Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as
of May 7, 2002 is entered into by and among Altair International Inc., a
corporation incorporated under the laws of the Province of Ontario, with
headquarters located at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx, Xxxxxxx 00000
(the "Company"), and the investors listed on Schedule 1 attached hereto
(individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Company desires to sell and the Buyers desire to
purchase, upon the terms and conditions stated in this Agreement, that number of
shares of the Company's common stock, no par value (the "Common Stock") and
warrants, in substantially the same form attached hereto as Exhibit A (the
"Warrants") to acquire shares of Company Common Stock (as exercised,
collectively, the "Warrant Shares"), all as set forth on Schedule 1 attached
hereto; and
C. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit B (the
"Registration Rights Agreement") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK AND WARRANTS.
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a. Purchase of Common Stock and Warrants. In connection with the
offering (the "Offering") by the Company of the Common Stock and Warrants to the
Buyers, and subject to the satisfaction (or waiver) of the conditions set forth
in Sections 6 and 7 below, the Company shall issue and sell to each Buyer and
each Buyer severally agrees to purchase from the Company the respective number
of shares of Common Stock set forth opposite such Buyer's name on Schedule 1,
along with Warrants to acquire the respective number of Warrant Shares set forth
opposite such Buyer's name on Schedule 1 (the "Closing"). The aggregate purchase
price (the "Purchase Price") of the shares of Common Stock and the related
Warrants at the Closing shall be One Million Dollars ($1,000,000).
b. Closing Date. The date and time of the Closing (the "Closing Date")
shall be 10:00 a.m. Central Time, within three (3) business days following the
date hereof, subject to notification of satisfaction (or waiver) of the
conditions to the Closing set forth in Sections 6 and 7 below (or such later
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date as is mutually agreed to by the Company and the Buyers). The Closing shall
occur on the Closing Date at the offices of Sidley Xxxxxx Xxxxx & Xxxx, Bank One
Plaza, 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such other place
as shall be agreed upon by the Company and Buyers, it being understood that
presence in person at the Closing is not required so long as Closing deliveries
are made by courier service, fax or otherwise as appropriate.
c. Form of Payment. On the Closing Date, (i) subject to the
satisfaction (or waiver) of the conditions set forth in Section 7 below, each
Buyer shall pay its portion of the Purchase Price to the Company, for the Common
Stock and Warrants to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the Company's written
wire transfer instructions, and (ii) subject to the satisfaction (or waiver) of
the conditions set forth in Section 6 below and after the Company has received
the Purchase Price from the Buyers, the Company shall deliver to Buyer stock
certificates (in the denominations as such Buyer shall request) (the "Common
Stock Certificates") representing such number of the shares of Common Stock
which such Buyer is then purchasing (as indicated opposite such Buyer's name on
Schedule 1) along with the Warrants such Buyer is purchasing (as indicated
opposite such Buyer's name on Schedule 1) hereunder, duly executed on behalf of
the Company and registered in the name of such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer is acquiring the Common Stock and
Warrants (the Common Stock and Warrants may also be referred to herein as the
"Securities"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such Securities.
d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
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in Section 3 below. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.
e. No Governmental Review. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that: (i) the Securities
have not been and, except as provided in the Registration Rights Agreement, are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule thereto) ("Rule 144"); and (ii) any sale of the Securities made
in reliance on Rule 144 may be made only in accordance with the terms of Rule
144 and further, and if Buyer intends to utilize Rule 144 but Rule 144 is not
applicable to such resale, any resale of the Securities under circumstances in
which Buyer (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder.
g. Legends. Such Buyer understands that the Common Stock Certificates
and certificates or other instruments representing the Warrants and, until such
time as the sale of the Common Stock and the Warrant Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement, the
Common Stock Certificates and stock certificates representing the Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (1) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE 1933 ACT OR APPLICABLE STATE SECURITIES LAWS,
OR (2) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT
OR (3) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER
SAID ACT.
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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act and the holder has agreed
to comply with the prospectus delivery requirements of the 1933 Act in
connection with any offer or sale of such Securities, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under the 1933 Act
or (iii) such holder provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold.
h. Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable against such Buyer in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country and state, if
applicable, specified in its address on Schedule 1.
j. Legends. Such Buyer understands that, for a period of 120 days after
the Closing Date, the Common Stock Certificates, the certificates or other
instruments representing the Warrants, and the certificates representing the
Warrant Shares shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfers of such stock
certificates in violation of the terms of such restrictive legend):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED TO ANY RESIDENT OF CANADA ON OR
BEFORE SEPTEMBER 10, 2002.
The Company agrees to cause such legend to be removed, and the Company shall
issue a certificate without such legend to the holder of the Securities upon
which it is stamped, (i) at the request of the holder at any time after
September 10, 2002 and (ii) in connection with a sale transaction to a resident
of Canada, if such holder provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under governing
Canadian securities laws.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyers that, except
as set forth in the disclosure schedule delivered by the Company to the Buyers
in connection herewith (the "Disclosure Schedule"):
a. Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns a controlling position of capital stock or holds a
controlling position of an equity or similar interest) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
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power and authorization to own their properties and to carry on their business
as now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results or operations, financial condition or prospects of the
Company and its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as defined below in Section
3(b)).
b. Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Transfer Agent Instructions
(as defined in Section 5) and the Warrants and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents"), and
to issue the Securities in accordance with the terms hereof and thereof, (ii)
the execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Common Stock and the Warrants
and the reservation for issuance and the issuance of the Warrant Shares issuable
upon exercise thereof, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) the Transaction Documents have
been duly executed and delivered by the Company and (iv) the Transaction
Documents constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.
c. Issuance of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms hereof, shall be (i) validly issued, fully
paid and non-assessable and (ii) free from all taxes, liens and charges with
respect to the issue thereof. 312,500 shares of Company common stock (subject to
adjustment pursuant to the Company's covenant set forth in Section 4(g) below)
have been duly authorized and reserved for issuance upon exercise of the
Warrants. Upon exercise in accordance with the Warrants, the Warrant Shares will
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of common stock of the Company. Subject to
the accuracy of the representations and warranties of the Buyer in Section 2,
the issuance by the Company of the Securities is, and the issuance by the
Company of the Warrant Shares shall be, exempt from registration under the 1933
Act.
d. No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
Company's issuance of the Securities and the reservation for issuance and
issuance of the Warrant Shares) will not (i) result in a violation of the
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Company's Articles of Incorporation, as amended and as in effect on the date
hereof (the "Articles of Incorporation") or the Company's By-laws, as amended
and as in effect on the date hereof (the "By-laws") or any Certificate of
Designations, Preferences and Rights of any outstanding series of preferred
stock of the Company or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the Principal
Market (as defined in Section 4(f) below)) applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is
in violation of any term of or in default under its Articles of Incorporation,
any Certificate of Designations, Preferences and Rights of any outstanding
series of preferred stock of the Company or By-laws or their organizational
charter or by-laws, respectively. Neither the Company or any of its Subsidiaries
is in violation or any term of or in default under any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its Subsidiaries,
except for possible conflicts, defaults, terminations and amendments that would
not have a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, ordinance, regulation of any governmental entity, except for possible
violations the sanctions for which either individually or in the aggregate would
not have a Material Adverse Effect. Except as specifically contemplated by the
Transaction Documents and as required under the 1933 Act and governing state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain prior to Closing pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. Except as set forth in the Disclosure Schedule, the
Company is not in violation of the listing requirements of the Principal Market
(as defined in Section 4(f) below).
e. SEC Documents; Financial Statements. As of the Closing, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof, all exhibits included therein and
financial statements and schedules thereto, all documents incorporated by
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reference therein, and all registration statements of the Company (and
prospectuses incorporated therein) filed under the 1933 Act being hereinafter
referred to as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by the Company to the Buyers which
is not included in the SEC Documents contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading. Neither the Company nor any of its Subsidiaries or
any of their officers, directors, employees or agents have provided the Buyers
with any material, nonpublic information.
f. Absence of Certain Changes. Since the most recent filing by the
Company with the SEC, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
g. Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company, the Company's common stock, the
Common Shares or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such.
h. Acknowledgment Regarding Buyers' Purchase of Common Stock and
Warrants. The Company acknowledges and agrees that each of the Buyers is acting
solely in the capacity of arm's-length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that each Buyer is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby and
any advice given by any of the Buyers or any of their respective representatives
or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Buyer's purchase of
the Securities. The Company further represents to each Buyer that the Company's
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
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i. No Undisclosed Events, Liabilities, Developments or Circumstances.
No event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement filed with the SEC relating to an
issuance and sale by the Company of its common stock and which has not been
publicly announced.
j. No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
k. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.
l. Employee Relations. Neither the Company nor any of its Subsidiaries
is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened.
m. Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth in the SEC Documents, none of
the Company's trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are expected to
expire or terminate within two (2) years from the date of this Agreement. The
Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
xxxx registrations, trade secret or other similar rights of others, or of any
such development of similar or identical trade secrets or technical information
by others and the Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
n. Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
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environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
o. Title. The Company and its Subsidiaries have good and marketable title to, or
a valid leasehold interest in, all real property and personal property that is
material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the SEC Documents or the Disclosure Schedule or such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
p. Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged and the Company does not have any reason to believe it will not be able
to renew its existing insurance coverage under substantially similar terms for
the next two (2) years.
q. Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
r. Tax Status. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
s. Transactions With Affiliates. Except as set forth in the SEC
Documents filed at least ten (10) days prior to the date hereof, none of the
officers, control parties, control entities, directors or employees of the
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
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partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
t. Eligibility. The Company is currently eligible to register the
resale of the Common Stock and Warrant Shares on a registration statement on
Form S-3 under the 1933 Act.
u. Dilutive Effect. The Company understands and acknowledges that the
number of Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances. The Company further acknowledges that its obligation to
issue the Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants, is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.
v. Placement Agent. The Company has not engaged any placement agent in
connection with the sale of the Common Stock and Warrants.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
b. Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyers on
or prior to the Closing Date. The Company shall make all filings and reports
relating the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing Date.
c. Reporting Status. Until the earlier of (i) the date which is one
year after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Common Stock and Warrant
Shares without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (ii) the date on which (A) the Investors shall
have sold all the Common Stock and Warrant Shares and (B) none of the Warrants
are outstanding, the Company shall file all reports required to be filed with
the SEC pursuant to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale of
the Common Stock and Warrants for working capital and capital expenditures.
e. Right of First Refusal. Subject to the exceptions described below,
the Company and its Subsidiaries shall not negotiate or contract with any party
for any equity financing (including any debt financing with an equity component)
or issue any equity securities of the Company or any Subsidiary or securities
10
convertible or exchangeable into or for equity securities of the Company or any
Subsidiary (including debt securities with an equity component) in any form
("Future Offerings") during the period beginning on the date hereof and ending
on, and including, the date which is three hundred sixty-five (365) days after
the Closing Date, unless it shall have first delivered to each Buyer or a
designee appointed by such Buyer written notice (the "Future Offering Notice")
describing the proposed Future Offering, including the terms and conditions
thereof, and providing each Buyer an option to purchase up to its Aggregate
Percentage (as defined below) of the securities to be issued in such Future
Offering, as of the date of delivery of the Future Offering Notice, in the
Future Offering (the limitations referred to in this sentence is referred to as
the "Capital Raising Limitations"). For purposes of this Section 4(e),
"Aggregate Percentage" at any time with respect to any Buyer shall mean the
percentage obtained by dividing (i) the aggregate number of the shares of Common
Stock initially issued at the Closing to such Buyer by (ii) the aggregate number
of the shares of Common Stock sold to the Buyers by the Company at the Closing
in connection with the Offering. A Buyer can exercise its option to participate
in a Future Offering by delivering written notice thereof to participate to the
Company within five (5) business days after receipt of a Future Offering Notice,
which notice shall state the quantity of securities being offered in the Future
Offering that such Buyer will purchase, up to its Aggregate Percentage, and that
number of securities it is willing to purchase in excess of its Aggregate
Percentage. In the event that one or more Buyers fail to elect to purchase up to
each such Buyer's Aggregate Percentage, then each Buyer which has indicated that
it is willing to purchase a number of securities in such Future Offering in
excess of its Aggregate Percentage shall be entitled to purchase its pro rata
portion (determined in the same manner as described in the preceding sentence)
of the securities in the Future Offering which one or more of the Buyers have
not elected to purchase. In the event the Buyers fail to elect to fully
participate in the Future Offering within the periods described in this Section
4(e), the Company shall have forty-five (45) days thereafter to sell the
securities of the Future Offering that the Buyers did not elect to purchase,
upon terms and conditions no more favorable to the purchasers thereof than
specified in the Future Offering Notice. In the event the Company has not sold
such securities of the Future Offering within such 45 day period, the Company
shall not thereafter issue or sell such securities without first offering such
securities to the Buyers in the manner provided in this Section 4(e). The
Capital Raising Limitations shall not apply to (i) a loan from a commercial bank
which does not have any equity feature, (ii) any transaction involving the
Company's issuances of securities (A) as consideration in a merger or
consolidation, (B) as consideration for the acquisition of a business, product,
license or other assets by the Company, (C) pursuant to the terms of a joint
venture or similar arrangement, or (D) as payment for bona fide consulting
services, (iii) the issuance of common stock in a firm commitment, underwritten
public offering in which the underwriter is an investment bank of national
reputation, (iv) the issuance of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of
the date hereof, (v) the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option plan,
restricted stock plan or stock purchase plan for the benefit of the Company's
employees, directors or consultants. The Buyers shall not be required to
participate or exercise their right of first refusal with respect to a
particular Future Offering in order to exercise their right of first refusal
with respect to later Future Offerings.
11
f. Listing. The Company shall promptly secure the listing of all of the
Registrable Securities (as that term is defined in the Registration Rights
Agreement) upon each national securities exchange, automated quotation system or
bulletin board system, if any, upon which shares of the Company's common stock
are then listed (subject to official notice of issuance) and shall maintain, so
long as any other shares of common stock shall be so listed, such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Nasdaq National Market, Nasdaq Small-Cap
Market, The New York Stock Exchange, Inc. or The American Stock Exchange, Inc.,
as applicable (the "Principal Market"). Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of common stock of the Company on the Principal
Market. The Company shall promptly, and in no event later than the following
business day, provide to each Buyer copies of any notices it receives from the
Principal Market regarding the continued eligibility of common stock of the
Company for listing on such automated quotation system or securities exchange.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f).
g. Reservation of Shares. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, no
less than 200% of the number of shares of common stock of the Company needed to
provide for the issuance of the shares of common stock of the Company upon
exercise of all outstanding Warrants.
h. Issuance of Warrant Shares. The issuance of the Warrant Shares shall
be duly authorized, and when issued in accordance with the Warrants, the Warrant
Shares will be validly issued, fully paid and non-assessable and free of all
taxes, liens, charges and preemptive rights with respect to the issue thereof.
i. Limitation on Filing Registration Statements. The Company shall not
file a registration statement (other than the Registration Statement (as defined
in the Registration Rights Agreement) or a registration statement on Form S-8)
covering the sale or resale of shares of common stock of the Company with the
SEC during the period beginning on the date hereof and ending on the date which
is ninety (90) days after the Registration Statement has been declared effective
by the SEC; provided, however, the foregoing shall not prohibit the Company from
registering the re-sale of up to 285,000 shares of Common Stock for security
holders other than the Buyers under the Registration Statement.
j. Independent Auditors. The Company shall, until at least three (3)
years after the Closing Date, maintain as its independent auditors an accounting
firm authorized to practice before the SEC.
k. Corporate Existence and Taxes. The Company shall, until at least the
later of (i) the date that is three (3) years after the Closing Date or (ii) the
exercise of all Warrants purchased pursuant to this Agreement, maintain its
corporate existence in good standing (provided, however, that the foregoing
covenant shall not prevent the Company from entering into any merger or
corporate reorganization as long as the surviving entity in such transaction, if
not the Company, has common stock listed for trading on the Principal Market and
shall pay all its taxes when due except for taxes which the Company disputes).
12
l. Filing of Form 8-K. On or before the third (3rd) business day
following the Closing Date, the Company shall file a Form 8-K with the SEC
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act.
m. Transactions With Affiliates. For a period of one year from the
Closing Date, none of the officers, directors, or employees of the Company shall
be a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
n. Restrictions on Sales of Securities. Each Buyer has not and will
not, prior to the earlier of (i) ninety (90) days following the Closing Date or
(ii) the date that the Registration Statement (as defined in the Registration
Rights Agreement) is first declared effective by the SEC (the "Effective Date"),
if then prohibited by law or regulation, sell, dispose of or grant any rights
with respect to the Common Stock or Warrant Shares. In addition, such Buyer
represents that as of the date of this Agreement such Buyer does not have any
existing short position in the Company's common stock that was entered into
subsequent to such Buyer obtaining knowledge of the transactions contemplated
hereby nor has such Buyer executed any derivative instruments with any third
party, which in either case is designed to dispose of the Common Stock or
Warrant Shares prior to the earlier of (y) ninety (90) days following the
Closing Date or (z) the Effective Date.
o. Buy-In Damages. If the Company fails to issue to the applicable
Buyer a certificate, without the legend set forth in Section 2(g) hereof, by the
third (3rd) trading day after the request thereof by such Buyer, and if after
such third (3rd) trading day such Buyer purchases (in an open market transaction
or otherwise) shares of common stock of the Company to deliver in satisfaction
of a sale by such Buyer of the shares that such Buyer anticipated receiving from
the Company, then the Company shall, within three (3) trading days after such
Buyer's request (i) pay cash to such Buyer in an amount equal to the excess (if
any) of such Buyer's total purchase price (including brokerage commissions, if
any) for the shares of common stock of the Company so purchased over the product
of (A) such number of shares of common stock times (B) the closing sale price of
the Company common stock on the date of the event giving rise to the Company's
obligation to deliver such certificate and (ii) promptly honor its obligation to
deliver to such Buyer the Common Stock Certificates.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall issue irrevocable instructions to its transfer agent
(the "Transfer Agent"), and any subsequent transfer agent, substantially in the
form of Exhibit C hereto (the "Transfer Agent Instructions") to issue
certificates, registered in the name of each Buyer or its respective nominee(s),
for the Warrant Shares, as applicable in such amounts as specified from time to
time by each Buyer to the Company upon exercise of the Warrants. Prior to
13
registration of the Common Stock and Warrant Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that no instruction other than the Transfer
Agent Instructions referred to in this Section 5, and stop transfer instructions
to give effect to Section 2(f) hereof will be given by the Company to its
Transfer Agent and that the Securities shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement. Nothing in this Section 5 shall
affect in any way each Buyer's obligations and agreements set forth in Section
2(g) to comply with all applicable prospectus delivery requirements, if any,
upon resale of the Securities. If a Buyer provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that a public sale,
assignment or transfer of the Securities or Warrant Shares may be made without
registration under the 1933 Act or the Buyer provides the Company with
reasonable assurances that the Securities or Warrant Shares can be sold pursuant
to Rule 144 without any restriction as to the number of securities acquired as
of a particular date that can then be immediately sold, the Company shall permit
the transfer, and, in the case of the Warrant Shares, promptly instruct its
Transfer Agent to issue one or more certificates in such name and in such
denominations as specified by such Buyer and without any restrictive legend. The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyers shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Common Stock and Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
a. Such Buyer shall have executed each of the Transaction Documents,
where appropriate, to which it is a party and delivered the same to the Company
for the transactions contemplated by this Agreement;
b. The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date; and
c. Such Buyer shall have delivered to the Company such other documents
relating to the transactions contemplated by this Agreement as the Company may
reasonable request.
14
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
The obligation of each Buyer hereunder to purchase the Common
Stock and Warrants at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:
a. The Company shall have executed each of the Transaction Documents
and delivered the same to the Buyers;
b. The common stock of the Company shall be authorized for quotation on
the Principal Market and trading in common stock of the Company shall not have
been suspended by the SEC or the Principal Market;
c. The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date) and the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date;
d. The Company shall have delivered to the Buyers the opinion of the
Company's outside legal counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially the form of
Exhibit D attached hereto;
e. The Company shall have executed and delivered to the Buyers the
Common Stock Certificates and Warrants (in such denominations as such Buyer
shall request) for the shares of Common Stock and Warrants being purchased by
such Buyer at the Closing;
f. The Transfer Agent Instructions shall have been delivered to and
acknowledged in writing by the Transfer Agent and a copy of the executed
Transfer Agent Instructions shall have been delivered to the Buyers;
g. The Company shall have made all required filings under all
applicable federal and state securities laws necessary to consummate the
issuance of the Securities pursuant to this Agreement in compliance with such
laws;
h. As of the Closing Date, the Company shall have reserved out of its
authorized and unissued common stock, solely for the purpose of effecting the
exercise of the Warrants, no less than 200% of the number of shares of common
stock of the Company needed to provide for the issuance of the shares of common
stock of the Company upon exercise of all outstanding Warrants;
i. The Company shall have delivered to the Buyers the following:
15
i. A certificate, executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, confirming that the representations and
warranties described in Section 7(c) above are true and correct as of the date
when made and as of the Closing Date and as to such other matters as may be
reasonably requested by such Buyer;
ii. The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form reasonably
acceptable to such Buyer;
iii. The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in such corporation's jurisdiction of incorporation issued by the
Secretary of State or other appropriate official of such jurisdiction of
incorporation as of a date within ten (10) days of the Closing Date; provided,
however, in light of the fact that the employees in the relevant government
office in the province of Ontario are presently on strike and will not issue any
such certificate, the Company shall be permitted to deliver such certificate at
any time within five business days of the date such certificate becomes
available.
iv. The Company shall have delivered to such Buyer a certified copy of
the Articles of Incorporation as certified by the Ministry of Consumer and
Business Services of the Province of Ontario within ten (10) days of the Closing
Date; provided, however, in light of the fact that the employees in such
government office are presently on strike and will not issue any such
certification, the Company shall be permitted to deliver such certificate at any
time within five business days of the date such certification becomes available;
and
v. The Company shall have delivered to such Buyer a secretary's
certificate, dated as the Closing Date, as to (A) the resolutions described in
Section 7(i)(ii) above, (B) the Articles of Incorporation and (C) the By-laws,
each as in effect at the Closing.
j. The Company shall have delivered to the Buyers such other documents
relating to the transactions contemplated by this Agreement as the Buyers may
reasonably request; and
k. Subject to Section 10(l) below, at Closing the Company shall
reimburse the Buyers for the Buyers' costs and expenses (in an amount not to
exceed $2,500), including without limitation Buyers' attorneys' fees and
expenses incurred by the Buyers concerning the due diligence review of the
contemplated transactions and the Company, and the negotiation and preparation
of the Transaction Documents and the consummation of the transactions
contemplated thereby.
8. INDEMNIFICATION.
---------------
a. In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
other holder of the Securities and all of their stockholders, officers,
directors, employees and direct or indirect investors and any of the foregoing
16
person's agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (c) any cause of action, suit or claim brought
or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(d) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (e) the
status of such Buyer or holder of the Securities as an investor in the Company.
Notwithstanding anything to the contrary herein, the Company shall have no
obligation under this Section 8 with respect to any Indemnified Liabilities
arising out of, or relating to, any breach of any representations, warrant or
covenant in any Transaction Document by a Buyer. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
b. In consideration of the Company's execution and delivery of the
Transaction Documents, each Buyer shall defend, protect, indemnify and hold
harmless the Company and its officers, directors, employees and direct or
indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Company Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Company
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Company Indemnified Liabilities"), incurred by any Company Indemnitee as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by such Buyer in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby or (b) any breach of any covenant, agreement or obligation of such
Buyer contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby. Notwithstanding anything
to the contrary herein, Buyers shall have no obligation under this Section 8
with respect to any Company Indemnified Liabilities arising out of, or relating
to, any breach of any representations, warrant or covenant in any Transaction
Document by the Company.
9. LIQUIDATED DAMAGES.
------------------
The Company agrees that Buyers will suffer damages if the Company
violates any provision of or fails to fulfill any of its obligations or duties
pursuant to the Transaction Documents, other than the Registration Rights
Agreement or the Warrants (a "Company Violation"), and that it would not be
17
possible to ascertain the extent of such damages. Accordingly, in the event of
such Company Violation, the Company hereby agrees to pay liquidated damages
("Liquidated Damages") to each Buyer following the occurrence of such Company
Violation in an amount determined by multiplying (i) one percent (1%) of such
Buyer's portion of the Purchase Price by (ii) the percentage derived by dividing
(A) the actual number of days elapsed from the last day of the date of the
Company Violation or the prior 30-day period, as applicable, to the day such
Company Violation has been completely cured by (B) 30, in cash, or at such
Buyer's option, in the number of shares of common stock of the Company equal to
the quotient of (v) the dollar amount of the Liquidated Damages on the Payment
Date (as defined below) divided by (w) the closing bid price of the common stock
of the Company as of the date of the Company Violation (as quoted in the
Principal Market or the market or exchange where the Company's common stock is
then traded). The Liquidated Damages payable pursuant hereto shall be payable
within five (5) business days from the end of the calendar month commencing on
the first calendar month in which the Company Violation occurs (each, a "Payment
Date"). In the event the Buyer elects to receive the Liquidated Damages amount
in shares of common stock of the Company, such shares shall also be considered
Common Stock and shall have the registration rights set forth in the
Registration Rights Agreement.
10. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law; Jurisdiction; Jury Trial. This Agreement shall be
governed by and construed in all respects by the internal laws of the State of
Illinois (except for the proper application of the United States federal
securities laws), without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
18
e. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and holders of at least two-thirds (2/3) of the shares of Common Stock
held by the Buyers then outstanding, and no provision hereof may be waived other
than by an instrument in writing signed by the party against whom enforcement is
sought.
f. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Altair International Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Chief Executive Officer
With a copy to:
Altair International Inc.
000 Xxxxx Xxxx Xxxx, Xxxxx 00
Xxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx, Chief Financial Officer
Stoel Rives LLP
000 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to a Buyer, to it at the address and facsimile number set forth on Schedule 1
with copies to such Buyer's representatives as set forth on Schedule 1, or at
19
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Common Stock. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of holders of at least two-thirds (2/3) of the shares of Common Stock
held by the Buyers. A Buyer may assign some or all of its rights hereunder
without the consent of the Company to the extent that such assignment complies
with governing state and federal securities laws (and does not affect the
exemption under which the Common Stock and Warrants are to be issued), provided,
however, that any such assignment shall not release such Buyer from its
obligations hereunder unless such obligations are assumed by such assignee and
the Company has consented to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. Unless this Agreement is terminated under Section 10(l),
the agreements and covenants set forth in Sections 4, 5 and 10, the
indemnification provisions set forth in Section 8 and the liquidated damages
provisions set forth in Section 9 shall survive the Closing. Each Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
j. Publicity. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing shall not have occurred
with respect to a Buyer on or before three (3) business days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions
set forth in Sections 6 and 7 above (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any other
party; provided, however, that if this Agreement is terminated pursuant to this
Section 10(l), the Company shall remain obligated to reimburse the nonbreaching
Buyers for the expenses described in Section 7(k) above.
20
m. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
n. Remedies. Each Buyer and each holder of the Securities shall have
all rights and remedies set forth in the Transaction Documents and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
o. Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to the Transaction Documents or the
Buyers enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
* * * * * *
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IN WITNESS WHEREOF, the Buyers and the Company have caused
this Securities Purchase Agreement to be duly executed as of the date first
written above.
COMPANY:
ALTAIR INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Name: Xxxxxxx X. Xxxx
Title: CEO
BUYERS:
CRANSHIRE CAPITAL, L.P.
By: Downsview Capital, Inc.,
the General Partner
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
IRON EQUITY FUND LP
By: Iron Partners L.L.C.
the General Partner
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: G.P. for Iron Equity Fund
22
SCHEDULE 1: LIST OF BUYERS
---------------------------------------------------------------------------------------------------------------------------
Buyer Contact Information Purchase Number of Number of Legal Representative
Price Common Stock Warrant
Shares Shares
---------------------------------------------------------------------------------------------------------------------------
Cranshire Capital, L.P. c/o Downsview Capital, $750,000 937,500 234,375 Sidley Xxxxxx Xxxxx &
Inc. Wood
666 Dundee Rd., Ste. 0000 Xxxx Xxx Xxxxx
Xxxxxxxxxx, XX 00000 00 X. Xxxxxxxx Xx.
Xxxx: Xxxxxxxx X. Xxxxx Xxxxxxx, XX 00000
(p)847/562-9030 Attn: Xxxx X. Xxxx
(f)847/562-9031 (p)312/853-7099
(f)312/853-7036
---------------------------------------------------------------------------------------------------------------------------
Iron Equity Fund LP One Northfield Plaza $250,000 312,500 78,125
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
(p)847/501-3511
---------------------------------------------------------------------------------------------------------------------------
TOTAL: $1,000,000 1,250,000 312,500
---------------------------------------------------------------------------------------------------------------------------
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EXHIBITS
Exhibit A Form of Warrant
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Transfer Agent Instructions
Exhibit D Form of Company Counsel Opinion
24
