maintains in full
force and effect insurance coverage for the business being conducted and
properties owned or leased by the Company and each Subsidiary that the Company
believes is adequate against all liabilities, claims and risks against which
would be prudent, given the totality of the circumstances, for the Company to
insure. The premiums for the insurance policies have been fully
paid. The insurance afforded under such policies is comparable in
type of coverage to that maintained by persons engaged in the manufacturing
processes similar to that engaged in by the Company and in amounts comparable to
manufacturing entities of similar size engaged in similar processes. Such
policies are in full force and effect and will remain so through each
Closing. None of such insurance policies are subject to
retroactive premium
adjustment in respect of prior periods.
4.24 Product
Warranty. The reserves set forth
in the financial statements of the Company with respect to any liability
associated with the failure of any product manufactured, sold, leased, or
delivered by the Company to be in conformity with all applicable laws,
contracts, and all express and implied warranties, have been calculated in
accordance with GAAP. No product designed, manufactured, sold, leased, or
delivered by the Company is subject to any guaranty, warranty, or other
indemnity or similar liability beyond the guaranties, warranties and indemnities
set forth in governing agreements or implied under governing law.
-16-
4.25 Product
Liability. The Company does not have any liability (and, to
the Knowledge of the Company, there is no basis for any present or future action
against the Company giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product designed, manufactured, sold, leased, or delivered by the
Company.
4.26 Listing. The
Company’s Common Stock is quoted on the NASDAQ Capital Market. The
Company has not received any oral or written notice that its Common Stock will
be delisted from the NASDAQ Capital Market nor that its Common Stock does not
meet all requirements for the continuation of such quotation and the Company
satisfies the requirements for the continued listing of its Common Stock on the
NASDAQ Capital Market.
4.27 Brokers and
Finders. No Person will have, as a result of actions or
omissions of the Company in connection with the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company.
4.28 No Directed Selling Efforts
or General Solicitation. In connection with the offer or sale
of any of the Shares Neither the Company nor any Person acting on its behalf has
conducted (a) any general solicitation or general advertising (as those terms
are used in Regulation D promulgated by the SEC (“Regulation D”)), or (b) any
direct selling efforts (as that term is used in Regulation S).
4.29 Private
Placement. Subject to the accuracy of the representations and
warranties of the Investor in Section 5, the offer and sale of the Shares to the
Investor as contemplated hereby is exempt from the registration requirements of
the 1933 Act and is being made pursuant to the exemption afforded by Regulation
S. The Company agrees not to register any transfer of the Shares not
made in accordance with the provisions of Regulation S.
4.30 Questionable
Payments. Neither
the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
their respective current or former shareholders, directors, officers, employees,
agents or other Persons acting on behalf of the Company or any Subsidiary, has
on behalf of the Company or any Subsidiary or in connection with their
respective businesses: (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds; (c) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
(d) made any false or fictitious entries on the books and records of the Company
or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of any nature.
4.31 Transactions with
Affiliates. Except as disclosed in the SEC Filings or filings
made by Affiliates of the Company on XXXXX pursuant to the 1934 Act, none of the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than as holders of capital stock, stock
options, warrants and/or other rights convertible into or exercisable for
capital stock, and for services as employees, officers and directors), that is
required by governing rules to be disclosed in any SEC Filings or filing by an
Affiliate of the Company.
-17-
4.32 Internal
Controls. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure
controls and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including the Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s most recently filed period
report under the 1934 Act, as the case may be, is being prepared. The
Company’s certifying officers have evaluated the effectiveness of the Company’s
controls and procedures as of a date within 90 days prior to the filing date of
the most recently filed periodic report under the 1934 Act (such date, the
“Evaluation Date”). The Company presented in its most recently filed
periodic report under the 1934 Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date,
there have been no significant changes in the Company’s internal controls (as
such term is defined in Item 307(b) of Regulation S-K) or, to the Company’s
Knowledge, in other factors that could significantly affect the Company’s
internal controls. The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with GAAP and the applicable requirements of the 1934
Act.
4.33 No Manipulation of
Stock. Neither the Company, nor any of its directors, officers
or Controlling Persons (other than Persons that become Controlling Persons as a
result of the transactions contemplated by this Agreement), has taken any action
designed to or that might reasonably be expected to cause or result in, or which
has constituted, stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of the Shares.
4.34 Company Not an “Investment
Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the
“Investment Company Act”). The Company is not, and immediately after
receipt of payment for the Shares will not be, an “investment company” or
(except to the extent the Investor is an “investment company”) an entity
“controlled” by an “investment company” within the meaning of the Investment
Company Act and (except to the extent the Investor is an “investment company”)
shall conduct its business in a manner so that it will not become subject to the
Investment Company Act.
-18-
4.35 Contracts. The
contracts described in the SEC Filings that are currently material to the
Company are in full force and effect on the Effective Date except as described
in the SEC Filings. Except as described in the SEC Filings, neither
the Company nor, to the Company’s Knowledge, any other party to such contracts
is in breach of or default under any of such contracts which would have a
Material Adverse Effect.
4.36 Insolvency. No
order has been made or petition presented or resolution passed for the winding
up of the Company or for the appointment of a provisional liquidator to the
Company or for an administration order in respect of the Company. No
receiver and manager has been appointed by any person of the whole or any part
of the business or assets of the Company.
4.37 Anti-Sandbagging
Representation. There are no Known Claims that could be made or asserted
by the Company or any Affiliate of the Company against any Investor Releasees
(as defined in Section 9.2(a)) arising out of or related to acts, events,
occurrences, statements or omissions that occurred (or failed to occur) prior to
the Effective Date other than Known Claims that are within the scope of, and
completely released and discharged by, Section 9.2.
5. Representations and
Warranties of the Investor. The Investor hereby represents and
warrants to the Company that:
5.1 Organization and
Existence. The Investor is a validly existing limited
liability company and has all requisite limited liability company power and
authority to invest in the Shares pursuant to this Agreement.
5.2 Authorization. The
execution, delivery and performance by the Investor of the Transaction Documents
have been duly authorized and will each constitute the valid and legally binding
obligation of the Investor, enforceable against the Investor in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.
5.
3 Purchase Entirely for Own
Account. The Shares to be received by the Investor hereunder
will be acquired for the Investor’s own account, not as nominee or agent, and
not with a view to the resale or distribution of any part thereof in violation
of the 1933 Act, and the Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same in violation of the
1933 Act. The Investor is not a registered broker dealer or an entity
engaged in the business of being a broker dealer.
5.4 Investment
Experience. The Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Shares and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby.
-19-
5.5 Disclosure of
Information. The Investor has had an opportunity to receive
all additional information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the
Shares. The Investor acknowledges receipt of copies of the SEC
Filings. Other than as expressly set forth in this Agreement, neither
such inquiries nor any other due diligence investigation conducted by the
Investor shall modify, amend or affect the Investor’s right to rely on the
Company’s representations and warranties contained in this
Agreement.
5.6 Restricted Securities/
Hedging Restrictions. In addition to complying with all other
restrictions set forth herein, the Investor agrees to resell the Shares only
(and acknowledges and agrees that the Company shall be required to refuse to
register any resale or other transfer of the Shares not made) in accordance with
the provisions of Regulation S, pursuant to registration under the 1933 Act or
pursuant to an available exemption from such registration. The
Investor acknowledges that, among other restrictions, Regulation S prohibits the
transfer of the Shares to, or for the account or benefit of, any U.S. person or
within the United States. The Investor will not engage in any hedging
transactions involving the Shares except in compliance with Regulation
S.
5.7 Legends. It
is understood that, except as provided below, certificates evidencing the Shares
may bear the following or any similar legend:
(a) THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION. ANY SUCH DISPOSITION MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT SHALL NOT BE MADE UNLESS THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED HEREBY SHALL NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT.
(b) If
required by the laws and regulations of Canada, any state or any province in
connection with the issuance or sale of the Shares, the legend required by such
law or regulation.
Upon the
earlier of (i) registration for resale pursuant to the Registration Rights
Agreement and receipt by the Company of the Investor’s written confirmation that
such Shares have been disposed in compliance with the prospectus delivery
requirements of the 1933 Act or (ii) Rule 144(b)(i) or successor provision
becoming available, the Company shall, upon an Investor’s written request,
promptly cause certificates evidencing the Shares to be replaced with
certificates which do not bear such restrictive legends.
-20-
5.8 Non US
Person. The Investor is not a "U.S. Person" (as defined in
Regulation S) and is not acquiring the Shares for the account or benefit of any
U.S. Person. Without limiting the generality of the foregoing, the
Investor is not acquiring the Shares for the account or benefit of any of the
following: (i) a natural person resident in the United States, (ii) a
partnership or corporation organized or incorporated under the laws of the
United States or formed by a U.S. Person principally for the purpose of
investing in securities not registered under the 1933 Act, (iii) an estate of
which any executor or administrator is a U.S. Person, (iv) a trust of which any
trustee is a U.S. Person, (v) an agency or branch of a foreign entity located in
the United States, (vi) a non-discretionary account or similar account held by a
dealer or other fiduciary for the benefit or account of a U.S. Person, or (vii)
a non-discretionary account or similar account held by a dealer or other
fiduciary organized, incorporated, or resident in the United
States. The Investor is domiciled in the United Arab Emirates and has
no present intention of becoming a resident of any other country. The
Investor was not solicited to purchase the Shares while present in the United
States. The Investor was outside the United States at the time of
executing this Agreement and delivering it to the Company.
5.9 No General
Solicitation. The Investor did not learn of the investment in
the Shares as a result of any advertisement, article, notice or other
communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any
seminar.
5.10 Brokers and
Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Investor.
5.11 Prohibited
Transactions. During the last thirty (30) days prior to the
Effective Date, the Investor has not, directly or indirectly, nor has the
Investor made any recommendation or suggestion regarding trading in the Common
Stock to or known of any Person who has, effected or agreed to effect any short
sale, whether or not against the box, established any “put equivalent position”
(as defined in Rule 16a-1(h) under the 0000 Xxx) with respect to the Common
Stock, granted any other right (including, without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that
includes, relates to or derives any significant part of its value from the
Common Stock or otherwise sought to hedge its position in the Shares (each, a
“Prohibited Transaction”).
5.12 Compliance with Domestic
Law. The offer, sale and purchase of the Shares pursuant to
this Agreement does not and will not violate any laws of the Investor’s
jurisdiction of domicile and incorporation, including without limitation, any
securities laws or foreign exchange or foreign investment laws, and no
governmental or other third party consents need to be obtained under the laws of
Investor’s jurisdiction in connection with this Agreement and the closing of the
transactions contemplated hereunder.
-21-
5.13 Accuracy of Form 4 /
Schedule 13D. The information set forth in the Investor’s most
recent Form 4 and Schedule 13D with respect to the Common Stock was true,
correct and complete and, with respect to the Schedule 13D with respect to the
Common Stock, remains true, correct and complete as of the date
hereof.
5.14 Anti-Sandbagging
Representation. There are no Known Claims that could be made or asserted
by the Investor or any Affiliate of the Investor against any Company Releasees
(as defined in Section 9.1(a)) arising out of or related to acts, events,
occurrences, statements or omissions that occurred (or failed to occur) prior to
the Effective Date other than Known Claims that are within the scope of, and
completely released and discharged by, Section 9.1.
6. Right to Designate
Director(s) and Observer.
6.1 Designation Rights.
Subject to Section 6.4, the Company shall take all such action as is necessary
or advisable and within its control (except to the extent such actions, upon
advice of counsel, would be a breach of, contrary to or otherwise in conflict
with any applicable Law or fiduciary duty imposed thereby), including without
limitation calling special Board of Director and stockholder meetings, so
that:
(a) during
the Rights Period, one individual (who initially will be Xxxxx Xx Xxxxxx)
designated by the Investor (the “Initial Director”) shall be appointed or
elected to the Board of Directors;
(b) from
and after the date of the next annual meeting of shareholders of the Company
through the end of the Rights Period, a second individual designated by the
Investor (the “Second Director”; together with the Initial Director, the
“Investor’s Directors”) shall be appointed or elected to the Board of
Directors;
(c)
during the Rights Period, the removal from the Board of Directors (with or
without cause) of an Investor’s Director shall be at the written request of the
Investor but only upon such written request and under no other circumstances;
and
(d) in
the event that an Investor’s Director ceases to serve as a member of the Board
of Directors during his term of office (whether by death, resignation or
removal) during the Rights Period, the resulting vacancy on the Board of
Directors shall be filled by an individual designated by the
Investor.
6.2 Failure to Designate
Investor’s Director. If the Investor fails to designate an
individual to fill one of the Investor’s Directorships pursuant to the terms of
this Section 6 during the Rights Period, the individual previously holding such
directorship shall be elected to such position, or if such individual fails or
declines to serve, the election of an individual to such directorship shall be
accomplished in accordance with the Company’s Bylaws and applicable
Law.
-22-
6.3 Observer
Rights. Until the appointment or election of the Second
Director and prior to the expiration of the Rights Period, the Company shall
give the Investor notice of each meeting of the Board of Directors, at the same
time and in the same manner as notice is given to the directors of the Board of
Directors, and, except as set forth in Section 6.4, the Company shall permit one
representative selected by the Investor (the “Observer”) to attend, as an
observer, all meetings of the Board of Directors. Except as set forth
in Section 6.4, the Observer shall be entitled to receive all written materials
and other information (including, without limitation, copies of meeting minutes)
given to directors in connection with such meetings. In connection with the
attendance of any meeting, or the receipt of any materials and other information
by the Observer, the Observer shall sign a confidentiality agreement in form and
substance reasonably satisfactory to the Observer and the
Company. Notwithstanding anything in this Section 6.3 to the
contrary, at any time the Initial Director is serving on the Board of Directors,
any notice, consent, explanation, written material or other information
delivered to the Initial Director shall be deemed to have been delivered to the
Observer.
6.4 Exceptions to Observation
Rights. Notwithstanding anything in this Agreement to the
contrary, the Board of Directors may limit the access of the Observer to any of
the following types of materials or communication, or to any portion of any
meeting to which any of the following considerations applies: (i) the materials,
communications or meeting involve communications with counsel with respect to
which the Board of Directors desires to maintain the right to assert
attorney-client privilege, (ii) the materials, communications or meeting involve
claims by, or transactions with, the Investor, the Observer or any Affiliate of
the Investor or Observer (including any entity in which the Investor, the
Observer or any Affiliate owns a 5% or greater equity interest), or (iii) the
Board of Directors otherwise determines, in its reasonable, discretion, that
granting the Observer access to such materials, communications or meeting would
create a material risk to the interests of the Company.
7. Compensation Committee
Representation. During the Rights Period, to the extent
permitted by Law, one of the Investor’s Directors (as designated by the
Investor) shall be entitled to serve as a member of the Compensation
Committee.
8.
Right of First
Offer.
8.1 Right of First
Offer. During the Rights Period, subject to the terms and
conditions specified in this Section 8 and applicable securities laws, in
the event the Company proposes to offer or sell any New Securities, the Company
shall first make an offering of such New Securities to the Investor in
accordance with the following provisions of this Section 8.
8.2 Notice. The
Company shall deliver a notice, in accordance with the provisions of Section
14.4 hereof (the “Offer Notice”), to the Investor stating
(i) its bona fide intention to offer such New Securities, (ii) the
number of such New Securities to be offered, and (iii) the price and terms,
if any, upon which it proposes to offer such New Securities.
8.2 Notice of
Acceptance. By written notification received by the Company,
within ten (10) calendar days of the date the Offer Notice is deemed to have
been received, the Investor may elect to purchase or obtain, at the price and on
the terms specified in the Offer Notice, up to that portion of such New
Securities which equals the proportion that the number of shares of Common Stock
held (and any other securities convertible into, or otherwise exercisable or
exchangeable for, shares of Common Stock then held) by such Major Investor bears
to the total number of shares of Common Stock of the Company then outstanding
(assuming full conversion and exercise of all convertible or exercisable
securities).
-23-
8.3 Remaining
Securities. If all New Securities referred to in the Offer
Notice are not elected to be purchased or obtained as provided in
Section 8.2 hereof, the Company may, during the ninety (90) day period
following the expiration of the period provided in Section 8.2 hereof,
offer the remaining unsubscribed portion of such New Securities (collectively,
the “Refused Securities”) to any person or persons at a price not less than, and
upon terms no more favorable to the offeree than, those specified in the Offer
Notice. If the Company does not enter into an agreement for the sale
of the New Securities within such period, or if such agreement is not
consummated within thirty (30) days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such New Securities shall not be
offered unless first reoffered to the Investor in accordance with this Section
8.
9. Release.
9.1 Release of the
Company.
(a) In
consideration of the covenants and agreements of the Company under this
Agreement, the Release Shares, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Investor, for
itself and its successors, assigns and all persons and entities claiming by,
through, or under it, hereby irrevocably, unconditionally, and completely
releases, discharges, and agrees to hold the Company and its present and former
officers, directors, employees, agents, representatives, attorneys, brokers,
placements agents and Affiliates (hereinafter referred to, both individually and
collectively, as “Company Releasees”), harmless of and from any and all (i)
Claims that the Investor had, has, or may claim to have against any Company
Releasees arising from the Battery Pack Issue, and (ii) Known
Claims.
(b) Investor
understands and agrees that it may be releasing and waiving Claim(s) that it
does not know exist or may exist in its favor at the time it signs
this Agreement which, if known by it, would materially affect its decision to
sign this Agreement. Nonetheless, for the purpose of implementing a
full and complete release and discharge of Company Releasees, Investor expressly
acknowledges that the release set forth in Section 9.1(a) is intended to include
in its effect, without limitation, Claim(s) which Investor does not actually
know exist in his favor and that the release set forth in Section 9.1(a)
contemplates the extinguishment of any such Claim(s). The
provisions of this Section 9.1 shall be effective on the Effective Date and
shall not be subject to termination or revocation, even if this Agreement is
subsequently terminated.
9.2 Release of the
Investor.
(a) In
consideration of the covenants and agreements of the Investor under this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, for itself and its
successors, assigns and all persons and entities claiming by, through, or under
it, hereby irrevocably, unconditionally, and completely releases, discharges,
and agrees to hold the Investor and its present and former officers, directors,
employees, agents, representatives, attorneys, brokers, placements agents and
Affiliates (hereinafter referred to, both individually and collectively, as
“Investor Releasees”), harmless of and from any and all (i) Claims that the
Company had, has, or may claim to have against any Investor Releasees arising
from the Battery Pack Issue, and (ii) Known Claims.
-24-
(b) The
Company understands and agrees that it may be releasing and waiving Claim(s)
that it does not know exist or may exist in its favor at the time it
signs this Agreement which, if known by it, would materially affect its decision
to sign this Agreement. Nonetheless, for the purpose of implementing
a full and complete release and discharge of Investor Releasees, Company
expressly acknowledges that the release set forth in Section 9.2(a) is intended
to include in its effect, without limitation, Claim(s) which Company does not
actually know exist in his favor and that the release set forth in Section
9.2(a) contemplates the extinguishment of any such
Claim(s). The provisions of this Section 9.2 shall be effective
on the Effective Date and shall not be subject to termination or revocation,
even if this Agreement is subsequently terminated.
10. Conditions to
Closing.
10.1 Conditions to the Investor’s
Obligations. The obligation of the Investor to purchase the
Shares at each Closing is subject to the fulfillment, on or prior to the
respective Closing Date, of the following conditions, any of which may be waived
by the Investor:
(a) The
representations and warranties made by the Company in Section 4 hereof shall
have been true and correct on the Effective Date, except to the extent any such
representation or warranty expressly speaks as of a different date, in which
case such representation or warranty shall be true and correct as of such
different date. The Company shall have performed in all material
respects all obligations and conditions herein required to be performed or
observed by it on or prior to the respective Closing Date.
(b) Since
the date of this Agreement, there shall not have occurred any events,
occurrences, changes, effects or conditions of any character which, individually
or in the aggregate, have, had or could reasonably be expected to have, in the
Investor’s opinion (acting reasonably), a Material Adverse Effect on the
Company.
(c) The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, and waivers necessary or appropriate for consummation of the purchase
and sale of the Shares and the consummation of the other transactions
contemplated by the Transaction Documents, all of which shall be in full force
and effect (except for filings referenced as post-closing filings and described
in Section 4.5).
(d) The
Company shall have executed and delivered the Amendment.
-25-
(e) No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.
(f) The
Company shall have delivered at the Initial Closing to the Investor a copy of a
Certificate, executed on behalf of the Company by its Chief Executive Officer or
its Chief Financial Officer, dated as of the Closing Date, certifying to the
fulfillment of the conditions specified in subsections (a), (b), (c) and (e) of
this Section 10.1.
(g) The
Company shall have delivered to the Investor at the Initial Closing a copy of a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated by this Agreement and the
other Transaction Documents and the issuance of the Shares, certifying the
current versions of the Articles of Continuance and Bylaws of the Company and
certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company.
(h) No
stop order or suspension of trading shall have been imposed by the SEC or any
other governmental regulatory body or the NASDAQ Capital Market with respect to
public trading in the Common Stock.
10.2 Conditions to Obligations of
the Company. The Company’s obligation to sell and issue the
Shares at each Closing to the Investor is subject to the fulfillment to the
satisfaction of the Company on or prior to the respective Closing Date of the
following conditions with respect to the Investor, any of which may be waived by
the Company:
(a) The
representations and warranties made by the Investor in Section 5 hereof shall be
true and correct in all respects when made and shall be true and correct in all
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date. The Investor shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing Date.
(b) The
Investor shall have executed and delivered the Amendment.
(c) The
Investor shall have delivered the Purchase Price to the Company.
(d) No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.
-26-
10.3 Termination of Obligations
to Effect Closing; Effects.
(a) The
obligations of the Company, on the one hand, and the Investor, on the other
hand, to effect the Closing shall terminate as follows:
(i) Upon
the mutual written consent of the Company and the Investor;
(ii) By
the Company if (A) any of the conditions set forth in Section 10.2 shall have
become incapable of fulfillment, and shall not have been waived by the Company,
or (B) the Company has satisfied all conditions set forth in Section 10.1 with
respect to the Closing and the Closing has not occurred prior to 5:00 P.M. New
York time on the deadline set forth in Section 3 with respect for the Closing
Date.
(iii) By
the Investor if (A) any of the conditions set forth in Section 10.1 shall have
become incapable of fulfillment, and shall not have been waived by the Investor,
or (B) the Investor has satisfied all conditions set forth in Section 10.2 with
respect to the Closing and the Closing has not occurred prior to 5:00 P.M. New
York time on the deadline set forth in Section 3 with respect for the Closing
Date.
(iv)
By the
Investor if the Company is in breach of any of the representations and
warranties set forth in Section 4.
provided,
however, that, except in the case of clauses (ii), (iii) or (iv) above, the
party seeking to terminate its obligation to effect the Closing shall not then
be in breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.
(b) If
the Investor terminates this Agreement pursuant to clause (iii) or (iv)
above, the Company shall reimburse the Investor for all attorneys fees relating
to the negotiation, preparation, execution or termination of the Transaction
Documents.
(c) Nothing
in this Section 10.3 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.
11. Covenants and
Agreements.
11.1 No Conflicting
Agreements. The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Investor under the
Transaction Documents, including without limitation, any action or steps that
would cause the offer and/or sale of the Shares to be integrated with other
offerings. The Company will not conduct any offering other than the
transactions contemplated hereby that will be integrated with the offer or
issuance of the Shares.
-27-
11.2 Compliance with
Laws. The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities.
11.3 Listing of Underlying Shares
and Related Matters. Promptly following the Closing, the
Company shall take all necessary action to cause the Shares to be listed on each
national securities exchange, or quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain such listing so long as any shares of Common Stock are listed on such
exchange or quotation system. The Company will maintain the listing of its
Common Stock on the NASDAQ Capital Market or, in its discretion, the American
Stock Exchange, NASDAQ Global Market or New York Stock Exchange (any such
exchange on which the Common Stock is listed, the “Principal Market”)
and will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Principal Market, provided that the
foregoing shall not prohibit the Company from delisting if at any time as a
result of a change of control or otherwise the Company is no longer required to
register its Common Stock under Section 12 of the 1934 Act. The Company will
provide within two (2) Business Days to the Investor copies of all notices it
receives notifying the Company of the threatened and actual delisting of the
Common Stock from the Principal Market.
11.4 Market
Regulations. The Company shall notify the SEC, the Principal
Market and applicable state authorities, in accordance with their requirements,
of the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Shares to the
Investor.
11.5 Termination of
Covenants. The provisions of Sections 11.1 through 11.4 shall
terminate and be of no further force and effect upon the earlier of (i) the
mutual consent of the Company and the Investor or (ii) the date there are no
longer any Lock-Up Shares.
12. Lock-up;
Leak-out.
12.1 Lock-Up. In
addition to any restrictions and limitations required by applicable securities
laws, rule and regulations, Investor shall not at any time offer, sale, pledge,
conveyance, transfer or make commitment to do any of the foregoing (each a
“Transfer”) any of the Shares that are of Lock-Up Shares (as defined
below).
12.2 Leak-Out.
(a) Prior
to and including the second anniversary of the Initial Closing, all of the
Shares shall be Lock-Up Shares and shall be subject to the restriction on
Transfer set forth in Section 12.1.
-28-
(b) Following
the second anniversary of the Initial Closing, two-thirds (round up to the
nearest Share) of the Shares shall be Lock-Up Shares and shall be subject to the
restriction on Transfer set forth in Section 12.1.
(c) Following
the third anniversary of the Initial Closing, one-third (round up to the nearest
Share) of the Shares shall be Lock-Up Shares and shall be subject to the
restriction on Transfer set forth in Section 12.1
(d) Following
the fourth anniversary of the Initial Closing, none of the Shares of the Shares
shall be Lock-Up Shares.
12.3 Legends. In
addition to any other legend placed on the Shares pursuant to this Agreement,
the following legend shall be imprinted on each stock certificate representing a
Lock-Up Share (with the “Applicable Date” to be the date on which the Shares
represented by the particular certificate cease to be Lock-Up
Shares):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CONTRACTUAL
PROHIBITIONS ON TRANSFER CONTAINED IN A STOCK PURCHASE AND SETTLMENT AGREEMENT
DATED AS OF SEPTEMBER 30, 2008 BETWEEN THE ISSUER AND THE ORIGINAL PURCHASER OF
SUCH SECURITIES. SUCH CONTRACTUAL PROHIBITIONS EXPIRE ON [APPLICABLE
DATE], AT WHICH TIME THIS LEGEND MAY BE REMOVED. A COPY OF SUCH AGREEMENT IS
AVAILABLE FROM THE ISSUER UPON REQUEST.
Upon any
Share’s ceasing to be a Lock-Up Share, the Company shall, upon an Investor’s
written request, promptly cause certificates evidencing the Shares to be
replaced with certificates which do not bear such restrictive
legend.
12.4 Stop Transfer
Instructions. The Company may place stop transfer instructions on the
Shares so as to restrict the Transfer of the Shares except in accordance with
the terms of this Agreement.
12.5 Permitted Transfers during
Lock-Up/Leak-Out Period. Notwithstanding anything contained in
this Section 12, the Investor may transfer Lock-Up Shares to its Affiliates or
subsidiaries provided that the transferee executes an agreement to be bound by
all the terms and conditions of this Agreement in connection with the Shares
acquired.
12.3 Beneficial Rights;
Additional Resale Restrictions. Except as otherwise provided in this
Agreement or any other agreements between the parties hereto, the Investor shall
be entitled to its beneficial rights of ownership of the Shares, including the
right to vote the Shares for any and all purposes. The resale
restrictions on the Shares set forth in this Agreement shall be in addition to
all other restrictions on transfer imposed by applicable United States and state
securities laws, rules and regulations.
-29-
13. Survival and
Indemnification.
13.1 Survival. The
representations and warranties contained in this Agreement shall survive the
closing of the transactions contemplated by this Agreement, to the extent a
Closing occurs, for a period of one year from the Initial Closing
Date. Unless terminated as provided in the following sentence, the
covenants and other provisions of this Agreement shall survive during the terms
set forth with respect thereto in this Agreement, and if no such term is set
forth herein, for one year from the date of the Initial Closing. With
respect to all parties, other than as expressly set forth in this Agreement
(including Section 9.1 and 9.2), if the Final Closing does not occur, no
representations, warranties, covenants or agreements shall survive termination
under Section 10.3.
13.2 Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Investor and its Affiliates
and their respective manager, members, employees and agents from and against any
and all losses, claims, damages, liabilities and expenses (including without
limitation reasonable attorneys’ fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”) to which
such Person may become subject as a result of any breach of representation,
warranty, covenant or agreement made by or to be performed on the part of the
Company under this Agreement, and will reimburse any such Person for all such
amounts as they are incurred by such Person.
(b) The
Investor agrees to indemnify and hold harmless the Company and its Affiliates
and its directors, officers, employees and agents from and against any and all
Losses to which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Investor under this Agreement, and will reimburse any such
Person for all such amounts as they are incurred by such Person.
13.3 Conduct of Indemnification
Proceedings. Promptly after receipt by any Person (the “Indemnified Person”)
of notice of any demand, claim or circumstances which would or might give rise
to a claim or the commencement of any action, proceeding or investigation in
respect of which indemnity may be sought pursuant to Section 13.2, such
Indemnified Person shall promptly notify the person from which indemnification
is sought (the “Indemnifying Person”)
in writing and the Indemnifying Person shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any
Indemnified Person to so notify promptly the Indemnifying Person shall not
relieve the Indemnifying Person of its obligations hereunder except to the
extent, and only to the extent, that the Indemnifying Person is materially
prejudiced by such failure to notify promptly. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the retention of such counsel; or (ii) in
the reasonable judgment of counsel to such Indemnified Person representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, which consent shall not be unreasonably withheld, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Person shall indemnify and hold harmless such Indemnified
Person from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Indemnifying Person shall not effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such
proceeding.
-30-
14. Miscellaneous.
14.1 Successors and
Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investor, as
applicable. The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
14.2 Counterparts;
Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
may also be executed via facsimile, which shall be deemed an
original.
14.3 Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
14.4 Notices. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by facsimile, then such notice shall be
deemed given upon receipt of confirmation of complete transmittal, (iii) if
given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient or (B) ten (14) days after
such notice is deposited in first class mail, postage prepaid, and (iv) if given
by an internationally recognized overnight air courier, then such notice shall
be deemed given two Business Days after delivery to such carrier. All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:
-31-
If to the Company:
Altair
Nanotechnologies, Inc.
000
Xxxxxx Xxx
Xxxx,
Xxxxxx 00000
Attention:
Xxxxx Xxxxxxxx
Fax: (000)
000-0000
email:
xxxxxxxxx@xxxxxxxxx.xxx
With a copy to:
Xxxx
Xxxxxxxx Xxxxx Xxx & Xxxxxxxx
000 Xxxxx
Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx
Xxxx, XX 00000
Attn: Xxxxx
X. Xxxxx
Fax:
(000) 000-0000
Email:
xxx@xxxxx.xxx
If to the Investor:
Xx
Xxxxxx, LLC
By
courier:
Mezzanine
Floor, Yamaha Showroom
Sheikh
Zayed Road
Dubai,
United Arab Emirates
By
mail:
X.X. Xxx
00
Xxxxx,
Xxxxxx Xxxx Xxxxxxxx
Attn:
Xxxxx Xx Xxxxxx
Fax:
x000.0.000.0000
Email:
xxxxxxx@xxxxxxxx.xxx
With a copy to:
Xxxxx
& XxXxxxx XXX
X.X. Xxx
000000
Xxxxx,
Xxxxxx Xxxx Xxxxxxxx
Attn:
Xxxx Xxxxxxx
Fax:
x000.0.000.0000
Email:
xxxxxxxx@xx.xxx
14.5 Expenses. The
parties hereto shall pay their own costs and expenses in connection
herewith. In the event that legal proceedings are commenced by any
party to this Agreement against another party to this Agreement in connection
with this Agreement or the other Transaction Documents, the party that does not
prevail in such proceedings shall pay the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.
-32-
14.6 Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Shares purchased under this Agreement at the time outstanding,
each future holder of all such Shares, and the Company.
14.7 Publicity. No
public release or announcement concerning the transactions contemplated hereby
shall be issued (i) by the Investor without the prior consent of the Company
(which consent shall not be unreasonably conditioned or withheld), or (ii) by
the Company with the prior consent of the Investor identified therein (which
consent shall not be unreasonably conditioned or withheld). The
foregoing shall not prohibit any party hereto from issuing any release or filing
any report that is required by law or the applicable rules or regulations of any
securities exchange or securities market. The Investor understands
that the Company is required to file a Current Report on Form 8-K describing the
terms of the Transaction Documents and to include the Transaction Documents as
Exhibits and hereby consents to such filing.
14.8 Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.
14.9 Entire
Agreement. This Agreement, including the Exhibits and the
Disclosure Letters, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.
14.10 Further
Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
14.11
Governing Law; Consent
to Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof. Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York and United States District Court located in the
New York City, New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives
any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
14.12 Currency. All
reference to dollars ($) or currency in this Agreement are to United States
Dollars.
[signature
page follows]
-33-
IN WITNESS WHEREOF, the parties have
executed this Stock Purchase and Settlement Agreement or caused their duly
authorized officers to execute this Agreement as of the date first above
written.
| The Company: | ALTAIR NANOTECHNOLOGIES INC. | ||
|
|
By:
|
/s/ Xxxxx Xxxxxxxx | |
| Name: Xxxxx Xxxxxxxx | |||
| Title: President and CEO | |||
| Investor: | XX XXXXXX, LLC | ||
|
|
By:
|
/s/ Xxxxx Xx Xxxxxx | |
| Name: Xxxxx Xx Xxxxxx | |||
| Title: President | |||
-34-
Exhibit
A
to
Purchase
Agreement
Amendment No. 1 to
Registration Rights Agreement
[see
attached]
-35-
