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EXHIBIT 1
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
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SECURITIES PURCHASE AGREEMENT
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COMMON STOCK
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May 12, 2000
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered into as
of May 12, 2000 by and between NORTH AMERICAN TECHNOLOGIES GROUP, INC., a
Delaware corporation (the "Company"), and AVALANCHE RESOURCES, LTD., a Texas
limited partnership (the "Purchaser").
RECITALS:
In order to obtain working capital for general corporate purposes and
to finance the Company's business plan, which includes the construction of at
least one manufacturing plant dedicated to the production of the Company's
TieTek Composite Railroad Ties, the Company desires to issue, and the Purchaser
desires to purchase, 500,000 shares of the Company's Common Stock Convertible
Common Stock, $.001 par value per share (the "Common Stock") at an aggregate
purchase price of $500,000.
NOW, THEREFORE, in consideration of the premises hereof and the
agreements set forth herein below, the parties hereto hereby agree as follows:
1. Sale and Purchase of Common Stock.
(a) Sale of the Common Stock. Subject to the terms and
conditions hereof, on the Closing Date, as defined in Section 3 hereof, the
Company agrees to issue and sell, and the Purchaser agrees irrevocably to
purchase 500,000 shares of Common Stock at $1.00 per share for an aggregate
purchase price of $500,000 (the "Purchase Price").
(b) Restricted Securities. The shares of Common Stock that are
being offered hereby are "restricted securities" as that term is defined under
Rule 144 of the Securities Act of 1933, as amended (the "Act"), and,
accordingly, may not be offered for sale or sold or otherwise transferred in a
transaction which would constitute a sale thereof within the meaning of the Act
unless: (i) such security has been registered for sale under the Act and
registered or qualified under applicable state securities laws relating to the
offer and sale of securities; or (ii) exemptions from the registration
requirements of the Act and the registration or qualification requirements of
all such state securities laws are available and the Company shall have received
an opinion of counsel that the proposed sale or other disposition of such
securities may be effected without registration under the Act and would not
result in any violation of any applicable state securities laws relating to the
registration or qualification of securities for sale, such counsel and such
opinion to be satisfactory to the Company. As restricted securities, the Common
Stock is subject to significant restrictions upon resale.
2. Common Stock Offered In A Private Placement Transaction.
The parties hereto agree and acknowledge that the Common Stock
subject to this Securities Purchase Agreement is offered as a private placement
transaction pursuant to Section 4(2) and Regulation D of the Securities Act (the
"Offering") by the Company.
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3. Binding Effect of Securities Purchase Agreement; The Closing.
(a) This Securities Purchase Agreement shall not be binding on
the Company unless and until the Company has accepted the offer represented by
an executed signature page at the end hereof. The Company may accept or reject
this Securities Purchase Agreement in the Company's sole discretion, if the
Purchaser does not meet the suitability standards established herein or for any
other reason.
(b) The closing of the purchase and sale of the Common Stock
hereunder (the "Closing") shall occur upon the satisfaction of each of the
following conditions (the date of such occurrence shall be referred to as the
"Closing Date"):
(i) acceptance by the Company and the Purchaser of this
Agreement and all Exhibits attached hereto duly executed by the Company and by
all other parties thereto;
(ii) delivery to the Company by the Purchaser of
immediately available funds for the Purchase Price; and
(iii) delivery to the Company by the Purchaser of the
Accredited Investor Certification set forth as Exhibit "A" hereto.
(c) As soon as practicable following the Closing Date, the
Company shall cause its transfer agent to deliver to the Purchaser a stock
certificate representing 500,000 shares of Common Stock.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) Organization and Standing of the Purchaser. The Purchaser
is a duly organized and validly existing limited partnership in good standing
under the laws of the State of Texas with adequate power and authority to
conduct the business in which it is now engaged and has the corporate power and
authority to enter into this Agreement and each of the Exhibits attached hereto,
and is duly qualified and licensed to do business as a foreign limited
partnership in such other states or jurisdictions as is necessary to enable it
to carry on its business, except where failure to do so would not have a
material adverse effect on its business;
(b) Power and Authority. The execution and delivery of this
Agreement and any Exhibit attached hereto and the transactions contemplated
thereby have been duly authorized by the partners of the Purchaser and will not
constitute or result in a breach or default under, or conflict with, any order,
ruling or regulation of any court or other tribunal or of any governmental
commission or agency, or any agreement or other undertaking, to which the
Purchaser is a party or by which the Purchaser is bound, and, if the Purchaser
is not an individual, will not violate any provision of the partnership
agreement of the Purchaser. The signatures on this Agreement and Exhibit A
attached hereto are genuine, and the signatory, if the Purchaser is an
individual, has legal competence and capacity to execute the same, or, if the
Purchaser is not an individual, the signatory has been duly authorized to
execute the same. No other act or proceeding on the part of the Purchaser or any
partner therein is necessary to authorize this Agreement or the consummation of
the transactions contemplated thereby. When duly executed and delivered by the
parties hereto, this Agreement and any Exhibit hereto will constitute a valid
and legally binding obligation of the Purchaser enforceable against it in
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accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization or other similar laws and
legal and equitable principles limiting or affecting the rights of creditors
generally; and/or (ii) general principles of equity, regardless of whether
considered in a proceeding in equity or at law;
(c) Accredited Investor. The Purchaser has such knowledge and
experience in business and financial matters such that such Partner is capable
of evaluating the merits and risks of purchasing the Common Stock. The Purchaser
is an "accredited investor" as that term is defined in Rule 501 of Regulation D
of the Securities Act and satisfies the suitability standards identified in
Section 7 hereof;
(d) Loss of Investment. The Purchaser's overall commitment to
investments which are not readily marketable is not disproportionate to its net
worth and its investment in the Company will not cause such overall commitment
to become excessive. The Purchaser can afford to bear the loss of its entire
investment in the Company and has adequate means of providing for its current
needs and has no need for liquidity in his investment in the Company;
(e) Special Suitability. The Purchaser satisfies any special
suitability or other applicable requirements of his state of residence and/or
the state in which the transaction by which the Common Stock purchased occurs;
(f) Investment Intent.
(i) The Purchaser has been advised that this Offering has
not been registered with, or reviewed by, the Securities and Exchange Commission
("SEC") because this Offering is intended to be a non-public offering pursuant
to Section 4(2) and Rule 506 of Regulation D of the Securities Act. The
Purchaser represents that the Common Stock is being purchased for the
Purchaser's own account and not on behalf of any other person, for investment
purposes only and not with a view towards distribution or resale to others. The
Purchaser agrees that the Purchaser will not attempt to sell, transfer, assign,
pledge or otherwise dispose of all or any portion of the Common Stock unless the
Common Stock is registered under the Act or unless in the opinion of counsel an
exemption from such registration is available, such counsel and such opinion to
be satisfactory to the Company. The Purchaser understands that the Common Stock
has not been registered under the Securities Act by reason of a claimed
exemption under the provisions of the Securities Act which depends, in part,
upon the Purchaser's investment intention; and
(ii) the Common Stock and any certificates issued in
replacement therefor shall bear the following legend, in addition to any other
legend required by law or otherwise:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY
THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO
RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE
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SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND
REGULATIONS THEREUNDER."
(g) State Securities Laws. The Purchaser understands that no
securities administrator of any state has made any finding or determination
relating to the fairness of this investment and that no securities administrator
of any state has recommended or endorsed, or will recommend or endorse, the
offering of the Common Stock;
(h) No General Solicitation. The Purchaser acknowledges that
no general solicitation or general advertising (including communications
published in any newspaper, magazine or other broadcast) has been received by it
and that no public solicitation or advertisement with respect to the offering of
the Common Stock has been made to it;
(i) Advice of Tax and Legal Advisors. The Purchaser has relied
solely upon the advice of its own tax and legal advisors with respect to the tax
and other legal aspects of this investment;
(j) Access to Information. The Purchaser has had access to all
material and relevant information concerning the Company, its management,
financial condition, capitalization, market information, properties and
prospects necessary to enable Purchaser to make an informed investment decision
with respect to its investment in the Common Stock. The Purchaser has carefully
read and reviewed, and is familiar with and understands the contents thereof and
hereof, including, without limitation, the risk factors described in this
Agreement. The Purchaser acknowledges that it has had the opportunity to ask
questions of and receive answers from, and to obtain additional information
from, representatives of the Company concerning the terms and conditions of the
acquisition of the Common Stock and the present and proposed business and
financial condition of the Company, and has had all such questions answered to
its satisfaction and has been supplied all information requested; and
(k) SEC Reports. The Purchaser acknowledges that it has been
advised of the availability of and has carefully reviewed a copy of the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999 and
its Quarterly Report on Form 10-QSB for the three months ended March 31, 2000
(collectively, the "SEC Reports").
5. Understanding of Investment Risks. An investment in the Common
Stock should not be made by a Purchaser who cannot afford the loss of its entire
Purchase Price. THE PURCHASER ACKNOWLEDGES THAT THE COMMON STOCK OFFERED HEREBY
HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
OR ANY STATE SECURITIES COMMISSIONS, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS SECURITIES PURCHASE AGREEMENT OR ANY EXHIBIT HERETO. PRIOR TO
MAKING AN INVESTMENT IN THE COMMON STOCK, THE PURCHASER AND EACH OF THE PARTNERS
HAS FULLY CONSIDERED, AMONG OTHER THINGS, THE BUSINESS RISKS DISCUSSED IN THE
COMPANY'S SEC REPORTS.
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6. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchaser as follows:
(a) Organization and Standing of the Company. The Company is a
duly organized and validly existing corporation in good standing under the laws
of the State of Delaware with adequate power and authority to conduct the
business in which it is now engaged and has the corporate power and authority to
enter into this Agreement and each of the Exhibits attached hereto, and is duly
qualified and licensed to do business as a foreign corporation in such other
states or jurisdictions as is necessary to enable it to carry on its business,
except where failure to do so would not have a material adverse effect on its
business.
(b) Corporate Power and Authority. The execution and delivery
of this Agreement and each of the Exhibits attached hereto and the transactions
contemplated thereby have been duly authorized by the Board of Directors of the
Company. No other corporate act or proceeding on the part of the Company is
necessary to authorize this Agreement or any of the Exhibits attached hereto or
the consummation of the transactions contemplated thereby. When duly executed
and delivered by the parties hereto, this Agreement will constitute a valid and
legally binding obligation of the Company enforceable against it in accordance
with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization or other similar laws and legal and
equitable principles limiting or affecting the rights of creditors generally;
and/or (ii) general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
(c) Issuance of Securities. Upon their issuance, the shares of
Common Stock shall be duly and validly issued, fully paid and nonassessable,
shares of the Company's common stock.
(d) SEC Reports; Absence of Certain Events. The Company has
timely filed all reports required to be filed with the SEC pursuant to the
Securities Act or the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder (the "Securities Act"), and has previously advised the
Purchaser of the availability of true and complete copies of such SEC Reports.
Such SEC Reports, as of their respective dates, complied in all materials
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and none of such SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as set forth in
the SEC Reports, there has not been any fact, event, circumstance or change
affecting or relating to the Company which has had or is reasonably likely to
have, individually or in the aggregate, a material adverse effect on the
Company; provided, however, that a material adverse effect shall not include any
adverse effect following the date of this Agreement which is solely attributable
to (i) the announcement or pendency of the transactions contemplated by this
Agreement or (ii) changes in national economic conditions or industry conditions
generally.
7. IMPORTANT CONSIDERATIONS: SUITABILITY STANDARDS - WHO SHOULD
INVEST.
INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK
AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO HAVE NO
NEED FOR LIQUIDITY IN THEIR INVESTMENT.
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A substantial number of state securities commissions have
established investor suitability standards for the marketing within their
respective jurisdictions of restricted securities. Some have also established
minimum dollar levels for purchases in their states. The reasons for these
standards appear to be, among others, the relative lack of liquidity of
securities of such programs as compared with other securities investments.
Investment in the Common Stock involves a high degree of risk and is suitable
only for persons of substantial financial means who have no need for liquidity
in their investments.
The Company has adopted as a general investor suitability
standard the requirement that the Purchaser and each of the Partners represent
in writing: (a) it is acquiring the Common Stock for investment and not with a
view to resale or distribution; (b) it can bear the economic risk of losing its
entire investment; (c) its overall commitment to investments which are not
readily marketable is not disproportionate to its net worth, and an investment
in the Common Stock will not cause such overall commitment to become excessive;
(d) it has adequate means of providing for its current needs and has no need for
liquidity in this investment in the Common Stock; (e) it has evaluated all the
risks of investment in the Company; and (f) it has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of investing in the Company or is relying on its own purchaser
representative, in making an investment decision.
The suitability standards referred to above represent minimum
suitability requirements for prospective purchasers and the satisfaction of such
standards by a prospective purchaser does not necessarily mean that the Common
Stock is a suitable investment for such purchaser. The Company may, in
circumstances it deems appropriate, modify such requirements. The Company may
also reject subscriptions for whatever reasons, in its sole discretion, it deems
appropriate.
THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE COMPANY
DOES NOT CONSTITUTE A DETERMINATION BY THE COMPANY THAT AN INVESTMENT IN THE
COMMON STOCK IS SUITABLE FOR A PROSPECTIVE PURCHASER. THE FINAL DETERMINATION OF
THE SUITABILITY OF INVESTMENT IN THE COMMON STOCK MUST BE MADE BY THE
PROSPECTIVE PURCHASER AND ITS ADVISERS.
8. Additional Investment Considerations.
IN MAKING AN INVESTMENT DECISION, THE PURCHASER MUST RELY ON
ITS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THE COMMON STOCK HAS NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION
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THEREFROM. THE PURCHASER AND EACH OF THE SHAREHOLDERS SHOULD BE AWARE THAT IT
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
9. Registration Rights.
The Company covenants and agrees as follows:
(a) Certain Additional Defined Terms. For the purpose of this
Section 9, the following definitions shall apply:
(i) "Exchange Act" shall mean the Securities Exchange Act
of 1934.
(ii) "Registration Statement" shall mean the Registration
Statement of the Company filed with the SEC pursuant to the provisions of
Paragraph 9(b) of this Agreement which covers the resale of any of the
Securities or the Common Stock to be issued upon the exercise of any of the
Securities on an appropriate form then permitted by the SEC to be used for such
registration and the sales contemplated to be made thereby under the Securities
Act, or any similar rule that may be adopted by the SEC, and all amendments and
supplements to such Registration Statement, including any pre- and post-
effective amendments thereto, in each case including the prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
(iii) "Restricted Stock" shall mean the Common Stock and
any additional shares of Common Stock or other equity securities of the Company
issued or issuable after the date hereof in respect of any such securities by
way of a stock dividend or stock split, in connection with a combination,
exchange, reorganization, recapitalization or reclassification of Company's
securities, or pursuant to a merger, division, consolidation or other similar
business transaction or combination involving the Company; provided that: as to
any particular shares of Restricted Stock, such securities shall cease to
constitute Restricted Stock (i) when a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of thereunder, or (ii) when and to
the extent such securities are permitted to be distributed pursuant to Rule 144
(or any successor provision to such Rule) under the Securities Act or are
otherwise freely transferable to the public without further registration under
the Securities Act.
(b) Piggyback Registration Rights.
(i) The Company shall advise the Purchaser by written
notice prior to the filing of a Registration Statement under the Securities Act
(excluding registration on Forms X-0, X-0, 10 or any successor forms thereto),
covering securities of the Company to be offered and sold by any stockholder of
the Company, and shall, upon the request of the Purchaser given at least five
(5) business days prior to the filing of such Registration Statement, include in
any such Registration Statement such information as may be required to permit a
public offering of the Restricted Stock purchased hereby. The Purchaser shall
furnish such information as may be reasonably requested by the Company in order
to include such Restricted Stock in the Registration Statement. Notwithstanding
the foregoing, the Company may withdraw any registration statement referred to
in this Paragraph 9(b) without thereby incurring liability to the holders of the
Restricted Stock.
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(ii) Notwithstanding anything to the contrary contained
herein, the Company's obligation in this Paragraph 9(b) shall extend only to the
inclusion of the Restricted Stock in a Registration Statement filed under the
Securities Act. The Company shall have no obligation to assure the terms and
conditions of distribution, to obtain a commitment from an underwriter relative
to the sale of the Restricted Stock or to otherwise assume any responsibility
for the manner, price or terms of the distribution of the Restricted Stock.
Furthermore, the Company shall not be restricted in any manner from including
within the Registration Statement or the distribution, issuance or resale of any
of its or any other securities.
(c) Registration Procedures. Whenever it is obligated to
register any Restricted Stock pursuant to this Agreement, the Company shall:
(i) prepare and file with the Commission a Registration
Statement with respect to the Restricted Stock in the manner set forth in
Paragraph 9(b) hereof and use its best efforts to cause such Registration
Statement to become effective as promptly as possible and to remain effective
for that period identified in Paragraph 9(c)(vii) hereafter;
(ii) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for the period specified in Paragraph 9(c)(vii) below and to comply
with the provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such Registration Statement in accordance with the
intended method of disposition set forth in such Registration Statement for such
period;
(iii) furnish to the Purchaser and to each underwriter, if
any, such number of copies of the Registration Statement and the prospectus
included therein (including each preliminary prospectus), as such person may
reasonably request in order to facilitate the public sale or other disposition
of the Restricted Stock covered by such Registration Statement;
(iv) use its best efforts to register or qualify the
Restricted Stock covered by such Registration Statement under the securities or
blue sky laws of such jurisdictions as the Purchaser, or, in the case of an
underwritten public offering, the managing underwriter shall reasonably request;
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(v) immediately notify the Purchaser and each underwriter,
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus contained in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required or necessary to be stated therein in order to make the statements
contained therein not misleading in light of the circumstances under which they
were made;
(vi) make available for inspection by the Purchaser, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by the Purchaser
or underwriter, all financial and other
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records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by the Purchaser, underwriter, attorney, accountant or
agent in connection with such Registration Statement;
(vii) for purposes of Paragraphs 9(c)(i) and 9(c)(ii)
above, the period of distribution of Restricted Stock shall be deemed to extend
until the earlier of: (A) in an underwritten public offering of all of the
Restricted Stock, the period in which each underwriter has completed the
distribution of all securities purchased by it; (B) in any other registration,
the earlier of the period in which all shares of Restricted Stock covered
thereby shall have been sold or two (2) years from the effective date of the
first Registration Statement filed by the Company with the SEC pursuant to this
Agreement.
(viii) if the Common Stock is listed on any securities
exchange or automated quotation system, the Company shall use its best efforts
to list (with the listing application being made at the time of the filing of
such Registration Statement or as soon thereafter as is reasonably practicable)
the Restricted Stock covered by such Registration Statement on such exchange or
automated quotation system;
(ix) enter into normal and customary underwriting
arrangements or an underwriting agreement and take all other reasonable and
customary actions if the Purchaser sell their shares of Restricted Stock
pursuant to an underwriting (however, in no event shall the Company, in
connection with such underwriting, be required to undertake any special audit of
a fiscal period in which an audit is normally not required);
(x) notify the Purchaser of any threat by the SEC or state
securities commission to undertake a stop order with respect to sales under the
Registration Statement; and
(xi) cooperate in the timely removal of any restrictive
legends from the shares of Restricted Stock in connection with the resale of
such shares covered by an effective Registration Statement.
(d) Expenses.
(i) For the purposes of this Paragraph 9(d), the term
"Registration Expenses" shall mean: all expenses incurred by the Company in
complying with Paragraph 9(b) of this Agreement, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, "blue sky" fees,
fees of the National Association of Securities Dealers, Inc. ("NASD"), fees and
expenses of listing shares of Restricted Stock on any securities exchange or
automated quotation system on which the Company's shares are listed and fees of
transfer agents and registrars. The term "Selling Expenses" shall mean: all
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock and all accountable or non-accountable expenses paid to any
underwriter in respect of the sale of Restricted Stock.
(b) Except as otherwise provided herein, the Company will
pay all Registration Expenses in connection with the Registration Statements
filed pursuant to Paragraph 9(b) of this Agreement. All Selling Expenses in
connection with any Registration Statements
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filed pursuant to Paragraph 9(b) of this Agreement shall be borne by the
participating holders of Restricted Stock either solely or, if applicable, in
proportion to the number of shares sold by each selling stockholder whose Shares
are covered by such registration statement, or by such persons other than the
Company (except to the extent the Company may be a seller) as they may agree.
(e) Obligations of the Purchaser.
(i) In connection with each registration hereunder, the
Purchaser, should it elect to participate in resales under such registration,
will furnish to the Company in writing such information with respect to the
Purchaser and the securities held by the Purchaser, and the proposed
distribution by it as shall be reasonably requested by the Company in order to
assure compliance with federal and applicable state securities laws, as a
condition precedent to including the Purchaser's Restricted Stock in the
Registration Statement. The Purchaser also shall promptly notify the Company of
any changes in such information included in the Registration Statement or
prospectus as a result of which there is an untrue statement of material fact or
an omission to state any material fact required or necessary to be stated
therein in order to make the statements contained therein not misleading in
light of the circumstances then existing.
(ii) In connection with each registration pursuant to this
Agreement, the Purchaser agrees that it will not effect sales of any Restricted
Stock until notified by the Company of the effectiveness of the Registration
Statement, and thereafter will suspend such sales after receipt of telegraphic
or written notice from the Company to suspend sales to permit the Company to
correct or update a Registration Statement or prospectus. At the end of any
period during which the Company is obligated to keep a Registration Statement
current, the Purchaser shall discontinue sales of Restricted Stock pursuant to
such Registration Statement upon receipt of notice from the Company of its
intention to remove from registration the Restricted Stock covered by such
Registration Statement which remain unsold, and the Purchaser shall notify the
Company of the number of shares registered which remain unsold immediately upon
receipt of such notice from the Company.
(f) Information Blackout, Holdbacks and Lock-Ups.
(i) At any time when a Registration Statement effected
pursuant to Paragraph 9(b) relating to Restricted Stock is effective, upon
written notice from the Company to the Purchaser that the Company has determined
in good faith that the sale of Restricted Stock pursuant to the Registration
Statement would require disclosure of non-public material information, the
Purchaser shall suspend sales of Restricted Stock pursuant to such Registration
Statement until such time as the Company notifies the Purchaser that such
material information has been disclosed to the public or has ceased to be
material or that sales pursuant to such Registration Statement may otherwise be
resumed.
(ii) Notwithstanding any other provision of this
Agreement, the Purchaser shall not effect any public sale or distribution
(including sales pursuant to Rule 144), if and when available, of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the thirty (30) days prior to the
commencement of any primary offering to be undertaken by the Company of shares
of its unissued common stock (the "Primary Offering"), which may also include
other securities, and
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ending 120 days after completion of any such Primary Offering, unless the
Company, in the case of a non-underwritten Primary Offering, or the managing
underwriter, in the case of an underwritten Primary Offering, otherwise agree.
(g) Indemnification.
(i) The Company agrees to indemnify, to the extent
permitted by law, the Purchaser, its partners and each Person who controls the
Purchaser (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue statement of material
fact contained in any Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished to the Company by the Purchaser for use therein or by
the Purchaser's failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished the Purchaser with a sufficient number of copies of the same.
(ii) In connection with any Registration Statement in
which the Purchaser is participating, the Purchaser shall furnish to the Company
in writing such information and affidavits as the Company reasonably requests
for use in connection with any such Registration Statement or prospectus and, to
the extent permitted by law, shall indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from: (i) any untrue or alleged untrue statement of material fact
contained in the Registration Statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, (but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
by the Purchaser); or (ii) any disposition of the Restricted Stock in a manner
that fails to comply with the permitted methods of distribution identified
within the Registration Statement.
(iii) Any Person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
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(iv) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
10. Notices. All notices, requests, consents or other communications
required or permitted hereunder shall be in writing and shall be hand delivered
or mailed first class postage prepaid, registered or certified mail, or sent by
a nationally recognized overnight courier such as federal express, to the
following addresses:
If to the Company:
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
00000 X. Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
President and Chief Executive
Telephone: 000-000-0000
Facsimile: 000-000-0000
14
With a copy to:
Xxxxxx X. Xxxxx, Esquire
Xxxxxxxx Ingersoll Professional Corporation
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
In the case of Purchaser:
AVALANCHE RESOURCES, LTD.
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
15
Unless specified otherwise, such notices and other
communications shall for all purposes of this Agreement be treated as being
effective upon being delivered personally or, if sent by mail, five days after
the same has been deposited in a regularly maintained receptacle for the deposit
of United States mail, addressed as set forth above, and postage prepaid or, if
sent by a nationally recognized overnight courier, on the next business day
after the date of mailing, addressed as set forth above.
11. Survival of Representations and Warranties. The representations and
warranties contained herein shall survive the execution and delivery of this
Agreement.
12. Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto, provided that
this Agreement and the interests herein may not be assigned by either party
without the express written consent of the other party.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
14. Sections and Other Headings. The section and other headings
contained in this Agreement are for the convenience of reference only, do not
constitute part of this Agreement or otherwise affect any of the provisions
hereof.
15. Counterpart and Facsimile Signatures. This Agreement may be signed
in counterparts and all counterparts together shall become effective only when
the counterpart(s) have been executed and delivered by and on behalf of the
Company and the Purchaser. Facsimile signatures to this Agreement shall be
deemed to be original signatures.
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IN WITNESS WHEREOF, intending to be legally bound, the parties hereto
have caused this Agreement to be signed by their duly authorized officers.
PURCHASER:
AVALANCHE RESOURCES, LTD.
By: Avalanche Management Corporation,
its general partner
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx Xxxxxx
President
COMPANY:
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
17
EXHIBIT "A"
ACCREDITED INVESTOR CERTIFICATION
(to be completed by separately Purchaser and each Partner)
(Place initials on the appropriate line(s))
___ (i) I am a natural person who had individual income of more than
$200,000 in each of the most recent two years or joint income
with my spouse in excess of $300,000 in each of the most recent
two years and reasonably expect to reach that same income level
for the current year ("income", for purposes hereof, should be
computed as follows: individual adjusted gross income, as
reported (or to be reported) on a federal income tax return,
increased by (1) any deduction of long-term capital gains under
section 1202 of the Internal Revenue Code of 1986 (the "Code"),
(2) any deduction for depletion under Section 611 et seq. of
the Code, (3) any exclusion for interest under Section 103 of
the Code and (4) any losses of a partnership as reported on
Schedule E of Form 1040);
___ (ii) I am a natural person whose individual net worth (i.e., total
assets in excess of total liabilities), or joint net worth with
my spouse, will at the time of purchase of the Common Stock be
in excess of $1,000,000;
___ (iii) The Purchaser or Partner is a "Qualified Institutional Buyer"
as the term is defined under Rule 144A of the Act.
___ (iv) The Purchaser or Partner is an investor satisfying the
requirements of Section 501(a)(1), (2) or (3) of Regulation D
promulgated under the Securities Act of 1933, as amended, which
includes but is not limited to, a self-directed employee
benefit plan where investment decisions are made solely by
persons who are "accredited investors" as otherwise defined in
Regulation D;
___ (v) The Purchaser or Partner is a trust, which trust has total
assets in excess of $5,000,000, which is not formed for the
specific purpose of acquiring the Common Stock offered hereby
and whose purchase is directed by a sophisticated person as
described in Rule 506(b)(ii) of Regulation D and who has such
knowledge and experience in financial and business matters that
it is capable of evaluating the risks and merits of an
investment in the Common Stock;
___ (vi) I am a director or executive officer of the Company; or
X (vii) The Purchaser or Partner is an entity (other than a trust) in
___ which all of the equity owners meet the requirements of at
least one of the above subparagraphs.
AVALANCHE RESOURCES, LTD.
DATED:5/12/00 By: /s/ Xxxxx X. Xxxxxx its General Partner
-------------------,
Name:
