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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
ALTAIR INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Province of
Ontario,
Canada 1-12497 None
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (307) 587-8245
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<PAGE>
Table of Contents
Item 5. Other Events.
A. PLACEMENT OF DEBENTURES AND ISSUANCE OF WARRANTS.
On December 29, 1997, pursuant to the terms of a Securities Purchase
Agreement dated December 29, 1997 (the "Purchase Agreement"), Altair
International Inc. (the "Company") completed the private placement of $5,000,000
in principal amount of 5% convertible subordinated debentures due December 29,
2001 (the "Initial Debentures") and warrants to purchase 75,000 shares of the
Company's common stock ("Common Stock") on or before December 29, 1999 at a
price equal to $16.7188 per share (the "Initial Warrants") to a small number of
institutional investors (the "Investors") in an offering exempt from the
registration requirements under the Securities Act of 1993, as amended (the
"Securities Act"). The Company has also issued to the placement agent which
arranged the transaction warrants to purchase 105,000 shares of Common Stock on
or before December 29, 1999, at a price equal to $16.7188 per share (the
"Placement Warrants").
Subject to certain restrictions during the first 180 days after issuance,
the Initial Debentures are convertible into Common Stock by the holders thereof
at any time prior to maturity, unless previously the subject of a forced
conversion or redemption by the Company. The Debentures are each convertible
into the number of shares of Common Stock equal to the quotient of (a) the sum
of the principal amount of such Debenture and all accrued but unpaid interest
and charges, divided by (b) the lesser of (i) an amount equal to 92% of the
average market price for one share of Common Stock for the five preceding
trading days and (ii) $14.7125. For purposes of the conversion formula, the
market price is equal to closing price of the Common Stock on the Nasdaq
SmallCap Market or the Nasdaq National Market, as applicable, or if the Common
Stock is not listed on either such exchange, by alternative methods described in
the Debentures. The holders of the Debentures have registration rights with
respect to the Common Stock as set forth in a Registration Rights Agreement,
pursuant to which the Company has agreed to register for resale under the
Securities Act the Common Stock issuable upon conversion of the Debentures and
exercise of the Warrants and Placement Warrants within 150 days of December 29,
1997.
In addition, subject to the terms and conditions of the Purchase
Agreement, the Company has the right to cause the Investors to purchase up to an
additional $5,000,000 aggregate principal amount of 5% convertible subordinated
debentures (the "Put Debentures"). If issued, the Put Debentures will be
accompanied by warrants to purchase an aggregate number of shares of Common
Stock equal to the product of (i) 75,000 multiplied by (ii) the quotient of the
principal amount of all Put Debentures divided by $5,000,000 (the "Put
Warrants"). The exercise price for the Put Warrants shall be an amount equal to
125% of the closing price per share of Common Stock on the Nasdaq Small Cap
Market or the Nasdaq National Market, as applicable, on the date immediately
prior to the date the Put Warrants are issued.
The foregoing descriptions do not purport to be complete and are qualified
by reference to the definitive agreements, debentures, and warrants filed as
Exhibits herewith.
B. RISK FACTORS.
The Company from time to time makes forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in the Company's periodic
filings with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, as amended. In
evaluating the Company's business, prospective investors should consider that
actual results could differ materially from those anticipated for a number of
reasons, including, among others, the failure of the Company's primary asset,
the Centrifugal Jig (the "CJ"), to prove economically attractive to end users,
the development of a substitute for the CJ by a competitor, the need for an
unforeseen amount of capital to complete testing and development of the CJ, and
other unanticipated factors.
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits.
4.1 Securities Purchase Agreement
4.2 Form of 5% Convertible Subordinated Debenture Due December 29,
2001
4.3 Registration Rights Agreement
4.4 Form of Warrant
99.1 Press Release dated December 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.
Altair International Inc.
January 13, 1997 By: /s/ William P. Long
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Date Dr. William P. Long, President
EXHIBIT 4.1
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of December 24,
1997, by and among Altair International, Inc., an Ontario corporation, with
headquarters located at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414
(the "Company"), and the investors listed on the Schedule of Buyers 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 has authorized the issue of 5% Convertible Subordinated
Debentures due December 29, 2001 (the "Debentures"), substantially in the form
attached hereto as Exhibit A, which shall be convertible into shares of the
Company's Common Shares, no par value (the "Common Stock") (as converted, the
"Conversion Shares"), and the issue of warrants (the "Warrants"), substantially
in the form attached hereto as Exhibit B, to purchase shares of Common Stock
(the "Warrant Shares");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of $5,000,000 principal amount of
Debentures (the "Initial Debentures") and Warrants to purchase an aggregate of
75,000 shares of Common Stock (the "Initial Warrants") in the respective amounts
set forth opposite each Buyer's name on the Schedule of Buyers;
D. Subject to the terms and conditions set forth in this Agreement, the
Company has the right to cause the Buyers to purchase (i) up to $5,000,0000
aggregate principal amount of Debentures (pro rata based on the principal amount
of Initial Debentures each Buyer purchased in relation to the aggregate
principal amount of Initial Debentures) (the "Put Debentures") (the Initial
Debentures and the Put Debentures are collectively referred to in this Agreement
as the "Debentures") and (ii) Warrants to purchase up to an aggregate number of
shares of Common Stock equal to the product of 75,000 and a fraction, the
numerator of which is the aggregate principal amount of all Put Debentures and
the denominator of which is $5,000,000 (pro rata based on the number of Put
Debentures each Buyer purchased in relation to the total number of Put
Debentures) (the "Put Warrants") (the Initial Warrants and the Put Warrants are
collectively referred to in this Agreement as the "Warrants");
E. 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 C (the "Registration Rights
<PAGE>
Exhibit 4.1
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, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyers hereby
agree as follows:
1. PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
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a. Purchase of Debentures and Warrants. Subject to satisfaction (or
waiver) of the conditions set forth in Sections 6(a) and 7(a), the Company shall
issue and sell to the Buyers and the Buyers severally shall purchase from the
Company $5,000,000 aggregate principal amount of Initial Debentures and the
Initial Warrants, in the respective amounts set forth opposite each Buyer's name
on the Schedule of Buyers (the "Initial Closing"). Subject to the satisfaction
(or waiver) of the conditions set forth in Sections l(c), 1(d), 6(b) and 7(b),
the Company may require that each Buyer purchase (i) that principal amount of
Put Debentures equal to such Buyer's pro rata portion of up to $5,000,000
aggregate principal amount of Put Debentures (based on the principal amount of
Initial Debentures each Buyer purchased in relation to the aggregate principal
amount of Initial Debentures purchased by all of the Buyers) and (ii) Put
Warrants to purchase up to an aggregate of 75,000 shares of Common Stock equal
to such Buyer's pro rata portion of Put Warrants (based on the number of Put
Debentures each Buyer purchased in relation to the total number of Put
Debentures purchased by all of the Buyers), the total number of Put Warrants to
be equal to the product of 75,000 and a fraction, the numerator of which is the
aggregate principal amount of all Put Debentures and the denominator of which is
$5,000,000 (the "Put Closing"). The Initial Closing and the Put Closing
collectively are referred to in this Agreement as the "Closings." The purchase
price (the "Purchase Price") for each Debenture at each of the Closings shall be
100% of face value.
b. The Initial Closing Date. The date and time of the Initial
Closing (the "Initial Closing Date") shall be 10:00 a.m. Central Time, within
two (2) business days following the date hereof, subject to satisfaction (or
waiver) of the conditions to the Initial Closing set forth in Sections 6(a) and
7(a) (or such later date as is mutually agreed to by the Company and the
Buyers). The Initial Closing shall occur on the Initial Closing Date at the
offices of Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New
York 10021, or at such other location as is mutually agreed to by the Company
and the Buyers.
c. The Put Closing Date. The date and time of the Put Closing (the
"Put Closing Date") shall be 10:00 a.m. Central Time, on the date specified in
the Company's Put Share Notice (as defined below), subject to satisfaction (or
waiver) of the conditions to the Put Closing set forth in Sections 6(b) and 7(b)
and the conditions set forth in Section 1(d), or such later date as is mutually
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<PAGE>
Exhibit 4.1
agreed to by the Company and the Buyers. Subject to the requirements of Sections
6(b) and 7(b) and satisfaction of the Put Notice Conditions (as defined in
Section l(d)), the Company on only one occasion may require each Buyer to
purchase Put Debentures and Put Warrants by delivering written notice to each of
the Buyers (a "Put Notice") at least 30 days but not more than 45 days (the "Put
Notice Date") prior to the Put Closing Date set forth in the Company's Put
Notice; provided, however, that such Put Closing Date may not be less than 240
days after the Initial Closing Date or more than 300 days after the Initial
Closing Date (the "Put Notice Period"). The Company's Put Notice shall set forth
(i) each Buyer's pro rata portion (based on the principal amount of Initial
Debentures each Buyer purchased in relation to the aggregate principal of
Initial Debentures purchased by the Buyers) of the aggregate principal amount of
Put Debentures, which aggregate principal amount shall not exceed $5,000,000,
and pro rata portion (based on the number of Initial Warrants each Buyer
purchased in relation to the total number of Initial Warrants purchased by the
Buyers) of the total number of Put Warrants which the Company is requiring each
Buyer to purchase at the Put Closing and (ii) the date selected by the Company
for the Put Closing Date. The Put Closing shall occur on the Put Closing Date at
the offices of Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York,
New York 10021, or at such other location as is mutually agreed to by the
Company and the Buyers. The Initial Closing Date and the Put Closing Date
collectively are referred to in this Agreement as the "Closing Dates."
d. The Put Notice Conditions. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be entitled to deliver a Put
Notice and require the Buyers to purchase the Put Debentures and Put Warrants
unless, in addition to the satisfaction of the requirements of Sections 6(b) and
7(b), all of the following conditions (the "Put Notice Conditions") are
satisfied: (i) during the period beginning 60 days prior to the Put Closing Date
and ending on and including the Put Closing Date, the Registration Statement (as
defined in the Registration Rights Agreement) shall have at all times been
effective; (ii) during the period beginning 90 days prior to the Put Closing
Date and ending on and including the Put Closing Date, the Common Stock has not
been delisted or suspended from trading on the Nasdaq SmallCap Market or the
Nasdaq National Market, as applicable; (iii) no event constituting a Major
Business Event (as defined below), including an agreement to consummate a Major
Business Event, shall have occurred during the period beginning on the Initial
Closing Date and ending on and including the Put Closing Date; and (iv) on each
day during the period beginning 60 days prior to the Put Closing Date and ending
on the day prior to the Put Closing Date, the fair market value of the Common
Stock is not less than $75,000,000; for purposes of this clause (iv), "fair
market value of the Common Stock" shall mean the closing price per share of
Common Stock on the Nasdaq SmallCap Market or the Nasdaq National Market, as
applicable, on the date of valuation multiplied by the total number of shares of
Common Stock then issued and outstanding. For purposes of this Section 1(d)
"Major Business Event" means (w) the consolidation, merger or other business
combination of the Company with another entity (other than pursuant to a
migratory merger effected solely for the purpose of changing the Company's
jurisdiction of incorporation or a merger between the Company and any
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<PAGE>
Exhibit 4.1
wholly-owned subsidiary of the Company, (x) the sale or transfer of all or
substantially all of the Company's assets, (y) a purchase, tender or exchange
offer made to and accepted by the holders of more than 50% of the outstanding
shares of Common Stock or (z) the failure for any reason, during any period of
two consecutive calendar years, of individuals who at the beginning of such
period constituted the board of directors of the Company (together with any new
directors whose election by the board of directors of the Company or whose
nomination for election by the stockholders of the Company was approved by a
vote of the majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) to constitute a majority of the directors
of the Company then in office.
e. Form of Payment. On each of the Closing Dates, (i) each Buyer
shall pay the Purchase Price to the Company for the Debentures and Warrants to
be issued and sold to such Buyer at the respective Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, and (ii) the Company shall deliver to each Buyer certificates (in
the denominations such Buyer shall request) representing such principal amount
of Debentures and such number of Warrants which such Buyer is then purchasing
(as indicated opposite such Buyer's name on the Schedule of Buyers), 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 (i) is acquiring the Debentures
and the Warrants, (ii) upon conversion of the Debentures, will acquire the
Conversion Shares then issuable and (iii) upon exercise of the Warrants, will
acquire the Warrant Shares then issuable (the Debentures, the Warrants, the
Conversion Shares and the Warrant Shares are collectively 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, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that such Buyer 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)(3) of Regulation D under the
1933 Act.
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
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<PAGE>
Exhibit 4.1
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, including all SEC Documents (as defined
below). Such Buyer has received from the Company the Private Placement
Memorandum which contains certain risk factors relating to the Company, and such
Buyer has reviewed the risk factors set forth therein. Such Buyer and its
advisors, if any, have been afforded the opportunity to review materials and 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 in Section 3. 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 Government Review. Such Buyer understands that no United
States federal or state authority or agency or any other governmental authority
or 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 except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and 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"); (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, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as the term is defined in
the 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
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<PAGE>
Exhibit 4.1
g. Legends. Such Buyer understands that the certificates or other
instruments representing the Debentures and the Warrants and, until such time as
the sale of the Conversion Shares and the Warrant Shares have been registered
under the 1933 Act, as contemplated by the Registration Rights Agreement, the
certificates representing the Conversion Shares and 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, ANY STATE
SECURITIES LAWS OR ANY OTHER SECURITIES LAWS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND THE RECEIPT OF ALL NECESSARY STATE AND
FOREIGN APPROVALS OR (II) AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO ALTAIR INTERNATIONAL INC., THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR ANY APPLICABLE STATE
OR FOREIGN SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped if, unless otherwise required by state securities laws, (i) such
Security is registered for sale under the 1933 Act and all necessary state and
foreign approvals are obtained, (ii) in connection with a sale transaction, such
holder provides the Company with an opinion of counsel, in form and substance
reasonably acceptable to the Company, to the effect that a public sale or
transfer of such Security may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that such
Security 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. Each Buyer acknowledges, covenants and agrees to sell all
Securities, including those Securities represented by a certificate(s) from
which the legend has been removed, only pursuant to (i) a registration statement
with respect to which the Buyer has been notified (and the Buyer has not
received any notice to the contrary) is effective under the 1933 Act, or (ii)
advice of counsel that such sale is exempt from registration required by Section
5 of the 1933 Act.
h. Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of such Buyer and are valid and binding agreements of such Buyer
enforceable in accordance with their terms, subject as to enforceability to
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<PAGE>
Exhibit 4.1
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 specified in
the Schedule of Buyers.
j. Trading Restrictions. During the period of thirty days prior to
the Closing Date, such Buyer and its affiliates have not, directly or
indirectly, entered into any short position or similar hedge of the Common Stock
and have not used shares of Common Stock to cover any such short position or
similar hedge.
k. No Material Misstatement. None of the representations or
warranties of the Buyers contained herein is false or misleading in any material
respect or omits to state a material fact necessary to make the statements
herein or therein not misleading in any material respect.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyers that:
a. Organization and Qualification. The Company and each of its
subsidiaries (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdictions in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their respective
businesses as now being conducted. The Company and each of its subsidiaries are
duly qualified as foreign corporations to do business and are in good standing
in every jurisdiction in which the nature of the business conducted by them
makes such qualification necessary, except to the extent that the failure to be
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 of operations,
liabilities, financial condition or prospects of the Company and its
subsidiaries, taken as a whole, or on the transactions contemplated hereby.
b. Authorization; Enforcement; Compliance with Other Instruments.
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement (including the Irrevocable Transfer Agent
Instructions, as defined in Section 5), the Registration Rights Agreement, the
Debentures, and the Warrants (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 thereby, including without
limitation the issuance of the Debentures, the issuance of the Conversion Shares
upon conversion thereof, the issuance of the Warrants and the issuance of the
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<PAGE>
Exhibit 4.1
Warrant Shares 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) each of
the Transaction Documents constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its 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. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of unlimited shares of Common Stock, of which
15,492,749 shares are issued and outstanding and 1,435,500 shares are reserved
and available for issuance pursuant to the Company's stock option and purchase
plans, and no shares are reserved for issuance pursuant to securities (other
than the Debentures and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock. All of such outstanding shares have
been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), no shares of Common Stock
are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company or were issued in violation of
the 1933 Act or applicable state, provincial or municipal securities laws.
Except as disclosed in Schedule 3(c), as of the date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe to, call
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the Company
or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the Company
or any of its subsidiaries, (ii) there are no outstanding debt securities, (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement) and (iv) there are no
outstanding securities of the Company or any of its subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to redeem or purchase a security of the Company or any of
its subsidiaries. Except as disclosed in Schedule 3(c), there are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities pursuant to this Agreement, the
Debentures or the Warrants. The Company has furnished to the Buyers true and
correct copies of the Company's Articles of Incorporation, as amended and as in
effect on the date hereof (the "Articles of Incorporation"), and the Company's
By-laws, as in effect on the date hereof (the "By-laws"), and the terms of all
securities convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
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<PAGE>
Exhibit 4.1
d. Issuance of Securities. The Debentures are duly authorized for
issuance and sale to the Buyers by the Company pursuant hereto. Sufficient
shares of Common Stock (subject to adjustment pursuant to the Company's covenant
set forth in Section 4(f)) have been duly authorized and reserved for issuance
upon conversion of the Debentures. Upon issuance in accordance with the terms
and conditions of this Agreement and the Debentures, the Conversion 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. The Warrants are duly
authorized for issuance and sale to the Buyers by the Company pursuant hereto.
Sufficient shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(f)) have been duly authorized and
reserved for issuance upon exercise of the Warrants. Upon exercise in accordance
with the terms and conditions of this Agreement and 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. To the best
knowledge of the Company, assuming the accuracy of the representations of the
Buyers set forth in the Transaction Documents, the issuance by the Company of
the Securities is exempt from registration under the 1933 Act.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby
(including, without limitation, the reservation for issuance and issuance of the
Conversion Shares and the Warrant Shares) will not (i) result in a violation of
the Articles of Incorporation or the By-laws, (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 agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, by-law, directive, order, judgment or
decree (including federal, state, provincial and municipal securities laws and
regulations and the rules and regulations of the principal market or exchange on
which the Common Stock is traded or listed) 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, except to the extent that matters within
clauses (ii) and (iii) immediately above would not have a Material Adverse
Effect. Except as disclosed in Schedule 3(e), neither the Company nor its
subsidiaries is in violation of any term of or in default under (i) the Articles
of Incorporation or the By-laws or their organizational charter or by-laws,
respectively, or (ii) any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule,
regulation, by-law or directive applicable to the Company or its subsidiaries,
except to the extent that such violation or default 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, rule,
regulation, by-law or directive of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act,
the Company is not required to obtain any consent, authorization or order of, or
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<PAGE>
Exhibit 4.1
make any filing or registration with, any court or governmental 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 thereof.
Except as disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain 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. The Company is not
in violation of the listing requirements of the Nasdaq SmallCap Market or the
Nasdaq National Market, as applicable, as in effect on the date hereof and on
each of the Closing Dates and is not aware of any facts which would reasonably
lead to delisting of the Common Stock by the Nasdaq SmallCap Market or the
Nasdaq National Market, as applicable, in the foreseeable future.
f. SEC Documents; Financial Statements. Since March 13, 1997, 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 and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC Documents"). The Company has delivered to
each Buyer or its respective representatives true and complete copies of 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 consolidated financial position of the Company and its
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). To the best
knowledge of the Company, no other information provided by or on behalf of the
Company to the Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(d), 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.
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<PAGE>
Exhibit 4.1
g. Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since December 31, 1996 there has been no Material Adverse Effect. 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.
h. Absence of Litigation. 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
or any of its subsidiaries that could have a Material Adverse Effect. Schedule
3(h) contains a complete list of any pending or threatened proceeding (known to
the Company) against or affecting the Company or any of its subsidiaries,
without regard to whether it would have a Material Adverse Effect.
i. Acknowledgment Regarding Buyers' Purchase of Debentures 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 thereby. The Company further
acknowledges that no Buyer is 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 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 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.
j. No Undisclosed Liabilities. As of the date of the most recent
balance sheet provided in Section 3(f), the Company had no material liabilities,
except for liabilities which are reflected or reserved for on such balance sheet
in accordance with generally accepted accounting principles or which are
specifically disclosed in the SEC Reports. Since the date of the most recent
balance sheet, the Company has operated in the ordinary course of business,
consistent with past practices, and has not incurred or become subject to, or
agreed to incur or become subject to, any material liability, except in the
ordinary course of business, consistent with past practice.
k. 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 1933 Act) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
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<PAGE>
Exhibit 4.1
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 the offering of the Securities
pursuant to this Agreement 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 the Nasdaq
SmallCap Market or the Nasdaq National Market, as applicable, nor will the
Company or any of its subsidiaries take any action or steps that would require
registration of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.
m. 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. Neither the
Company nor any of its subsidiaries is a party to a collective bargaining
agreement, and the Company and its subsidiaries believe that relations with
their employees are good. Each of the Company an its subsidiaries is in
compliance in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations and published interpretations thereunder. None of the following
events has occurred or is reasonably expected to occur that when taken together
with all other such events could reasonably be expected to result in a Material
Adverse Effect: (i) any "reportable event," as defined in Section 4043 of ERISA
or the regulations issued thereunder, with respect to any "employee pension
benefit plan" as such term is defined in Section 3 of ERISA (other than a
Multiemployer Plan (as defined below)) subject to the provisions of Title IV of
ERISA or Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code"), or Section 302 of ERISA (a "Plan"); (ii) the adoption of any amendment
to a Plan that would require the provision of security pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA; (iii) the existence with respect
to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (iv) the filing
pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (v) the incurrence of any liability under Title IV of ERISA with respect
to the termination of any Plan or the withdrawal or partial withdrawal of the
Company or any of its subsidiaries from any Plan or "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA ("Multiemployer Plan"); (vi) the receipt
by the Company or any of its subsidiaries from the Pension Benefit Guaranty
Corporation or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(vii) the receipt by the Company or any of its subsidiaries of any notice
concerning the imposition of liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA or of a determination that
a Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; and (viii) the occurrence of a
"prohibited transaction" with respect to which the Company or any of its
subsidiaries is a "disqualified person" (within the meaning of Section 4975 of
the Code) and with respect to which the Company or such subsidiary would be
liable for the payment of an excise tax.
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<PAGE>
Exhibit 4.1
n. Intellectual Property Rights. To the knowledge of the Company,
the Company and its subsidiaries own or possess adequate rights or licenses to
use all trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights to conduct
their respective businesses as now conducted, except to the extent that the
failure to possess such rights or licenses would not have a Material Adverse
Effect. The Company and its subsidiaries do not have any knowledge of any
infringement by the Company or its subsidiaries of any trademarks, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, trade secret or other similar rights
of others, and, except as set forth on Schedule 3(n), there is no claim, action
or proceeding being made or brought against, or to the Company's knowledge,
being threatened against, the Company or any of its subsidiaries regarding any
trademarks, trade names, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing, except for such
facts and circumstances which would not have a Material Adverse Effect.
o. Environmental Laws. (i) The Company and its subsidiaries (x) are
in compliance with any and all applicable foreign, provincial, municipal,
federal, state and local laws and regulations relating to the protection of
human health and safety or emissions, discharges, releases, threatened releases,
removal, remediation or abatement of pollutants, contaminants, chemicals or
industrial, hazardous or toxic substances or wastes into or in the environment
(including without limitation air, surface water, ground water or land), or
otherwise used in connection with the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, hazardous or toxic substances or wastes, as defined under such
applicable laws ("Environmental Laws"), (y) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (z) are in compliance with all terms and
conditions of any such permit, license or approval, except to the extent that
the matters within clauses (x), (y) or (z) above would not have a Material
Adverse Effect.
(ii) There is no substance designated a "hazardous substance" by any
Environmental Law, including asbestos, petroleum, urea formaldehyde insulation
and petroleum by-products ("Hazardous Substance") present at any of the real
property currently owned or leased by the Company or any of its subsidiaries,
except to the extent that such presence could not reasonably be expected to have
a Material Adverse Effect; and with respect to such real property, there has not
occurred (x) any release or, to the knowledge of the Company, any threatened
release of a Hazardous Substance or (y) any discharge or, to the knowledge of
the Company, threatened discharge of any Hazardous Substance into the ground,
surface or navigable waters which discharge or threatened discharge violates any
federal, state, local, provincial, municipal or foreign laws, rules or
regulations concerning water pollution.
- 13 -
<PAGE>
Exhibit 4.1
(iii) None of the Company or any of its subsidiaries has disposed
of, transported, or arranged for the transportation or disposal of any Hazardous
Substance where such disposal, transportation or arrangement would give rise to
liability pursuant to any Environmental Law other than any such liabilities that
could not reasonably be expected to have a Material Adverse Effect.
(iv) There are no underground storage tanks, asbestos-containing
materials, polychlorinated biphenyls or urea formaldehyde insulation at any of
the real property currently owned or leased by the Company or any of its
subsidiaries in violation of any Environmental Law.
p. Title. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, except to the extent that the failure to have
good and marketable title would not have a Material Adverse Effect, in each case
free and clear of all liens, encumbrances and defects except such as are
described in Schedule 3(p) 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 or any of its subsidiaries. Any real property and
facilities held under lease by the Company or 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.
q. 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. Neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect.
r. Regulatory Permits. Except as set forth on Schedule 3(e), the
Company and its subsidiaries possess all certificates, authorizations,
approvals, licenses, easements, rights-of-way, orders and permits ("Permits")
issued by the appropriate federal, state, provincial, municipal or foreign
regulatory authorities necessary to conduct their respective businesses, except
to the extent that the failure to possess such certificates, authorizations and
permits would not have a Material Adverse Effect; and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such Permit.
s. Compliance With Law. Except as set forth on Schedule 3(s), each
of the Company and its subsidiaries has complied with, has not received any
notice of violation of, and has no knowledge of any facts which with or without
notice could reasonably be expected to constitute a violation of, any laws,
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<PAGE>
Exhibit 4.1
ordinances, rules, regulations, by-laws, directives, orders, judgment,
injunctions, awards or decrees of any governmental entity applicable to the
Company and its subsidiaries and their properties, except for any violation or
failure so to comply which could not reasonably be expected to have a Material
Adverse Effect.
t. Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
u. No Materially Adverse Contracts, Etc. Neither the Company nor any
of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
reasonable judgment of the Company's officers has or is expected in the future
to have a Material Adverse Effect.
v. Tax Status. Except as set forth on Schedule 3(v), the Company and
each of its subsidiaries has made or filed all federal, state, provincial and
municipal 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.
w. Dilutive Effect. The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Debentures and
the number of Warrant Shares issuable upon exercise of the Warrants will
increase in certain circumstances. The Company further acknowledges that its
obligations to issue Conversion Shares upon conversion of the Debentures and to
issue Warrant Shares upon exercise of the Warrants in accordance with this
Agreement, the Debentures and the Warrants (subject to the terms and conditions
thereof), as the case may be, are absolute and unconditional regardless of the
dilutive effect that such issuances may have on the ownership interests of other
stockholders of the Company.
- 15 -
<PAGE>
Exhibit 4.1
x. No Other Agreements. The Company has not, directly or indirectly,
made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.
y. No Material Misstatement. None of the representations or
warranties of the Company contained herein and none of the information contained
in the Schedules hereto furnished by the Company is false or misleading in any
material respect or omits to state a material fact necessary to make the
statements herein or therein not misleading in any material respect.
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. 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 each of the
Closing Dates, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States and
under applicable securities laws of the applicable provinces and municipalities
of Canada, and shall provide evidence of any such action so taken to the Buyers
on or prior to the Closing Date. Each Buyer shall provide all information
reasonably requested by the Company in order to comply with its obligations
under this Section 4(b).
c. Reporting Status. Until the earlier of (i) the date as of which
the Investors (as that term is defined in the Registration Rights Agreement) may
sell all of the Conversion 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 of the Conversion Shares and all of the
Warrant Shares and (B) none of the Debentures and Warrants is outstanding (the
"Registration Period"), 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 Debentures and the Warrants for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the following
to Angelo, Gordon & Co., in its capacity as agent for the Investors (as that
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<PAGE>
Exhibit 4.1
term is defined in the Registration Rights Agreement), during the Registration
Period: (i) within two (2) days after the filing thereof with the SEC, a copy of
its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements or amendments filed pursuant
to the 1933 Act; (ii) on the same day as the release thereof, facsimile copies
of all press releases issued by the Company or any of its subsidiaries and (iii)
copies of any notices and other information made available or given to the
stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.
f. 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 150% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant Shares.
g. Right of First Refusal. So long as an aggregate of at least ten
percent (10%) of the Debentures issued at the Closings remains outstanding, but
subject to the exceptions described below, the Company shall not enter into a
binding agreement or otherwise agree with any party for or otherwise issue
securities in connection with any debt financing with an equity component, any
equity financing at a fixed discount in excess of 10% of the Market Value (as
defined below) of such securities, or any sale or issuance of convertible
preferred stock ("Future Offerings") during the period beginning on the Initial
Closing Date and ending on and including the date which is 365 days after the
Initial Closing Date, unless it shall have first delivered to Angelo, Gordon &
Co. written notice (the "Future Offering Notice") describing the proposed Future
Offering, including the terms and conditions thereof, and providing Angelo,
Gordon & Co. a non-assignable option to purchase up to the Maximum Amount (as
defined below), as of the date of delivery of the Future Offering Notice, in the
Future Offering on the same terms and conditions set forth in the Future
Offering Notice (the limitations referred to in this sentence are collectively
referred to as the "Capital Raising Limitation"). For purposes of this Section
4(g), "Market Value" shall mean the average of the closing prices on the Alberta
Stock Exchange, the Nasdaq SmallCap Market or the Nasdaq National Market, as
selected by the Company, for the Common Stock for the ten consecutive trading
days immediately preceding (i) if the Company selects the Alberta Stock Exchange
as the basis for the calculation of the Market Value, the date of the Company's
filing with the Alberta Stock Exchange of a notice of the proposed transaction
or the trading date immediately preceding the date of such notice, whichever
date is selected by the Alberta Stock Exchange, or (ii) if the Company selects
the Nasdaq SmallCap Market or the Nasdaq National Market as the basis for
calculation of the Market Value, the date of the Future Offering Notice (or, if
the Company is not required to send a Future Offering Notice, the date on which
the Company enters into an agreement to sell securities in the Future Offering
to the purchasers thereof); provided, however, that the Company shall not select
the Alberta Stock Exchange as the basis for the calculation of the Market Value
unless the Company is required to do so by rule or regulation of the Alberta
Stock Exchange. For purposes of this Section 4(g), "Maximum Amount" shall mean
the aggregate amount invested by Angelo, Gordon & Co. and its affiliates
- 17 -
<PAGE>
Exhibit 4.1
in the Company pursuant to this Agreement. Angelo, Gordon & Co. can exercise its
option to participate in a Future Offering by delivering written notice thereof
to participate to the Company within ten (10) business days of receipt of a
Future Offering Notice, which notice shall state the quantity of securities
being offered in the Future Offering that it will purchase, up to the Maximum
Amount. In the event Angelo, Gordon & Co. purchases less than all of the
securities available in the Future Offering within the periods described in this
Section 4(g), the Company shall have sixty (60) days thereafter to sell the
securities of the Future Offering respecting which the rights of Angelo, Gordon
& Co. were not exercised upon terms and conditions (as set forth in the
applicable transaction documents) no more favorable to the purchasers thereof
than the terms and conditions specified in the Future Offering Notice. In the
event the Company has not sold such securities of the Future Offering within
such 60-day period, the Company shall not thereafter issue or sell such
securities without first offering such securities to Angelo, Gordon & Co. in the
manner provided in this Section 4(g). Angelo, Gordon & Co. shall purchase such
securities on the date of consummation of the Future Offering. The Capital
Raising Limitation shall not apply to (i) a loan from a commercial bank, (ii)
any transaction involving the Company's issuances of securities (A) as
consideration in a merger or consolidation, (B) in connection with any strategic
partnership or joint venture, or (C) as consideration for the acquisition of a
business, product or license by the Company, (iii) the issuance of Common Stock
in an underwritten public offering, (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 or restricted stock plan for the benefit of the Company's
employees, directors or consultants, (vi) a single issuance by the Company
consisting solely of Common Stock provided that the consideration received by
the Company for each such share of Common Stock issued is not less than the
greater of (A) the closing price of a share of Common Stock on the Nasdaq
SmallCap Market or the Nasdaq National Market, as applicable, on the day prior
to the date of issuance of such shares and (B) the average of the closing prices
on the Nasdaq SmallCap Market or the Nasdaq National Market, as applicable, for
the Common Stock for the 20 consecutive trading days immediately preceding the
date of issuance of such shares, or (vii) a fixed-discount offering of equity
securities in which the discount applied to such offering does not exceed ten
percent (10%) of the Market Value of such securities. Angelo, Gordon & Co. 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.
h. Listing. The Company shall promptly use its best efforts to
secure the listing of all of the Registrable Securities (as defined in the
Registration Rights Agreement) upon the Nasdaq SmallCap Market or the Nasdaq
National Market, as applicable, upon which shares of Common Stock are 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
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<PAGE>
Exhibit 4.1
quotation on the Nasdaq SmallCap Market or the Nasdaq National Market, as
applicable. The Company shall promptly provide to Angelo, Gordon & Co., as agent
for the Buyers, copies of any notices it receives from the Nasdaq SmallCap
Market or the Nasdaq National Market, as applicable, regarding the continued
eligibility of the Common Stock 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(h).
i. Expenses. Subject to Section 9(l), following the Initial Closing,
the Company shall reimburse the Buyers for the Buyers' reasonable attorneys fees
and expenses in connection with negotiating and preparing the Transaction
Documents and consummating the transactions contemplated thereby, up to an
aggregate of $20,000.
j. Filing of Form 8-K. On or before the fifteenth (15th) day
following each of the Closing Dates, the Company shall file a Form 8-K with the
SEC describing the terms of the transaction contemplated by the Transaction
Documents and consummated at such Closing, in each case in the form required by
the 1934 Act.
k. Sale Restrictions.
(i) Prior to conversion of any or all of the Debentures or the
exercise of any or all of the Warrants, without the prior written consent of the
Company, no Buyer shall enter into any short position involving the Common Stock
in an amount such that the aggregate short position of all Buyers exceeds the
greatest of (i) 20% of the average daily trading volume of the Common Stock on
the Nasdaq SmallCap Market or the Nasdaq National Market, as applicable, for the
five trading days immediately preceding the date of sale, (ii) 20% of the
trading volume of the Common Stock on the Nasdaq SmallCap Market or the Nasdaq
National Market, as applicable, on the day prior to the date of sale; and (iii)
50,000 shares.
(ii) Following the conversion of any or all of the Debentures or the
exercise of any or all of the Warrants, without the prior written consent of the
Company, no Buyer will sell at any time any Conversion Shares or Warrant Shares
in an amount such that the total number of Conversion Shares and Warrant Shares
sold by all Buyers exceeds the greatest of (i) 10% of the average daily trading
volume of the Common Stock on the Nasdaq SmallCap Market or the Nasdaq National
Market, as applicable, for the five trading days immediately preceding the date
of sale; (ii) 10% of the trading volume of the Common Stock on the Nasdaq
SmallCap Market or the Nasdaq National Market, as applicable, on the day prior
to the date of sale; and (iii) 35,000 shares.
l. Underwriting Lock-Up Agreements. At any time during the period
beginning on and including the Initial Closing Date and ending on the date which
is eighteen months after the Initial Closing Date, the Company may require that
all, but not less than all, of the holders of the Debentures and the Warrants
- 19 -
<PAGE>
Exhibit 4.1
agree to sign a "lock-up" agreement with the underwriters of a public offering
of the Common Stock pursuant to which the holders would agree that, during the
period beginning on the date designated by the Company, which date shall be not
less than ten (10) days after the holders' receipt of such notice, and ending on
the date which is the earlier of the closing date of such offering and sixty
(60) days after the beginning of the lock-up period as designated by the Company
(the "Underwriting Lock-Up Period"), such holders would not sell any Conversion
Shares issued to the holders pursuant to a Conversion Notice delivered to the
Company or any Warrant Shares issued to the holders . The Company shall exercise
this right by delivering written notice (the "Lock-Up Request Notice") of such
request to all of the holders of the Debentures and Warrants then outstanding at
least 10 days prior to the date on which the Underwriting Lock-Up Period will
begin, but in no event prior to the filing of the registration statement for
such proposed offering. The Lock-up Request Notice shall state (i) that the
underwriters of such offering have requested that the holders of the Debentures
and the Warrants enter into "lock-up" agreements, (ii) the date on which the
Underwriting Lock-Up Period will begin and (iii) the name of the managing
underwriters of the proposed offering. Notwithstanding the foregoing, the
Company shall not be entitled to require the holders to enter into lock-up
agreements unless (A) the Underwriting Lock-Up Period is not more than 60 days,
(B) the Underwriting Lock-Up Period shall terminate immediately upon the
termination or abandonment or indefinite delay of the underwritten offering, (C)
the managing underwriters for such proposed offering are included on the
Schedule of Underwriters attached to this Agreement, (D) the preliminary
prospectus for such underwritten public offering reflects a price per share to
the public of not less than $10.00 per share and an aggregate gross proceeds to
the Company of at least $20,000,000, (E) there has been no other Underwriting
Lock-Up Period in the 365 days prior to the date of the Lock-Up Request Notice,
and (F) there has been no Grace Period (as defined in the Registration Rights
Agreement) during the period beginning on and including the date which is ten
days prior to the filing of the registration statement for the proposed offering
and ending on and including the first day of the Underwriting Lock-Up Period. If
the Company delivers a Lock-Up Request Notice and the underwritten public
offering is not consummated within 90 days of the first day of the Underwriting
Lock-Up Period and such failure to consummate the offering is due to any action
of the Company or any failure of the Company to act, then the Company may not
require any additional Underwriting Lock-Up Period pursuant to this Section
4(l).
5. TRANSFER AGENT INSTRUCTIONS.
----------------------------
The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, to issue certificates, registered in
the name of each Buyer or its respective nominee(s), for (i) the Conversion
Shares in such amounts as specified from time to time by each Buyer to the
Company upon conversion of the Debentures in accordance with the terms and
conditions of the Transaction Documents and (ii) the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon
exercise of the Warrants in accordance with the terms and conditions of the
Transaction Documents (the "Irrevocable Transfer Agent Instructions"). Prior to
- 20 -
<PAGE>
Exhibit 4.1
registration of the Conversion Shares and the Warrant Shares under the 1933 Act,
all such certificates shall bear the restrictive legend specified in Section
2(g). The Company warrants that, except as set forth in the Transaction
Documents, no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5, and stop transfer instructions to give effect to
Section 2(f) (prior to registration of the Conversion Shares and Warrant Shares
under the 1933 Act), 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
Conversion Shares or the Warrant Shares. If a Buyer provides the Company with an
opinion of counsel, reasonably satisfactory in form and substance to the
Company, that registration of a resale by such Buyer of any of such Securities
is not required under the 1933 Act, the Company shall permit the transfer, and
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 legends. The Company acknowledges that a breach by it of its
obligations arising under this Section 5 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 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.
-----------------------------------------------
a. Initial Closing Date. The obligation of the Company hereunder to
issue and sell the Initial Debentures and Initial Warrants to each Buyer at the
Initial Closing is subject to the satisfaction, at or before the Initial 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 written notice thereof:
(i) Such Buyer shall have executed each of the Transaction Documents
(other than the Debentures and the Warrants) and delivered the same to the
Company.
(ii) Such Buyer shall have delivered to the Company the Purchase
Price for the Debentures and Warrants being purchased by such Buyer at the
Initial Closing by wire transfer of immediately available funds pursuant
to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer in this
Agreement shall be true and correct in all material respects as of the
- 21 -
<PAGE>
Exhibit 4.1
date when made and as of the Initial Closing Date as though made at that
time (except for representations and warranties that speak as of a fixed
date), and such Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with
by such Buyer at or prior to the Initial Closing Date.
(iv) No suit, action or other proceeding shall have been commenced
(and be pending) which seeks to restrain or prohibit or questions the
validity or legality of the transactions contemplated by the Transaction
Documents, nor shall any such suit, action or proceeding be threatened.
(v) All consents, Permits, authorizations, approvals, waivers and
amendments required for the consummation of the transactions contemplated
by the Transaction Documents shall have been obtained.
b. Put Closing Date. The obligation of the Company hereunder to
issue and sell the Put Debentures and Put Warrants to each Buyer at the Put
Closing is subject to the Company's delivery of the Put Notice and the
satisfaction, at or before the Put 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 written notice thereof:
(i) Such Buyer shall have delivered to the Company the Purchase
Price for the Put Debentures and Put Warrants being purchased by such
Buyer at the Put Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(ii) The representations and warranties of such Buyer in this
Agreement shall be true and correct in all material respects as of the
date when made and as of the Put 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 the Transaction Documents to be performed, satisfied or complied with
by such Buyer at or prior to the Put Closing Date.
(iii) No suit, action or other proceeding shall have been commenced
(and be pending) which seeks to restrain or prohibit or questions the
validity or legality of the transactions contemplated by the Transaction
Documents, nor shall any such suit, action or proceeding be threatened.
- 22 -
<PAGE>
Exhibit 4.1
(iv) All consents, Permits, authorizations, approvals, waivers and
amendments required for the consummation of the transactions contemplated
by the Transaction Documents shall have been obtained.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
--------------------------------------------------
a. Initial Closing Date. The obligation of each Buyer hereunder to
purchase the Initial Debentures and Initial Warrants at the Initial Closing is
subject to the satisfaction, at or before the Initial 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 written notice thereof:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
(ii) The Common Stock shall be authorized for quotation on the
Nasdaq SmallCap Market or the Nasdaq National Market, as applicable;
trading in the Common Stock issuable upon conversion of the Initial
Debentures and upon exercise of the Initial Warrants, which are to be
traded on the Nasdaq SmallCap Market or the Nasdaq National Market, as
applicable, shall not have been suspended by the SEC or The Nasdaq Stock
Market, Inc.; and all of the Conversion Shares issuable upon conversion of
the Initial Debentures, and all of the Warrant Shares issuable upon
exercise of the Initial Warrants, to be sold at the Initial Closing shall
be listed upon the Nasdaq SmallCap Market or the Nasdaq National Market,
as applicable.
(iii) The representations and warranties of the Company in this
Agreement shall be true and correct in all material respects (except to
the extent that any of such representations and warranties is already
qualified as to materiality in Section 3, in which case, such
representations and warranties shall be true and correct without further
qualification) as of the date when made and as of the Initial Closing Date
as though made at that time and the Company shall have performed,
satisfied and complied in all material respects 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
Initial Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
Initial Closing Date, to the foregoing effect and as to such other matters
as may be reasonably requested by such Buyer including, without
limitation, an update as of the Initial Closing Date regarding the
representation contained in Section 3(c).
(iv) Such Buyer shall have received the opinion of the Company's
counsel dated as of the Initial Closing Date, in form, scope and substance
reasonably satisfactory to such Buyer and in substantially the form of
Exhibit D attached hereto.
- 23 -
<PAGE>
Exhibit 4.1
(v) The Company shall have executed and delivered to such Buyer the
Debentures and the Warrants (in such denominations as such Buyer shall
request) being purchased by such Buyer at the Initial Closing.
(vi) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) (the "Resolutions").
(vii) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Debentures and the exercise of
the Warrants, a number of shares of Common Stock equal to at least 150% of
the number of shares of Common Stock which would be issuable upon
conversion of the then outstanding Debentures and upon exercise of the
then outstanding Warrants, including for such purposes any Debentures and
any Warrants to be issued at such Closing.
(viii) The Company shall have delivered to such Buyer a certificate
evidencing the status of the Company and the incorporation and good
standing of each subsidiary of the Company in such corporation's
jurisdiction of incorporation issued by the Ministry of Consumer and
Commercial Relations (Ontario), with respect to the Company, and the
Secretary of State of the State of Nevada, with respect to the
subsidiaries of the Company, as of a date within 10 days of the Initial
Closing.
(ix) The Company shall have delivered to such Buyer a secretary's
certificate certifying as to (a) the Resolutions, (b) the Articles of
Incorporation and (c) Bylaws, each as in effect at the Initial Closing.
(x) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by the Transaction
Documents as such Buyer or its counsel may reasonably request.
(xi) No suit, action or other proceeding shall have been commenced
(and be pending) which seeks to restrain or prohibit or questions the
validity or legality of the transactions contemplated by the Transaction
Documents, nor shall any such suit, action or proceeding be threatened.
(xii) All consents, Permits, authorizations, approvals, waivers and
amendments required for the consummation of the transactions contemplated
by the Transaction Documents shall have been obtained.
b. Put Closing Date. The obligation of each Buyer hereunder to
purchase the Put Debentures and the Put Warrants at the Put Closing is subject
to receipt of the Put Notice and the satisfaction, at or before the Put Closing
- 24 -
<PAGE>
Exhibit 4.1
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 written notice thereof:
(i) The Company shall have complied with the requirements of Section
l(c) and all of the Put Notice Conditions set forth in Section l(d) shall
have been satisfied.
(ii) The Common Stock shall be authorized for quotation on the
Nasdaq SmallCap Market or the Nasdaq National Market, as applicable;
trading in the Common Stock issuable upon conversion of the Put Debentures
and upon exercise of the Put Warrants, which are to be traded on the
Nasdaq SmallCap Market or the Nasdaq National Market, as applicable, shall
not have been suspended by the SEC or The Nasdaq Stock Market, Inc.; and
all of the Conversion Shares issuable upon conversion of the Put
Debentures, and all of the Warrant Shares issuable upon exercise of the
Put Warrants, to be sold at the Put Closing shall be listed upon the
Nasdaq SmallCap Market or the Nasdaq National Market, as applicable.
(iii) The representations and warranties of the Company in this
Agreement shall be true and correct in all material respects (except to
the extent that any of such representations and warranties is already
qualified as to materiality in Section 3, in which case, such
representations and warranties shall be true and correct without further
qualification) as of the date when made and as of the Put Closing Date as
though made at that time and the Company shall have performed, satisfied
and complied in all material respects 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 Put Closing
Date. Such Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Put Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, without limitation, an update as of the
Put Closing Date regarding the representation contained in Section 3(c).
(iv) Such Buyer shall have received the opinion of the Company's
counsel dated as of the Put Closing Date, in form, scope and substance
reasonably satisfactory to such Buyer and in substantially the form of
Exhibit D attached hereto.
(v) The Company shall have executed and delivered to such Buyer the
Put Debentures and the Put Warrants (in such denominations as such Buyer
shall request) being purchased by such Buyer at the Put Closing.
(vi) The Board of Directors of the Company shall have adopted, and
shall not have amended, the Resolutions.
- 25 -
<PAGE>
Exhibit 4.1
(vii) As of the Put Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Debentures and the exercise of the
Warrants, a number of shares of Common Stock equal to at least 150% of the
number of shares of Common Stock which would be issuable upon conversion
of the then outstanding Debentures and upon exercise of the then
outstanding Warrants, including for such purposes any Debentures and any
Warrants to be issued at such Put Closing.
(viii) The Company shall have delivered to such Buyer a certificate
evidencing the status of the Company and the incorporation and good
standing of each subsidiary of the Company in such corporation's
jurisdiction of incorporation issued by the Ministry of Consumer and
Commercial Relations (Ontario), with respect to the Company, and the
Secretary of State of the State of Nevada, with respect to the
subsidiaries of the Company, as of a date within 10 days of the Put
Closing.
(ix) The Company shall have delivered to such Buyer a secretary's
certificate certifying as to (a) the Resolutions, (b) the Articles of
Incorporation and (c) Bylaws, each as in effect at the Put Closing.
(x) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
(xi) No suit, action or other proceeding shall have been commenced
(and be pending) which seeks to restrain or prohibit or questions the
validity or legality of the transactions contemplated by the Transaction
Documents, nor shall any such suit, action or proceeding be threatened.
(xii) All consents, Permits, authorizations, approvals, waivers and
amendments required for the consummation of the transactions contemplated
by the Transaction Documents shall have been obtained.
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 officers, directors, employees
and agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Buyer
Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
- 26 -
<PAGE>
Exhibit 4.1
connection therewith (irrespective of whether any such Buyer Indemnitee is a
party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Buyer Indemnified
Liabilities"), incurred by any Buyer 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 certificate,
instrument or document delivered pursuant thereto, (b) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents or any certificate, instrument or document delivered pursuant thereto,
or (c) any cause of action, suit or claim brought or made against such Buyer
Indemnitee and arising out of or resulting from 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 the status of such Buyer or holder of the
Securities as an investor in the Company. 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 Buyer Indemnified Liabilities which is permissible under applicable law.
b. In consideration of the Company's execution and delivery of the
Transaction Documents and in addition to the other obligations of the Buyers
under the Transaction Documents, each of the Buyers severally, and not jointly
(the "Responsible Buyer"), shall defend, protect, indemnify and hold harmless
the Company and all of its officers, directors, employees and agents (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 the Responsible Buyer(s) in the Transaction Documents or any
certificate, instrument or document delivered pursuant thereto, (b) any breach
of any covenant, agreement or obligation of the Responsible Buyer(s) contained
in the Transaction Documents or any certificate, instrument or document
delivered pursuant thereto, or (c) any cause of action, suit or claim brought or
made against such Company Indemnitee and arising out of or resulting from the
status of such Responsible Buyer(s) or holder of the Securities as an investor
in the Company; provided, however, that in no case shall the Responsible
Buyer(s) be liable or responsible for any amount in excess of the principal
amount of Debentures purchased by it as set forth opposite such Buyer's name on
the Schedule of Buyers. To the extent that the foregoing undertaking by the
Buyers may be unenforceable for any reason, the Responsible Buyer(s) shall make
the maximum contribution to the payment and satisfaction of each of the Company
Indemnified Liabilities which is permissible under applicable law; provided,
however, that in no case shall any Buyer be liable or responsible for any amount
in excess of the principal amount of Debentures purchased by it as set forth
opposite such Buyer's name on the Schedule of Buyers.
- 27 -
<PAGE>
Exhibit 4.1
9. GOVERNING LAW; MISCELLANEOUS.
-----------------------------
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. 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.
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. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
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.
e. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between or among the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and the Transaction Documents contain the entire understanding
of the parties with respect to the matters covered therein and, except as
specifically set forth 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
- 28 -
<PAGE>
Exhibit 4.1
writing signed by the Company and the holders of at least two-thirds (2/3) of
the Debentures 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 generated and kept on file by the
sending party); (iii) three (3) days after being sent by U.S. certified mail,
return receipt requested, or (iv) one (1) 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.
230 South Rock Boulevard, Suite 21
Reno, Nevada 89502
Telephone: 702-857-1966
Facsimile: 702-857-1920
Attention: Chief Financial Officer
With copies to:
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Telephone: 307-587-8245
Facsimile: 307-587-8357
Attention: Dr. William P. Long
and
Parr Waddoups Brown Gee & Loveless, P.C.
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Telephone: 801-532-7840
Facsimile: 801-532-7750
Attention: Brian G. Lloyd, Esq.
If to the Transfer Agent:
- 29 -
<PAGE>
Exhibit 4.1
Equity Transfer Services
120 Adelaide Street West, Suite 800
Toronto, Ontario, Canada M5H 3V1
Telephone: (416) 361-0152
Facsimile: (416) 361-0470
Attention: Peter Lindemann
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers.
Each party shall provide five (5) days' prior written notice to the other
party of any change in address or facsimile number or person to whose attention
notices shall be given.
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 Debentures or the Warrants. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the holders of two-thirds (2/3) of the Debentures then
outstanding. No Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Company, except that a Buyer
may assign some or all of its rights hereunder to an "affiliate" of such Buyer
(as such term is defined in the 1934 Act), without the consent of the Company;
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. Notwithstanding
anything to the contrary, Angelo, Gordon & Co. shall not, without the prior
written consent of the Company, assign or transfer any of its rights under
Section 4(g).
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 9(l),
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive each of
the Closings. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. Publicity. The Company and one representative selected by the
Buyers 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
- 30 -
<PAGE>
Exhibit 4.1
(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 Initial Closing shall not have
occurred with respect to a Buyer on or before five (5) 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 9(l), the Company shall remain obligated to reimburse the
non-breaching Buyers for the expenses described in Section 4(i) above.
m. 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. Unless the
context otherwise requires: (a) words in the singular include the plural and in
the plural include the singular; (b) "or" is disjunctive but not exclusive; (c)
"including" means "including, without limitation,"; (d) masculine pronouns
include the feminine pronouns and feminine pronouns include the masculine
pronouns; and all references herein to Sections or Exhibits are references to
Sections of or Exhibits to this Agreement unless otherwise specified.
- 31 -
<PAGE>
Exhibit 4.1
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: BUYERS:
ALTAIR INTERNATIONAL INC. LEONARDO, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By:_____________________________ By:_________________________________________
Name:___________________________ Name: Michael L. Gordon
Its:____________________________ Its: Chief Operating Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: Angelo, Gordon & Co., L.P.
Its: Investment Advisor
By:_________________________________________
Name: Michael L. Gordon
Its: Chief Operating Officer
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By:_________________________________________
Name: Michael L. Gordon
Its: Chief Operating Officer
RAPHAEL, L.P.
By:_________________________________________
Name: Michael L. Gordon
Its: Chief Operating Officer
<PAGE>
Exhibit 4.1
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By:_________________________________________
Name: Michael L. Gordon
Its: Managing Officer
BALDWIN ENTERPRISES, INC.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By:_________________________________________
Name: Michael L. Gordon
Its: Managing Officer
<PAGE>
Exhibit 4.1
<TABLE>
SCHEDULE OF BUYERS
<CAPTION>
Principal
Amount
Investor Address of Initial Investor's Representatives' Address
Investor Name and Facsimile Number Debenture and Facsimile Number
<S> <C> <C> <C>
Leonardo, L.P. c/o Angelo, Gordon & Co., L.P. $3,000,000 Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
GAM Arbitrage c/o Angelo, Gordon & Co., L.P. $ 300,000 Angelo, Gordon & Co., L.P.
Investments, Inc. 245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
AG Super Fund c/o Angelo, Gordon & Co., L.P. $ 300,000
International Partners, 245 Park Avenue - 26th Floor
L.P. New York, New York 10167
Attn: Gary Wolf
Facsimile: 212-867-6449
Raphael, L.P. c/o Angelo, Gordon & Co., L.P. $ 300,000 c/o Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
Ramius Fund, Ltd. c/o Angelo, Gordon & Co., L.P. $ 500,000 c/o Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
Baldwin Enterprises, c/o Angelo, Gordon & Co., L.P. $ 600,000 c/o Angelo, Gordon & Co., L.P.
Inc. 245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
======================================================================================================
</TABLE>
<PAGE>
Exhibit 4.1
SCHEDULE OF UNDERWRITERS
A.G. Edwards & Sons Inc.
Bancamerica Robertson Stephens
BT Alex Brown
Cowen & Co.
Cruttendon Roth Incorporated
CS First Boston
Dain Bosworth Incorporated
Deutsche Morgan Grenfell
Donaldson Lufkin & Jenrette Securities Corporation
Fahnestock & Co., Inc.
Furman Selz Incorporated
Genesis Merchant Securities
Goldman Sachs & Co.
Hambrecht & Quist
Invermed Associates
J.P. Morgan & Company
Lehman Brothers Inc.
Merrill Lynch & Co.
NationsBank Montgomery Securities
Morgan Stanley, Dean Witter, Discover & Co.
Needham & Company, Inc.
Oppenheimer & Co.
Pacific Growth Equities Inc.
Paine Webber
Piper Jaffray Inc.
Prudential Securities Incorporated
Punk Ziegel & Knoll
Raymond James & Associates, Inc.
SBC Warburg/Dillon Read
Smith Barney Salomon
UBS Securities, Inc.
Vector Securities
Wedbush Morgan Securities
<PAGE>
Exhibit 4.1
Schedule 3(a)
Subsidiaries
1) Fine Gold Recovery Systems, Inc., a Nevada corporation.
2) Mineral Recovery Systems, Inc., a Nevada corporation.
<PAGE>
Exhibit 4.1
Schedule 3(c)
Capitalization
1) Altair International, Inc. Stock Option Plan, provides for issuance of
2,500,000 Altair common shares. See Form S-8, filed July 11, 1997, for
Option Plan details. As of 17 December 1997, 882,500 shares granted under
the plan remained unexercised, and 553,000 shares remained for granting
under the Plan.
2) Notes payable as of September 30, 1997, including both principal and
accrued interest totaled $257,543.
<PAGE>
Exhibit 4.1
Schedule 3(e)
No Conflicts
1) Application to list additional shares on NASDAQ Small Cap Market or NASDAQ
National Market, as applicable, will be filed following execution of the
Transaction Documents.
<PAGE>
<TABLE>
Schedule 3(f)
ALTAIR INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
<CAPTION>
September 30, December 31,
1997 1996
(unaudited) (audited)
------------- ----------
ASSETS
<S> <C> <C>
Current
Cash and term deposits $ 2,953,241 $ 3,270,161
Advances and accounts receivable 60,024 13,556
----------- -----------
3,013,265 3,283,717
Capital
Office equipment, vehicles, testing and mining
equipment. (Cost, net of amortization) 455,744 257,018
Centrifugal jig patents and related expenditures
(Cost, net of amortization) 3,967,856 4,365,064
Mineral properties and related deferred
exploration expenditures 456,204 126,302
Goodwill, net 10,789 10,789
----------- -----------
$ 7,903,858 $ 8,042,890
=========== ===========
LIABILITIES
Current
Accounts payable and accrued liabilities $ 162,773 $ 155,729
Current portion of notes payable 153,036
----------- -----------
162,773 308,765
Notes payable 257,543 269,685
----------- -----------
420,316 578,450
----------- -----------
SHAREHOLDERS' EQUITY
Capital stock issued
15,233,245 common shares at September 30, 12,779,254 11,421,004
1997; 14,686,296 shares at December 31, 1996
----------- -----------
Deficit
Balance, beginning of period 3,956,564 3,347,808
Net loss for period 1,339,148 608,756
----------- -----------
Balance, end of period 5,295,712 3,956,564
----------- -----------
Total Shareholders' Equity 7,483,542 7,464,440
----------- -----------
$ 7,903,858 $ 8,042,890
=========== ===========
</TABLE>
<PAGE>
Exhibit 4.1
Schedule 3(g)
Absence of Certain Changes
None.
<PAGE>
Exhibit 4.1
Schedule 3(h)
Absence of Litigation
1) Fine Gold Recovery Systems, Inc. (Plaintiff), versus Micron Science, Inc.
and Morton P. McCleod (Defendants) filed December 6, 1996, in the Second
Judicial District Court of the State of Nevada.
<PAGE>
Exhibit 4.1
Schedule 3(n)
Intellectual Property Rights
None.
<PAGE>
Exhibit 4.1
Schedule 3(p)
Title
None.
<PAGE>
Exhibit 4.1
Schedule 3(s)
Compliance With Law
None.
<PAGE>
Exhibit 4.1
Schedule 3(v)
Tax Status
None.
<PAGE>
Exhibit 4.1
Schedule 4(d)
Use of Proceeds
Asset Acquisitions $4,000,000
Camden Project Development and
Additional Tennessee Lease Positions $3,000,000
Corporate Expansion and Working Capital $2,200,000
Transaction Costs $ 800,000
----------
Total $10,000,000
Exhibit 4.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, ANY STATE
SECURITIES LAWS OR ANY OTHER SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RECEIPT OF ALL NECESSARY STATE AND FOREIGN
APPROVALS OR (II) AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO ALTAIR INTERNATIONAL INC., THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR ANY APPLICABLE STATE OR FOREIGN
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
No. __ $_________
5% CONVERTIBLE SUBORDINATED DEBENTURE DUE DECEMBER 29, 2001
THIS CONVERTIBLE SUBORDINATED DEBENTURE ("Debenture") is one of a duly
authorized issue of Debentures of Altair International Inc., a corporation duly
incorporated under the laws of the Province of Ontario, Canada and having its
principal address at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414 (the
"Company"), designated as its 5% Convertible Subordinated Debentures Due
December 29, 2001 in an aggregate principal amount not exceeding Ten Million
U.S. Dollars (U.S. $10,000,000) (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to the order of___________
_______________________, having an address at__________________________________,
the holder hereof, or its registered assigns (the "Holder"), the principal sum
of _____________ United States Dollars (U.S. $_________) on December 29, 2001
(the "Maturity Date") and to pay interest on the principal sum outstanding under
this Debenture, at the rate of 5% per annum. At the option of the Company,
interest shall be payable in arrears annually on December 29 of each year,
commencing on December 29, 1998 (each such date, an "Interest Payment Date") and
on the Maturity Date. Interest shall be calculated based on a 360 day year.
Interest shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of original issuance and shall
continue until the following Interest Payment Date. The interest so payable will
be paid to the person in whose name this Debenture is registered on the records
of the Company regarding registration and transfers of the Debentures (the
"Debenture Register") at the close of business on the record date for interest
payable on such Interest Payment Date; provided, however, that the Company's
- 1 -
<PAGE>
Exhibit 4.2
obligation to a permitted transferee of this Debenture arises only if the
transfer, sale or other disposition is made in accordance with the terms and
conditions of the Securities Purchase Agreement, dated as of December 24, 1997,
among the Company and the purchasers of the original issue of the Debentures (as
amended from time to time and in effect, the "Purchase Agreement"). The record
date for any interest payment is the close of business on the date fifteen days
prior to the Interest Payment Date, unless such date shall not be a business
day, in which case on the next preceding business day. The Company shall be
entitled to withhold from all payments of interest on this Debenture any amounts
required to be withheld under the applicable provisions of the United States or
Canadian income tax laws as evidenced by an opinion of counsel of the Company.
The principal of this Debenture is payable in United States Dollars at the
address last appearing on the Debenture Register of the Company as designated in
writing by the Holder hereof from time to time. At the option of the Company,
the interest on this Debenture is payable either (i) in United States Dollars or
(ii) in shares of Common Stock (as defined in Paragraph 3) at the address last
appearing on the Debenture Register of the Company as designated in writing by
the Holder hereof from time to time; for purposes of clause (ii), the value of
one share of Common Stock shall be, on the Interest Payment Date, the Maturity
Date or on the date of conversion of the Debenture pursuant to Paragraph 5
hereof, as applicable, the lesser of (i) an amount that is equal to ninety-two
percent (92%) of the average Market Price for one share of Common Stock for the
five trading days immediately preceding such date, and (ii) the Ceiling (as
defined in Paragraph 3).
This Debenture is subject to the following additional provisions:
1. Subordination to Senior Indebtedness. The Company covenants and agrees,
and each holder of Debentures, by his acceptance thereof, likewise covenants and
agrees, that the indebtedness evidenced by the Debentures, including the
principal of, premium, if any, on and interest thereon, shall be subordinate and
subject in right of payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full of all Senior Indebtedness of the Company,
whether now outstanding or hereinafter incurred, and each holder of Debentures,
by his acceptance thereof, agrees to and shall be bound by the provisions of
this Paragraph 1.
(a) "Senior Indebtedness" shall mean the principal of and premium, if
any, on and interest on the following, whether outstanding at the date hereof or
hereafter issued, created, incurred or assumed:
(i) any indebtedness of the Company, and any indebtedness of another
entity for the payment of which the Company is at the time of
determination responsible or liable as guarantor or otherwise, which
indebtedness in either case (x) is for money borrowed, including, but
without limitation, indebtedness for money borrowed from entities which
engage in lending money such as banks, trust companies, insurance
- 2 -
<PAGE>
Exhibit 4.2
companies and other financing institutions, (y) is for the payment of the
purchase price of property or assets purchased (whether by the Company or
another entity), or (z) is a direct or indirect obligation which arises as
a result of drawings under bank letters of credit issued to secure
obligations of the Company, or others, whether contingent or otherwise;
and
(ii) any indebtedness of the Company on its commercial paper.
(b) Upon any distribution of the assets of the Company upon any
dissolution, winding up or total liquidation or reorganization relative to the
Company or to its property (whether in bankruptcy, insolvency or receivership
proceedings, or upon an assignment for the benefit of creditors, or any other
marshaling of the assets and liabilities of the Company or otherwise),
(i) all principal of (premium, if any) and interest on all Senior
Indebtedness (including interest thereon accruing after the commencement
of any bankruptcy or insolvency proceedings) shall first be paid in full,
or provision made for such payment in cash, before any payment is made on
account of the principal of, premium, if any, or interest on the
Debentures;
(ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than securities
of the Company as reorganized or readjusted or securities of the Company
or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Paragraph 1 with respect to the Debentures, to the
payment of all indebtedness of the nature of Senior Indebtedness, provided
that the rights of the holders of Senior Indebtedness at the time
outstanding are not altered by such reorganization or readjustment) on
account of the indebtedness evidenced by the Debentures to which the
holders of the Debentures would be entitled except for the provisions of
this Paragraph 1, shall be paid or delivered by the trustee in bankruptcy,
receiver, assignee for the benefit of creditors or other liquidating agent
making such payment or distribution directly to the holders of Senior
Indebtedness, or their representative or representatives or to the trustee
or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness may have been issued, pro rata,
as their respective interests may appear for application to the payment of
all Senior Indebtedness remaining unpaid to the extent necessary to pay
all Senior Indebtedness in full after giving effect to any concurrent
payment or distribution, or provision therefor in cash, to the holders of
such Senior Indebtedness.
The Company shall give prompt written notice to the holders of the
Debentures of any dissolution, winding up, total liquidation or reorganization
of the Company within the meaning of this Paragraph 1(b). Upon any payment or
- 3 -
<PAGE>
Exhibit 4.2
distribution of assets of the Company referred to in this Paragraph 1(b), the
holders of the Debentures shall be entitled to rely upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors or other
liquidating agent making such payment or distribution, delivered to the holders
of the Debentures, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Paragraph 1(b).
(c) In the event that the Debentures shall be accelerated because of the
occurrence of an Event of Default hereunder, the Company shall promptly notify
holders of Senior Indebtedness of such acceleration.
(d) In the event that any direct or indirect payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (other than securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in this Paragraph 1 with respect to the Debentures, to the
payment of all indebtedness of the nature of Senior Indebtedness, provided that
the rights of the holders of Senior Indebtedness at the time outstanding are not
altered by such reorganization or readjustment) on account of the indebtedness
evidenced by the Debentures shall be received by the holders of the Debentures
in contravention of Paragraphs 1(b) or 1(g) before all Senior Indebtedness is
paid in full, or provision made for its payment in cash, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of such Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing any such Senior Indebtedness may have been
issued, pro rata, as their respective interests may appear, for application to
the payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all such Senior Indebtedness after giving effect to any concurrent
payment or distribution, or provision therefor in cash, to the holders of such
Senior Indebtedness.
(e) After all Senior Indebtedness is paid in full, the holders of the
Debentures shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company made
on the Senior Indebtedness until the Debentures and interest shall be paid in
full, and for purposes of such subrogation, no such payments or distributions to
the holders of Senior Indebtedness of cash, property or securities, which
otherwise would be payable or distributable to the holders of the Debentures,
shall, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Debentures, be deemed to be a payment by
the Company to or on account of Senior Indebtedness, it being understood that
the provisions of this Paragraph 1 are and are intended solely for the purpose
of defining the relative rights of the holders of the Debentures, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
- 4 -
<PAGE>
Exhibit 4.2
(f) Nothing contained in this Paragraph 1 or elsewhere in this Debenture
or in the Purchase Agreement is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness and the
holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of the
Debentures, premium, if any, and interest thereon, as and when the same shall
become due and payable in accordance with their terms, or to affect the relative
rights of the holders of the Debentures and creditors of the Company other than
the holders of Senior Indebtedness, nor shall anything herein or therein prevent
the holder of any Debentures from exercising all remedies otherwise permitted by
applicable law upon default under this Debenture, subject to the rights, if any,
under this Paragraph 1 of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
(g) No direct or indirect payment (in cash, property, securities, by
set-off or otherwise) shall be made or agreed to be made on account of the
principal of the Debentures, premium, if any, or interest thereon, or in respect
of any redemption, retirement, purchase or other acquisition of any of the
Debentures, and no holder of any Debentures shall be entitled to demand or
receive any such payment (i) unless all amounts then due and payable for
principal of (premium, if any) and interest on all Senior Indebtedness shall
have been paid in full or (ii) if at the time of such payment or after giving
effect thereto there shall have occurred and be continuing any event of default
under any Senior Indebtedness or under any agreement or indenture pursuant to
which any instruments evidencing any such Senior Indebtedness may have been
issued and the maturity of such Senior Indebtedness shall have been accelerated
as a result of such default.
Notwithstanding the foregoing, the Company may make payments on account
of the principal of, premium, if any, or interest on the Debentures, or in
respect of any redemption, retirement, purchase or other acquisition of any of
the Debentures when (a) the Company has received a notice of a default or an
event of default under any agreement governing Senior Indebtedness (other than
notice of a default or event of default relating to payment of principal or
interest, either at maturity, upon redemption, by acceleration or otherwise)
(the receipt of such notice being referred to herein as a "Blockage Event"), and
(b) 179 days pass after the earliest date on which such notice was given with
respect to such default or event of default (the "Payment Blockage Period"), so
long as this Paragraph 1 otherwise permits payment at that time; provided,
however, that only one Payment Blockage Period may be commenced within any
consecutive 365-day period with respect to the Debentures. For purposes of this
paragraph, no event of default which existed or was continuing on the date of
the commencement of any Payment Blockage Period with respect to the Senior
Indebtedness initiating such Payment Blockage Period shall be, or be made, the
basis for the commencement of a second Payment Blockage Period by a
representative of such Senior Indebtedness, whether or not within a period
- 5 -
<PAGE>
Exhibit 4.2
of 365 consecutive days unless such event of default shall have been cured or
waived for not less than 90 consecutive days.
2. Transfers. This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged in the United States only (a) in compliance with the Securities Act of
1933, as amended (the "Act") and applicable state securities laws, (b) as
expressly permitted by the Purchase Agreement, and (c) in accordance with other
applicable provisions hereof. Prior to due presentment for transfer of this
Debenture, the Company may treat the person in whose name this Debenture is duly
registered on the Company's Debenture Register as the owner hereof for the
purpose of receiving payment as herein provided and all other purposes, whether
or not this Debenture is then overdue, and the Company shall not be affected by
notice to the contrary.
3. Definitions. For purposes hereof, the following terms shall have the
following meanings:
"Ceiling" shall mean an amount that is equal to the lesser of (x)
$14.36875 or (y) $14.7125, which represents 110% of the Market Price for one
share of Common Stock on the day immediately preceding the Closing Date;
provided, however, that the Ceiling shall increase by an additional $0.50 on
each of the second and the third anniversaries of the Closing Date.
"Closing Date" shall mean the date of original issuance of this
Debenture.
"Common Stock" shall mean the Common Shares, no par value, of the
Company.
"Conversion Date Market Price" shall mean, at any Holder Conversion Date
or Forced Conversion Date, as the case may be, the lesser of (i) an amount that
is equal to ninety-two percent (92%) of the average Market Price for one share
of Common Stock for the five trading days immediately preceding the date of a
Conversion Notice, and (ii) the Ceiling.
"Conversion Deficiency" shall have the meaning set forth in Paragraph
9(b).
"Conversion Notice" shall have the meaning set forth in Paragraph 5(c)
"Conversion Rate" shall have the meaning set forth in paragraph 5(b).
"Equity Offerings" shall mean the issuance or sale by the Company of any
Common Stock or securities which are convertible into or exchangeable for Common
Stock, or any warrants or other rights to subscribe for or to purchase, or any
options for the purchase of, Common Stock or any such convertible or
exchangeable securities (other than shares or options issued or which may be
- 6 -
<PAGE>
Exhibit 4.2
issued pursuant to the Company's employee or director option plans or shares
issued upon exercise of options, warrants or rights outstanding on the Closing
Date and listed in the SEC Documents (as defined in the Purchase Agreement)).
"Event of Default" shall have the meaning set forth in Paragraph 17.
"Forced Conversion Date" shall have the meaning set forth in Paragraph
(5)(c)(ii).
"Forced Conversion Notice" shall have the meaning set forth in Paragraph
(5)(c)(ii).
"Holder Conversion Date" shall have the meaning set forth in Paragraph
5(c)(i).
"Market Price" shall mean, as of any relevant date, the price of one
share of Common Stock determined as follows:
(i) If the Common Stock is listed on the Nasdaq SmallCap
Market or the Nasdaq National Market, as applicable, the closing price on the
relevant date, as reported by Bloomberg Financial Markets; or
(ii) If (i) does not apply but the Common Stock is listed on
any other securities exchange or automated quotation system, the closing bid
price on the relevant date, as reported by Bloomberg Financial Markets; or
(iii) If neither (i) nor (ii) applies, but the Common Stock is
quoted in the over-the-counter market on the pink sheets or bulletin board, the
lowest sales price on the relevant date, as reported by Bloomberg Financial
Markets; or
(iv) If none of clause (i), (ii) or (iii) above applies, the
market value as determined by an independent nationally recognized investment
banking firm or financial advisor retained in good faith by the Company for such
purpose, taking into consideration, among other factors, the earnings history,
book value and prospects for the Company, and the prices at which shares of
Common Stock recently have been traded. Such determination shall be conclusive
and binding on all persons.
"Minimum Number of Shares" shall mean, at any time, the sum of (i) the
number of shares of Common Stock issued prior to such time upon conversion of
all or any part of the Debentures, plus (ii) the number of shares (as may be
adjusted in accordance with the terms hereof) of Common Stock issuable at such
time upon conversion of the Debentures (without giving effect to any applicable
conversion restrictions), minus (iii) the number of shares of Common Stock
described in clause (i) above that have been sold prior to such time by the
Holders pursuant to a registration statement or Rule 144.
- 7 -
<PAGE>
Exhibit 4.2
"Outstanding Amount" shall mean the principal sum outstanding under this
Debenture and all accrued but unpaid interest thereon.
"Redemption Date" shall have the meaning set forth in Paragraph 6(a).
"Redemption Debentures" shall have the meaning set forth in Paragraph
6(d).
"Redemption Price" shall have the meaning set forth in Paragraph 6(c).
"Registration Rights Agreement" shall have the meaning set forth in the
Purchase Agreement.
Other terms defined in the Purchase Agreement and not otherwise defined
herein shall have the same meanings herein as are set forth for such terms in
the Purchase Agreement.
4. Intentionally Omitted.
5. Conversion. This Debenture is subject to conversion as follows:
----------
(a) (i) Holder's Right to Convert. This Debenture shall be convertible
at any time and from time to time after the Closing Date, in whole or in part,
at the option of the Holder hereof, into fully paid, validly issued and
nonassessable shares of Common Stock; provided that the Conversion Date Market
Price is greater than the Ceiling. During the periods set forth below, if the
Conversion Date Market Price is less than the Ceiling, no Holder may convert
more than the following percentages of the original principal amount of all
Debentures held by all Holders:
Date Percentage
---- ----------
1 to 45 days after Closing Date 0%
46 to 90 days after Closing Date 25%
91 to 135 days after Closing Date 50%
136 to 180 days after Closing Date 75%
181 days after Closing Date and thereafter 100%
The foregoing conversion restrictions shall immediately terminate, and the
Holder shall be permitted to convert all or any part of this Debenture without
regard to the conversion restrictions, upon the occurrence of any Event of
Default, Paragraph 4 Transaction or upon the commencement by any person (other
than the Holder) of any tender offer for shares of Common Stock.
- 8 -
<PAGE>
Exhibit 4.2
(ii) Company's Right to Force Conversion. (A) The Company may
require conversion of all or any part of the Outstanding Amount of this
Debenture from time to time into fully paid, validly issued and nonassessable
shares of Common Stock; provided, that
(1) prior to the date on which the Company may require
such conversion, the Registration Statement contemplated by the Registration
Rights Agreement shall have been declared effective (and not subject to any stop
orders or other prohibitions on sale of Common Stock thereunder) and shall
permit the sale thereunder of not less than the Minimum Number of Shares;
(2) the Registration Statement shall be effective (and
not subject to any stop orders or other prohibitions on sale of Common Stock
thereunder) as of the date of delivery of the Forced Conversion Notice and on
each trading day commencing with the date of delivery of the Forced Conversion
Notice and ending on the Forced Conversion Date for the sale thereunder of not
less than the Minimum Number of Shares;
(3) the average closing price per share of Common Stock
for the five trading days immediately preceding the delivery of the Forced
Conversion Notice shall have been greater than or equal to 130% of the Ceiling;
(4) (A) no Event of Default as specified in Section
17(c), (d), (e), (f), (g) or (h) shall have occurred prior to the Forced
Conversion Date and (B) no Event of Default as specified in Section 17(a) or (b)
shall have occurred and be continuing as of the Forced Conversion Date;
(5) no Conversion Deficiency shall have occurred prior
to the Forced Conversion Date; and
(6) any such required conversion shall be made from
each Holder, pro rata according to the portion of the total Outstanding Amount
of all Debentures held by each Holder.
(B) Notwithstanding clause (A) of this Paragraph 5(a)(ii), after the
second anniversary of the Closing Date, the Company may require conversion of
all or any part of this Debenture from time to time into fully paid, validly
issued and nonassessable shares of Common Stock; provided, that
(1) (A) no Event of Default as specified in Section
17(c), (d), (e), (f), (g) or (h) shall have occurred prior to the Forced
Conversion Date and (B) no Event of Default as specified in Section 17(a) or (b)
shall have occurred and be continuing as of the Forced Conversion Date;
- 9 -
<PAGE>
Exhibit 4.2
(2) no Conversion Deficiency shall have occurred prior
to the Forced Conversion Date; and
(3) any such required conversion shall be made from
each Holder, pro rata according to the portion of the total Outstanding Amount
of all Debentures held by each Holder.
(iii) Automatic Conversion. At the Maturity Date, the
Outstanding Amount of this Debenture plus any unpaid charges or amounts shall
automatically be converted into fully paid, validly issued and nonassessable
shares of Common Stock and, except for the Holder's right to receive the Common
Stock into which this Debenture is automatically so converted, and except for
any portion of this Debenture which cannot be converted because of the
limitations contained in Paragraphs 5(d) and 9(b), this Debenture shall be
deemed to have been canceled whether or not surrendered upon such automatic
conversion.
(iv) Accrued But Unpaid Interest. Notwithstanding anything in
this Debenture to the contrary, the Outstanding Amount of this Debenture on any
Holder Conversion Date or any Forced Conversion Date, as the case may be, shall
include, without limitation, all accrued but unpaid interest under this
Debenture through such date.
(b) Conversion Price for Holder Converted Shares. The Outstanding
Amount of this Debenture shall be convertible into the number of validly issued,
fully paid and non-assessable shares of Common Stock determined in accordance
with the following formula:
P + I
-------------------------
Conversion Date Market Price
P = principal amount of this Debenture submitted for conversion
I = accrued but unpaid interest on the principal amount of this
Debenture submitted for conversion plus any unpaid charges or
amounts through the Holder Conversion Date or Forced Conversion
Date, as the case may be.
The number of shares of Common Stock into which the Outstanding Amount of
this Debenture may be converted pursuant to this paragraph is herein referred to
as the "Conversion Rate."
(c) (i) Mechanics of Conversion by Holder. In order to convert
this Debenture (in whole or in part) into shares of Common Stock, the Holder
shall surrender this Debenture, duly endorsed, by either overnight courier or
two-day courier, to the Company, and, in case of any conversion pursuant to
- 10 -
<PAGE>
Exhibit 4.2
Paragraph 5(a)(i), shall give written notice in the form of Exhibit A hereto
(the "Conversion Notice") by facsimile (with the original of such notice
forwarded with the foregoing courier) to the Company that the Holder elects to
convert all or the portion of the Outstanding Amount of this Debenture specified
therein, which notice and election shall be irrevocable by the Holder unless the
Company shall default in or fail to fulfill any or all of its obligations
arising hereunder or otherwise by reason of such notice or election, in which
case, in addition to and not in lieu of any and all other rights and remedies to
which the Holder may thereby be and become entitled, such notice and election,
by further notice to the Company may be revoked and rescinded at the election of
the Holder exercised in its sole discretion; provided, however, that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon conversion unless this Debenture with evidence of the
principal amount hereof to be converted is delivered to the Company as provided
above, or the Holder notifies the Company that this Debenture has been lost,
stolen or destroyed and promptly executes an agreement reasonably satisfactory
to the Company to indemnify the Company from any loss which may be incurred by
it in connection with this Debenture; and provided, further, that each
Conversion Notice shall provide for the Holder's election to convert either (A)
at least $250,000 of the Outstanding Amount of this Debenture, or (B) if such
Outstanding Amount shall then be less than $250,000, the entire Outstanding
Amount. The date on which a Conversion Notice is given (the "Holder Conversion
Date") shall be deemed to be the date the Company received by facsimile the
Conversion Notice, as evidenced by a printed confirmation of receipt received by
the Holder and confirmed by telephone conference between the Holder and the
Company. Upon receipt of any Conversion Notice, the Company shall immediately
verify the Holder's calculation of the Conversion Rate. Unless the Company
objects, in writing, to the Holder's calculation within four (4) business days
after the Holder Conversion Date, the Company will be deemed to have accepted
such calculation.
(ii) Mechanics of Forced Conversion by Company. In order to
require conversion of this Debenture pursuant to Paragraph 5(a)(ii), the Company
shall give written notice in the form of Exhibit B hereto, appropriately
completed (the "Forced Conversion Notice"), by facsimile (with the original of
such notice forwarded with the foregoing courier) to each Holder of Debentures.
Such Forced Conversion Notice shall state that the Company elects to force
conversion of all or a specified portion of the Outstanding Amount of the
Debentures of each Holder, which notice and election shall be irrevocable by the
Company and shall be delivered at least 10 trading days prior to the date of
conversion specified in the Forced Conversion Notice (the "Forced Conversion
Date"). Each Holder will, within two business days after the Forced Conversion
Date, to the extent the Debenture has not been converted by such Holder prior to
the Forced Conversion Date, deliver such Debenture evidencing the Outstanding
Amount of such Debenture to be converted to the Company, duly endorsed, by
either overnight courier or two-day courier, or notify the Company that such
Debenture has been lost, stolen or destroyed and promptly execute an agreement
reasonably satisfactory to the Company to indemnify the Company from any loss
- 11 -
<PAGE>
Exhibit 4.2
which may be incurred by it in connection with such Debenture. Notwithstanding
anything herein to the contrary, any Holder may convert any portion of its
Debentures prior to the Forced Conversion Date.
(iii) Issuance of Certificates. In the case of any Conversion
Notice given by the Holder or any Forced Conversion Notice given by the Company,
the Company shall use its best efforts to cause the Company's transfer agent for
the Common Stock to issue and deliver as promptly as practicable and in no event
later than two (2) business days after delivery to the Company of the Debenture,
or after receipt of such agreement and indemnification, to such Holder or to its
designee, a certificate or certificates for the number of shares of Common Stock
to which the Holder shall be entitled, together with a Debenture for the
principal amount not submitted for conversion or forced to convert, as the case
may be. The person or persons entitled to receive the shares of Common Stock
issuable upon conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on the Holder Conversion Date or the
Forced Conversion Date, as the case may be. If the Company shall not have the
requisite number of shares of Common Stock issuable upon conversion of the
Debentures by any Holder, then, without limiting the Company's obligation to
convert all of the Debentures, such conversion shall be made for each Holder,
pro rata according to the portion of the total Outstanding Amount of the portion
of the Debentures sought to be converted. At the Holder's option, the request
for conversion by the Holder or the required conversion by the Company shall be
null and void for any portion of the Debentures for which the Company does not
have shares of Common Stock issuable upon conversion as of the Holder Conversion
Date or the Forced Conversion Date.
6. Redemption.
-----------
(a) Company Option To Redeem. Any portion of this Debenture may
be redeemed at the Company's option expressed by a written notice (a "Redemption
Notice") to the Holder; provided that
(i) the closing price per share of Common Stock for each of
the ten (10) consecutive trading days immediately preceding the delivery of the
Redemption Notice shall have been less than $6.50 per share, such price to be
proportionately adjusted in the event of a subdivision, split-up, spin-off or
combination in accordance with Section 7(a);
(ii) the Redemption Notice delivered by the Company shall be
received by the Holder at least ten (10) trading days (but not more than forty
(40) trading days) prior to the date (the "Redemption Date") of redemption;
(iii) at all times from and after the effective date of the
Registration Statement contemplated by the Registration Rights Agreement, the
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<PAGE>
Exhibit 4.2
Registration Statement shall have been effective for sale thereunder (except
pursuant to suspension periods contemplated by the Registration Rights
Agreement) of not less than the Minimum Number of Shares;
(iv) the Registration Statement shall be effective (and not
subject to any stop orders or other prohibitions on sale of Common Stock
thereunder) on the date of delivery of the Redemption Notice and on each day
from the date of such delivery through the Redemption Date for the sale
thereunder of not less than the Minimum Number of Shares;
(v) on the date of the Redemption Notice, the Company shall have
deposited at least seventy percent (70%) of the Redemption Price in an escrow
account reasonably satisfactory to the Holder, and shall have notified the
Holder in writing that the Company shall have adequate liquidity to pay the
Redemption Price on the Redemption Date, and shall not be prohibited under the
terms of any financing or other agreements or applicable law from redeeming the
Debentures on the Redemption Date; and
(vi) no Conversion Deficiency, as defined in Paragraph 9(b),
shall have occurred prior to the Redemption Date.
(b) Company's Obligation To Redeem. Upon a determination by the
Holders of more than 50% of the principal amount of Debentures then outstanding,
the Holders of the Debentures shall have the right to demand from the Company,
upon written notice to the Company at any time after the occurrence of any of
the following events, redemption of all Debentures in cash at the Redemption
Price pursuant to this Paragraph 6 in the event of the following:
(i) the Registration Statement shall not have been declared
effective within 180 days after the Closing Date; or
(ii) the failure of the Company to comply with a Conversion
Notice, other than pursuant to Paragraph 9(b) hereof.
(c) Redemption Price. The redemption price for the portion of this
Debenture being redeemed, except as provided in the Registration Rights
Agreement, shall equal 110% of the outstanding principal amount of this
Debenture being so redeemed, plus all accrued but unpaid interest and all late
payment charges and all other amounts accrued under this Debenture and not
previously paid (the "Redemption Price"). The Redemption Price shall be payable
in cash in United States Dollars.
(d) Mechanics of Redemption. If less than all of the Outstanding
Amount of Debentures are to be redeemed at any time, selection of Debentures for
redemption will be made by the Company on a pro rata basis. In the event the
- 13 -
<PAGE>
Exhibit 4.2
Company shall be required or elects to redeem any part or all of the Outstanding
Amount of the Debentures, the Company shall send by either overnight courier or
two-day courier (with a copy sent by facsimile) confirmation of such
determination or obligation to the record Holders of the Debentures being
redeemed (the "Redemption Debentures"), which confirmation shall be included in
the Redemption Notice, if the redemption is made pursuant to Paragraph 6(a)
above. Such confirmation shall specify the Redemption Date, which shall be (i)
no later than seven (7) business days after the receipt by the Company of the
notice requiring redemption pursuant to Paragraph 6(b) above, or (ii) at least
20 trading days (but not more than 40 trading days) after receipt by the Holder
of the Redemption Notice, as applicable. On the Redemption Date, the Redemption
Debentures shall be redeemed automatically without any further action by the
Holders of such Debentures and whether or not the Debentures are surrendered to
the Company (but only to the extent that the Company complies with its
obligation to pay the Redemption Price therefor); provided, that the Company
shall be obligated to pay the cash consideration due to a Holder of such
Debentures upon redemption when such Debentures are either delivered to the
principal office of the Company or the Holder notifies the Company that such
Debentures have been lost, stolen or destroyed and executes an agreement
reasonably satisfactory to the Company to indemnify the Company from any loss
which may be incurred by it in connection with such Debenture. Thereupon, there
shall be promptly issued and delivered to such Holder, within seven (7) business
days after the Redemption Date and delivery to the Company of such Debentures,
or after receipt of such agreement and indemnification, at the address of such
Holder on the books of the Company, payment in immediately available funds to
the name as shown on the books of the Company in the amount of the Redemption
Price as calculated as set forth in Paragraph 6(c). If the Company shall not
have the funds available to pay the aggregate Redemption Price of all Redemption
Debentures, then, without limiting the Company's obligation to redeem all
Redemption Debentures, such redemption shall be made from each Holder, pro rata
according to the portion of the total Outstanding Amount of all Redemption
Debentures then held by each Holder and the Company shall not be permitted to
require any further redemption in accordance with Paragraph 6(a).
Notwithstanding anything to the contrary contained herein, the Holders'
rights of conversion pursuant to Paragraph 5 hereof shall not be limited in any
manner by the Company's rights of redemption pursuant to this Paragraph 6.
(e) Failure to Redeem. In the event that the Company fails to redeem
any portion of the Outstanding Amount of the Debentures required to be redeemed
on any Redemption Date, the Company shall pay, in cash, to each Holder on such
Redemption Date, and on the last day of each 30-day period thereafter until the
Company redeems such unredeemed portion, an amount equal to two percent (2%) of
the unredeemed portion of the Outstanding Amount of the Debentures of such
Holder. This amount shall be deemed to be liquidated damages and shall not be
credited against the Redemption Price.
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<PAGE>
Exhibit 4.2
7. Stock Splits, Dividends, Reorganizations.
------------- ---------- ----------------
(a) Adjustment for Subdivisions, Combinations, etc. If the Company
shall subdivide its outstanding Common Stock, by split-up, spin-off, or
otherwise, or combine its outstanding Common Stock, then the Conversion Rate in
effect as of the date of such subdivision, split-up, spin-off, or combination
shall forthwith be proportionately adjusted.
(b) Adjustment for Dividends and Distributions. In the event the
Company at any time or from time to time after the Closing Date makes, or fixes
a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in Common Stock (or rights to
acquire Common Stock), then and in each such event provision shall be made so
that the Holders of Debentures shall receive upon conversion thereof pursuant to
Paragraph 5 hereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of such other securities of the Company to
which a Holder on the relevant record or payment date, as applicable, of the
number of shares of Common Stock so receivable upon conversion would have been
entitled, plus any dividends or other distributions which would have been
received with respect to such securities, had such Holder thereafter, during the
period from the date of such event to and including the Holder Conversion Date
or Forced Conversion Date, as the case may be, retained such securities, subject
to all other adjustments called for during such period under this Paragraph 7
with respect to the rights of the Holders of the Debentures. For purposes of
this Paragraph 7(b), the number of shares of Common Stock so receivable upon
conversion shall be deemed to be that number which the Holder would have
received upon conversion of the entire Outstanding Amount hereof if the Holder
Conversion Date or Forced Conversion Date, as the case may be, had been the day
preceding the date upon which the Company announced the making of such dividend
or other distribution.
(c) Adjustment for Merger, Reorganization; etc. In the event that at
any time or from time to time after the Closing Date, the Common Stock issuable
upon conversion of the Debentures is changed into the same or a different number
of shares of any class or classes of stock, whether in connection with a merger
or consolidation, by recapitalization, reclassification, reorganization or
otherwise (other than a subdivision, or combination of shares or stock dividend
or reorganization provided for elsewhere in this Paragraph 7), then and in each
such event each Holder of Debentures shall have the right, for a period of
fifteen (15) days following receipt of the Company's notice of such adjustment,
to convert such Debentures into the kind of securities receivable by a holder of
Common Stock upon such merger, recapitalization, reclassification or other
change, all subject to further adjustment as provided herein. In the event a
Holder does not elect to convert all of its Debentures during the fifteen-day
period described in the preceding sentence, the Company may, in its discretion,
elect to redeem all unconverted Debentures of the Holders at a redemption price
equal to 120% of the Outstanding Amount of the Debentures being so redeemed,
- 15 -
<PAGE>
Exhibit 4.2
plus all late payment charges and all other amounts accrued under the Debentures
and not previously paid. Such redemption price shall be payable in cash in
United States Dollars. The Company shall make such redemption in accordance with
Paragraph 6(d).
(d) Certificate as to Adjustments. Upon each occurrence of an
adjustment pursuant to this Paragraph 7, the Company at its expense shall
furnish to each Holder a certificate setting forth (i) in reasonable detail the
facts upon which such adjustment is based, and (ii) the number of shares of
Common Stock and the amount of other property or securities that after giving
effect thereto would be received by the Holder upon conversion of this
Debenture.
(e) Disputes. In the event of a reasonable, good faith dispute
between a Holder of Debentures and the Company with respect to the adjustments
required by Paragraphs 7(a), (b) or (c), then, at the option of either the
Holders of Debentures evidencing 50% or more of the principal indebtedness
evidenced by all Debentures held by Holders involved in such dispute or the
Company, the dispute shall be submitted to the American Arbitration Association
for resolution according to the then applicable rules thereof. The cost of such
proceeding shall be borne by the non-prevailing party, except that each party
shall bear its own legal and other expenses.
8. Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issuable hereunder. The
number of shares of Common Stock that are issuable upon any conversion shall be
rounded up or down to the nearest whole share.
9. Reservation of Stock Issuable Upon Conversion.
----------------------------------------------
(a) Reservation Requirement. The Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligation to issue shares of its Common Stock upon
conversion of the Debentures. The number of shares so reserved may be reduced by
the number of shares actually delivered pursuant to conversion of Debentures
(provided that in no event shall the number of shares so reserved be less than
the Minimum Number of Shares applicable to any Debenture) and the number of
shares so reserved shall be increased or decreased proportionally to reflect
stock splits, stock dividends and other distributions. In the event that the
number of shares so reserved (either in the aggregate or as to any Debenture)
shall be insufficient for issuance upon conversion of the Debentures (without
giving effect to an applicable conversion restrictions), or if the Holders of
the Debentures would at any time upon conversion thereof be entitled to the
issuance of shares of Common Stock in excess of the limitation in Paragraphs
5(d) and 9(b) herein, then in either case, upon receipt by the Company of notice
from any Holder, the Company shall use its best efforts and all due diligence to
increase the number of shares so reserved (without giving effect to any
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<PAGE>
Exhibit 4.2
applicable conversion restrictions) to cure all such deficiencies (either in the
aggregate or as to any Debenture) and, if necessary, to obtain the approval by
its shareholders therefor, including the authorization of such additional number
of shares of Common Stock as may be required to issue such shares in excess of
the number so reserved (either in the aggregate or as to any Debenture) or in
excess of such limitation, as the case may be.
(b) Conversion Deficiency. If, upon receipt of a Conversion Notice,
the Company does not have a sufficient number of shares of Common Stock
available to satisfy the Company's obligations to issue Common Stock upon
conversion of all or any of the Debentures to be so converted (a "Conversion
Deficiency"), any Holder of the Debentures shall have the right to demand from
the Company immediate redemption of any portion of the Debentures with respect
to which the Company does not have a sufficient number of shares available to
satisfy such conversion obligations, in cash at the Redemption Price pursuant to
Paragraph 6 hereof, without regard to Paragraphs 6(d) or 6(e) hereof. Within
three business days of the occurrence of any Conversion Deficiency, the Company
shall notify each Holder in writing of such occurrence.
Within three business days of the receipt of written demand for redemption
from any Holder pursuant to this Paragraph 9(b), the Company shall notify each
such Holder whether the Company has adequate liquidity to redeem such portion of
the Debentures as required by the foregoing paragraph (and, if requested by such
Holder, will provide reasonable written support for its position with respect
thereto within ten business days of the occurrence of any Conversion Deficiency)
and whether such redemption is prohibited under the terms of any financing or
other agreements or applicable law.
In the event that the Company notifies the Holder in writing that the
Company has adequate liquidity and is not otherwise restricted from redeeming
such portion of this Debenture, then the Company shall pay, in cash, to such
Holder within three business days after which a Conversion Deficiency shall have
occurred and on the last day of each 30-day period for which a Conversion
Deficiency is continuing, an amount equal to one percent (1%) of the amount of
such portion of the Debentures which such Holder does not require the Company to
redeem, for a maximum of three percent (3%) for such Conversion Deficiency.
In the event that the Company does not notify the Holder in writing that
the Company has adequate liquidity to redeem such portion of the Debentures or
that the Company is not otherwise restricted from redeeming such portion of this
Debenture, the Company shall pay, in cash, to such Holder within three business
days after which a Conversion Deficiency shall have occurred and on the last day
of each 30-day period for which a Conversion Deficiency is continuing (or until
the Company establishes to the reasonable satisfaction of the Holder that the
Company has adequate liquidity to and is not otherwise prohibited from redeeming
such Holder's Debentures, in which case the provisions of the foregoing
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<PAGE>
Exhibit 4.2
paragraph shall govern), two percent (2%) of the amount of such portion of the
Debentures which such Holder does not require the Company to redeem.
10. Other Covenants of the Company.
-------------------------------
(a) The Company shall not intentionally take any action which would
be reasonably likely to impair the contractual rights and privileges of the
Debentures set forth herein or of the Holders thereof.
(b) The Company shall not incur, create, assume, guarantee or
otherwise become liable for any indebtedness that is subordinate or junior in
right of payment to any Senior Indebtedness of the Company and senior in any
respect in right of payment to the Debentures.
(c) The Company shall not redeem (other than pursuant to Paragraph
6), retire, purchase or otherwise acquire, directly or indirectly, Debentures
held by any holder unless the Company shall have offered to redeem, retire,
purchase or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Debentures held by each other holder of Debentures
at the time outstanding upon the same terms and conditions and such offer shall
remain open for a period of at least twenty (20) business days.
11. Holders' Rights if Shares are Delisted or if Trading in Common Stock
is Suspended. In the event that at any time on or after the date hereof, trading
in the shares of the Company's Common Stock is suspended on the Nasdaq SmallCap
Market or the Nasdaq National Market, as applicable, for a period of seven
consecutive trading days, other than as a result of the suspension of trading in
securities in general, or if such Shares are delisted and not relisted within
twenty (20) trading days thereafter, then, at a Holder's option, the Company
shall redeem such Holder's Debentures on a Redemption Date designated by such
Holder, and at the Redemption Price and in accordance with Paragraph 6 hereof.
12. Limitations on Holder's Obligation to Convert. Notwithstanding
anything to the contrary contained herein, no Holder shall be required to
convert any part of this Debenture in excess of the portion then convertible
into that number of shares of Common Stock specified in the Holder's
representation to the Company that, after giving effect to the shares of the
Common Stock to be issued pursuant to such Conversion Notice, the total number
of shares of Common Stock deemed beneficially owned by the Holder, together with
all shares of the Common Stock deemed beneficially owned by the Holder's
affiliates" as defined in Rule 144 of the Act, would exceed 4.9% of the total
issued and outstanding shares of the Common Stock.
13. Obligations Absolute. No provision of this Debenture, other than
conversion as provided herein, shall alter or impair the obligation of the
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<PAGE>
Exhibit 4.2
Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place and rate, and in the manner,
herein prescribed.
14. Waivers of Demand, Etc. The Company hereby expressly waives demand and
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of dishonor, notice of intent to accelerate, prior notice of bringing of
suit and diligence in taking any action to collect amounts called for hereunder
and will be directly and primarily liable for the payments of all sums owing and
to be owing hereon, regardless of and without any notice (except as required by
law), diligence, act or omission as or with respect to the collection of any
amount called for hereunder.
15. Replacement Debentures. In the event that the Holder notifies the
Company that its Debenture has been lost, stolen or destroyed, a replacement
Debenture identical in all respects to the original Debenture (except for
registration number and Outstanding Amount, if different than that shown on the
original Debenture) shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
the Debenture and provided that the Company is provided a form of Debenture for
such replacement purposes.
16. Limitation on Number of Conversion Shares. In the event that upon
conversion of the Debentures the Company would be obligated to issue an
aggregate amount of shares of Common Stock which exceeds 19.99% of the number of
shares of Common Stock outstanding on the Closing Date (such amount to be
proportionately and equitably adjusted from time to time in the event of stock
dividends, subdivisions, combinations, reclassifications, capital
reorganizations and similar events relating to the Common Stock) (the "Exchange
Cap") and such issuance would constitute a breach of the Company's obligations
under the rules or regulations of the Nasdaq SmallCap Market or the Nasdaq
National Market, as applicable, or any other principal securities exchange or
market upon which the Common Stock is or becomes traded, the Company may elect
to redeem in accordance with Paragraph 6 only that principal amount of
Debentures which, if converted, would result in the issuance of more than the
Exchange Cap. The Exchange Cap shall be allocated among the Debentures pro rata
based on the total principal amount of Debentures then outstanding.
17. Defaults. If one or more of the following events hereinafter called
"Events of Default") shall occur:
(a) Any of the representations or warranties made by the Company
herein, in the Purchase Agreement, in the Registration Rights
Agreement, in any other Transaction Document, or in any
certificate or financial statements of the Company furnished
- 19 -
<PAGE>
Exhibit 4.2
by or on behalf of the Company in connectionwith the execution
and delivery of this Debenture, the Purchase Agreement, the
Registration Rights Agreement or any other Transaction
Document shall be false or (when taken together with other
information furnished by or on behalf of the Company,
including SEC Documents) misleading in any material respect at
the time made; or
(b) As long as the Holder of this Debenture is Angelo, Gordon
& Co. or any of its affiliates, the Company shall fail to
perform or observe any covenant or agreement in the Purchase
Agreement, the Registration Rights Agreement or any other
Transaction Document or any other covenant, term, provision,
condition, agreement or obligation of the Company under this
Debenture, and such failure shall continue uncured for a
period of twenty (20) business days after notice from the
Holder of such failure; or if the Holder of this Debenture is
a third party other than Angelo, Gordon & Co. or any of its
affiliates, the Company shall fail to perform or observe any
material covenant or agreement in the Purchase Agreement, the
Registration Rights Agreement or any other Transaction
Document or any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture,
and such failure shall continue uncured for a period of twenty
(20) business days after notice from the Holder of such
failure; or
(c) The Company shall fail to make any payments of principal or
interest when due under this Debenture or upon redemption of
this Debenture when due or fail to issue shares of Common
Stock upon conversion of this Debenture (other than in
accordance with Section 9(b); or
(d) The Company shall (i) become insolvent; (ii) admit in writing
its inability to pay its debts generally as they mature; (iii)
make a general assignment for the benefit of creditors or
commence proceedings for its dissolution; or (iv) apply for or
consent to the appointment of a trustee, liquidator or
receiver for it or for a substantial part of its property or
business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty
(60) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter;
or
- 20 -
<PAGE>
Exhibit 4.2
(g) Any money judgment, writ or warrant of attachment or similar
process in excess of Five Hundred Thousand Dollars ($500,000)
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded and unstayed for a period of sixty
(60) days or in any event later than ten (10) days prior to
the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings, or relief under any
bankruptcy law or any law for the relief of debt, shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60)
days after such institution, or the Company shall by any
action or answer approve of, consent to, or acquiesce in any
such proceedings or admit to any material allegations of, or
default in answering a petition filed in, any such proceeding;
then, or at any time thereafter prior to the date on which all continuing Events
of Default have been cured, and in each and every such case, unless such Event
of Default shall have been waived in writing by the Holder (which waiver shall
not be deemed to be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may, by notice to the
Company declare this Debenture immediately due and payable, and the Holder may
immediately, and without expiration of any period of grace, enforce any and all
of the Holder's rights and remedies provided herein or any other rights or
remedies afforded by law. In such event, the Debenture shall be redeemed at a
redemption price per Debenture equal to the redemption price provided in
Paragraph 6(c).
18. Savings Clause. In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
19. Entire Agreement. This Debenture and the agreements referred to in
this Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and a
two-thirds-in-interest of the Holders.
20. Assignment Etc. The Holder may, subject to compliance with the
Purchase Agreement, without notice, transfer or assign this Debenture or any
interest herein (but in no event in an amount less than $1,000,000 in
- 21 -
<PAGE>
Exhibit 4.2
Outstanding Amount or, if less than $1,000,000, the total Outstanding Amount
hereof); provided, however, that before the Registration Statement contemplated
by the Registration Rights Agreement becomes effective, the Holder will furnish
the Company with an opinion of counsel to the effect that such assignment or
transfer is exempt from the registration requirements under the Securities Act.
Each such assignee or transferee shall have all of the rights and obligations
of, the Holder under this Debenture. The Company agrees that, subject to
compliance with the Purchase Agreement, after receipt by the Company of written
notice of assignment from the Holder or from the Holders' assignee, all
principal, interest, and other amounts which are then due and thereafter become
due under this Debenture shall be paid to such assignee at the place of payment
designated in such notice. This Debenture shall be binding upon the Company and
its successors and shall inure to the benefit of the Holder and its successors
and assigns.
21. No Waiver. No failure on the part of the Holder to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Holder of any
right, remedy or power hereunder preclude any other or future exercise of any
other right, remedy or power. Each and every right, remedy or power hereby
granted to the Holder or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by the Holder
from time to time.
22. Miscellaneous. Unless otherwise provided herein, any notice or other
communication to a party hereunder shall be deemed to have been duly given if
personally delivered or sent by registered or certified mail, return receipt
requested, postage prepaid with a copy in each case sent on the same day to the
party by facsimile, Federal Express or other overnight delivery service to said
party at its address set forth herein or such other address as either may
designate for itself in such notice to the other and communications shall be
deemed to have been received when delivered personally or, if sent by mail, when
actually received by the party to whom it is addressed. Copies of all notices to
the Company shall be sent to Altair International Inc., 230 South Rock
Boulevard, Suite 21, Reno, Nevada, 89502, Facsimile No. (702) 857-1920,
Attention: Chief Financial Officer, and to Altair International Inc., 1725
Sheridan Avenue, Suite 140, Cody, Wyoming, 82414, Facsimile No. (307) 587-8357,
Attention: Dr. William P. Long, and to Parr Waddoups Brown Gee & Loveless P.C.,
185 South State Street, Suite 1300, Salt Lake City, Utah 84111, Facsimile No.
(801) 532-7750, Attention: Brian G. Lloyd. Whenever the sense of this Debenture
requires, words in the singular shall be deemed to include the plural and words
in the plural shall be deemed to include the singular. Paragraph headings are
for convenience only and shall not affect the meaning of this document.
23. Choice of Law and Venue: Waiver of Jury Trial. THIS DEBENTURE SHALL
BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW THEREOF. The Company hereby (i)
- 22 -
<PAGE>
Exhibit 4.2
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York for the purposes of any suit, action
or proceeding arising out of or relating to this Debenture and (ii) waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
the Company at the address in effect for notices to it under this Debenture and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
- 23 -
<PAGE>
Exhibit 4.2
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated as of: ___________, 1997
ALTAIR INTERNATIONAL INC.
By:__________________________
Name:________________________
Title:_______________________
ATTEST:
- ----------------------
- 24 -
<PAGE>
Exhibit 4.2
EXHIBIT A
(To Be Executed by Registered Holder
in order to Convert Debenture)
CONVERSION NOTICE
-----------------
FOR
---
5% CONVERTIBLE SUBORDINATED DEBENTURES DUE , 2001
-------------------------------------------------
The undersigned, as Holder of the 5% Convertible Subordinated Debenture Due
_______, 2001 of Altair International Inc. ("Altair"), No. ______, in the
outstanding principal amount of U.S.$______________ (the "Debenture"), hereby
irrevocably elects to convert U.S.$___________ of the outstanding principal
amount of the Debenture and U.S.$___________ of interest accrued but unpaid
under the Debenture into shares of the Common Shares, no par value (the "Common
Stock"), of Altair according to the conditions of the Debenture, as of the date
written below. The undersigned hereby requests that share certificates for the
Common Stock to be issued to the undersigned pursuant to this Conversion Notice
be issued in the name of, and delivered to, the undersigned or its designee as
indicated below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. No fee will be charged to the Holder for any conversion, except
for transfer taxes, if any.
Accompanying this Conversion Notice is a Conversion Rate Computation
Schedule setting forth the determination by the undersigned of the number of
shares of Common Stock issuable pursuant to this Conversion Notice.
Conversion Information: NAME OF HOLDER____________________
By:________________________________
Print Name:
Print Title:
Print Address of Holder:
------------------------------------
------------------------------------
Issue Common Stock to:______________
at:_________________________________
- 1 -
<PAGE>
Exhibit 4.2
------------------------------------
Date of Conversion
- 2 -
<PAGE>
Exhibit 4.2
CONVERSION RATE COMPUTATION SCHEDULE
Conversion Date Market Price (as such term is defined in the Debenture)
equal to the lesser of (i) an amount that is equal to ninety-two percent (92%)
of the average Market Price for Shares of Common Stock for the five trading days
immediately preceding the date of this Conversion Notice, and (ii) an amount
(the "Ceiling") that is equal to the lesser of (x) $14.36875 or (y) 110% of the
Market Price for Shares of Common Stock on the day immediately preceding the
Closing Date (the Ceiling shall increase by an additional $0.50 on each of the
second and the third anniversaries of the Closing Date):
Trading Day Market Price
----------- ------------
Conversion Date Market Price
- ----------------------------
Average of Market Prices listed above: _________
Applicable X% thereof: _________%
Principal To Be Converted:
- --------------------------
plus
Interest To Be Converted: $_________
- -------------------------
Divided by Conversion Date
Market Price per above: $_________
Shares of Common Stock to be
issued on conversion _________
- 3 -
<PAGE>
Exhibit 4.2
EXHIBIT B
FORCED CONVERSION NOTICE
------------------------
FOR
---
5% CONVERTIBLE SUBORDINATED DEBENTURES DUE , 2001
-------------------------------------------------
The undersigned, an authorized officer of Altair International Inc. (the
"Company"), issuer of the 5% Convertible Subordinated Debenture Due _______,
2001 of the Company, No. _______, held by _____________________ (the "Holder")
in the outstanding principal amount of U.S.$_____________ and accrued but unpaid
interest thereon in the amount of U.S.$_____________ (the "Debenture"), hereby
irrevocably elects to require conversion of U.S. $____________ of the
outstanding principal amount of the Debenture and U.S. $____________ of
interest, fees and other amounts accrued but unpaid under the Debenture into
shares of the Common Shares, no par value (the "Common Stock"), of the Company
according to the terms and conditions of the Debenture, on the Forced Conversion
Date written below.1 Capitalized terms used in this Forced Conversion Notice and
not otherwise defined shall have the meanings ascribed thereto in or by
reference in the Debenture.
The undersigned hereby certifies on behalf and in the name of and the Company
that all of the conditions set forth in Paragraph 5(a)(ii) of the Debenture have
been satisfied.
Accompanying this Forced Conversion Notice is a Computation Schedule completed
by the Company setting forth the determination by the Company of the Outstanding
Amount of such Debenture, plus fees and other charges and amounts, to be
converted. The calculation of the number of shares of Common Stock issuable
pursuant to this Forced Conversion Notice shall be made in accordance with the
terms of the Debenture.
The Company shall issue and deliver to the Holder share certificates for the
Common Stock issuable pursuant to this Forced Conversion Notice. If the Holder
desires the shares to be issued in the name of, and delivered to a person other
than, the Holder, the Holder should so indicate below and deliver a copy of this
Forced Conversion Notice to the Company, 1725 Sheridan Avenue, Suite 140, Cody,
Wyoming, 82414, Attention: President, at least two business days prior to the
Forced Conversion Date. No fee will be charged to the Holder for this
conversion, except for transfer taxes, if any.
- --------
1 The Forced Conversion Date shall be at least 10 trading days from the date
of delivery of this Forced Conversion Notice.
<PAGE>
Exhibit 4.2
------------------------------
Forced Conversion Date
ALTAIR INTERNATIONAL INC.
By:___________________________
Name:
Title:
Issue Common Stock to:________
______________________________
At:___________________________
______________________________
- 2 -
<PAGE>
Exhibit 4.2
CONVERSION RATE COMPUTATION SCHEDULE
Conversion Date Market Price (as such term is defined in the Debenture)
equal to the lesser of (i) an amount that is equal to ninety-two percent (92%)
of the average Market Price for Shares of Common Stock for the five trading days
immediately preceding the date of this Conversion Notice, and (ii) an amount
(the "Ceiling") that is equal to the lesser of (x) $14.36875 or (y) 110% of the
Market Price for Shares of Common Stock on the day immediately preceding the
Closing Date (the Ceiling shall increase by an additional $0.50 on each of the
second and the third anniversaries of the Closing Date):
Trading Day Market Price
----------- ------------
Conversion Date Market Price:
- -----------------------------
Average of Market Prices listed above: _________
Applicable X% thereof: _________%
Principal To Be Converted:
- --------------------------
plus
Interest To Be Converted: $_________
- -------------------------
Divided by Conversion Date
Market Price per above: $_________
Shares of Common Stock to be
issued on conversion _________
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December 24,
1997, by and among Altair International Inc., an Ontario corporation, with
headquarters located at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414
(the "Company"), Prudential Securities Incorporated (the "Placement Agent") and
the investors listed on the Schedule of Buyers attached hereto (each, a "Buyer"
and collectively, the "Buyers").
WHEREAS:
24. In connection with the Securities Purchase Agreement by and among the
parties of even date herewith (the "Securities Purchase Agreement"), the Company
has agreed, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to issue and sell to the Buyers 5% Convertible Subordinated
Debentures due December 29, 2001 (the "Debentures"), which will be convertible
into shares of the Company's common shares, no par value (the "Common Stock")
(as converted, the "Conversion Shares"), and warrants (the "Warrants") to
purchase shares of Common Stock (the "Warrant Shares"); and
25. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws; and
26. In connection with the transactions contemplated by the Securities
Purchase Agreement, the Company has issued to the Placement Agent warrants (the
"Placement Warrants") to purchase shares of Common Stock (the "Placement Warrant
Shares"), and has agreed to provide certain registration rights under the 1933
Act and applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the buyers hereby
agree as follows:
(a) DEFINITIONS.
------------
As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means a Buyer, the Placement Agent and any transferee
or assignee thereof to whom a Buyer or the Placement Agent assigns its rights
- 1 -
<PAGE>
Exhibit 4.3
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
(ii) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, a trust, an individual,
a governmental or political subdivision thereof or a governmental agency.
(iii) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement(s) by the United States Securities and Exchange
Commission (the "SEC")
(iv) "Registrable Securities" means the Conversion Shares issued or
issuable upon conversion of the Debentures, the Warrant Shares issued or
issuable upon exercise of the Warrants and the Placement Warrant Shares issued
or issuable upon exercise of the Placement Warrants and any shares of capital
stock issued or issuable with respect to the Conversion Shares, the Warrant
Shares or the Placement Warrant Shares as a result of any stock split, stock
dividend, recapitalization, exchange, recapitalization, combination, merger,
consolidation, distribution or similar event or otherwise.
(v) "Registration Statement" means a registration statement of the
Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
(b) REGISTRATION.
-------------
(i) Mandatory Registration. The Company shall prepare, and, on or
prior to 90 days after the date of issuance of the relevant Debentures, Warrants
and Placement Warrants, file with the SEC a Registration Statement or
Registration Statements (as is necessary) on Form S-3 (or, if such form is
unavailable for such a registration, on such other form as is available for such
a registration, subject to the consent of the Investors holding a majority of
the Registrable Securities and the provisions of Section 2(c), which consent
will not be unreasonably withheld), covering the resale of all of the
Registrable Securities, which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement(s) also covers such intermediate number of additional shares of Common
Stock as may become issuable upon conversion of the Debentures and upon exercise
of the Warrants and Placement Warrants (i) to prevent dilution resulting from
- 2 -
<PAGE>
Exhibit 4.3
stock splits, stock dividends or similar transactions and (ii) by reason of
changes in the Conversion Price or Conversion Rate of the Debentures and the
Exercise Price of the Warrants and the Exercise Price of the Placement Warrants
in accordance with the terms thereof. Such Registration Statement shall
initially register for resale at least such number of shares of Common Stock
equal to the number of relevant Conversion Shares, Warrant Shares and Placement
Warrant Shares, subject to adjustment as provided in Section 3(b). Such
registered shares of Common Stock shall be allocated among the Investors pro
rata based on the total number of Registrable Securities issued or issuable as
of each date that a Registration Statement, as amended, relating to the resale
of the Registrable Securities is declared effective by the SEC. The Company
shall use its best efforts to have the Registration Statement(s) declared
effective by the SEC as soon as practicable, but in no event later than 150 days
after the issuance of the relevant Debentures, Warrants and Placement Warrants.
The Company or any other holder of the Company's securities who has registration
rights (other than the Investors and their assignees or transferees) may include
its securities in an aggregate amount not to exceed 100,000 in any registration
effected pursuant to this Section 2(a); provided, however, that at such time as
the total number of Registrable Securities held by the Investors is less than
ten percent (10%) of an amount equal to the total number of Registrable
Securities covered by the Registration Statement(s) described in this Section
2(a) less the number of securities of the Company or any other holder of the
Company's securities included in such Registration Statement(s) as previously
described, the Company shall not be limited in any manner with respect to the
number of securities to be covered by such Registration Statement(s).
(ii) Counsel and Investment Bankers. Subject to Section 5, in
connection with any offering pursuant to Section 2, the Investors shall have the
right to select one legal counsel and an investment banker or bankers and
manager or managers to administer their interest in the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company. The Company shall reasonably cooperate with any
such counsel and investment bankers. The Investors shall pay all expenses of
such counsel, investment bankers and managers.
(iii) Piggy-Back Registrations. If a Registration Statement in
compliance with this Agreement is not effective, and prior to the expiration of
the Registration Period (as hereinafter defined), the Company proposes to file
with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its securities
(other than (i) a Registration Statement on Form S-4 or Form S-8 or their then
equivalents relating to securities to be issued solely in connection with any
acquisition of any entity or business securities issuable in connection with
stock option or other employee benefit plans or (ii) a Registration Statement
relating to the sale of securities pursuant to Rule 145 promulgated under the
1933 Act), the Company shall promptly send to each Investor who is entitled to
registration rights under this Section 2(c), at least twenty (20) days prior to
the anticipated date of filing, written notice of the Company's intention to
- 3 -
<PAGE>
Exhibit 4.3
file a Registration Statement and of such Investor's rights under this Section
2(c) and, if within twenty (20) days after receipt of such notice, such Investor
shall so request in writing, the Company shall include in such Registration
Statement the Registrable Securities such Investor requests to be registered,
subject to the priorities set forth in Section 2(d). No right to registration of
Registrable Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a). The obligations of the Company under
this Section 2(c) may be waived by Investors holding a majority of the
Registrable Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten offering,
then each Investor whose Registrable Securities are included in such
Registration Statement shall unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.
(iv) Priority in Piggy-Back Registration Rights in connection with
Registrations for Company Account. If the registration referred to in Section
2(c) is to be an underwritten public offering and the managing underwriter(s)
advise the Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of shares of
Common Stock which may be included in the Registration Statement (which may
include a total "cut-back" of all Registrable Securities) is necessary to
facilitate and not adversely affect the proposed offering, then the Company
shall include in such registration: (1) first, all securities the Company
proposes to sell for its own account, (2) second, up to the full number of
securities proposed to be registered for the account of the holders of
securities entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the securities
requested to be registered by the Investors and other holders of securities
entitled to participate in the registration, as of the date hereof, drawn from
them pro rata based on the number each has requested to be included in such
registration.
(v) Eligibility for Form S-3. In the event that Form S-3 is not
available for the sale by the Investors of the Registrable Securities, then the
Company (i) with the consent of the Investors holding a majority of the
Registrable Securities pursuant to Section 2(a), shall, in accordance with
Section 2(a), register the sale of the Registrable Securities on another
appropriate form and (ii) the Company shall undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect, if any, until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the SEC.
(vi) Liquidated Damages. If pursuant to Section 2(a) a Registration
Statement is not (i) filed with the SEC on or prior to 90 days after the date of
issuance of the relevant Debentures, the Warrants and the Placement Warrants or
- 4 -
<PAGE>
Exhibit 4.3
(ii) declared effective within 150 days after the date of issuance of the
relevant Debentures, Warrants and Placement Warrants (each a "Registration
Default"), the Company agrees to pay to each Investor liquidated damages
("Liquidated Damages") in an amount equal to two percent (2%) of the principal
amount of the relevant Debentures per month. All accrued Liquidated Damages
shall be paid to the affected Investors by the Company by wire transfer of
immediately available funds on the first calendar day of each month, except that
if such date is not a business day, then the next business day immediately
following such date. As of the date of the cure of all Registration Defaults
relating to any particular Registrable Securities, the accrual of Liquidated
Damages with respect to such Registrable Securities will cease.
(vii) Limitation on Registration Rights. Notwithstanding anything
contained in this Agreement to the contrary, when, in the opinion of counsel to
the Company (which counsel shall be experienced in securities law matters),
registration of the Registrable Securities is not required by the 1933 Act and
other applicable securities laws in connection with a proposed sale of such
Registrable Securities, an Investor shall have no rights pursuant to this
Section 2 to request registration in connection with such proposed sale, and the
Company shall promptly provide to the transfer agent and the Investor's broker
in connection with any sale transaction an opinion to the effect set forth
above.
(c) RELATED OBLIGATIONS.
--------------------
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
(i) The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities on or prior to
the ninetieth (90th) day after the date of issuance of any Debentures, Warrants
and Placement Warrants for the registration of Registrable Securities pursuant
to Section 2(a) and use its best efforts to cause such Registration Statement
relating to the Registrable Securities to become effective as soon as possible
after such filing (but in no event later than 150 days after the issuance of any
Debentures, Warrants and Placement Warrants for the registration of Registrable
Securities pursuant to Section 2(a)), and keep such Registration Statement
effective pursuant to Rule 415 at all times until the earlier of (i) the date as
of which the Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) (or its then equivalent) promulgated under
the 1933 Act or (ii) the date on which (A) the Investors shall have sold all the
Registrable Securities and (B) none of the Debentures, Warrants and Placement
Warrants is outstanding (the "Registration Period"), which Registration
Statement (including any amendments or supplements thereto and prospectuses
- 5 -
<PAGE>
Exhibit 4.3
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.
(ii) Subject to Section 3(f), the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus forming a part of
such Registration Statement, which prospectus is to be filed pursuant to Rule
424 promulgated under the 1933 Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the 1933 Act with respect
to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as such Registrable Securities shall have
been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in such Registration Statement. In the
event the number of shares available under a Registration Statement filed
pursuant to this Agreement is insufficient to cover all of the Registrable
Securities, the Company shall amend such Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case, as soon as
practicable, but in any event within fifteen (15) business days after the
necessity therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely). The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as reasonably practicable
following the filing thereof. For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed
"insufficient to cover all of the Registrable Securities" if at any time the
number of Registrable Securities issued or issuable upon conversion of the
Debentures, the Warrants and the Placement Warrants is greater than the quotient
determined by dividing (i) the number of shares of Common Stock available for
resale under such Registration Statement by (ii) 1.5. For purposes of the
calculation set forth in the foregoing sentence, any restrictions on the
convertibility of the Debentures and the exercise of the Warrants and the
Placement Warrants shall be disregarded and such calculation shall assume that
the Debentures are then convertible into shares of Common Stock at the then
prevailing Conversion Rate (as defined in the certificate representing the
Debentures) and the Warrants and the Placement Warrants are then exercisable
into shares of Common Stock at the prevailing Exercise Price, as applicable (as
defined in the certificate representing the Warrants and the certificate
representing the Placement Warrants).
(iii) The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement and its legal counsel
without charge (i) promptly after the same is prepared and filed with the SEC at
least one copy of such Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, the prospectus included in such Registration
Statement (including each preliminary prospectus) and, with regard to such
- 6 -
<PAGE>
Exhibit 4.3
Registration Statement(s), any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives, (ii) upon the effectiveness of
any Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor.
(iv) The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by a Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as any Investor reasonably requests, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
each Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.
(v) Intentionally omitted.
(vi) As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor in writing of the happening of any event
as a result of which the prospectus included in a Registration Statement, as
then in effect, includes an untrue statement of a material fact or omission 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, and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Investor (or such other
number of copies as such Investor may reasonably request). The Company shall
also promptly notify each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
- 7 -
<PAGE>
Exhibit 4.3
any request by the SEC for amendments or supplements to a Registration Statement
or related prospectus or related information, and (iii) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate. Notwithstanding anything to the contrary in this
Section 3(f), at any time after the Registration Statement has been declared
effective, the Company may delay the disclosure of any information concerning
the Company if the Board of Directors of the Company determines in good faith
that in its reasonable business judgment such disclosure would interfere in any
material respect with any financing, acquisition, corporate reorganization or
other transaction or development involving the Company that in the reasonable
good faith business judgment of such board is a transaction or development that
is or would be material to the Company and, in the opinion of counsel to the
Company, such disclosure is not otherwise required (a "Grace Period"); provided,
that the Company shall promptly (i) notify the Investors in writing of the
existence of material non-public information giving rise to a Grace Period and
the date on which the Grace Period will begin, and (ii) notify the Investors in
writing of the date on which the Grace Period ends; and, provided further, that
(A) during any consecutive 120 day period, the Grace Period shall not exceed
thirty (30) calendar days in the aggregate, and (B) during any consecutive 365
day period, the Grace Period shall not exceed forty-five (45) calendar days in
the aggregate, and (C) there has been no Underwriting Lock-Up Period (as defined
in the Securities Purchase Agreement) in the 20 day period prior to the
Company's notice to the Investors of a Grace Period. For purposes of determining
the length of a Grace Period above, the Grace Period shall begin on and include
the date the holders receive the notice referred to in clause (i) of this
Section 3(f) and shall end on and include the date the holders receive the
notice referred to in clause (ii) of this Section 3(f). Upon expiration of the
Grace Period, the Company shall again be bound by the first sentence of this
Section 3(f) with respect to the information giving rise thereto.
(vii) The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify each Investor who holds Registrable Securities
being sold of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.
(viii) The Company shall permit each Investor and a single firm of
counsel, initially Kramer, Levin, Naftalis & Frankel or such other counsel as
thereafter designated as selling stockholders' counsel by the Investors who hold
a majority of the Registrable Securities being sold, to review and comment upon
a Registration Statement and all amendments and supplements thereto at least
seven business days prior to their filing with the SEC.
(ix) At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall use its best efforts to
- 8 -
<PAGE>
Exhibit 4.3
furnish, on the date that Registrable Securities are delivered for sale in
connection with the Registration Statement an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement,
addressed to the Investors.
(x) The Company shall make reasonably available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition pursuant
to a Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Investors, and (iv) one firm of
attorneys retained by all such underwriters (collectively, the "Inspectors") all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively the "Records"), as shall be reasonably
deemed necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) or
use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified in writing, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement or is
otherwise required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement of which the Inspector has
knowledge. The Company shall not be required to disclose any confidential
information in such Record to an Inspector unless and until such Inspector shall
have entered into a confidentiality agreement with the Company with respect
thereto, substantially in accordance with the provisions of this Section 3(j).
Each Investor shall agree that, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, it will give prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, the Records deemed confidential. The
Investors shall pay all costs and expenses incurred by the Company in connection
with its obligations under this Section 3(j).
(xi) The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with any federal or
state securities law, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
- 9 -
<PAGE>
Exhibit 4.3
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(xii) The Company shall use its best efforts (i) to secure the
inclusion for quotation on the Nasdaq SmallCap Market or the Nasdaq National
Market, as applicable, for all the Registrable Securities covered by a
Registration Statement and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. as such with respect to such Registrable Securities
or (ii) to cause such Registrable Securities to be listed or traded on each
securities exchange or automated quotation system on which securities of the
same class or series issued by the Company are then listed or traded, if any, if
the listing or trading of such Registrable Securities is then permitted under
the rules of such exchange or automated quotation system. The Company shall pay
all fees and expenses in connection with satisfying its obligation under this
section 3(l).
(xiii) The Company shall cooperate with the Investors who hold
Registrable Securities being offered to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.
(xiv) The Company shall provide a transfer agent and registrar for
all such Registrable Securities not later than the effective date of such
Registration Statement.
(xv) If requested by Investors holding a majority of the Registrable
Securities, the Company shall (i) immediately incorporate in a prospectus
supplement or post-effective amendment such information as the Investors
reasonably agree should be included therein relating to the sale and
distribution of Registrable Securities; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any Registration Statement
if requested by Investors holding a majority of the Registrable Securities.
(xvi) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.
- 10 -
<PAGE>
Exhibit 4.3
(xvii) The Company shall make generally available to its security
holders as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Section 11(a) of the 1933 Act and Rule 158 promulgated thereunder)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the Registration
Statement.
(xviii) The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
(xix) Within two (2) business days after the Registration Statement
which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that the Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
(d) OBLIGATIONS OF THE INVESTORS.
-----------------------------
(i) At least seven (7) days prior to the first anticipated filing
date of a Registration Statement, the Company shall notify each Investor in
writing of the information the Company requires from each such Investor if such
Investor elects to have any of such Investor's Registrable Securities included
in such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
(ii) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.
(iii) In the event any Investor elects to participate in an
underwritten public offering pursuant to Section 2, each such Investor agrees to
enter into and perform such Investor's obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations (only with respect to violations
which occur in reliance upon and in conformity with information furnished in
writing to the Company by such Investor expressly for use in the Registration
- 11 -
<PAGE>
Exhibit 4.3
Statement for such underwritten public offering), with the managing underwriter
of such offering and take such other actions as are reasonably required by the
Company in order to expedite or facilitate the disposition of the Registrable
Securities, unless such Investor notifies the Company in writing of such
Investor's election to exclude all of such Investor's Registrable Securities
from such Registration Statement.
(iv) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f).
(v) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Company and the Investors entitled hereunder to approve such arrangements,
(ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements, and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions.
(e) EXPENSES OF REGISTRATION.
-------------------------
Except as otherwise provided in this Agreement, all reasonable
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees, fees and
disbursements of counsel and accountants for the Company shall be paid by the
Company, whether or not any registration statement becomes effective. In the
event the Investors select underwriters pursuant to Section 2(b) for the
offering of any Registrable Securities, all fees, costs, charges and expenses of
such underwriters in the offering shall be paid by the Investors. Any fees to be
paid by the Investors pursuant to this Agreement shall be paid on a pro rata
basis among the Investors.
(f) INDEMNIFICATION.
----------------
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
(i) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents of,
- 12 -
<PAGE>
Exhibit 4.3
and each Person, if any, who controls, any Investor within the meaning of the
1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 Act")
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, attorneys' fees,
amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which the statements therein were
made, not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(d) with
respect to the number of legal counsel, the Company shall reimburse the
Indemnified Persons promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by any Indemnified Person
or its counsel, agent or representative for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c); and (ii) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
- 13 -
<PAGE>
Exhibit 4.3
contained in this Section 6(a) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
(ii) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon (i) any Violation, in each
case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by such Investor for use in connection with such Registration Statement
or (ii) any action or failure to act of an underwriter selected by the Investors
pursuant to Section 2(b); and, subject to Section 6(d), such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
(iii) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
(iv) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
- 14 -
<PAGE>
Exhibit 4.3
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the Investors, and
such legal counsel shall be selected by the Investors holding a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all Persons relating to
the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is materially prejudiced in its
ability to defend such action.
(v) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
- 15 -
<PAGE>
Exhibit 4.3
(vi) The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
(g) CONTRIBUTION.
-------------
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ill) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
(h) REPORTS UNDER THE 1934 ACT.
---------------------------
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
(iii) furnish to Angelo, Gordon & Co., as agent for the Buyers, and
the Placement Agent, so long as any Investor owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of the 1934 Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may
- 16 -
<PAGE>
Exhibit 4.3
be reasonably requested to permit the Investors to sell such securities pursuant
to Rule 144 without registration.
(i) ASSIGNMENT OF REGISTRATION RIGHTS.
----------------------------------
The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned in accordance with the
terms of the Securities Purchase Agreement; (ii) at or before the time the
Company receives such written notice the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions contained herein,
including providing the Company with a current address for all required notices;
(iii) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement, the Debentures, the Warrants
and the Placement Warrants; and (iv) such transferee shall be an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the 1933 Act.
(j) AMENDMENT OF REGISTRATION RIGHTS.
---------------------------------
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.
(k) MISCELLANEOUS.
--------------
(i) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(ii) 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 a confirmation
of transmission is mechanically generated and kept on file by the sending
party); (iii) three (3) days after being sent by U.S. certified mail, return
receipt requested; or (iv) one (1) day after deposit with a nationally
- 17 -
<PAGE>
Exhibit 4.3
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.
230 South Rock Boulevard, Suite 21
Reno, Nevada 89502
Telephone: 702-857-1966
Facsimile: 702-857-1920
Attention: Chief Financial Officer
With copies to:
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Telephone: 307-587-8245
Facsimile: 307-587-8357
Attention: Dr. William P. Long
and
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Telephone: 801-532-7840
Facsimile: 801-532-7750
Attention: Brian G. Lloyd, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers attached hereto, with copies to such Buyer's counsel as set forth
on the Schedule of Buyers.
If to the Placement Agent:
Prudential Securities Incorporated
One New York Plaza, 17th Floor
New York, New York 10292
Telephone: 212-778-3166
Facsimile: 212-778-4196
Attention: John McKenna
- 18 -
<PAGE>
Exhibit 4.3
Each party shall provide five (5) days prior notice to the other party of any
change in address, phone number or facsimile number or the person to whose
attention notices are to be sent.
(iii) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(iv) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
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.
(v) This Agreement, the Securities Purchase Agreement, the
Debentures and the Warrants constitute the entire agreement among the Company
and the Buyers with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement, the Securities Purchase
Agreement, the Debentures and the Warrants supersede all prior agreements and
understandings among the Company and the Buyers with respect to the subject
matter hereof and thereof. This Agreement and the Placement Warrants constitute
the entire agreement between the Company and the Placement Agent with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Warrants supersede all prior agreements and
understandings between the Company and the Placement Agent with respect to the
subject matter hereof and thereof.
(vi) Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto and, with respect to Section 6, to the benefit of
the Indemnified Persons and Indemnified Parties.
- 19 -
<PAGE>
Exhibit 4.3
(vii) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect, the meaning hereof. Any
reference to "Section __" shall refer to the applicable section of this
Agreement.
(viii) This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
(ix) 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.
(x) All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Investors holding a majority of the Registrable
Securities, determined as if all of the Debentures then outstanding have been
converted into, all of the Warrants have been exercised for, and all of the
Placement Warrants have been exercised for, Registrable Securities.
(xi) 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.
- 20 -
<PAGE>
Exhibit 4.3
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
ALTAIR INTERNATIONAL INC. LEONARDO, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By:___________________________ By:_________________________________________
Name: Name: Michael L. Gordon
Its: Its: Chief Operating Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: Angelo, Gordon & Co., L.P.
Its: Investment Advisor
By:_________________________________________
Name: Michael L. Gordon
Its: Chief Operating Officer
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By:_________________________________________
Name: Michael L. Gordon
Its: Chief Operating Officer
RAPHAEL, L.P.
By:_________________________________________
Name: Michael L. Gordon
Its: Chief Operating Officer
<PAGE>
Exhibit 4.3
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By:_________________________________________
Name: Michael L. Gordon
Its: Managing Officer
BALDWIN ENTERPRISES, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By:_________________________________________
Name: Michael L. Gordon
Its: Managing Officer
PLACEMENT AGENT:
PRUDENTIAL SECURITIES INCORPORATED
By:_________________________________________
Name:
Its:
<PAGE>
Exhibit 4.3
<TABLE>
SCHEDULE OF BUYERS
<CAPTION>
Principal
Amount
Investor Address of Initial Investor's Representatives' Address
Investor Name and Facsimile Number Debenture and Facsimile Number
<S> <C> <C> <C>
Leonardo, L.P. c/o Angelo, Gordon & Co., L.P. $3,000,000 Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
GAM Arbitrage c/o Angelo, Gordon & Co., L.P. $ 300,000 Angelo, Gordon & Co., L.P.
Investments, Inc. 245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
AG Super Fund c/o Angelo, Gordon & Co., L.P. $ 300,000
International Partners, 245 Park Avenue - 26th Floor
L.P. New York, New York 10167
Attn: Gary Wolf
Facsimile: 212-867-6449
Raphael, L.P. c/o Angelo, Gordon & Co., L.P. $ 300,000 c/o Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
Ramius Fund, Ltd. c/o Angelo, Gordon & Co., L.P. $ 500,000 c/o Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
Baldwin Enterprises, c/o Angelo, Gordon & Co., L.P. $ 600,000 c/o Angelo, Gordon & Co., L.P.
Inc. 245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attn: Gary Wolf Attn: Gary Wolf
Facsimile: 212-867-6449 Facsimile: 212-867-6449
==============================================================================================================
</TABLE>
<PAGE>
Exhibit 4.3
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[ ]
[ADDRESS]
Attn:
Re: Altair International Inc.
-------------------------
Ladies and Gentlemen:
We are counsel to Altair International Inc., an Ontario corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement") entered into by and
among the Company and the buyers named therein (collectively, the "Holders")
pursuant to which the Company issued to the Holders its 5% Convertible
Subordinated Debentures due December __, 2001 (the "Debentures"), convertible
into shares of the Company's common shares, no par value (the "Common Stock"),
and warrants (the "Warrants") to purchase shares of Common Stock. Pursuant to
the Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders and Prudential Securities Incorporated (the
"Registration Rights Agreement") pursuant to which the Company agreed, among
other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Debentures and the shares of Common Stock issuable upon
exercise of the Warrants and the Placement Warrants (as defined in the
Registration Rights Agreement), under the Securities Act of 1933, as amended
(the "1933 Act"). In connection with the Company's obligations under the
Registration Rights Agreement, the Company filed a Registration Statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders
and Prudential Securities Incorporated as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ ]
By:_________________________________________
Exhibit 4.4
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, ANY STATE SECURITIES LAWS OR ANY OTHER SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE RECEIPT OF ALL NECESSARY STATE AND FOREIGN APPROVALS OR (II) AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO ALTAIR INTERNATIONAL
INC., THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR ANY APPLICABLE STATE
OR FOREIGN SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN.
ALTAIR INTERNATIONAL INC.
(INCORPORATED UNDER THE LAWS OF THE PROVINCE OF ONTARIO)
Warrant for the Purchase of Common Shares,
no par value
THIS WARRANT EXPIRES ON DECEMBER 29, 1999
No. __ _________ Shares
THIS CERTIFIES that, for value received, ______________ with an address
at _____________________________________________________________________________
(including any transferee, the "Holder"), is entitled to subscribe for and
purchase from Altair International Inc., an Ontario corporation (the "Company"),
upon the terms and conditions set forth herein, at any time or from time to time
before 5:00 P.M. on December 29, 1999, New York time (the "Exercise Period"),
______ of the Company's Common Shares, no par value ("Common Stock"), at a price
equal to $16.7188, which represents 125% of the closing price per share of the
Common Stock on the Nasdaq SmallCap Market or the Nasdaq National Market, as
applicable, on the date immediately prior to the date of issuance hereof (the
"Exercise Price").
This Warrant is the warrant or one of the warrants (collectively,
including any warrants issued upon the exercise or transfer of any such warrants
in whole or in part, the "Warrants") issued pursuant to the Securities Purchase
Agreement (the "Securities Purchase Agreement") by and among the Company and the
purchasers of the original issue of the Warrants, pursuant to which the Company
has agreed to issue and sell its 5% Convertible Subordinated Debentures due
December 29, 2001 (the "Debentures") and warrants to purchase shares of Common
Stock. As used herein the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares") and the Exercise Price may be adjusted from time
to time as hereinafter set forth.
1. This Warrant may be exercised during the Exercise Period, as to the
whole or any lesser number of whole Warrant Shares equal to or greater than
25,000 Warrant Shares, by the surrender of this Warrant (with the election at
the end hereof duly executed) to the Company at its office at Altair
International Inc., 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414, or at
such other place as is designated in writing by the Company. Such executed
election must be accompanied by payment in an amount equal to the Exercise Price
multiplied by the number of Warrant Shares for which this Warrant is being
exercised. Such payment may be made by certified or bank cashier's check payable
to the order of the Company.
- 1 -
<PAGE>
Exhibit 4.4
2. Upon each exercise of the Holder's rights to purchase Warrant Shares
and the Company's receipt of the full amount of the Exercise Price payable in
connection therewith, the Holder shall be deemed to be the holder of record of
the Warrant Shares issuable upon such exercise, notwithstanding that the
transfer books of the Company shall then be closed or certificates representing
such Warrant Shares shall not then have been actually delivered to the Holder.
As soon as reasonably practicable after each such exercise of this Warrant, the
Company shall issue and deliver to the Holder a certificate or certificates for
the Warrant Shares issuable upon such exercise, registered in the name of the
Holder or its designee. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder of
any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with the actual
knowledge of such facts that its participation therein amounts to bad faith.
This Warrant shall be transferable only (i) in increments with respect to a
number of Warrant Shares equal to or greater than 25,000 Warrant Shares and (ii)
on the books of the Company upon delivery thereof duly endorsed by the Holder or
by its duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment, or authority to transfer. In all cases of
transfer by an attorney, executor, administrator, guardian, or other legal
representative, duly authenticated evidence of his or its authority shall be
produced. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the person entitled thereto. This Warrant may be
exchanged, at the option of the Holder thereof, for another Warrant, or other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares (or portions
thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding the foregoing, the Company shall have no obligation to cause
Warrants to be transferred on its books to any person if, in the opinion of
counsel to the Company, such transfer does not comply with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
thereunder. Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of a Warrant, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrant if mutilated, the
Company will make and deliver a new Warrant of like tenor to the registered
owner in lieu of the Warrant so lost, stolen, destroyed or mutilated.
(b) The Holder acknowledges that it has been advised by the Company
that neither this Warrant nor the Warrant Shares have been registered under the
Act, that this Warrant is being or has been issued and the Warrant Shares may be
issued on the basis of the statutory exemption provided by Section 4(2) of the
Act or Regulation D promulgated thereunder, or both, relating to transactions by
an issuer not involving any public offering, and that the Company's reliance
thereon is based in part upon the representations made by the original Holder in
the Securities Purchase Agreement. The Holder acknowledges that he has been
informed by the Company of, or is otherwise familiar with, the nature of the
- 2 -
<PAGE>
Exhibit 4.4
limitations imposed by the Act and the rules and regulations thereunder on the
transfer of securities. In particular, the Holder agrees that no sale,
assignment or transfer of this Warrant or the Warrant Shares issuable upon
exercise hereof shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless (i)
the sale, assignment or transfer of this Warrant or such Warrant Shares is
registered under the Act, it being understood that neither this Warrant nor such
Warrant Shares are currently registered for sale and that the Company has no
obligation or intention to so register this Warrant or such Warrant Shares
except as specifically provided in the Registration Rights Agreement by and
among the Company and the purchasers of the original issue of the Warrants, or
(ii) this Warrant or such Warrant Shares are sold, assigned or transferred in
accordance with all the requirements and limitations of Rule 144 under the Act,
it being understood that Rule 144 is not available at the time of the original
issuance of this Warrant for the sale of this Warrant or such Warrant Shares and
that there can be no assurance that Rule 144 sales will be available at any
subsequent time, or (iii) such sale, assignment or transfer is otherwise exempt
from registration under the Act.
(c) Following any assignment or other transfer permitted by this
Warrant and the Securities Purchase Agreement that results in the issuance of
warrants to purchase Warrant Shares purchasable hereunder to more than one
person or entity, all elections that may be made by the Holders under such
warrants shall be made by written notice of Holders representing rights to
purchase a majority of the Warrant Shares for which such warrants are then
exercisable.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
the Warrants, such number of shares of Common Stock as shall, from time to time,
be sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
Exercise Price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights. The Company shall provide for and maintain the
listing of the Common Stock, including the Warrant Shares, upon the Nasdaq
SmallCap Market or the Nasdaq National Market, as applicable (or any other
securities exchange or automated quotation system which is the principal
exchange or system on which the Common Stock is then traded or listed).
5. (a) In case the Company shall at any time after the date this
Warrant is first issued (i) declare a dividend on the outstanding Common Stock
payable in shares of Common Stock or in rights to acquire shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then, in each such
case, the Exercise Price, and the number of Warrant Shares issuable upon
exercise of this Warrant, in effect at the time of the record date for such
dividend or of the effective date of such subdivision or combination, shall be
proportionately adjusted so that the Holder after such time shall be entitled to
receive the aggregate number and kind of shares for such consideration which, if
such Warrant had been exercised immediately prior to such time at the
then-current exercise price, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision or combination. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion or
- 3 -
<PAGE>
Exhibit 4.4
exchange price per share, if a security convertible into or exchangeable for
Common Stock) less than the lesser of the Exercise Price or the Current Market
Price per share of Common Stock on such record date, then, in each case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (or the aggregate
initial conversion or exchange price of the convertible or exchangeable
securities so to be offered) would purchase at such Exercise Price or Current
Market Price, as applicable, and the denominator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription or purchase (or
into which the convertible or exchangeable securities so to be offered are
initially convertible or exchangeable); provided, however, that no such
adjustment pursuant to this Section 5(b) shall be made which results in an
increase in the Exercise Price. Such adjustment shall become effective at the
close of business on such record date; provided, however, that, to the extent
the shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) are not delivered, or if securities convertible into or
exchangeable for shares of Common Stock are delivered but are not converted into
or exchanged for shares of Common Stock, the Exercise Price shall be readjusted
after the expiration of such rights, options, or warrants (but only with respect
to Warrants exercised after such expiration), to the Exercise Price which would
then be in effect had the adjustments made upon the issuance of such rights,
options, or warrants been made upon the basis of delivery of only the number of
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) actually issued. In case any subscription price may be
paid in a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
board of directors of the Company, whose determination shall be conclusive
absent manifest error. Shares of Common Stock owned by or held for the account
of the Company or any majority-owned subsidiary shall not be deemed outstanding
for the purpose of any such computation.
(c) For the purpose of any computation under this Section 5 or
Section 1, the Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices of the Common Stock for
the 10 consecutive trading days immediately preceding the date in question. The
closing price for each day shall be the closing price on the principal
securities exchange (including, for purposes hereof, the Nasdaq SmallCap Market
or the Nasdaq National Market, as applicable) on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any securities exchange, the highest reported bid price for the
Common Stock as furnished by the National Association of Securities Dealers,
Inc. through Nasdaq or a similar organization if Nasdaq is no longer reporting
such information. If on any such date the Common Stock is not listed or admitted
to trading on any securities exchange and is not quoted by Nasdaq or any similar
organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error, shall be used.
(d) No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest one-thousandth of
a share, as the case may be (with 0.005 being rounded to 0.01 and 0.0005 being
rounded to 0.001).
- 4 -
<PAGE>
Exhibit 4.4
(e) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise
over and above the shares of Common Stock, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(f) Upon each adjustment of the Exercise Price as a result of the
calculations made in Section 5(b) hereof, this Warrant shall thereafter evidence
the right to purchase, at the adjusted Exercise Price, that number of shares
(calculated to the nearest thousandth) obtained by dividing (A) the product
obtained by multiplying the number of shares purchasable upon exercise of this
Warrant prior to adjustment of the number of shares by the Exercise Price in
effect prior to adjustment of the Exercise Price by (B) the Exercise Price in
effect after such adjustment of the Exercise Price.
(g) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(h) The Company shall not be required to issue a fraction of a share
of Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
6. (a) In case of any consolidation of the Company with, or merger of
the Company with or into, another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation),
or in case of any sale, lease or conveyance to another corporation of the
property and assets of any nature of the Company as an entirety or substantially
as an entirety, such successor, leasing or purchasing corporation, as the case
may be, shall (i) execute and deliver to the Holder an agreement providing that
the Holder shall have the right thereafter to receive upon exercise of this
Warrant solely the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such consolidation,
merger, sale, lease or conveyance by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately prior to such
consolidation, merger, sale, lease or conveyance, and (ii) make effective
provision in its certificate of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments which shall
be as nearly equivalent as practicable to the adjustments in Section 5.
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<PAGE>
Exhibit 4.4
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive shares of stock (other than Common Stock), other
securities, property or cash) of the shares of Common Stock (other than a change
in par value, or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), the Holder shall have the right thereafter to
receive upon exercise of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash or any combination thereof receivable
upon such reclassification, change, consolidation or merger by a holder of the
number of shares of Common Stock for which this Warrant might have been
exercised immediately prior to such reclassification, change, consolidation or
merger. Thereafter, appropriate provision shall be made for adjustments which
shall be as nearly equivalent as practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or rights to acquire Common Stock to all holders
of Common Stock; or
(b) issue any rights, warrants, or other securities to all holders
of Common Stock entitling them to purchase any additional shares of Common Stock
or any other rights, warrants, or other securities; or
(c) effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6 hereof; or
(d) effect any liquidation, dissolution, or winding-up of the
Company; or
(e) take any other action which would cause an adjustment to the
Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.
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<PAGE>
Exhibit 4.4
8. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), including an affidavit of the Holder thereof that this
Warrant has been lost, stolen, destroyed or mutilated, together with an
indemnity against any claim that may be made against the Company on account of
such lost, stolen, destroyed or mutilated Warrant, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor, and denomination.
10. The Holder of any Warrant shall not have solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
11. This Warrant shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed within such State,
without regard to principles governing conflicts of law.
12. The Company irrevocably consents to the jurisdiction of the courts
of the State of New York and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Warrant, any document or instrument delivered pursuant to, in connection with or
simultaneously with this Warrant, or a breach of this Warrant or any such
document or instrument. In any such action or proceeding, the Company waives
personal service of any summons, complaint or other process and agrees that
service thereof may be made in accordance with Section 9 of the Securities
Purchase Agreement.
13. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express or similar overnight delivery or
courier service or delivered (in person or by telecopy, telex or similar
telecommunications equipment) against receipt to the party to whom it is to be
given, (i) if to the Company, at Altair International Inc., 230 South Rock
Boulevard, Suite 21, Reno, Nevada 89502, Attention: Chief Financial Officer, Fax
No. 702-857-1920 and Altair International Inc., 1725 Sheridan Avenue, Suite 140,
Cody, Wyoming, 82414, Attention: Dr. William P. Long, Fax No. (307)-587-8357,
and to Parr Waddoups Brown Gee & Loveless P.C., 185 South State Street, Suite
1300, Salt Lake City, Utah 84111, Attention: Brian G. Lloyd, Fax No. (801) 532-
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<PAGE>
Exhibit 4.4
7750, (ii) if to the Holder, at its address set forth on the first page hereof,
or (iii) in either case, to such other address or person's attention as the
party shall have furnished in writing in accordance with the provisions of this
Section 13. Notice to the estate of any party shall be sufficient if addressed
to the party as provided in this Section 13. Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof. Any notice given by other means permitted
by this Section 13 shall be deemed given at the time of receipt thereof.
14. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
15. This Warrant may be amended or any of its provisions waived only by
a written consent or consents executed by the Company and Holders of Warrants
representing a majority of Warrant Shares issuable upon exercise of the Warrants
issued to investors pursuant to the Securities Purchase Agreement. Any amendment
or waiver shall be binding upon all future Holders.
Dated: _________, 1997
ALTAIR INTERNATIONAL INC.
By: _____________________________
Name:
Title:
- --------------------------------------
Secretary
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<PAGE>
Exhibit 4.4
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto _________________ a Warrant to purchase __________ Common Shares,
no par value, of Altair International Inc. (the "Company"), together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ______________________ attorney to transfer such Warrant on the books of
the Company, with full power of substitution.
Dated: _________________
Signature____________________
____________________
Signature Guarantee
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
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<PAGE>
Exhibit 4.4
To: Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
ELECTION TO EXERCISE
The undersigned hereby exercises his, her or its rights to purchase
_______ Warrant Shares covered by the within Warrant, and tenders payment
herewith in the aggregate amount of $________ by certified or bank cashier's
check, in accordance with the terms thereof, and requests that certificates for
such securities be issued in the name of, and delivered to:
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant and the remaining portion of the within Warrant be
not cancelled in payment of the Exercise Price, that a new Warrant for the
balance of the Warrant Shares covered by the within Warrant be registered in the
name of, and delivered to, the undersigned at the address stated below.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
Dated: _________________
Name:___________________
(Print)
Address:________________________________________________________
________________________
(Signature)
_______________(Signature Guarantee)
_______________
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Exhibit 99.1
ALTAIR INTERNATIONAL
1725 Sheridan Avenue
Suite 140
Cody, WY 82414
Tel: (307) 587-8245
Fax: (307) 587-8357
FOR IMMEDIATE RELEASE: December 30, 1997
ALTAIR COMPLETES $10 MILLION CONVERTIBLE
DEBT FINANCING OFFERED THROUGH PRUDENTIAL SECURITIES
CODY, WY -- Altair International Inc. (NASDAQ:ALTIF/ASE:AIL) today announced the
closing of a $10 million convertible debt financing. Under the terms of the
financing, funding will be made in two blocks - $5 million at closing with the
additional $5 million available between eight and ten months after closing, at
Altair's option. Financing was provided by an institutional investor. Prudential
Securities Incorporated acted as placement agent and financial advisor to
Altair.
"This financing gives Altair increased financial strength to proceed with our
Tennessee property and bring the centrifugal jig to market," said Dr. William
Long, Altair's President.
The debt conversion price is determined by using a formula based on Altair's
stock price at the time of conversion. The convertible debt accrues interest at
5%, payable in cash or common stock. The investors also received two year
warrants to purchase up to 150,000 shares of the company's common stock at 125%
of the common stock price on the day prior to closing. Altair will fie a
registration statement for the necessary shares of common stock underlying the
convertible debt and warrants. Final documentation will be filed with the
Alberta Stock Exchange.
Prudential Securities Incorporated is a fully diversified, global securities
firm based in New York City, serving clients in the U.S. and overseas through
approximately 6,000 Financial Advisors. The fifth-largest brokerage firm in the
U.S., Prudential Securities is a subsidiary of the Prudential Insurance Company
of America.
Altair International is in the development stage of commercializing its
state-of-the-art technology, the Centrifugal Jig, which recovers extremely fine,
heavy particulate matter using a combination of a mechanical jig and centrifugal
force. Potential applications include gold/mineral recovery, coal cleaning and
environmental remediation. Altair is the 100% owner of a large titanium/zircon
mineral deposit in Tennessee.
The Alberta Stock Exchange neither approves nor disapproves of the information
contained herein. This press release may be deemed to contain certain
forward-looking statements with respect to the Company that are subject to risks
and uncertainties that include, but are not limited to, those identified in the
Company's press releases or discussed from time to time in the Company's
Securities and Exchange Commission filings. Actual results may vary materially.
FOR MORE INFORMATION CONTACT:
Carl Thompson, CEO Dr. William P. Long
Carl Thompson Associates Altair International Inc.
(303) 494-5472 (307) 587-8245
News releases, 10K and other information on Altair can be accessed at no charge
at Web Site http://www.ctaonline.com/ir/aig.htm on the Internet.
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