Certain portions of this exhibit have been omitted pursuant to Rule 24b-2 and are subject to a confidential treatment request. Copies of this exhibit containing the omitted information have been filed separately with the Securities and Exchange...
Exhibit
10.1
Certain
portions of this exhibit have been omitted pursuant to Rule 24b-2 and are
subject to a confidential treatment request. Copies of this exhibit containing
the omitted information have been filed separately with the Securities and
Exchange Commission. The omitted portions of this document are marked with
a
***.
This
Warrant Issuance Agreement (this
“Agreement”) dated as of July 20, 2007 is among AES Energy Storage, LLC,
(“AES”), Altairnano, Inc., a Nevada corporation (“Altairnano”) and Altair
Nanotechnologies Inc., a Canadian corporation (“Parent”). AES, Parent
and Altairnano shall be collectively referred to herein as the “Parties” and
each such entity a “Party.”
RECITALS
WHEREAS,
AES and Altairnano have entered into a Joint Product Development and Equipment
Purchase Agreement dated as of July 20, 2007 (the “Joint Development Agreement”)
with respect to the design, development and manufacture of Energy Storage
Systems;
WHEREAS,
Altairnano is a second-tier wholly-owned subsidiary of Parent, and Parent
believes that it will benefit if the project contemplated by the Joint
Development Agreement is successful; and
WHEREAS,
Parent
desires to provide AES with an incentive to complete the project contemplated
by
the Joint Development Agreement and purchase Energy Storage Systems from
Altairnano;
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and covenants and
agreements set forth herein and in the Joint Development Agreement and for
other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties hereto agree as follows:
ARTICLE
I
WARRANTS
1.1
Definitions. Capitalized
terms used but not defined herein will have the meaning set forth in the Joint
Development Agreement
1.2 Initial
Warrant. On the date of this Agreement, Parent shall issue and
deliver to AES a warrant (the “Initial Warrant”) in substantially the form
attached as Exhibit A (the “Form of Warrant”) to purchase common shares of
Parent (“Common Shares”); provided that the following all-capitalized terms set
forth in the Form of Warrant shall be completed with the following
terms:
(a)
ISSUE
DATE: the date hereof;
(b)
NUMBER OF SHARES: 200,000;
(c)
VESTING DATE: the earlier of the date of delivery of the Pilot
Project Storage System by Altairnano pursuant to the Joint Development Agreement
and December 31, 2007; and
(d)
EXERCISE PRICE: the Execution Date Closing Price (as defined
below).
1
For
purposes of this Agreement, the “Execution Date Closing Price” shall be the
closing price of the Common Shares on the principal U.S. market on which such
shares are traded or quoted on the trading day prior to the date
hereof.
1.3 Milestone
Warrants. On or before March 31 of each calendar year during the
term of the Joint Development Agreement, and so long as the Joint Development
Agreement has not been terminated (but AES shall be entitled to receive what
it
has earned under this Agreement up until any such termination of the Joint
Development Agreement), Parent shall issue and deliver to AES a warrant (each
a
“Milestone Warrant”) in substantially the form of the Form of Warrant to
purchase Common Shares; provided that the following all-capitalized placeholders
in the Form of Warrant shall be filled in with the following terms:
(a)
ISSUE
DATE: March 31st of each
year;
(b)
NUMBER OF SHARES: a number equal to the quotient of (i) revenues
earned during the preceding calendar year from sales of Product to AES and
its
Affiliates, (ii) divided by *** (such amount, the "Warrants Earned"); provided,
however, notwithstanding the foregoing, Parent shall not be required to issue
Milestone Warrants with respect to any calendar year (1) in excess of the (Y)
lesser of Milestone Warrants to Purchase 500,000 Common Shares, and Milestone
Warrants with respect to which Parent’s associated expense, determined in
accordance with United States generally accepted accounting principles
consistent with past practice, exceeds 10% of revenues earned during the
preceding calendar year from sales of Product to AES and its Affiliates, or
(2)
in an amount less than 20,000; provided, further, that any Milestone Warrants
which were not issued as to any calendar year as a result of the maximum and
minimum amounts set forth in the foregoing proviso shall be added to the
Warrants Earned in the subsequent calendar year provided Warrants Earned equal
or exceed 20,000 in such subsequent year or any subsequent
contract year thereafter until issued by Parent;
(c)
VESTING DATE: date the Milestone Warrant is issued; and
(d)
EXERCISE PRICE: the greater of (i) the Execution Date Closing Price,
and (ii) the difference determined by subtracting $5.00 from the Closing Price
on January 31 (or if such day is not a Business Day, the immediately preceding
Business Day) following the applicable calendar year.
Notwithstanding
anything to the contrary in this Agreement, Parent shall have no obligation
to
issue any additional Milestone Warrants if the aggregate number of the Initial
Warrants and Milestone Warrants issued pursuant to this Agreement equals
2,000,000 (the “Warrant Cap”). In no event shall Milestone Warrants
be issued under this Agreement once warrants equaling the Warrant Cap have
been
issued.
1.4 Equitable
Adjustments.
(a) With
respect to each Milestone Warrant, if any of the events set forth in subsections
(a), (b), (c) and (d) below occur on or before the date of issuance of the
respective Milestone Warrant, the numbers set forth in Section 1.3 used to
determine the Number of Shares and the Exercise Price for a Milestone Warrant
(and the Warrant Cap) shall be subject to adjustment as follows: In case Parent
shall (a) declare a dividend or make a distribution on its outstanding Common
Shares in Common Shares or any other security, (b) subdivide or reclassify
its
outstanding Common Shares into a greater number of shares, (c) combine or
reclassify its outstanding Common Shares into a smaller number of shares, or
(d)
enter into any transaction whereby the outstanding Common Shares are at any
time
changed into or exchanged for a different number or kind of shares or other
securities of Parent or of another corporation through reorganization, merger,
consolidation, liquidation or recapitalization, then proportionate adjustments
in the numbers set forth in Section 1.3 used to determine the Number of Shares
and the Exercise Price for a Milestone Warrant (and the Warrant Cap) shall
be
made so the Milestone Warrant will relate to the aggregate number and kind
of
shares or other securities (subject to the appropriately adjusted Warrant Cap),
and will have the Exercise Price it would have related to or had if it had
been
issued immediately prior to the date of such event.
2
(b) If,
as a result of an adjustment made pursuant to the provisions of this Section
1.4, AES shall become entitled to receive any shares of Parent other than Common
Shares, the number of such other shares so receivable upon exercise of the
Milestone Warrant shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Common Shares contained in Section 1.4(a) above.
ARTICLE
II
REGISTRATION
RIGHTS
2.1. Registration
Rights. Parent covenants and agrees that: (subject to the
provisions of this Section 2.1), within 30 days from receipt of a written
request from AES, it will prepare and file with the United States Securities
and
Exchange Commission (the “Commission”) a registration statement on Form S-3 (or
if such form is not available, a Form S-1) (a “Registration Statement”) covering
all of the Common Shares (or, if applicable, other shares of the Parent)
issuable upon the exercise of any Initial Warrant or Milestone Warrant
outstanding at the time (the “Registrable Securities”) for a secondary or resale
offering to be made on a continuous basis pursuant to Rule
415. Parent will use its commercially reasonable efforts to cause
each Registration Statement to be declared effective under the Securities Act
of
1933 (the “Securities Act”) Act within 120 days of the purchase of the relevant
shares of Parent and to keep the Registration Statement continuously effective
until the earlier of (a) such time that all of the Registrable Securities have
been sold or (b) the date when the Registrable Securities are eligible for
resale pursuant to paragraph (k) of Rule 144 promulgated under the Securities
Act. In addition, Parent shall timely supplement and amend each
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used for each Registration Statement or
if
required by the Securities Act. If (a) at any time when a prospectus
relating to Registrable Securities is required to be made available under the
Securities Act, Parent discovers that, or any event occurs as a result of which,
the prospectus (including any supplement thereto) included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading, or (b) the Commission issues any stop order
suspending the effectiveness of the Registration Statement or proceedings are
initiated or threatened for that purpose, then Parent shall promptly deliver
a
written notice to such effect to AES, and AES shall immediately upon receipt
of
such notice discontinue its disposition of Registrable Securities pursuant
to
the Registration Statement until the copies of the supplemented or amended
prospectus contemplated by the immediately following sentence is made available
and, if so directed by Parent, shall deliver to Parent (at Parent's expense),
if
applicable, all copies, other than permanent file copies, then in AES's
possession of the prospectus or prospectus supplement relating to such
Registrable Securities current at the time of receipt of such notice. As
promptly as practicable following the event or discovery referred to in clause
(a) of the immediately preceding sentence, Parent shall prepare and make
available to AES the amendment or supplement of such prospectus so that, as
thereafter made available to purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Notwithstanding anything to the contrary in
this Section 2.1 if the filing or maintenance of the Registration Statement
would require Parent to make a disclosure that would, in the good faith,
reasonable judgment of Parent's Board of Directors, have a material adverse
effect on the business, operations, properties, prospects or financial condition
of Parent or on pending or imminent transactions, Parent shall have the right,
upon delivery to AES of a certificate executed by Parent's chief executive
officer certifying the Board of Directors' finding (a "Blackout Notice") to
delay the filing (but not the preparation) of the Registration Statement or
of
any amendment or supplement thereto, to suspend its obligation to maintain
the
effectiveness of the Registration Statement and to suspend the use of any
prospectus or prospectus supplement in connection with the Registration
Statement, in each case for a reasonable amount of time not to exceed thirty
(30) days (the "Blackout Period") within the ninety (90) day period beginning
on
the first day of a Blackout Period; provided, however, that Parent shall not
deliver a Blackout Notice more than twice in any 365-day period; and provided,
further that any Blackout Period shall only be effective when and for so long
as
other holders, if any, of registration rights with respect to Parent's
securities are restricted from exercising their registration rights to the
same
or greater extent as AES. AES agrees that upon receipt of a Blackout
Notice, it shall immediately cease all efforts to dispose of Registrable
Securities pursuant to the Registration Statement until such time as Parent
shall notify it of the end of such restrictions or, if earlier, the expiration
of the Blackout Period.
3
2.2 Parent’s
obligations under Article II are conditioned upon AES providing any information
regarding AES reasonably requested by Parent in order for Parent to complete
the
Registration Statement.
2.3 With
respect to any offering and sale pursuant to the Registration Statement, Parent
agrees to indemnify and hold AES, each Person who "controls" AES within the
meaning of Section 15 of the Securities Act, and any directors and officers
of
the foregoing, harmless against any and all losses, claims, damages or
liabilities (including reasonable legal fees and other reasonable expenses
incurred in the investigation and defense thereof) to which they or any of
them
may become subject under the Securities Act or otherwise (collectively,
"Losses"), insofar as any such Losses shall arise out of or shall be based
upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment or supplement thereto,
or any prospectus relating to the Registration Statement, or the omission or
alleged omission to state in any of the foregoing a material fact required
to be
stated therein or necessary to make the statements contained therein not
misleading, or (ii) any violation or alleged violation by Parent of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or
any
applicable state securities law; provided, however, that the indemnification
contained in this Section 2.3 shall not apply to such Losses which shall arise
out of or shall be based upon any such untrue statement, or any such omission
or
alleged omission, which shall have been made in reliance upon and in conformity
with information furnished in writing to Parent by AES specifically for use
in
connection with the preparation of the Registration Statement or prospectus
contained in the Registration Statement or any such amendment or supplement
thereto.
2.4 With
a view to making available to AES the benefits of Rule 144 and any other rule
or
regulation of the Commission that may permit AES to sell securities of Parent
to
the public without registration, Parent agrees to use its reasonable best
efforts until such time as all of the Registrable Securities have been sold
under the Registration Statement or are eligible for re-sale under subsection
(k) of Rule 144, to (a) make and keep public information available, as those
terms are understood and defined in Rule 144, at all times, and take all action
as may be required as a condition to the availability of Rule 144, (b) file
with
the Commission in a timely manner all reports and other documents required
of
Parent under the Securities Act and the Exchange Act, and (c) facilitate and
expedite transfers of Registrable Shares sold pursuant to Rule 144, including
providing timely notice to Parent's transfer agent to expedite such
transfer.
4
2.5 Parent
shall not be obligated to effect, or to take any action to effect, any
registration this Section 2 after Parent has effected two registrations
pursuant to this Section 2 and such registrations have been declared or
ordered effective (except that a registration shall be deemed to have been
“declared or ordered effective” if Parent withdraws a Registration Statement at
the request of AES after it has been filed).
2.6 Parent
shall not grant, and represents that it has not granted, any other person or
entity rights to register securities of Parent on terms that would be reasonably
likely to restrict the ability of Parent to fully perform its obligations to
AES
under this Section 2. Parent shall not amend any registration rights
agreement with any other person or entity nor shall Parent waive any provision
under any registration rights agreement that it would be entitled to waive
thereunder if such waiver would be reasonably likely to adversely affect the
registration rights contemplated by this Article II.
ARTICLE
III
INVESTOR
REPRESENTATIONS
3.1 Investment
Purposes. AES is acquiring the Initial Warrants and Milestone
Warrants identified above and the Common Shares issuable upon the exercise
thereof (the “Securities”) for its own account for investment and not with a
view to, or for sale in connection with, any public distribution thereof within
the meaning of the Securities Act of 1933, as amended (the “Securities
Act”).
3.2 Sophistication. AES
is an “accredited investor” as defined in Rule 501(a) promulgated under the
Securities Act. AES has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
an
investment in the Securities and making an informed investment
decision.
3.3 Restrictions
on Transfer. AES understands that the Securities will not be registered
under the Securities Act, or any state securities laws, and will be issued
in
reliance upon exemptions from registration for certain private
offerings. AES understands and agrees that the Securities, or any
interest therein, may not be resold or otherwise disposed of by AES unless
the
resale of the Securities is subsequently registered under the Securities Act
and
under all applicable state securities laws or unless the Parent receives an
opinion of counsel, satisfactory to it, that an exemption from registration
is
available.
3.4 Access
to Information. AES acknowledges and represents that it has reviewed a copy
of the most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q
(and all subsequently filed Current Reports on Form 8-K) of Parent, has been
given a reasonable opportunity to review all documents, books, and records
of
Parent pertaining to this investment, has been supplied with all additional
information concerning Parent and the Securities that has been requested by
it,
has had a reasonable opportunity to ask questions of and receive answers from
Parent or its representatives concerning this investment, and that all such
questions have been answered to the full satisfaction of AES. Except
for the representations and warranties set forth in the Joint Development
Agreement, AES has received no representations, written or oral, from Parent,
a
placement agent or any officer, director, employee, attorney or agent thereof,
other than those contained in the Form 10-K, Form 10-Q and Forms 8-K referenced
above and has relied solely on the same in making its decision to purchase
the
Securities.
5
3.5 Restrictive
Legends. AES understands and agrees that the following restrictions and
limitations are applicable to its resales, pledges, hypothecations, or other
transfers of the Securities: (a) the Securities shall not be sold, pledged,
hypothecated, or otherwise transferred unless registered under the Securities
Act and applicable state securities laws or an exemption from registration
is
available; and (b) each certificate or other document evidencing or representing
the Securities shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE
SECURITIES OF THE COMPANY EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY
STATE IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND VARIOUS APPLICABLE STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
ASSIGNED OR A SECURITY INTEREST CREATED THEREIN, UNLESS THE PURCHASER,
TRANSFEREE, ASSIGNEE, PLEDGEE OR HOLDER OF SUCH SECURITY INTEREST COMPLIES
WITH
ALL STATE AND FEDERAL SECURITIES LAWS (I.E., SUCH SECURITIES ARE REGISTERED
UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE THEREUNDER)
AND
UNLESS THE SELLER, TRANSFEROR, ASSIGNOR, PLEDGOR OR GRANTOR OF SUCH SECURITY
INTEREST PROVIDES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT THE TRANSACTION CONTEMPLATED WOULD NOT BE IN VIOLATION OF THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS."
"UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [insert date that is four (4) months and one day
after
issue date]"
3.6 Canadian
Representations. The offer and sale of the Securities to AES was
not made in Canada. AES is not subject to the securities laws of any
province or territory of Canada, and AES is not purchasing, and will not
purchase, any of the Securities for the account or benefit of any resident
of
any province or territory of Canada.
ARTICLE
IV
TERM
AND TERMINATION
The
term of this Agreement shall
commence as of the date hereof and shall terminate upon the occurrence of the
last Expiration Date of the Initial Warrants and all Milestone Warrants issued
in accordance herewith.
6
ARTICLE
V
MISCELLANEOUS
5.1 Notices. All
notices or other communications which are required or permitted hereunder shall
be in writing and shall be deemed sufficiently given if delivered personally
(as
confirmed by signature of receiving party) or sent by nationally recognized
overnight courier postage prepaid (as confirmed by signature of receiving party)
to the address set forth below or to such other address as any Party may have
specified in a notice duly given to the other Party as provided herein. Such
notice of communication shall be deemed to have been given as of the date
received.
If
to
Altairnano:
Altairnano,
Inc.
000
Xxxxxx Xxx
Xxxx,
Xxxxxx 00000
Attn: Xxxx
Xxxxxxx, CEO and President
If
to
AES:
AES
Energy Storage, LLC
c/o
The
AES Corporation
0000
Xxxxxx Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx Xxxxxxx
With
a
copy to:
AES
Energy Storage, LLC
c/o
The
AES Corporation
0000
Xxxxxx Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
General Counsel
7
5.2 Amendment;
Interpretation. No change or modification of this Agreement shall
be valid unless the same shall be in writing and signed by all of the
Parties. All headings and subheadings are inserted for convenience
only and shall not affect any construction or interpretation of this
Agreement.
5.3 Waiver. No
failure or delay on the part of the Parties in exercising any right, power
or
privilege hereunder shall operate as a waiver thereof nor shall any single
or
partial exercise of any right, power or privilege hereunder preclude the
simultaneous or later exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Parties would otherwise have.
5.4 Governing
Law; Jurisdiction. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAW
OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CONFLICTS OF LAW
PRINCIPLES.
(a) Any
action for enforcement of any judgment may be brought in the courts of the
State
of New York or of the United States of America for the Southern District of
New
York, and, by execution and delivery of this Agreement, each of the Parties
hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any appeal thereof. Each of the Parties
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such Party at its notice
address provided pursuant to Section 5.1 hereof. Each of the Parties
hereby irrevocably waives any objection which it may now or hereafter have
to
the laying of venue of any of the aforesaid actions or proceedings arising
out
of or in connection with this Agreement brought in the courts referred to above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has
been
brought in an inconvenient forum. Nothing herein shall affect the
right of either Party to serve process in any other manner permitted by law
or
to commence legal proceedings or otherwise proceed against the other Party
in
any other jurisdiction.
(b) The
Parties hereby irrevocably waive, to the fullest extent permitted by Applicable
Law, any and all rights to trial by jury in any legal proceeding arising out
of
or relating to this Agreement or the transactions contemplated
hereby.
5.5 Counterparts;
Fax Signatures. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Any such executed
counterpart may be delivered by facsimile, and, as so delivered, shall be
legally enforceable in accordance with its terms. Any such facsimile shall
be
followed by delivery, as promptly as practicable, of a non-facsimile
original.
5.6 Assignment. No
Party may assign its rights, title and interests under this Agreement without
the prior written consent of the other Party. No assignment of this
Agreement shall relieve the assigning Party of any liability or obligations
that
accrued or arise prior to the assignment of this Agreement. In case
of any consolidation of Parent with, or merger of Parent into, any other entity,
or in case of any sale or conveyance of all or substantially all of the assets
of Parent other than in connection with a plan of complete liquidation of Parent
at any time prior to the expiration of this Agreement, then as a condition
of
such consolidation, merger or sale or conveyance, (a) Parent shall give written
notice of consolidation, merger, sale or conveyance to AES, and (b) from and
after the effective date of such consolidation, merger, sale or conveyance,
the
surviving entity or purchaser shall be bound by the terms of this
Agreement.
8
5.7 Resolution
by Senior Representatives; Arbitration.
(a) In
the event a dispute arises among the Parties regarding the application or
interpretation of any provision of this Agreement or the performance thereof,
then any Party may promptly notify the other Party in writing of the dispute
(including the material details of the dispute) and request a meeting among
senior representatives. Each Party shall, within ten (10) calendar
days, (i) appoint a person not concerned with the day-to-day performance of
that
Party’s obligations under this Agreement and who has general decision-making
authority to resolve and settle the subject dispute on behalf of such Party,
and
(ii) agree upon a date and time for the representatives to meet which is no
later than twenty (20) calendar days from the date of the notice of the
dispute. No later than five (5) calendar days prior to the scheduled
meeting, each Party shall submit to the other a Party a written statement of
the
facts and issues surrounding the dispute and its position as to how such dispute
should be resolved. At the initial meeting and thereafter, the
representatives shall negotiate in good faith towards the development of a
written statement of the terms of settlement of the dispute which written terms
of settlement, if any, when signed by each Party’s representative, shall serve
as conclusive evidence of the resolution of such dispute. If such
written terms of settlement are not produced and signed by each Party’s
representative by the date which is the earlier of: (i) fifteen (15) calendar
days after the date of such representatives’ first meeting, or (ii) forty-five
(45) calendar days after the date of the notice of dispute whether or not the
initial meeting of representatives has been scheduled or has occurred by such
date, or (iii) a later date mutually agreed to by the Parties in writing (the
“Negotiation End Date”), then, at the written request of either Party, the
dispute shall be submitted to arbitration in accordance with Section
5.7(b).
(b) If
senior representatives of the Parties shall have failed to resolve the dispute
as of the Negotiation End Date, then either Party may require that such dispute
shall be submitted to, and be determined exclusively by, arbitration that shall
proceed in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (“AAA”) then in effect (the “Rules”). Any
notice of demand for arbitration shall be in writing and shall be delivered
to
the other Party and the AAA. All proceedings before the arbitrators
shall be held in Chicago, Illinois. The governing law shall be as
specified in Section 5.5. The matter shall be heard by three (3)
arbitrators, who possess adequate and relevant technical knowledge regarding
securities laws, one appointed by AES, one appointed by Altairnano and the
third
appointed jointly by the first two arbitrators or the AAA if the first two
arbitrators are otherwise unable to mutually agree within fifteen (15) calendar
days. The arbitrators shall not have the right to award special,
indirect, consequential or punitive damages. The cost and fees of the
arbitration, including attorneys’ fees, shall be allocated by the
arbitrators. The award (judgment) shall be decided by majority
opinion and issued in writing and shall state the reasons upon which it is
based. It may be made public only with the consent of all
Parties. The award rendered by the arbitrator shall be final and
binding on the Parties and judgment may be entered in accordance with applicable
law.
5.8 Severability. The
provisions of this Agreement shall be severable in the event that any of the
provisions hereof are held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
5.9 Entire
Agreement. This Agreement (including any exhibits hereto),
constitutes the entire agreement with respect to the subject matter hereof
and
supersedes all prior agreements, understandings, representations and warranties,
both written and oral, among the Parties.
9
5.10. Opinion. Within
seven days of the execution of this Agreement, Parent shall deliver to AES
one
or more opinions from counsel to Parent in a form and substance reasonably
acceptable to AES addressing the matters described on Exhibit B attached
hereto.
IN
WITNESS WHEREOF, the Parties hereto have signed this Warrant Issuance Agreement
as of the day and year first above written.
AES
ENERGY STORAGE, LLC
By:_/s/_____________________________
Name:
Xxxx Zahurancik________________
Title:_Vice
President___________________
ALTAIRNANO,
INC.
By:
/s/____________________________
Name:_Alan
Gotcher________________
Title:__President
and CEO____________
ALTAIR
NANOTECHNOLOGIES, INC.
By:
/s/____________________________
Name:_Alan
Gotcher________________
Title:__President
and CEO____________
10
EXHIBIT
A
FORM
OF
WARRANT
[see
attached]
11
THIS
WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT
AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO
RESTRICTIONS ON RESALE AND MAY NOT BE RESOLD EXCEPT AS PERMITTED UNDER THE
ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [insert date that is four (4) months and one day
after
issue date].
Warrant
to Purchase [NUMBER OF SHARES] Common Shares
of
WARRANT
Issue
Date: [ISSUE DATE]
This
certifies that AES Energy Storage, LLC or its permitted transferee (the
“Holder”) is entitled to purchase from ALTAIR NANOTECHNOLOGIES
INC., a corporation continued under the Canada Business Corporations Act (the
“Company”), at the price and during the period as hereinafter
specified, [NUMBER OF SHARES] shares, (such number of shares, as adjusted as
provided below, the “Shares”) without nominal or par value, of
the Company (the “Common Shares”), at a purchase price of
$EXERCISE PRICE per share, subject to adjustment as described below (as so
adjusted from time to time, the “Exercise Price”), at any time
during the period specified in Section 1(a) hereof.
1. Exercise. The
rights represented by this Warrant (the “Warrant”) shall be
exercisable at the Exercise Price, and during the periods as
follows:
(a) At
any time and from time to time between, the [VESTING DATE] and the four-year
anniversary of the Issue Date (the “Expiration Date”)
inclusive, the Holder shall have the right to purchase all or any portion of
the
Shares at the Exercise Price.
(b) After
the Expiration Date, the Holder shall have no right to purchase all or any
portion of the Shares hereunder.
2. Payment
for Shares; Issuance of Certificates; Net Exercise.
(a) The
rights represented by the Warrant may be exercised at any time within the
periods above specified, in whole or in part, by (i) the surrender of the
Warrant (with the purchase form at the end hereof properly executed) at the
principal executive office of the Company (or such other office or agency of
the
Company as it may designate by notice in writing to the Holder at the address
of
the Holder appearing on the books of the Company); (ii) payment to the Company
of the Exercise Price then in effect for the number of Shares specified in
the
above-mentioned purchase form together with applicable stock transfer taxes,
if
any; and (iii) delivery to the Company of a duly executed agreement signed
by
the person(s) designated in the purchase form to the effect that such person(s)
agree(s) to be bound by the provisions of Section 3. The Warrant shall be deemed
to have been exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date the Warrant is surrendered and
payment is made in accordance with the foregoing provisions of this Section
2,
and the person or persons in whose name or names the certificates for the Shares
shall be issuable upon such exercise shall become the holder or holders of
record of such Shares at that time and date. The Shares and the certificates
for
the Shares so purchased shall be delivered to the Holder within a reasonable
time, not exceeding ten (10) business days, after the rights represented by
this
Warrant shall have been so exercised.
(b) Notwithstanding
anything to the contrary contained in Section 2(a), the Holder may elect to
exercise this Warrant in whole or in part on a “cashless exercise basis” by
receiving Shares equal to the value (as determined below) of this Warrant,
or
any part hereof, upon surrender of the Warrant at the principal office of the
Company together with notice of such election in which event the Company shall
issue to the Holder a number of Shares computed
using the following formula:
X
= Y(A-B)
A
|
Where:
|
X
= the number of Shares to be issued to the
Holder;
|
Y
= the number of Shares issuable upon exercise of this Warrant or, if
only a portion of this Warrant is being exercised, the portion of this Warrant
being exercised (at the date of such calculation);
A
= the
fair market value of one Common Share (at the date of such calculation);
and
B
= the
Exercise Price (as adjusted to the date of such calculation).
For
the
purpose of any computation under this Subsection 2(b), the fair market value
per
Common Share at any date shall be deemed to be the Closing Price (as defined
below) of the Common Shares on the Trading Day immediately preceding the date
as
of which the fair market value is being determined, provided that if
the Common Shares are not then listed or quoted on any market or exchange,
then
the fair market value shall be the average of the closing bid prices for the
Common Shares on the OTC Bulletin Board, or, if such is not available, the
Pink
Sheets LLC, or otherwise the average of the closing bid prices for the Common
Shares quoted by two market-makers of the Common Shares, or otherwise such
fair
market value shall be determined in good faith by the Company and the Holders.
“Trading Day” shall mean any day on which the principal United
States securities exchange or trading market on which the Common Shares are
listed, quoted or traded (the “Principal Market”) as reported
by Bloomberg Financial Markets (“Bloomberg's”) is open for
trading. “Closing Price” shall mean the average of the last
sale prices for the Common Shares on the Principal Market for the ten Trading
Days previous to the date of determination.
2
3. Transfer. (a) Any
transfer of this Warrant shall be effected by the Holder by (i) executing the
transfer form at the end hereof; and (ii) surrendering the Warrant for
cancellation at the office or agency of the Company referred to in Section
2
hereof, accompanied by (y) a certificate (signed by an officer of the Holder,
or
other authorized representative reasonably satisfactory to the Company, if
the
Holder is an entity) stating that each transferee is a permitted transferee
under this Section 3; and, if applicable, (z) an opinion of counsel, reasonably
satisfactory in form and substance to the Company, to the effect that the Shares
or the Warrant, as the case may be, may be sold or otherwise transferred without
registration under the Securities Act of 1933, as amended (the
“Act”). Notwithstanding the foregoing, the Holder
agrees that it shall not sell or transfer all or any part of the Warrant or
the
Shares to a resident of Canada or a person subject to the securities laws of
Canada for a period of at least four (4) months and one day from the date
hereof.
Upon
any
transfer of this Warrant or any part thereof in accordance with the first
sentence of this Section 3(a), the Company shall issue, in the name or names
specified by the Holder (including the Holder), a new Warrant or Warrants of
like tenor (including all substantive provisions hereof) and representing in
the
aggregate rights to purchase the same number of Shares as are purchasable
hereunder at such time.
(b) Any
attempted transfer of this Warrant or any part thereof in violation of this
Section 3 shall be null and void ab initio.
(c) This
Warrant may not be exercised and neither this Warrant nor any of the Shares,
nor
any interest in either, may be offered, sold, assigned, pledged, hypothecated,
encumbered or in any other manner transferred or disposed of, in whole or in
part, except in compliance with applicable United States federal and state
securities laws and applicable Canadian securities laws and the terms and
conditions hereof. Each Warrant shall bear a legend in substantially
the same form as the legend set forth on the first page of this
Warrant. Each certificate for Shares issued upon exercise of this
Warrant, unless at the time of exercise such Shares are acquired pursuant to
a
registration statement that has been declared effective under the Act and
applicable blue sky laws, shall bear a legend substantially in the following
form:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. ALTAIR
NANOTECHNOLOGIES INC. MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO
IT THAT A PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT.”
Additionally,
similar legends pursuant to Canadian law, as applicable, shall be set forth
on
any such Shares or Warrant, as reasonably determined by the Company’s Canadian
counsel, including the following:
"UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [insert date that is four (4) months and one day
after
issue date]."
Any
certificate for any Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate
for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement that has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby need no longer be subject to the restriction
contained herein. The provisions of this Section 3(c) shall be
binding upon all subsequent holders of certificates for Shares bearing the
above
legend and all subsequent holders of this Warrant, if any.
3
4. Shares
to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all Shares which may be purchased hereunder will,
upon
issuance and delivery against payment therefor of the requisite purchase price,
be duly and validly issued, fully paid and non-assessable. The Company further
covenants and agrees that, during the periods within which the Warrant may
be
exercised, the Company will at all times have authorized and reserved a
sufficient number of Common Shares to provide for the exercise of the
Warrant.
5. No
Voting or Dividend Rights. The Warrant shall not
entitle the Holder to any voting rights or any other rights, including without
limitation notice of meetings of other actions or receipt of dividends or other
distributions, as a stockholder of the Company.
6. Adjustment
of Exercise Price. The Exercise Price in effect at
the time and the number and kind of securities purchasable upon the exercise
of
this Warrant shall be subject to adjustment from time to time upon the happening
of certain events as follows:
(a) In
case the Company shall (i) declare a dividend or make a distribution on its
outstanding Common Shares in Common Shares or any other security, (ii) subdivide
or reclassify its outstanding Common Shares into a greater number of shares,
(iii) combine or reclassify its outstanding Common Shares into a smaller number
of shares, or (iv) enter into any transaction whereby the outstanding Common
Shares are at any time changed into or exchanged for a different number or
kind
of shares or other securities of the Company or of another corporation through
reorganization, merger, consolidation, liquidation or recapitalization, then
appropriate adjustments in the number of Shares (or other securities for which
such Shares have previously been exchanged or converted) subject to this Warrant
shall be made and the Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date of such subdivision,
combination, reclassification, reorganization, merger, consolidation,
liquidation or recapitalization shall be proportionately adjusted so that the
Holder of this Warrant exercised after such date shall be entitled to receive
the aggregate number and kind of shares or other securities which, if this
Warrant had been exercised by such Holder immediately prior to such date, the
Holder would have been entitled to receive upon such dividend, distribution,
subdivision, combination, reclassification, reorganization, merger,
consolidation, liquidation or recapitalization. For example, if the Company
declares a 2 for 1 stock subdivision (split) and the Exercise Price hereof
immediately prior to such event was $7.00 per Share and the number of Shares
issuable upon exercise of this Warrant was 85,500, the adjusted Exercise Price
immediately after such event would be $3.50 per Share and the adjusted number
of
Shares issuable upon exercise of this Warrant would be 171,000. Such adjustment
shall be made successively whenever any event listed above shall
occur.
(b) Whenever
the Exercise Price is adjusted, as herein provided, the Company shall promptly
cause a notice setting forth the adjusted Exercise Price and adjusted number
of
Shares issuable upon exercise of the Warrant to be mailed to the Holder, at
its
address set forth herein, and shall cause a certified copy thereof to be mailed
to the Company's transfer agent, if any. The Company may retain a firm of
independent certified public accountants selected by the Board of Directors
(who
may be the regular accountants employed by the Company) to make any computation
required by this Section 6, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(c) In
the event that at any time, as a result of an adjustment made pursuant to the
provisions of this Section 6, the Holder thereafter shall become entitled to
receive any shares of the Company other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of the Warrant shall
be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 6(a) above.
4
(d) The
Company shall provide the Holder with prior written actual notice (receipt
confirmed) of any event described in Section 6(a) at least ten (10) days prior
to the record date with respect to such event. In addition, the
Company shall deliver to the Holder copies of any and all information it is
required to deliver to its shareholders with respect to such event at the same
time such information is delivered to shareholders.
7. Governing
Law. This Agreement shall be governed by and in
accordance with the laws of the State of New York without regard to conflicts
of
laws principles thereof.
8. Binding
Effect on Successors. In case of any consolidation
of the Company with, or merger of the Company into, any other entity, or in
case
of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company at any time prior to the Expiration Date, then as a condition of such
consolidation, merger or sale or conveyance, the Company shall give written
notice of consolidation, merger, sale or conveyance to the Holder and, from
and
after the effective date of such consolidation, merger, sale or conveyance
the
Warrant shall represent only the right to receive the consideration that would
have been issuable in respect of the Shares underlying the Warrant in such
consolidation, merger, sale or conveyance had the Warrant been exercised in
full
immediately prior to such effective time and the Holder shall have no further
rights under this Warrant other than the right to receive such
consideration.
9. Fractional
Shares. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash equal
to such fraction multiplied by the then effective Exercise Price.
10. Lost
Warrants. The Company represents and warrants to
the Holder hereof that upon receipt of evidence reasonably satisfactory to
the
Company of the loss, theft, destruction, or mutilation of this Warrant and,
in
the case of any such loss, theft or destruction, upon receipt of an affidavit
of
loss and indemnity reasonably satisfactory to the Company, or in the case of
any
such mutilation upon surrender and cancellation of such Warrant, the Company,
at
its expense, will make and deliver a new Warrant, of like tenor, in lieu of
the
lost, stolen, destroyed or mutilated Warrant.
11. Headings. The
headings of the several sections and paragraphs of this Warrant are inserted
for
convenience only and do not constitute a part of this Warrant.
12. Modification
and Waiver. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is
sought.
13. Survival. The
rights and obligations of the Company, of the Holder and of the holder of Shares
issued upon exercise of this Warrant shall survive the exercise of this
Warrant.
14. Remedies. The
Company stipulates that the remedies at law of the Holder in the event of any
default or threatened default by the Company in the performance of or compliance
with any of the terms of this Warrant are not and will not be adequate and
that,
to the fullest extent permitted by law, such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein
or by
an injunction against a violation of any of the terms hereof or
otherwise.
15. Reservation
of Shares. The Company covenants and agrees that all
Shares which may be purchased hereunder will, upon issuance and delivery against
payment therefor of the requisite purchase price, be duly and validly issued,
fully paid and non-assessable. The Company further covenants and agrees that,
during the periods within which the Warrant may be exercised, the Company will
at all times have authorized and reserved a sufficient number of Common Shares
to provide for the exercise of the Warrant.
5
16. Will
Secure Governmental Approvals. If any of the Shares
required to be reserved for the purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any law of
the
United States or its constituent states (other than the Securities Act) before
such Shares may be issued upon exercise of this Warrant (other than as a result
of a breach by AES of its representations and warranties to the Company or
an
assignment of this Warrant by AES), the Company will, at its expense, as
expeditiously as possible use its commercially reasonable efforts to cause
such
Shares to be duly registered or approved, as the case may be.
17. No
Obligations as Shareholder. No provision hereof, in the
absence of affirmative action by the Holder hereof to purchase Shares, and
no
mere enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of such Holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company
or
by creditors of the Company.
18. Taxes
Payable Upon Exercise. The Company shall pay any stock
issuance, transfer or similar taxes that may be payable in respect of the
issuance of Shares upon exercise of this Warrant. For purposes of
clarity, the Company shall not be required to pay any federal, state, local
or
foreign income taxes, if any, payable by the Holder or any other person upon
exercise of this Warrant, or any taxes which may be payable in respect of any
transfer involved in the issuance of Shares in the name other than that in
which
this Warrant is registered, and the Company shall not be required to issue
or
deliver any such Shares unless and until the person requesting such issuance
shall have paid to the Company the amount of any such transfer taxes, or shall
have established to the satisfaction of the Company that such taxes have been
paid.
19. Notice
to Cash or Similar Dividend. The Company shall provide
the Holder with written actual notice (receipt confirmed) of any dividend or
other distribution of assets (other than a distribution described in Section
6(a)) at least ten (10) days prior to the record date for such dividend or
other
distribution.
20. Notices. All
notices or other communications which are required or permitted hereunder shall
be in writing and shall be deemed sufficiently given if delivered personally
(as
confirmed by signature of receiving party) or sent by nationally recognized
overnight courier postage prepaid (as confirmed by signature of receiving party)
to the address set forth below or to such other address as any party may have
specified in a notice duly given to the other party as provided herein. Such
notice of communication shall be deemed to have been given as of the date
received.
If
to
Altairnano:
Altairnano,
Inc.
000
Xxxxxx Xxx
Xxxx,
Xxxxxx 00000
Attn: Xxxx
Xxxxxxx, CEO and President
If
to
AES:
AES
Energy Storage, LLC
c/o
The
AES Corporation
0000
Xxxxxx Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx Xxxxxxx
6
With
a
copy to:
AES
Energy Storage, LLC
c/o
The
AES Corporation
0000
Xxxxxx Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
General Counsel
IN
WITNESS WHEREOF, the Company has
caused this Warrant to be signed by its duly authorized officers.
By:______________________________
Name:
Title:
7
PURCHASE
FORM
(To
be
signed only upon exercise of Warrant)
The
undersigned, the holder of the foregoing Warrant, hereby irrevocably elects
to
exercise the purchase rights represented by such Warrant for, and to purchase
thereunder, _______________ Common Shares, without nominal or par value per
share (the “Shares”), of ALTAIR NANOTECHNOLOGIES INC. and
either tenders herewith payment of the aggregate Exercise Price in respect
of
the Shares in full, in the amount of $_________; or elects pursuant to Section
2(b) of such Warrant into Common Shares on a cashless basis and requests that
the certificates for the Shares be issued in the name(s) of, and delivered
to
_________________, whose address(es) is (are):
Dated: __________________________
By:
___________________________
___________________________
___________________________
Address
8
TRANSFER
FORM
(To
be
signed only upon transfer of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto
______________________________ the right to purchase Shares represented by
the
foregoing Warrant to the extent of __________ Shares, and appoints
_________________________ attorney to transfer such rights on the books of
Altair Nanotechnologies Inc., with full power of substitution in the
premises.
Dated: ____________________________
By:
_____________________________
_____________________________
_____________________________
Address
In
the
presence of:
___________________________
9
EXHIBIT
B
SUBSTANTIVE
MATTERS TO BE ADDRESSED IN OPINION
Canadian
Law Opinions:
Parent
is
a corporation existing under the laws of Canada.
Parent
has the corporate power and authority to enter into the Agreement, and to
consummate the transactions contemplated thereby, including the issuance and
delivery of the Initial Warrants and the Milestone Warrants (collectively,
the
“Warrants”) to AES and the issuance and delivery of the Common Shares issuable
upon exercise of the Warrants (the “Warrant Shares”) to the holder of the
Warrants upon the proper exercise thereof, including payment of the exercise
price.
Parent
has taken all necessary corporate action to authorize the execution and delivery
by it of the Agreement and the performance by Parent of its obligations under
the Agreement, including the issuance and delivery of the Warrants to AES and
the issuance and delivery of the Common Shares issuable upon exercise of the
Warrants.
To
the
extent that such matters are governed by the laws of the Province of Ontario
and
the laws of Canada applicable therein, each of the Agreement and the Initial
Warrant has been duly executed and delivered by Parent.
The
Warrant Shares have been validly created and allotted and, when issued to the
holder of the Warrant in accordance with the terms of the Warrant, will be
validly issued and outstanding as fully paid and non-assessable Common Shares
of
Parent.
To
the
extent that such matters are governed by the laws of the Province of Ontario
and
the laws of Canada applicable therein, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or
filing with, any governmental authority is required in connection with the
execution and delivery by the Parent of the Agreement or the performance by
Parent of its obligations under the Agreement.
U.S.
Law
Opinions:
No
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of Parent is required in connection with
the
execution and performance of the Warrant Issuance Agreement, other than (i)
the
completion, execution and filing of a Form D with the United States Securities
and Exchange Commission (the “Commission”) following execution of the Warrant
Issuance Agreement, (ii) the completion, execution and filing of a Form D and
related documentation with, and the payment of required fees to, the securities
divisions of applicable states following the execution of the Warrant Issuance
Agreement, and (iii) the completion, execution and filing of a Current Report
on
Form 8-K with the Commission reporting the execution of the Warrant Issuance
Agreement and filing certain documents as exhibits.
Each
of
the Warrant Issuance Agreement and the Initial Warrant constitutes the valid
and
binding agreement of Parent, enforceable against Parent in accordance with
its
terms.
