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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
Date of Report: November 16, 1999
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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Table of Contents
Item 2. Acquisition or Disposition of Assets.
As of November 15, 1999, Altair International Inc. (the "Company," "we" or
"Altair") entered into an Asset Purchase and Sale Agreement (the "Asset Purchase
Agreement") with BHP Minerals International Inc. ("BHP") pursuant to which we
purchased all patents and technology related to a hydrometallurgical process
developed by BHP primarily for the production of titanium dioxide products from
titanium bearing ores or concentrates (the "Technology"), all tangible equipment
and other assets used by BHP to develop and implement the Technology (the
"Assets") and the use for one year (for no fee) of the services of the BHP
personnel presently developing the Technology.
The purchase price for the Technology and Assets is 15,000,000 Australian
Dollars (AUD$) and was arrived at after extensive arms-length negotiation
between Altair and BHP. (The noon buying rate in New York City for an Australian
Dollar on November 16, 1999, as reported by the Federal Reserve Bank of New York
for customs purposes, was $.6417 United States Dollars.) Altair has agreed to
pay the purchase price in four equal installments of AUD$3,750,000, the first of
which was made at closing, and the remaining three of which are due and payable
on February 15, 2000, May 15, 2000, and August 15, 2000. Altair funded its first
installment of the purchase price using existing cash. Altair intends to fund
future installments primarily through the offer and sale of common shares,
warrants to purchase common shares, and various other debt or equity securities.
Altair may also use revenues, if any, generated from the sale of mineral
products produced using the Technology to fund part of the May 15, 2000 and
August 15, 2000 installments. If Altair fails to pay any of the remaining three
installments to the purchase price, the Asset Purchase Agreement provides that
Altair will forfeit to BHP, without a right to reimbursement of any amount of
the purchase price paid to date, all right, title and interest in the Technology
and Assets.
The Asset Purchase Agreement also requires Altair to pay to BHP, until the
earlier of the fifteenth anniversary of November 15, 1999 or the date Altair has
paid an aggregate royalty of AUD$105,000,000, a quarterly royalty equal to:
o 1.5% of the international market price of all uncoated titanium dioxide
pigment produced and sold as a result of the use of the Technology by
Altair or a transferee at Altair's mineral properties in Tennessee;
o 1.5% of the international market price of all uncoated titanium dioxide
pigment produced and sold as a result of the use of the Technology by
BHP or any affiliate of BHP at a specified heavy mineral sand operation
located in Auckland, New Zealand;
o 3% of the international market price of all uncoated titanium dioxide
pigment produced and sold as a result of the use of the Technology by
Altair or a transferee of Altair at any location other than Altair's
Tennessee Mineral Property or the Auckland, New Zealand heavy mineral
sand operation; and
o 3% of the sales proceeds (F.O.B. Altair's facility, reduced by the
amount of product returns) received by Altair or a transferee of Altair
from the sale of any products other than titanium dioxide pigment
produced through Altair's use of the Technology.
We believe that the Technology represents a significant improvement in the
processing of mineral ores, particularly titanium containing ores, and has the
potential to materially reduce processing costs for commodity and specialty
products. We anticipate commencing limited production of titanium dioxide
products using the Technology and Assets during the first quarter of 2000.
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In addition, in connection with the Asset Purchase Agreement, Altair and
BHP entered into a Lease dated November 15, 1999, pursuant to which Altair will
lease approximately 20,000 square feet of laboratory and testing space at BHP's
testing facility in Reno, Nevada for a monthly rent of $15,000. The initial term
of the Lease expires on December 31, 2000, subject to automatic renewal for
six-month periods at inflation adjusted rent until terminated by the Company.
The Lease grants Altair a right of first refusal in the event BHP intends to
sell the building and property subject to the Lease and includes an agreement to
negotiate in good faith with respect to Altair's possible purchase of such
building and property.
Forward-Looking StatementsFORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K (this "Current Report") contains various
forward-looking statements. Such statements can be identified by the use of the
forward-looking words "anticipate," "estimate," "project," "likely," "believe,"
"intend," "expect," or similar words. These statements discuss future
expectations, contain projections regarding future developments, operations, or
financial conditions, or state other forward-looking information. When
considering such forward-looking statements, you should keep in mind the risk
factors noted in this section and other cautionary statements throughout this
Current Report and our periodic filings with the SEC. You should also keep in
mind that all forward-looking statements are based on management's existing
beliefs about present and future events outside of management's control and on
assumptions that may prove to be incorrect. If one or more risks identified in
this Current Report or any of our periodic filings with the SEC materializes, or
any other underlying assumptions prove incorrect, our actual results may vary
materially from those anticipated, estimated, projected, or intended.
Among the key factors that may have a direct bearing on the our operating
results are risks and uncertainties described under "Risk Factors," including
those attributable to uncertainties regarding our ability to raise all capital
necessary to fund the purchase of the Assets and Technology and uncertainties
regarding the effectiveness of the Technology or quality of the Assets.
Risk Factors
Before you invest in the Common Shares of the Company, you should be
aware that such investment involves the assumption of various risks, including
those described below. What follows is a summary of certain risks related to the
Company's purchase and proposed development and exploitation of the Technology
and Assets. You should consider carefully these risk factors, together with the
Risk Factors dealing with other aspects of the Company's business and contained
in the Company's filings with the Securities and Exchange Commission, including
the Company's Annual Report on Form 10-K for the year ended December 31, 1998,
before you decide to purchase any Common Shares of the Company.
We May Not Have Sufficient Capital To Pay All Installments Of The Purchase Price
And May Forfeit the Technology and Assets.
We may not be able to obtain the capital necessary to make the
AUD$3,750,000 payments due on each of February 15, 2000, May 15, 2000 and August
15, 2000 with respect to our purchase of the Assets and Technology from BHP and,
if we fail to make such payments, we may forfeit our interest in the Technology
and Assets. Altair does not presently have sufficient capital to pay the second,
third or fourth installments to the purchase price of the Technology and Assets
from BHP and has not secured the additional capital needed to fund such
installments. Although Altair intends to raise such additional capital through
the sale of titanium dioxide produced using the Technology and Assets and/or
through the placement of Common Shares, warrants, and other debt or equity
securities, the capital generated from such activities may be insufficient to
pay all installments to the purchase price. Factors affecting the availability
and price of capital may include, without limitation, the following:
o Market factors affecting the availability and cost of capital
generally;
o The market's perception of our ability to use and further develop the
Technology and the Assets;
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o The initial performance of the Technology and the Assets and the
quality and variety of products produced;
o The market's perception of mining, technology, and/or minerals stocks;
o The price of, and demand for, titanium dioxide and any other products
produced, or proposed to be produced, with the Technology and Assets;
o Market perception of the abilities of our management team;
o Our progress in developing our other projects, including the Altair
Centrifugal Jig and the Tennessee Mineral Property.
Under the Asset Purchase Agreement, if we fail to timely make the three
remaining AUD $3,750,000 payments to BHP, we will forfeit to BHP, without any
right to reimbursement for the amount of the purchase price paid to date, all
right, title and interest in and to the Technology and related Assets.
The Technology May Prove Ineffective Or the Assets May Prove Unreliable.
The Technology and Assets have not been used by Altair, or by anyone in
a commercial setting, and may prove ineffective or unreliable when subjected to
continuous use. We have reviewed test results produced by BHP suggesting that
the Technology and Assets can effectively extract titanium dioxide from titanium
containing ores. Nevertheless, Altair has not independently tested the
Technology and Assets, and neither Altair nor BHP has attempted to use the
Technology or Assets on a continuous basis in a commercial setting. The
Technology may prove wholly or partially ineffective when applied by Altair. In
addition, the Assets may break down, be costly to maintain or prove unreliable
when operated on a continuous basis in a commercial setting. Our plans for
funding the purchase of the Technology and Assets depend upon our being able to
quickly and effectively commercialize the Technology. If the Technology proves
ineffective or the Assets prove unreliable in a commercial setting, we may be
unable to fund our purchase of the Technology and Assets or may otherwise be
unable to recoup our investment in the Technology and Assets.
The Market May Not Accept End Products Produced Using the Technology.
In the short run, we plan to use the Technology and Assets to produce
titanium dioxide nanoparticles from ilmenite containing feed stocks. We have not
previously produced or marketed titanium dioxide nanoparticles and, to date,
have not obtained or sought to obtain any orders for titanium dioxide
nanoparticles. The titanium dioxide nanoparticles and other products produced
using the Technology and Assets may be of inferior quality to alternative
products or, regardless of actual quality, may be perceived as lacking adequate
quality or reliability. Even if we are able to efficiently produce titanium
dioxide nanoparticles and other products using the Technology and Assets, we may
not be able to sell such products in the marketplace.
The Market for Titanium Dioxide and Other Products May Be Too Small or May
Contract or Collapse.
In the short run, we plan to use the Technology and Assets to
produce titanium dioxide nanoparticles from ilmenite containing feed stocks.
Although titanium dioxice is versatile and used in a wide range of
applications, the uses for such nanoparticles are limited--primarily cosmetics
and surface coatings--and the market for such nanoparticles is small, estimated
at 5,000 tons per annum. Even if we are able to effectively produce titanium
dioxide nanoparticles and other products using the Technology and Assets, we may
not be able to profitably market such products for any of the following reasons:
o there may be insufficient demand for such products;
o despite strong initial demand for such products, the market for such
products may contract or collapse as a result of a decrease in demand
for goods incorporating such mineral products, a worldwide or regional
financial crisis, or other unforeseen event;
o the increased supply of such mineral products as a result of the
entrance of Altair or other suppliers into the market may cause the
price to drop, reducing or eliminating profitability;
o such products may be of inferior quality to alternative products or,
regardless of actual quality, may be perceived as lacking adequate
quality or reliability.
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Our Costs of Production May Exceed Expectations or Our Competitors May Charge
Lower Prices for the Same Products.
We are purchasing the Technology and Assets based on our belief that,
with our use of the Technology and the Assets, we will be able to produce
titanium dioxide and other products more cheaply than many competitors. We have
not, however, produced any mineral products using the Technology and Assets on
either a test or a commercial basis. Our actual costs of production may exceed
those of our competitors and, even if our costs of production are lower, our
competitors may be able to sell titanium dioxide and other products on at a
lower price than is economical for Altair.
We May Be Unable to Obtain or Renew All Permits Necessary to Operate the Assets.
In order to begin commercial production using the Technology and the
Assets at the facility we are leasing in Reno, Nevada, we may be required to
obtain certain state and local permits. BHP has assigned to us all of the
permits it held with respect to its use of the Assets; however, our governmental
compliance due diligence is incomplete, and we have been unable to confirm
whether any additional permits will be required in order to use the Technology
and the Assets or whether we will be able to obtain any such permits. In
addition, many such permits must be renewed on a periodic basis or amended in
connection with our planned expansion of operations at the leased Reno, Nevada
facility. We can provide no assurance that we will be able to obtain all new
permits, or extensions, amendments or renewals of existing permits, necessary to
use the Assets and Technology for commercial production. Even if we can obtain
all such permits, we may incur substantial costs or need to make substantial
modifications in order to obtain such permits.
Our Applications For Patents Related To The Technology May Be Denied Or May
Otherwise Be Unenforceable.
BHP has filed patent applications with the United States Patent and
Trademark Office ("PTO") with respect to the Technology and has transferred the
rights to such applications to Altair. Such applications are being reviewed by
the PTO, and no patents with the respect to the Technology have been granted to
date. If the applications for any patents related to the Technology are denied,
or the scope of any such application is narrowed, the value of the Technology,
and any competitive advantage gained from Altair's ownership of the Technology,
may be substantially diminished. We can provide no assurance that pending patent
applications will be granted.
In addition, we have not filed patent applications in any jurisdictions
outside of the United States. Persons in countries in which no application has
been filed, or which do not honor United States patents, may develop and market
infringing technologies. In addition, the cost of enforcing patents outside of
North America, as well as other obstacles, may limit the our ability to enforce
any patents related to the Technology outside of the United States.
We May Incur Liability Under Applicable Environmental Laws.
Any proposed use of the Technology and Assets will be subject to
federal, state, and local environmental laws. Under such laws, we may be jointly
and severally liable with prior property owners for the treatment, cleanup,
remediation, and/or removal of substances discovered at the leased Reno, Nevada
facility or any other property used by Altair, which are deemed by the federal
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and/or state government to be toxic or hazardous ("Hazardous Substances").
Courts or government agencies may impose liability for, among other things, the
improper release, discharge, storage, use, disposal, or transportation of
Hazardous Substances. We might use Hazardous Substances and, although we intend
to employ all reasonably practicable safeguards to prevent any liability under
applicable laws relating to Hazardous Substances, companies engaged in mineral
exploration and processing are inherently subject to substantial risk that
environmental remediation will be required.
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Item 7. Financial Statements and Exhibits
(c) Exhibits.
10.1 Amended and Restated Shareholder Rights Plan dated
October 15, 1999, between the Company and Equity
Transfer Services, Inc.
10.2 Lease dated November 15, 1999, between the Company and
BHP Minerals International Inc.
10.3 Services Agreement dated November 15, 1999, between
the Company and BHP Minerals International Inc.
10.4 Asset Purchase and Sale Agreement dated November 15,
1999, between the Company and BHP Minerals
International Inc.(Portions of pages 33, 34, 35 and
36 of the Asset Purchase and Sale Agreement have been
omitted and are subject of an application for
confidenatial treatment.)
99.1 Press Release dated November 17, 1999
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.
November 17, 1999 By: /s/ William P. Long
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Date Dr. William P. Long, President
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Exhibit 10.1
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AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT
BETWEEN
ALTAIR INTERNATIONAL INC.
AND
EQUITY TRANSFER SERVICES INC.
DATED AS OF OCTOBER 15, 1999
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TABLE OF CONTENTS
<S> <C>
ARTICLE 1INTERPRETATION..................................................................................................2
1.1 Certain Definitions.........................................................................................2
1.2 Currency...................................................................................................12
1.3 Number and Gender..........................................................................................12
1.4 Sections and Headings......................................................................................12
1.5 Statutory References.......................................................................................12
1.6 Determination of Percentage Ownership......................................................................13
1.7 Acting Jointly or in Concert...............................................................................13
1.8 Generally Accepted Accounting Principles...................................................................13
ARTICLE 2THE RIGHTS.....................................................................................................14
2.1 Legend on Common Share Certificates........................................................................14
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights...........................................14
2.3 Adjustments to Exercise Price; Number of Rights............................................................18
2.4 Date on Which Exercise is Effective........................................................................23
2.5 Execution, Authentication, Delivery and Dating of Rights Certificates......................................24
2.6 Registration, Transfer and Exchange........................................................................24
2.7 Mutilated, Lost, Stolen and Destroyed Rights Certificates..................................................25
2.8 Persons Deemed Owners......................................................................................25
2.9 Delivery and Cancellation of Certificates..................................................................26
2.10 Agreement of Rights Holders................................................................................26
ARTICLE 3ADJUSTMENTS TO THE RIGHTS......................................................................................27
3.1 Flip-in Event..............................................................................................27
3.2 Fiduciary Duties of the Board of Directors of the Corporation..............................................28
ARTICLE 4THE RIGHTS AGENT...............................................................................................29
4.1 General....................................................................................................29
4.2 Merger, Amalgamation, Consolidation or Change of Name of Rights Agent......................................29
4.3 Duties of Rights Agent.....................................................................................30
4.4 Change of Rights Agent.....................................................................................32
ARTICLE 5MISCELLANEOUS..................................................................................................33
5.1 Redemption, Waiver and Termination.........................................................................33
5.2 Expiration.................................................................................................35
5.3 Issuance of New Rights Certificates........................................................................35
5.4 Supplements and Amendments.................................................................................35
5.5 Fractional Rights and Fractional Shares....................................................................35
5.6 Rights of Action...........................................................................................36
5.7 Holder of Rights Not Deemed a Shareholder..................................................................36
</TABLE>
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5.8 Notice of Proposed Actions.................................................................................36
5.9 Notices....................................................................................................37
5.10 Costs of Enforcement.......................................................................................37
5.11 Regulatory Approvals.......................................................................................37
5.12 Declaration as to Non-Canadian and Non-U.S. Holders........................................................38
5.13 Successors.................................................................................................38
5.14 Benefits of this Agreement.................................................................................38
5.15 Determination and Actions by the Board of Directors........................................................38
5.16 Governing Law..............................................................................................38
5.17 Language...................................................................................................39
5.18 Counterparts...............................................................................................39
5.19 Severability...............................................................................................39
5.20 Effective Date.............................................................................................39
5.21 Time of the Essence........................................................................................39
</TABLE>
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5.22 Amendment and Restatement..................................................................................39
EXHIBIT A
Rights Certificate ....................................................................................................A-1
FORM OF ELECTION TO EXERCISE ..........................................................................................A-3
FORM OF ASSIGNMENT ....................................................................................................A-5
</TABLE>
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AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT dated as of
October 15, 1999 (the AAmendment Date@).
BETWEEN:
ALTAIR INTERNATIONAL INC.
(the "Corporation")
OF THE FIRST PART
- and -
EQUITY TRANSFER SERVICES INC.
(the "Rights Agent")
OF THE SECOND PART
WHEREAS:
A. The Board of Directors has determined that it is advisable to adopt a
shareholder rights plan (the "Rights Plan") to ensure, to the extent
possible, that all shareholders of the Corporation are treated fairly
in connection with any takeover offer for the Corporation or other
acquisition of control of the Corporation.
B. In order to implement the Rights Plan, the Board of Directors has:
(a) authorized and declared a distribution of one right (a
"Right") effective at the Close of Business at the Record Time
in respect of each Common Share outstanding at the Close of
Business at the Record Time;
(b) authorized the issuance of one Right in respect of each Common
Share issued after the Record Time and prior to the earlier of
the Separation Time and the Expiration Time; and
(c) authorized the issuance of Rights Certificates to holders of
Rights pursuant to the terms and subject to the conditions set
forth herein.
C. Each Right entitles the holder thereof, after the Separation Time, to
purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein.
D. The Corporation desires to appoint the Rights Agent to act on behalf of
the Corporation, and the Rights Agent is willing to so act, in
connection with the issuance, transfer, exchange and replacement of
Rights Certificates, the exercise of Rights and other matters referred
to herein.
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5. Based upon the determinations set forth in the preceding paragraphs, on
November 27, 1998 the Corporation and the Rights Agent entered into a
Shareholder Rights Plan Agreement setting forth the terms and
conditions of the Rights Plan.
6. The Corporation and the Right Agent now desire to amend and restate the
Rights Plan in its entirety in accordance with the provisions of this
Amended and Restated Shareholder Rights Plan Agreement.
NOW THEREFORE in consideration of the premises and respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Certain Definitions
For the purposes of this Agreement, including the recitals hereto, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who is at any time
after the date hereof the Beneficial Owner of 15% or more of
the outstanding Voting Shares of the Corporation; provided,
however, that the term AcquiringPerson shall not include:
(i) the Corporation or any corporation controlled by the
Corporation;
(ii) any Person who becomes the Beneficial Owner of 15% or
more of the outstanding Voting Shares as a result of
one or any combination of:(ii)
(A) a Voting Share Reduction;
(B) an Exempt Acquisition; and
(C) a Pro Rata Acquisition;
provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the outstanding
Voting Shares by reason of one or any combination of
a Voting Share Reduction, an Exempt Acquisition or a
Pro Rata Acquisition, and thereafter becomes the
Beneficial Owner of an additional one per cent of the
Voting Shares then outstanding (otherwise than
pursuant to a Voting Share Reduction, an Exempt
Acquisition or a Pro Rata Acquisition), then, as of
the date that such Person becomes a Beneficial Owner
of such additional Voting Shares, such Person shall
become an "Acquiring Person";
(iii) for the period of 10 days after the Disqualification
Date (as hereinafter defined), any Person who becomes
the Beneficial Owner of 15% or more of the
outstanding Voting Shares as a result of such Person
becoming disqualified from relying on subclause
1.1(d)(v) hereof where such disqualification results
solely because such Person is making or has announced
a current intention to make a Take-over Bid, either
alone or by acting jointly or in concert with any
other Person. For the purposes of this definition,
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"Disqualification Date" means the first date of
public announcement that such Person is making or has
announced a current intention to make a Take-over
Bid, alone or by acting jointly or in concert with
another Person;
(iv) an underwriter that becomes the Beneficial Owner of
15% or more of the Voting Shares in connection with a
distribution of securities pursuant to an
underwriting agreement with the Corporation; or
(v) a Person (a "Grandfathered Person") who is the
Beneficial Owner of 15% or more of the outstanding
Voting Shares of the Corporation determined as at the
Close of Business on the Amendment Date provided,
however, that this exception shall not be, and shall
cease to be, applicable to a Grandfathered Person in
the event that such Grandfathered Person shall, after
the Close of Business on the Amendment Date, become
the Beneficial Owner of Corporation that increases
its Beneficial Ownership of Voting Shares by more
than 1% of the number of Voting Shares outstanding as
at the Close of Business on the Amendment Date, other
than through a Voting Share Reduction, an Exempt
Acquisition or a Pro Rata Acquisition;
(b) "Affiliate", when used to indicate a relationship with a
specified Person, means a Person that directly or indirectly
controls, or is controlled by, or is under common control
with, such specified Person.(
(c) "Associate", when used to indicate a relationship with a
specified Person, means any relative of such specified Person
who has the same home as such specified Person, or any person
to whom such specified Person is married, or any person with
whom such specified Person is living in a conjugal
relationship outside marriage, or any relative of such spouse
or other person who has the same home as such specified
Person.
(d) A Person shall be deemed the "Beneficial Owner" of, and to
have "Beneficial Ownership" of, and to "Beneficially Own":
(i) any securities of which such Person or any of such
Person's Affiliates or Associates is owner at law or
in equity;
(ii) any securities which the Person or any of such
Person's Affiliates or Associates has the right to
acquire, within 60 days (whether such right is
exercisable immediately or after the passage of not
more than 60 days thereafter or upon the occurrence
of a contingency or the making of a payment) pursuant
to any Convertible Security, agreement, arrangement,
pledge or understanding, whether or not in writing
(other than (A) customary agreements with and between
underwriters and/or banking group and/or selling
group members with respect to a distribution of
securities and (B) pledges of securities in the
ordinary course of the pledgee's business); and
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(iii) any securities that are Beneficially Owned within the
meaning of clauses (i) or (ii) of this Subsection
1.1(d) by any other Person with which such Person is
acting jointly or in concert;(
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to have "Beneficial Ownership" of,
or to "Beneficially Own", any security:
(iv) because such security has been deposited or tendered
pursuant to a Take-over Bid made by such Person or
any of such Person's Affiliates or Associates or any
other person acting jointly or in concert with such
Person until the earlier of such tendered security
being 1) accepted unconditionally for payment or
exchange and 2) taken up and paid for;
(v) because (A) such Person or any of the Affiliates or
Associates of such Person or any other Person acting
jointly or in concert with such Person, holds such
security provided that the ordinary business of any
such Person (the "Fund Manager") includes the
management of investment funds for others and such
security is held by the Fund Manager in the ordinary
course of such business in the performance of such
Fund Manager's duties for the account of any other
Person (a "Client"), (B) such Person (the "Trust
Company") is licensed to carry on the business of a
trust company under applicable laws and, as such,
acts as trustee or administrator or in a similar
capacity in relation to the estates of deceased or
incompetent Persons (each an "Estate Account") or in
relation to other accounts (each an "Other Account")
and holds such security in the ordinary course of
such duties for such Estate Accounts or for such
Other Accounts, (C) such Person (the "Plan
Administrator") is the administrator or the trustee
of one or more pension funds or plans (a "Plan")
registered under the laws of Canada or any province
thereof or the laws of the United States of America
or any state thereof, (D) such Person (the "Crown
Agent") is established by statute for purposes that
include, and the ordinary business or activity of
such Person includes, the management of investment
funds for employee benefit plans, pension plans,
insurance plans, or various public bodies, or (E)
such Person is a Plan; provided, however, that in any
of the foregoing cases the Fund Manager, the Trust
Company, the Plan Administrator, the Crown Agent or
the Plan, as the case may be, is not then making or
has not then announced an intention to make a
Take-over Bid, alone or by acting jointly or in
concert with any other Person, other than an Offer to
Acquire Voting Shares or other securities (X)
pursuant to a distribution by the Corporation or (Y)
by means of market transactions made in the ordinary
course of the business of such Person (including
pre-arranged trades entered into the ordinary course
of business of such Person) executed through the
facilities of a stock exchange or organized
over-the-counter market;
(vi) because such Person is a Client of the same Fund
Manager as another Person on whose account the Fund
Manager holds such security, or because such Person
is an Estate Account or an Other Account of the same
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Trust Company as another Person on whose account the
Trust Company holds such security, or because such
Person is a Plan with the same Plan Administrator as
another Plan on whose account the Plan Administrator
holds such securities;
(vii) because such Person is a Client of a Fund Manager and
such security is owned at law or in equity by the
Fund Manager or because such Person is an Estate
Account or an Other Account of a Trust Company and
such security is owned at law or in equity by the
Trust Company or such Person is a Plan and such
security is owned at law or in equity by the Plan
Administrator; or
(viii) because such Person is the registered holder of
securities as a result of carrying on the business of
or acting as a nominee of a securities
depositary.
For purposes of this Agreement in determining the percentage
of the outstanding Voting Shares with respect to which a
Person is or is deemed to be the Beneficial Owner, any
unissued Voting Shares as to which such Person is deemed the
Beneficial Owner pursuant to this Subsection 1.1(d) shall be
deemed outstanding.
(e) "Board of Directors" shall mean the board of directors of the
Corporation or any duly constituted and empowered committee
thereof.
(f) "Business Corporations Act" shall mean the Business
Corporations Act (Ontario), R.S.O. 1990, Chapter B.16, as
amended and the regulations thereunder, and any comparable or
successor laws or regulations thereto.
(g) "Business Day" shall mean any day, other than a Saturday or
Sunday or a day on which banking institutions in the City of
Toronto are authorized or obligated by law to close.
(h) "Canadian Dollar Equivalent" of any amount which is expressed
in United States dollars shall mean on any day the Canadian
dollar equivalent of such amount determined by reference to
the Canadian - U.S. Exchange Rate in effect on such date.
(i) "Close of Business" on any given date shall mean the time on
such date (or, if such date is not a Business Day, the time on
the next Business Day) at which the principal office of the
transfer agent for the Common Shares in Toronto, Ontario (or
after the Separation Time, the principal office of the Rights
Agent in Toronto, Ontario) is closed to the public.
(j) "Closing Price" per security of any securities on any date of
determination shall mean:
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(i) the closing board lot sale price or, if such price is
not available, the average of the closing bid and
asked prices, for such securities as reported by the
stock exchange or national securities quotation
system on which such securities are listed or
admitted to trading (provided that, if at the date of
determination such securities are listed or admitted
to trading on more than one stock exchange or
national securities quotation system, such price or
prices shall be determined based on the stock
exchange or quotation system on which such securities
are then listed or admitted to trading on which the
largest number of such securities were traded during
the most recently completed calendar year); or
(ii) if for any reason none of such prices is available on
such day or the securities are not listed or admitted
to trading on a stock exchange or a national
securities quotation system, the last sale price, or
in case no sale takes place on such date, the average
of the high bid and low asked prices for each of such
securities in the over-the-counter market;
provided, however, that (A) if for any reason none of such
prices are available on such date, the "Closing Price" per
security of such securities on such date shall mean the fair
value per security of the securities on such date as
determined by a nationally or internationally recognized
investment dealer or investment banker with respect to the
fair value per security of such securities and (B) if the
Closing Price so determined is expressed in United States
dollars, such amount shall be converted to the Canadian Dollar
Equivalent.
(k) "Common Shares" shall mean the Common Shares in the share
capital of the Corporation as presently constituted, as such
shares may be subdivided, consolidated, reclassified or
otherwise changed from time to time, and "common shares" when
used with reference to any Person other than the Corporation
means the class or classes of shares (or similar equity
interest) with the greatest per share voting power entitled to
vote generally in the election of all directors of such other
Person or the equity securities or other equity interest
having power (whether or not exercised) to control or direct
the management of such other Person or, if such other Person
is a corporation controlled by another Person, the Person
(other than an individual) which ultimately controls such
first mentioned other Person.
(l) [Intentionally omitted]
(m) "controlled": a body corporate is "controlled" by another Person if
and only if:
(i) securities entitled to vote in the election of
directors carrying more than 50% of the votes for the
election of directors are held, directly or
indirectly, by or for the benefit of the other
Person; and
(ii) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of
directors of such body corporate;
and "controls", "controlling" and "under common control with"
shall be interpreted accordingly.
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(n) "Convertible Security" means, with respect to any security, a
security convertible into or exchangeable for the
first-mentioned security.
(o) "Co-Rights Agents" shall have the meaning ascribed thereto in
Subsection 4.1(a).
(p) "Disposition Date" has the meaning ascribed thereto in
Subsection 5.1(b).
(q) "Disqualification Date" has the meaning ascribed thereto in
Clause 1.1(a)(iii) hereof.
(r) "Effective Date" shall mean the Close of Business on November
27, 1998.
(s) "Election to Exercise" has the meaning ascribed thereto in
Subsection 2.2(d).
(t) "Exempt Acquisition" means a share acquisition in respect of
which the Board of Directors has waived the application of
Section 3.1 pursuant to Subsection 5.1(b), 5.l(d) or 5.l(e) or
which was made on or prior to the date of this Agreement.
(u) "Exercise Price" shall mean, as of any date, the price at
which a holder of a Right may purchase the securities issuable
upon exercise of one whole Right and, until adjustment thereof
in accordance with the terms hereof, the Exercise Price shall
be US$20..
(v) "Expansion Factor" has the meaning ascribed thereto in
subclause 2.3(b)(iv)(A)(1).
(w) "Expiration Time" shall mean the Termination Time.
(x) "Fiduciary" shall, for the purpose of Section 5.12, mean a
trust company registered under the trust company legislation
of Canada or any province thereof, a trust company organized
under the laws of any state of the United States, a portfolio
manager registered under the securities legislation of one or
more provinces of Canada or an investment adviser registered
under the United States Investment Advisers Act of 1940 or any
other securities legislation of the United States or any
state, of the United States.
(y) "Flip-in Event" shall mean a transaction or event in or
pursuant to which any Person becomes an Acquiring Person.
(z) "holder" shall have the meaning ascribed thereto in Section
2.8.
(aa) [Intentionally omitted]
(ab) "Market Price" per security of any securities on any date of
determination shall mean the average of the daily Closing
Prices per security of such securities on each of the 20
consecutive Trading Days through and including the Trading Day
immediately preceding such date of determination; provided,
however, that if an event of a type analogous to any of the
events described in Section 2.3 hereof shall have caused any
Closing Price used to determine the Market Price on any
Trading Day not to be fully comparable with the Closing Price
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on the Trading Day immediately preceding such date of
determination, each such Closing Price so used shall be
appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 hereof in order to make
it fully comparable with the Closing Price on the Trading Day
immediately preceding such date of determination.
(ac) "Nominee" has the meaning ascribed thereto in Subsection
2.2(c).
(ad) "Offer to Acquire" shall include:
(i) an offer to purchase or a solicitation of an offer to
sell Voting Shares, or a public announcement of an
intention to make such an offer or solicitation;
and
(ii) an acceptance of an offer to sell Voting Shares,
whether or not such offer to sell has been
solicited;
or any combination thereof, and the Person accepting an offer
to sell shall be deemed to be making an Offer to Acquire to
the Person that made the offer to sell.
(ae) "Offeror" shall mean a Person who has announced a current
intention to make, or who is making, a Take-over
Bid.
(af) "Offeror's Securities" shall mean the Voting Shares
Beneficially Owned on the date of a Take-over Bid by an
Offeror.
(ag) [Intentionally omitted]
(ah) [Intentionally omitted]
(ai) [Intentionally omitted]
(aj) "Person" includes any individual, firm, partnership,
association, trust, trustee, executor, administrator, legal
personal representative, government, governmental body or
authority, corporation, or other incorporated or
unincorporated organization, syndicate or other entity.
(ak) "Pro Rata Acquisition" means an acquisition by a Person of
Voting Shares pursuant to (i) any dividend reinvestment plan
or share purchase plan of the Corporation made available to
all holders of Voting Shares (other than holders resident in
any jurisdiction where participation in any such plan is
restricted or impractical as a result of applicable law), (ii)
a stock dividend, a stock split or other event pursuant to
which such Person becomes the Beneficial Owner of Voting
Shares on the same pro rata basis as all other holders of
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Voting Shares of the same class or series, (iii) the
acquisition or exercise of rights to purchase Voting Shares
distributed to all holders of Voting Shares (other than
holders resident in any jurisdiction where such distribution
is restricted or impractical as a result of applicable law) by
the Corporation pursuant to a rights offering (but only if
such rights are acquired directly from the Corporation) or
(iv) a distribution of Voting Shares or Convertible Securities
in respect thereof offered pursuant to a prospectus or by way
of a private placement or a conversion or exchange of any such
Convertible Security, provided such Person does not thereby
acquire a greater percentage of Voting Shares or Convertible
Securities so offered than the Person's percentage of Voting
Shares Beneficially Owned immediately prior to such
acquisition..
(al) "Record Time" means the Close of Business on the Effective
Date.
(am) "Redemption Price" shall have the meaning attributed thereto
in Subsection 5.1(a).
(an) "Regular Periodic Cash Dividend" means cash dividends paid on
the Common Shares at regular intervals in any fiscal year of
the Corporation to the extent that such cash dividends do not
exceed in the aggregate in any fiscal year, on a per share
basis, the greatest of:
(i) 200% of the aggregate amount of cash dividends
declared payable by the Corporation on its Common
Shares in its immediately preceding fiscal year
divided by the number of Common Shares outstanding as
at the end of such fiscal year;
(ii) 300% of the arithmetic mean of the aggregate amounts
of cash dividends declared payable by the Corporation
on its Common Shares in its three immediately
preceding fiscal years divided by the arithmetic mean
of the number of Common Shares outstanding as at the
end of each of such fiscal years; and
(iii) 100% of the aggregate consolidated net income of the
Corporation, before extraordinary items, for its
immediately preceding fiscal year divided by the
number of Common Shares outstanding as at the end of
such fiscal year.
(ao) "Right" shall mean the herein described rights to purchase
securities pursuant to the terms and subject to the conditions
set forth herein.
(ap) "Rights Certificate" shall mean the certificates representing
the Rights after the Separation Time which shall be
substantially in the form attached hereto as Exhibit A.
(aq) "Rights Register" and "Rights Registrar" shall have the
respective meanings ascribed thereto in Subsection 2.6(a).
(ar) "Securities Act (Ontario)" shall mean the Securities Act
(Ontario), R.S.O. 1990, c.S-5, as amended and the regulations
and rules made thereunder, as now in effect or as the same may
from time to time be amended, re-enacted or replaced.
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(as) "Separation Time" means the Close of Business on the eighth
Business Day after the earlier of:
(i) the Stock Acquisition Date; and
(ii) the date of the commencement of, or first public
announcement or disclosure of the intent of any
Person (other than the Corporation or any corporation
controlled by the Corporation) to commence, a
Take-over Bid or such later Business Day as may be
determined at any time or from time to time by the
Board of Directors;
provided, however, that if any such Take-over Bid expires, is
canceled, is terminated or is otherwise withdrawn prior to the
Separation Time, such Take-over Bid shall be deemed, for
purposes of this Subsection 1.1(ar) never to have been made,
and, provided further, that if the Board of Directors
determines, pursuant to Section 5.1, to waive the application
of Section 3.1 to a Flip-In Event, the Separation Time in
respect of such Flip-In Event shall be deemed never to have
occurred.
(at) "Stock Acquisition Date" shall mean the first date of public
announcement or disclosure by the Corporation or an Acquiring
Person of facts indicating that a Person has become an
Acquiring Person (which, for the purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 141 of the Securities Act (Alberta), Section 101 of
the Securities Act (Ontario) or Section 13(d) of the U.S.
Exchange Act disclosing such information).
(au) "Take-over Bid" means an Offer to Acquire Voting Shares of any
class, or Convertible Securities with respect thereto, where
the Voting Shares subject to the Offer to Acquire, together
with the Voting Shares into or for which the securities
subject to the Offer to Acquire are convertible or
exchangeable and the Offeror's Securities constitute in the
aggregate 15% or more of the outstanding Voting Shares at the
date of the Offer to Acquire.
(av) "Termination Time" means the time at which the right to
exercise Rights shall terminate pursuant to Section 5.1
hereof.
(aw) "Trading Day", when used with respect to any securities, means
the day on which the principal Canadian or United States
securities exchange (as determined by the Board of Directors)
on which such securities are listed or admitted to trading is
open for the transaction of business or, if the securities are
not listed or admitted to trading on any Canadian or United
States securities exchange, a Business Day.
(ax) "U.S. - Canadian Exchange Rate" on any date shall mean::
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(i) if on such date the Bank of Canada sets an average
noon spot rate of exchange for the conversion of one
United States dollar into Canadian dollars, such
rate; and
(ii) in any other case, the rate for such date for the
conversion of one United States dollar into Canadian
dollars which is calculated in the manner which shall
be determined by the Board of Directors from time to
time acting in good faith;
(ay) "U.S. Exchange Act" means the United States Securities
Exchange Act of 1934, as amended, and the rules and
regulations thereunder as from time to time in effect.
(az) "Voting Share Reduction" means an acquisition or redemption by
the Corporation of Voting Shares which, by reducing the number
of Voting Shares outstanding, increases the percentage of
Voting Shares Beneficially Owned by any Person to 15% or more
of the Voting Shares then outstanding.
(aaa) "Voting Shares" shall mean the Common Shares and any other
securities the holders of which are entitled to vote generally
on the election of directors of the Corporation, and "voting
shares", when used with reference to any Person other than the
Corporation, means common shares of such other Person and any
other securities the holders of which are entitled to vote
generally in the election of the directors of such other
Person.
1.2 Currency
All sums of money which are referred to in this Agreement are expressed
in lawful money of Canada, unless otherwise specified.
1.3 Number and Gender
Wherever the context will require, terms (including defined terms) used
herein importing the singular number only include the plural and vice versa and
words importing any one gender shall include all others.
1.4 Sections and Headings
The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms this "Agreement", "hereunder", "hereof", and similar
expressions refer to this Agreement as amended or supplemented from time to time
and not to any particular Article, Section or other portion hereof and include
any Agreement or instrument supplemental or ancillary hereto. Unless something
in the subject matter or context is inconsistent therewith, references herein to
Articles, Sections, Subsections, Clauses and Subclauses are to Articles,
Sections, Subsections, Clauses and Subclauses of this Agreement.
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1.5 Statutory References
Unless the context otherwise requires, any reference to a specific
Section, Subsection, Clause or Rule of any statute or regulation shall be deemed
to refer to the same as it may be amended, reenacted or replaced or, if repealed
and there shall be no replacement therefor, to the same as it is in effect on
the date of this Agreement.
1.6 Determination of Percentage Ownership.6 Determination of Percentage
Ownership
The percentage of Voting Shares Beneficially Owned by any Person,
shall, for the purposes of this Agreement, be and be deemed to be the product
determined by the formula:
100 x A
B
where:
A= the aggregate number of votes for the election of
all directors generally attaching to the Voting
Shares Beneficially Owned by such Person; and
B= the aggregate number of votes or the election of
all directors generally attaching to all outstanding
Voting Shares.
Where any person is deemed to Beneficially Own unissued Voting
Shares pursuant to Subsection 1.1(d), such Voting Shares shall
be deemed to be outstanding for the purpose of both A and B in
the formula above.
1.7 Acting Jointly or in Concert
For the purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to an agreement, commitment or
understanding, whether formal or informal, with the first Person for the purpose
of acquiring or offering to acquire Voting Shares or Convertible Securities in
respect thereof (other than customary agreements with and between underwriters
and banking group or selling group members with respect to a distribution of
securities or pursuant to a pledge of securities in the ordinary course of the
pledgee's business).
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1.8 Generally Accepted Accounting Principles.8 Generally Accepted
Accounting Principles
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.
ARTICLE 2
THE RIGHTSARTICLE 2THE RIGHTS
2.1 Legend on Common Share Certificates
(a) Certificates representing the Common Shares, including without
limitation Common Shares issued upon the conversion of
Convertible Securities, issued after the Close of Business on
the Amendment Date but prior to the Close of Business on the
earlier of the Separation Time and the Expiration Time, shall
also evidence one Right for each Common Share represented
thereby and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
"Until the Separation Time (as defined in the Rights
Agreement referred to below), this certificate also
evidences and entitles the holder hereof to certain
Rights as set forth in an Amended and Restated
Shareholder Rights Plan Agreement, dated as of
October 15, 1999 (the "Rights Agreement"), between
the Corporation and Equity Transfer Services Inc., as
Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the registered office of the
Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be
amended or redeemed, may expire, may become void (if,
in certain cases, they are "Beneficially Owned" by an
"Acquiring Person", as such terms are defined in the
Rights Agreement, or a transferee thereof) or may be
evidenced by separate certificates and may no longer
be evidenced by this certificate. The Corporation
will mail or arrange for the mailing of a copy of the
Rights Agreement to the holder of this certificate
without charge as soon as practicable after the
receipt of a written request therefor."
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(b) Certificates representing Common Shares that are issued and
outstanding at the Record Time shall evidence one Right for
each Common Share evidenced thereby, notwithstanding the
absence of the foregoing legend, until the earlier of the
Separation Time and the Expiration Time.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights
(a) Subject to adjustment as herein set forth, including without
limitation as set forth in Article 3, each Right will entitle
the holder thereof, from and after the Separation Time and
prior to the Expiration Time, to purchase one-half of one
Common Share for the Exercise Price as at the Business Day
immediately preceding Separation Time (which Exercise Price
and number of Common Shares are subject to adjustment as set
forth below). Notwithstanding any other provision of this
Agreement, any Rights held by the Corporation or any of its
Subsidiaries shall be void.
(b) Until the Separation Time, (i) the Rights shall not be
exercisable and no Right may be exercised; and (ii) for
administrative purposes, each Right will be evidenced by the
certificate for the associated Common Share registered in the
name of the holder thereof (which certificate shall be deemed
to represent a Rights Certificate) and will be transferable
only together with, and will be transferred by a transfer of,
such associated Common Share.
(c) From and after the Separation Time and prior to the Expiration
Time, the Rights may be exercised, and the registration and
transfer of the Rights shall be separate from and independent
of Common Shares. Promptly following the Separation Time, the
Corporation will prepare or cause to be prepared and the
Rights Agent will mail to each holder of record of Common
Shares as of the Separation Time and, in respect of each
Convertible Security converted into Common Shares after the
Separation Time and prior to the Expiration Time, promptly
after such conversion, the Corporation will prepare or cause
to be prepared and the Rights Agent will mail to the holder so
converting (other than an Acquiring Person and in respect of
any Rights Beneficially Owned by such Acquiring Person which
are not held of record by such Acquiring Person, the holder of
record of such rights (a "Nominee")) at such holder's address
as shown by the records of the Corporation (the Corporation
hereby agreeing to furnish copies of such record to the Rights
Agent for this purpose):
(i) a Rights Certificate in substantially the form of
Exhibit A hereto appropriately completed,
representing the number of Rights held by such holder
at the Separation Time and having such marks of
identification or designation and such legends,
summaries or endorsements printed thereon as the
Corporation may deem appropriate and as are not
inconsistent with the provisions of this Agreement,
or as may be required to comply with any law, rule or
regulation or judicial or administrative order, or
with any article or regulation of any stock exchange
or quotation system on which the Rights may from time
to time be listed or traded, or to conform to usage;
and
(ii) a disclosure statement prepared by the Corporation
describing the Rights, provided that a Nominee shall
be sent the materials provided for in (i) and (ii)
only in respect of all Common Shares held of record
by it which are not Beneficially Owned by an
Acquiring Person and the Corporation may require any
Nominee or suspected Nominee to provide such
information and documentation as the Corporation may
reasonably require for such purpose.
(d) Rights may be exercised in whole or in part on any Business
Day after the Separation Time and prior to the Expiration Time
by submitting to the Rights Agent, at its principal office in
Toronto:
(i) the Rights Certificate evidencing such Rights;
(ii) an election to exercise (an "Election to Exercise")
substantially in the form attached to the Rights
Certificate duly completed, and executed in a manner
acceptable to the Rights Agent; and
(iii) payment by certified cheque, banker's draft or money
order payable to the order of the Corporation, of a
sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient
to cover any transfer tax or charge which may be
payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common
Shares in a name other than that of the holder of the
Rights being exercised.
(e) Upon receipt of a Rights Certificate, which is accompanied by
an appropriately completed and duly executed Election to
Exercise (which does not indicate that such Right is null and
void as provided by Subsection 3.1(b)) and payment as set
forth in Subsection 2.2(d), the Rights Agent (unless otherwise
instructed by the Corporation) will thereupon promptly:
(i) requisition from the transfer agent of the Common
Shares certificates representing the number of Common
Shares to be purchased (the Corporation hereby
irrevocably authorizing its transfer agent to comply
with all such requisitions);
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(ii) after receipt of such Common Share certificates,
deliver such certificates to, or to the order of, the
registered holder of such Rights Certificate,
registered in such name or names as may be designated
by such holder;
(iii) when appropriate, requisition from the Corporation
the appropriate payment by certified cheque, banker's
draft or money order, if any, to be paid in lieu of
issuing fractional Common Shares;
(iv) when appropriate, after receipt of such certified
cheque, banker's draft or money order, deliver such
funds to, or to the order of, the registered holder
of the Rights Certificate; and
(v) tender to the Corporation all payments received on
exercise of the Rights.(v) tender to the Corporation
all payments received on exercise of the Rights.
(f) If the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new
Rights Certificate evidencing the Rights remaining unexercised
will be issued by the Rights Agent to such holder or to such
holder's duly authorized assigns.
(g) The Corporation covenants and agrees that it will:
(i) take all such action as may be necessary and within
its power to ensure, that all Common Shares delivered
upon the exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares
(subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and
delivered as fully paid and non-assessable;
(ii) take all such action as may reasonably be considered
to be necessary and within its power to comply with
any applicable requirements of the Business
Corporations Act, the Securities Act (Ontario), the
U.S. Exchange Act, the United States Securities Act
of 1933, as amended, and comparable legislation of
each of the provinces and territories of Canada and
states of the United States of America, or the rules
and regulations thereunder or any other applicable
law, rule or regulation, in connection with the
issuance and delivery of the Rights, the Rights
Certificates and the issuance of any Common Shares
upon exercise of the Rights;
(iii) use reasonable efforts to cause all Common Shares
issued upon exercise of the Rights to be listed on
the stock exchanges on which the Common Shares are
listed at that time;
(iv) cause to be reserved and kept available out of its
authorized and unissued Common Shares, the number of
Common Shares that, as provided in this Agreement,
will from time to time be sufficient to permit the
exercise in full of all outstanding Rights;
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(v) pay when due and payable, if applicable, any and all
federal, provincial, state and municipal taxes (not
in the nature of income, capital gains or withholding
taxes) and charges which may be payable in respect of
the original issuance or delivery of the Rights
Certificates or certificates for Common Shares issued
upon the exercise of Rights, provided that the
Corporation shall not be required to pay any transfer
tax or charge which may be payable in respect of any
transfer of Rights or the issuance or delivery of
certificates for Common Shares issued upon the
exercise of Rights, in a name other than that of the
holder of the Rights being transferred or exercised;
and
(vi) after the Separation Time, except as permitted by
Section 5.1 or Section 5.4 hereof, not take (or
permit any corporation it controls to take) any
action if at the time such action is taken it is
reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
2.3 Adjustments to Exercise Price; Number of Rights
(a) The Exercise Price, the number and kind of securities subject
to purchase upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time
as provided in this Section 2.3 and in Article 3.
(b) In the event that the Corporation shall at any time after the
Record Time and prior to the Expiration Time:
(i) declare or pay a dividend on the Common Shares
payable in Voting Shares or Convertible Securities in
respect thereof other than pursuant to any dividend
reinvestment plan;
(ii) subdivide or change the then outstanding Common
Shares into a greater number of Common Shares;
(iii) consolidate or change the then outstanding Common
Shares into a smaller number of Common Shares;
or
(iv) issue any Voting Shares (or Convertible Securities in
respect thereof) in respect of, in lieu of or in
exchange for existing Common Shares, whether in a
reclassification, amalgamation, statutory
arrangement, consolidation or otherwise;
the Exercise Price and the number of Rights outstanding (or,
if the payment or effective date therefor shall occur after
the Separation Time, the securities purchasable upon the
exercise of Rights) shall be adjusted as follows:
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(A) If the Exercise Price and number of Rights
outstanding are to be adjusted:
1) the Exercise Price in effect after
such adjustment will be equal to the
Exercise Price in effect immediately
prior to such adjustment divided by
the number of Common Shares (or
other securities of the Corporation)
(the "Expansion Factor") that a
holder of one Common Share
immediately prior to such dividend,
subdivision, change, combination or
issuance would hold thereafter as a
result thereof; and
2) each Right held prior to such
adjustment will become that number
of Rights equal to the Expansion
Factor, and the adjusted number of
Rights will be deemed to be
allocated among the Common Shares
with respect to which the original
Rights were associated (if they
remain outstanding) and the
securities of the Corporation issued
in respect of such dividend,
subdivision, change, consolidation
or issuance, so that each such
Common Share (or other security of
the Corporation) will have exactly
one Right associated with it..
(B) If the securities purchasable upon exercise
of Rights are to be adjusted, the securities
purchasable upon exercise of each Right
after such adjustment will be the securities
that a holder of the securities purchasable
upon exercise of one Right immediately prior
to such dividend, subdivision, change,
consolidation or issuance would hold
thereafter as a result thereof.
(c) Adjustments pursuant to Subsection 2.3(b) shall be made
successively, whenever an event referred to in Subsection
2.3(b) occurs.
(d) If an event occurs which would require an adjustment under
both this Section 2.3 and Section 3.1 hereof, the adjustment
provided for in this Section 2.3 shall be in addition to, and
shall be made prior to, any adjustment required pursuant to
Section 3.1 hereof.
(e) In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time issue any Common
Shares otherwise than in a transaction referred to in
Subsection 2.3(b), each such Common Share so issued shall
automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such
Common Share.
(f) In the event the Corporation shall, at any time after the
Record Time and prior to the Expiration Time, fix a record
date for the making of a distribution to all holders of Common
Shares of rights or warrants entitling them (for a period
expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or Convertible
Securities in respect of Common Shares) at a price per Common
Share (or, in the case of such a Convertible Security, having
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a conversion, exchange or exercise price per share (including
the price required to be paid to purchase such Convertible
Security)) less than 90% of the Market Price per Common Share
on such record date, the Exercise Price in effect after such
record date will equal the Exercise Price in effect
immediately prior to such record date multiplied by a
fraction;
(i) of which the numerator shall be the number of Common
Shares outstanding on such record date plus the
number of Common Shares which the aggregate offering
price of the total number of Common Shares so to be
offered (and/or the aggregate initial conversion,
exchange or exercise price of the Convertible
Securities so to be offered (including the price
required to be paid to purchase such Convertible
Securities)) would purchase at such Market Price per
Common Share; and
(ii) of which the denominator shall be the number of
Common Shares outstanding on such record date plus
the number of additional Common Shares to be offered
for subscription or purchase (or into which the
Convertible Securities so to be offered are initially
convertible, exchangeable or exercisable).
In case such subscription price is satisfied, in whole or in
part, by consideration other than cash, the value of such
consideration shall be as determined in good faith by the
Board of Directors. Such adjustment shall be made successively
whenever such a record date is fixed. To the extent that such
rights or warrants are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted in the manner
contemplated above based on the number of Common Shares (or
securities convertible into or exchangeable for Common Shares)
actually issued on the exercise of such rights or warrants.
For purposes of this Agreement, the granting of the right to
purchase Common Shares (whether from treasury or otherwise)
pursuant to any dividend or interest reinvestment plan or any
share purchase plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation
or the investment of periodic optional payments or employee
benefit or similar plans (so long as such right to purchase is
in no case evidenced by the delivery of rights or warrants by
the Corporation) shall not be deemed to constitute an issue of
rights or warrants by the Corporation; provided, however, that
in the case of any dividend or interest reinvestment or share
purchase plan, the right to purchase Common Shares is at a
price per share of not less than 90% of the current market
price per share (determined as provided in such plans) of the
Common Shares.
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(g) In the event the Corporation shall at any time after the
Record Time and prior to the Expiration Time fix a record date
for the making of a distribution to all holders of Common
Shares of (i) evidences of indebtedness or assets (other than
a Regular Periodic Cash Dividend or a dividend paid in Common
Shares, but including any dividend payable in securities other
than Common Shares), (ii) rights or warrants entitling them to
subscribe for or purchase Voting Shares (or Convertible
Securities in respect of Voting Shares), at a price per Voting
Share (or, in the case of a Convertible Security in respect of
Voting Shares, having a conversion, exchange or exercise price
per share (including the price required to be paid to purchase
such Convertible Security)) less than 90% of the Market Price
per Common Share on such record date (excluding rights or
warrants referred to in Subsection 2.3(f)) or (iii) other
securities of the Corporation, the Exercise Price in effect
after such record date shall be equal to the Exercise Price in
effect immediately prior to such record date less the fair
market value (as determined in good faith by the Board of
Directors) of the portion of the assets, evidences of
indebtedness, rights or warrants or other securities so to be
distributed applicable to each of the securities purchasable
upon exercise of one Right. Such adjustment shall be made
successively whenever such a record date is fixed.
(h) Each adjustment made pursuant to Section 2.3 shall be made as
of(h) Each adjustment made pursuant to Section 2.3 shall be
made as of:
(i) the payment or effective date for the applicable
dividend, subdivision, change, combination or
issuance, in the case of an adjustment made pursuant
to Subsection 2.3(b) above; and
(ii) the record date for the applicable dividend or
distribution, in the case of an adjustment made
pursuant to Subsections 2.3(f) or 2.3(g) above,
subject to readjustment to reverse the same if such
distribution shall not be made.
(i) In the event the Corporation shall at any time after the
Record Time and prior to the Expiration Time issue any shares
(other than Common Shares), or rights or warrants to subscribe
for or purchase any such shares, or Convertible Securities in
respect of any such shares, in a transaction referred to in
any of subclauses 2.3(b)(i) to (iv) above, if the Board of
Directors acting in good faith determines that the adjustments
contemplated by Subsections 2.3(b), 2.3(f) and 2.3(g) above in
connection with such transaction will not appropriately
protect the interests of the holders of Rights, the Board of
Directors may from time to time determine what other
adjustments to the Exercise Price, number of Rights or
securities purchasable upon exercise of Rights would be
appropriate and, notwithstanding Subsections 2.3(b), 2.3(f)
and 2.3(g) above, such adjustments, rather than the
adjustments contemplated by Subsections 2.3(b), 2.3(f) and
2.3(g) above, shall be made upon the Board of Directors
providing written certification thereof to the Rights Agent
pursuant to Subsection 2.3(q).
(j) Notwithstanding anything herein to the contrary, no adjustment
of the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such
Exercise Price; provided, however, that any adjustments which
by reason of this Subsection 2.3(j)) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All adjustments to the Exercise Price
made pursuant to this Section 2.3 shall be calculated to the
nearest cent.
(k) All Rights originally issued by the Corporation subsequent to
any adjustment made to an Exercise Price hereunder shall
evidence the right to purchase, at the adjusted Exercise
Price, the number of Common Shares purchasable from time to
time hereunder upon exercise of the Rights, all subject to
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further adjustment as provided herein.
(l) Unless the Corporation shall have exercised its election, as
provided in Subsection 2.3(m), upon each adjustment of an
Exercise Price as a result of the calculations made in
Subsections 2.3(f) and 2.3(g), each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of Common Shares obtained by::
(i) multiplying (A) the number of Common Shares covered
by a Right immediately prior to such adjustment, by
(B) the Exercise Price in effect immediately prior to
such adjustment; and
(ii) dividing the product so obtained by the Exercise
Price in effect immediately after such
adjustment.
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(m) The Corporation may elect on or after the date of any
adjustment of an Exercise Price to adjust the number of
Rights, in lieu of any adjustment in the number of Common
Shares purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of Common Shares
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become the number of Rights
obtained by dividing the relevant Exercise Price in effect
immediately prior to adjustment of the relevant Exercise Price
by the relevant Exercise Price in effect immediately after
adjustment of the relevant Exercise Price. The Corporation
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the relevant Exercise Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued,
shall be at least 10 calendar days later than the date of the
public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this
Subsection 2.3(m), the Corporation shall, as promptly as
practicable, cause to be distributed to holders of record of
Rights Certificates on such record date, Rights Certificates
evidencing, subject to Section 5.5, the additional Rights to
which such holders shall be entitled as a result of such
adjustment, or, at the option of the Corporation, shall cause
to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender
thereof, if required by the Corporation, new Rights
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and may bear,
at the option of the Corporation, the relevant adjusted
Exercise Price and shall be registered in the names of holders
of record of Rights Certificates on the record date specified
in the public announcement.
(n) In any case in which this Section 2.3 shall require that an
adjustment in an Exercise Price be made effective as of a
record date for a specified event, the Corporation may elect
to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of
the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise over and
above the number of Common Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis
of the relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall
deliver to such holder an appropriate instrument evidencing
such holder's right to receive such additional Common Shares
25
<PAGE>
(fractional or otherwise) or other securities upon the
occurrence of the event requiring such adjustment.
(o) Notwithstanding anything in this Section 2.3 to the contrary,
the Corporation shall be entitled to make such adjustments in
the Exercise Price, in addition to those adjustments expressly
required by this Section 2.3, as and to the extent that in its
good faith judgment the Board of Directors shall determine to
be advisable in order that any (i) subdivision or
consolidation of the Common Shares, (ii) issuance wholly for
cash of any Common Shares at less than the applicable Market
Price, (iii) issuance wholly for cash of any Common Shares or
securities that by their terms are exchangeable for or
convertible into or give a right to acquire Common Shares,
(iv) stock dividends, or (v) issuance of rights, options or
warrants referred to in this Section 2.3, hereafter made by
the Corporation to holders of its Common Shares, shall not be
taxable to such shareholders.
(p) Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
represent the securities so purchasable which were represented
in the initial Rights Certificates issued hereunder.(p)
Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
represent the securities so purchasable which were represented
in the initial Rights Certificates issued hereunder.
(q) Whenever an adjustment to the Exercise Price is made pursuant
to this Section 2.3, the Corporation shall
(i) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts
accounting for such adjustment; and
(ii) promptly file with the Rights Agent and with each
transfer agent for the Common Shares a copy of such
certificate and mail a brief summary thereof to each
holder of Rights who requests a copy.
Failure to file such certificate or to cause such notice to be
given as aforesaid, or any defect therein, shall not affect
the validity of any such adjustment or change.
2.4 Date on Which Exercise is Effective
Each Person in whose name any certificate for Common Shares is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with a duly completed
Election to Exercise) and payment of the Exercise Price for such Rights (and any
applicable transfer taxes and other governmental charges payable by the
exercising Person hereunder) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Common Share transfer books
of the Corporation are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
Business Day on which the Common Share transfer books of the Corporation are
open.
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2.5 Execution, Authentication, Delivery and Dating of Rights Certificates
(a) The Rights Certificates shall be executed on behalf of the
Corporation by a senior officer. The signature of any such
officer on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the
Corporation shall bind the Corporation, notwithstanding that
such individuals or any of them have ceased to hold such
offices prior to the countersignature and delivery of such
Rights Certificates.
(b) Promptly following the Separation Time, the Corporation will
notify the Rights Agent of such Separation Time and will
deliver Rights Certificates executed by the Corporation to the
Rights Agent for countersignature and a statement describing
any adjustment to the Exercise Price, and the Rights Agent
shall countersign (manually or by facsimile signature in a
manner satisfactory to the Corporation) and deliver such
Rights Certificates and any statement describing an adjustment
to the Exercise Price to the holders of the Rights pursuant to
Section 2.2 hereof. No Rights Certificate shall be valid for
any purpose until countersigned by the Rights Agent as
aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 Registration, Transfer and Exchange
(a) After the Separation Time, the Corporation shall cause to be
kept a register (the "Rights Register") in which, subject to
such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed "Rights
Registrar" for the purpose of maintaining the Rights Register
for the Corporation and registering Rights and transfers of
Rights as herein provided and the Rights Agent hereby accepts
such appointment. In the event that the Rights Agent shall
cease to be the Rights Registrar, the Rights Agent will have
the right to examine the Rights Register at all reasonable
times.
(b) After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any
Rights Certificate, and subject to the provisions of
Subsections 2.6(d) and 3.1(b) below, the Corporation will
execute, and the Rights Agent will countersign, deliver and
register, in the name of the holder or the designated
transferee or transferees, as required pursuant to the
holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the
Rights Certificates so surrendered.
(c) All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be valid obligations of
the Corporation, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon
such registration of transfer or exchange.
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<PAGE>
(d) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to
the Corporation or the Rights Agent, as the case may be, duly
executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any
new Rights Certificate under this Section 2.6, the Corporation
may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and
expenses of the Rights Agent) in connection therewith.
2.7 Mutilated, Lost, Stolen and Destroyed Rights Certificates
(a) If any mutilated Rights Certificate is surrendered to the
Rights Agent prior to the Expiration Time, the Corporation
shall execute and the Rights Agent shall countersign and
deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time: (i) evidence to their
reasonable satisfaction of the destruction, loss or theft of
any Rights Certificate; and (ii) such security or indemnity as
may be reasonably required by them to save each of them and
any of their agents harmless, then, in the absence of notice
to the Corporation or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the
Corporation shall execute and, upon the Corporation's request
the Rights Agent shall countersign and deliver, in lieu of any
such destroyed, lost or stolen Rights Certificate, a new
Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Corporation may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.7 in lieu of any destroyed, lost or stolen Rights
Certificate shall evidence a contractual obligation of the
Corporation, whether or not the destroyed, lost or stolen
Rights Certificate shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Agreement
equally and proportionately with any and all other Rights duly
issued hereunder.
Persons Deemed Owners
The Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever. As used in this Agreement, unless
the context otherwise requires, the term "holder" of any Rights shall mean the
registered holder of such Rights (or, prior to the Separation Time, the
associated Common Shares).
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2.9 Delivery and Cancellation of Certificates
All Rights Certificates surrendered upon exercise or for redemption,
for registration of transfer or exchange shall, if surrendered to any person
other than the Rights Agent, be delivered to the Rights Agent and, in any case,
shall be promptly canceled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly canceled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates canceled as
provided in this Section 2.9 except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable law, destroy all canceled Rights
Certificates and deliver a certificate of destruction to the Corporation.
2.10 Agreement of Rights Holders
Every holder of Rights, by accepting such Rights, consents and agrees
with the Corporation and the Rights Agent and with every other holder of Rights:
(a) to be bound by and subject to the provisions of this
Agreement, as amended from time to time in accordance with the
terms hereof, in respect of all Rights held;
(b) that, prior to the Separation Time, each Right will be
transferable only together with, and will be transferred by a
transfer of, the associated Common Share;
(c) that, after the Separation Time, the Rights will be
transferable only on the Rights Register as provided
herein;
(d) that, prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Share
certificate) for registration of transfer, the Corporation,
the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the Person in whose name the
Rights Certificate (or, prior to the Separation Time, the
associated Common Share certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on such
Rights Certificate or the associated Common Share certificate
made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor
the Rights Agent shall be affected by any notice to the
contrary;
(e) that such holder of Rights has waived its right to receive any
fractional Rights or any fractional Common Shares or other
securities upon exercise of a Right (except as provided
herein); and
(f) that, without the approval of any holder of Rights or Voting
Shares and upon the sole authority of the Board of Directors
acting in good faith, this Agreement may be supplemented or
amended from time to time as provided herein.
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ARTICLE 3
ADJUSTMENTS TO THE RIGHTSARTICLE
3.1 Flip-in Event
(a) Subject to Sections 3.1(b) and 5.1, in the event that prior to
the Expiration Time a Flip-in Event occurs, each Right shall
thereafter constitute the right to purchase from the
Corporation, upon exercise thereof in accordance with the
terms hereof, that number of Common Shares as have an
aggregate Market Price on the date of consummation or
occurrence of such Flip-in Event equal to four times the
Exercise Price for an amount in cash equal to the Exercise
Price (such right to be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section
2.3 in the event that, after such date of consummation or
occurrence, an event of a type analogous to any of the events
described in Section 2.3 shall have occurred with respect to
such Common Shares).
(b) Notwithstanding anything in this Agreement to the contrary,
upon the occurrence of any Flip-in Event, any Rights that are
or were Beneficially Owned on or after the earlier of the
Separation Time and the Stock Acquisition Date, or which may
thereafter be Beneficially Owned, by:
(i) an Acquiring Person (or any Affiliate or Associate of
an Acquiring Person or any other Person acting
jointly or in concert with an Acquiring Person or any
Associate or Affiliate of such other Person); or
(ii) a transferee, direct or indirect, of an Acquiring
Person (or any Affiliate or Associate of an Acquiring
Person or any Person acting jointly or in concert
with an Acquiring Person or any Associate or
Affiliate thereon in a transfer of Rights occurring
subsequent to the Acquiring Person becoming such;
shall become null and void without any further action and any
holder of such Rights (including any transferee of, or other
successor entitled to, such Rights, whether directly or
indirectly) shall thereafter have no right to exercise such
Rights under any provisions of this Agreement and further
shall thereafter not have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement
or otherwise. The holder of any Rights represented by a Rights
Certificate which is submitted to the Rights Agent upon
exercise or for registration of transfer or exchange which
does not contain the necessary certifications set forth in the
Rights Certificate establishing that such Rights are not void
under this Subsection 3.1(b) shall be deemed to be an
Acquiring Person for the purposes of this Subsection 3.1(b)
and such Rights shall become null and void.
(c) Any Rights Certificate that represents Rights Beneficially
Owned by a Person described in either of subclauses 3.1(b)(i)
or 3.1(b)(ii) or transferred to any Nominee of any such
Person, and any Rights Certificate issued upon transfer,
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exchange, replacement or adjustment of any other Rights
Certificate, referred to in this sentence, shall contain or
will be deemed to contain the following legend:
"The Rights represented by this Rights Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement) or acting jointly or in concert with any
of them. This Rights Certificate and the Rights represented
hereby shall be void in the circumstances specified in
Subsection 3.1(b) of the Rights Agreement."
The Rights Agent shall not be under any responsibility to
ascertain the existence of facts that would require the
imposition of such legend but shall be required to impose such
legend only if instructed to do so by the Corporation or if a
holder fails to certify upon transfer or exchange in the space
provided to do so.
(d) After the Separation Time, the Corporation shall do all such
acts and things necessary and within its power to ensure
compliance with the provisions of this Section 3.1 including,
without limitation, all such acts and things as may be
required to satisfy the requirements of the Business
Corporations Act, the Securities Act (Ontario) and the
securities laws or comparable legislation in each of the
provinces of Canada and in any other jurisdiction where the
Corporation is subject to such laws and the rules of the stock
exchanges where the Common Shares are listed at such time in
respect of the issue of Common Shares upon the exercise of
Rights in accordance with this Agreement.
3.2 Fiduciary Duties of the Board of Directors of the Corporation
For clarification it is understood that nothing contained in this
Article 3 shall be considered to affect the obligations of the Board of
Directors to exercise its fiduciary duties. Without limiting the generality of
the foregoing, nothing contained herein shall be construed to suggest or imply
that the Board of Directors shall not be entitled to recommend that holders of
the Voting Shares reject or accept any Take-over Bid or take any other action
including, without limitation, the commencement, prosecution, defense or
settlement of any litigation and the submission of additional or alterative
Take-over Bids or other proposals to the shareholders of the Corporation with
respect to any Takeover Bid or otherwise that the Board of Directors believes is
necessary or appropriate in the exercise of its fiduciary duties.
<PAGE>
ARTICLE 4
THE RIGHTS AGENT
4.1 General
(a) The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation and the holders of the Rights in
accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Corporation
may from time to time appoint such co-rights agents
("Co-Rights Agents") as it may deem necessary or desirable. In
the event the Corporation appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and
Co-Rights Agents shall be as the Corporation may determine.
The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its
reasonable expenses and other disbursements reasonably
incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder,
including the reasonable fees and disbursements of counsel and
other experts consulted by the Rights Agent pursuant to
Subsection 4.3(a). The Corporation also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without gross
negligence, bad faith or wilful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending
against any claim of liability, which right to indemnification
will survive the termination of this Agreement or the
resignation or removal of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any certificate for Common Shares,
Rights Certificate, certificate for other securities of the
Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper
Person or Persons.
(c) The Corporation shall inform the Rights Agent in a reasonably
timely manner of events which may materially affect the
administration of this Agreement by the Rights Agent and, at
any time upon request, shall provide to the Rights Agent an
incumbency certificate certifying the then current officers of
the Corporation.
<PAGE>
4.2 Merger, Amalgamation, Consolidation or Change of Name of Rights Agent
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may
be consolidated, or any corporation resulting from any merger,
amalgamation or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation
succeeding to the shareholder services business of the Rights
Agent or any successor Rights Agent, will be the successor to
the Rights Agent under this Agreement without the execution or
filling of any document or any further act on the part of any
of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4 hereof. In case at the time such
successor Rights Agent succeeds to the agency created by this
Agreement any of the Rights Certificates have been
countersigned but not delivered any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
4.3 Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation) and the opinion of such
counsel will be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion; the Rights
Agent may also, with the approval of the Corporation (such
approval not to be unreasonably withheld), consult with such
other experts as the Rights Agent shall consider necessary or
appropriate to properly carry out the duties and obligations
imposed under this Agreement (at the expense of the
Corporation) and the Rights Agent shall be entitled to rely in
good faith on the advice of any such expert.
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(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact
or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a person
believed by the Rights Agent to be a senior officer of the
Corporation and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable hereunder only for its own
gross negligence, bad faith or wilful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement
or in the certificates for Common Shares, or the Rights
Certificates (except its countersignature thereof) or be
required to verify the same, and all such statements and
recitals are and will be deemed to have been made by the
Corporation only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Common Share certificate, or
Rights Certificate (except its countersignature thereon) nor
will it be responsible for any breach by the Corporation of
any covenant or condition contained in this Agreement or in
any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the
Rights becoming void pursuant to Subsection 3.1(b) hereof or
any adjustment required under the provisions of Section 2.3)
hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights after receipt of the certificate
contemplated by Section 2.3 describing any such adjustment or
any written notice from the Corporation or any holder that a
Person has become an Acquiring Person); nor will it by any act
hereunder be deemed to make any representation or warranty as
to the authorization of any Common Shares to be issued
pursuant to this Agreement or any Rights or as to any Common
Shares, when issued, being duly and validly authorized, issued
and delivered as fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.(f) The
Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent
for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
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(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any individual believed by the Rights Agent to
be a senior officer of the Corporation, and to apply to such
individuals for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions
of any such individual. It is understood that instructions to
the Rights Agent shall, except where circumstances make it
impractical or the Rights Agent otherwise agrees, be given in
writing and, where not in writing, such instructions shall be
confirmed in writing as soon as reasonably practicable after
the giving of such instructions.
(h) Subject to applicable law, the Rights Agent and any
shareholder or director, officer or employee of the Rights
Agent may buy, sell or deal in Common Shares, Rights or other
securities of the Corporation or become pecuniarily interested
in any transaction in which the Corporation may be interested,
or contract with or lend money to the Corporation or otherwise
act as fully and freely as though it were not the Rights Agent
under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or
for any other legal entity.
(i) the Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent will not be answerable or accountable for any
act, default, neglect or misconduct of any such act, default,
neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.
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4.4 Change of Rights Agent
The Rights Agent may resign and be discharged from its duties under
this Agreement by giving 60 days' prior written notice (or such lesser notice as
is acceptable to the Corporation) to the Corporation, to each transfer agent of
Common Shares and to the holders of the Rights, all in accordance with Section
5.9 and at the expense of the Corporation. The Corporation may remove the Rights
Agent by giving 30 days' prior written notice to the Rights Agent, to each
transfer agent of the Common Shares and to the holders of the Rights in
accordance with Section 5.9. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation will appoint a successor
to the Rights Agent. If the Corporation fails to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of any Rights (which holder shall, with such notice, submit such
holder's Rights Certificate for inspection of the Corporation), then the holder
of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, must be a corporation incorporated under
the laws of Canada or a province thereof and authorized to carry out the duties
of the Rights Agent specified in this Agreement in the Province of Ontario.
After appointment, the successor Rights Agent will be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent, upon payment of any
outstanding fee, any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares and mail a notice thereof in
writing to the holders of the Rights in accordance with Section 5.9. Failure to
give any notice provided for in this Section 4.4, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
ARTICLE 5
MISCELLANEOUSARTICLE 5MISCELLANEOUS
5.1 Redemption, Waiver and Termination
(a) The Board of Directors acting in good faith may, at any time
prior to the later of the Stock Acquisition Date and the
Separation Time, elect to redeem all but not less than all of
the then outstanding Rights at a redemption price of
$0.0000001 per Right appropriately adjusted in a manner
analogous to the applicable adjustments provided for in
Section 2.3 in the event that an event of the type analogous
to any of the events described in Section 2.3 shall have
occurred (such redemption price being herein referred to as
the "Redemption Price").
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(b) The Board of Directors shall waive the application of Section
3.1 in respect of the occurrence of any Flip-in Event if the
Board of Directors has determined, following the Stock
Acquisition Date and prior to the Separation Time, that a
Person became an Acquiring Person by inadvertence and without
any intention to become, or knowledge that it would become, an
Acquiring Person under this Agreement and, in the event that
such a waiver is granted by the Board of Directors, such Stock
Acquisition Date shall be deemed not to have occurred. Any
such waiver pursuant to this Subsection 5.1(b) may only be
given on the condition that such Person, within 10 days after
the foregoing determination by the Board of Directors or such
later date as the Board of Directors may determine (the
"Disposition Date"), has reduced its Beneficial Ownership of
Voting Shares such that the Person is no longer an Acquiring
Person. If the Person remains an Acquiring Person at the Close
of Business on the Disposition Date, the Disposition Date
shall be deemed to be the date of occurrence of a further
Stock Acquisition Date and Section 3.1 shall apply
thereto.
(c) In the event that a Person acquires Voting Shares pursuant to
an Exempt Acquisition referred to in Subsection 5.1(d), then
the Board of Directors of the Corporation shall, immediately
upon the consummation of such acquisition and without further
formality, be deemed to have elected to redeem the Rights at
the Redemption Price.
(d) The Board of Directors acting in good faith may, prior to the
occurrence of the relevant Flip-in Event, upon prior written
notice delivered to the Rights Agent, determine to waive the
application of Section 3.1.
(e) The Board of Directors may, prior to the Close of Business on
the eighth Business Day following a Stock Acquisition Date or
such later Business Day as they may from time to time
determine, upon prior written notice delivered to the Rights
Agent, waive the application of Section 3.1 to the related
Flip-in Event, provided that the Acquiring Person has reduced
its Beneficial Ownership of Voting Shares (or has entered into
a contractual arrangement with the Corporation, acceptable to
the Board of Directors, to do so within 10 days of the date on
which such contractual arrangement is entered into or such
later date as the Board of Directors may determine) such that
at the time the waiver becomes effective pursuant to this
Subsection 5.1(e) such Person is no longer an Acquiring
Person. In the event of such a waiver becoming effective prior
to the Separation Time, for the purposes of this Agreement,
such Flip-in Event shall be deemed not to have occurred.
(f) Where a Take-over Bid is withdrawn or otherwise terminated
after the Separation Time has occurred and prior to the
occurrence of a Flip-in Event, or if the Board of Directors
grants a waiver under Subsection 5.1(e) after the Separation
Time, the Board of Directors may elect to redeem all the
outstanding Rights at the Redemption Price. Upon the Rights
being redeemed pursuant to this Subsection 5.1(f), all the
provisions of this Agreement shall continue to apply as if the
Separation Time had not occurred and Rights Certificates
representing the number of Rights held by each holder of
record of Common Shares at the Separation Time had not been
mailed to each such holder, for all purposes of this Agreement
the Separation Time shall be deemed not to have occurred and
the Corporation shall be deemed to have issued replacement
Rights to the holders of its then outstanding Common
Shares.
(g) If the Board of Directors is deemed under Subsection 5.1(c) to
have elected or elects under Subsection 5.1(a) to redeem the
Rights, the right to exercise the Rights will thereupon,
without further action and without notice, terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price.
(h) Within 10 days after the Board of Directors is deemed under
Subsection 5.1(c) to have elected or elects under Subsection
5.1(a) or (f) to redeem the Rights, the Corporation shall give
notice of redemption to the holders of the then outstanding
Rights by mailing such notice to the Rights Agent and to each
such holder at his last address as it appears upon the
registry books of the Rights Agent or, prior to the Separation
Time, on the registry books of the transfer agent for the
Voting Shares. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will
be made.
5.2 Expiration
No person will have any rights pursuant to this Agreement or in respect
of any Right after the Expiration Time, except in respect of any right to
receive cash, securities or other property which has accrued at the Expiration
Time and except as specified in Subsections 4.1(a) and 4.1(b) hereof.
<PAGE>
5.3 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
5.4 Supplements and Amendments
(a) Subject to Subsection 5.4(b), the Corporation may from time to
time amend, vary or delete any of the provisions of this
Agreement and the Rights.
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(b) For greater certainty, (i) no amendment, variation or deletion
to the provisions of Article 4 or the rights, duties,
obligations or indemnities of the Rights Agent shall be made
except with the concurrence of the Rights Agent thereto, and
(ii) neither the exercise by the Board of Directors of any
power or discretion conferred on it hereunder nor the making
by the Board of Directors of any determination or the granting
of any waiver it is permitted to make or give hereunder shall
constitute an amendment, variation or deletion of the
provisions of this Agreement or the Rights, for purposes of
this Section 5.4 or otherwise.
5.5 Fractional Rights and Fractional Shares
(a) The Corporation will not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. After the Separation Time there shall be
paid, in lieu of such fractional Rights, to the registered
holders of the Rights Certificates with regard to which
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the Market Price of a whole
Right.
(b) The Corporation shall not be required to issue fractional
Common Shares upon exercise of the Rights or to distribute
certificates that evidence fractional Common Shares. In lieu
of issuing fractional Common Shares, the Corporation shall pay
to the registered holder of Rights Certificates at the time
such Rights are exercised as herein provided, an amount in
cash equal to the same fraction of the Market Price of one
Common Share at the date of such exercise.
<PAGE>
5.6 Rights of Action
Subject to the terms of this Agreement, rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to enforce, or otherwise
act in respect of, such holder's right to exercise such holder's Rights in the
manner provided in this Agreement and in such holder's Rights Certificate.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or any other
securities which may at any time be issuable on the exercise of Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
5.8 hereof) or to receive dividends or subscription rights or otherwise, until
such Rights shall have been exercised in accordance with the provisions hereof.
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5.8 Notice of Proposed Actions
In case the Corporation proposes after the Separation Time and prior to
the Expiration Time to effect the liquidation, dissolution or winding up of the
Corporation or the sale of all or substantially all of the Corporation's assets,
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.9 hereof, a notice of such proposed action, which
shall specify the date on which such liquidation, dissolution, or winding up is
to take place, and such notice shall be so given at least 20 Business Days prior
to the date of the taking of such proposed action by the Corporation.
5.9 Notices
Notices or demands authorized or required by this Agreement to be given
or made to or by the Rights Agent, the holder of any Rights or the Corporation
will be sufficiently given or made and shall be deemed to be received if
delivered or sent by first-class mail, postage prepaid, or by fax machine or
other means of printed telecommunication, charges prepaid and confirmed in
writing by mail or delivery, addressed (until another address is filed in
writing with the Rights Agent or the Corporation, as applicable), as follows:
(a) if to the Corporation:(a) if to the Corporation:
1725 Sheridan Avenue
Cody, Wyoming
82414 U.S.A.
Attention: William P. Long
Facsimile No. 702-857-1920
(b) if to the Rights Agent:(b)if to the Rights Agent:
120 Adelaide Street West, Suite 420
Toronto, Ontario M5H 4C3
Attention: Manager, Client Services
Facsimile No. (416) 361-0470
(c) if to the holder of any Rights, to the address of such holder
as it appears on the registry books of the Rights Agent or,
prior to the Separation Time, on the registry books of the
Corporation for the Common Shares.
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<PAGE>
5.10 Costs of Enforcement
The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.
5.11 Regulatory Approvals
Any obligation of the Corporation or action or event contemplated by
this Agreement, shall be subject to applicable law and to the receipt of any
requisite approval or consent from any governmental or regulatory authority.
Without limiting the generality of the foregoing, any issuance or delivery of
debt or equity securities (other than non-convertible debt securities) of the
Corporation upon the exercise of Rights and any amendment to this Agreement
shall, if required, be subject to the prior consent of the stock exchanges on
which the Corporation is from time to time listed.
5.12 Declaration as to Non-Canadian and Non-U.S Holders
If in the opinion of the Board of Directors (who may rely upon the
advice of counsel), any action or event contemplated by this Agreement would
require compliance with the securities laws or comparable legislation of a
jurisdiction outside Canada and the United States of America, its territories
and possessions, the Board of Directors acting in good faith may take such
actions as it may deem appropriate to ensure that such compliance is not
required, including without limitation establishing procedures for the issuance
to a Canadian resident Fiduciary of Rights or securities issuable on exercise of
Rights, the holding thereof in trust for the Persons entitled thereto (but
reserving to the Fiduciary or to the Fiduciary and the Corporation, as the
Corporation may determine, absolute discretion with respect thereto) and the
sale thereof and remittance of the proceeds of such sale, if any, to the Persons
entitled thereto. In no event shall the Corporation or the Rights Agent be
required to issue or deliver Rights or securities issuable on exercise of Rights
to Persons who are citizens, residents or nationals of any jurisdiction other
than Canada and a province or territory thereof and the United States of America
and any state thereof in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.
5.13 Successors
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and enure to the
benefit of their respective successors and assigns hereunder.
5.14 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person
other than the Corporation, the Rights Agent and the holders of the Rights any
legal or equitable right, remedy or claim under this Agreement; this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the holders of the Rights.
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5.15 Determination and Actions by the Board of Directors
All actions, calculations, interpretations and determinations
(including all omissions with respect to the foregoing) which are done or made
by the Board of Directors, in good faith, (x) may be relied on by the Rights
Agent, and (y) shall not subject the Board of Directors to any liability to the
holders of the Rights or to any other parties.
5.16 Governing Law
This Agreement and the Rights issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
will be governed by and construed in accordance with the laws of such province
applicable to contracts to be made and performed entirely within such province.
5.17 Language
Les parties aux presentes ont exige que la presente convention ainsi
que tous les documents et avis qui s'y rattachent et/ou qui en coulent soient
redieds en langue anglaise. The parties hereto have required that this Agreement
and all documents and notices related thereto and/or resulting therefrom be
drawn up in English.
5.18 Counterparts
This Agreement may be executed in any number of counterparts and each
of such counterparts will for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
5.19 Severability
If any term or provision hereof or the application thereof to any
circumstance is, in any jurisdiction and to any extent, invalid or
unenforceable, such term or provision will be ineffective only to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining terms and provisions hereof or the application of
such term or provision to circumstances other than those as to which it is held
invalid or unenforceable.
5.20 Effective Date
The original Shareholder Rights Plan Agreement was effective as of the
Effective Date. The amendment and restatement of this Agreement, as set forth
herein, is effective as of October ____, 1999.
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<PAGE>
5.21 Time of the Essence
Time shall be of the essence hereof.
5.22 Amendment and Restatement
The original Shareholder Rights Plan Agreement between the Corporation
and the Rights Agent dated as of November 27, 1998, as amended and restated by
this Agreement, constitutes the entire understanding between the parties hereto
with respect to the subject matter hereof and supersedes all prior discussions,
agreements and understandings relating to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Shareholder Rights Plan Agreement to be duly executed effective October
___, 1999.
ALTAIR INTERNATIONAL INC.
By: /s/William P. Long
--------------------
William P. Long
EQUITY TRANSFER SERVICES INC.
By: /s/ Richard M. Barnowski
------------------------
Richard M. Barnowski
Vice President
41
<PAGE>
EXHIBIT A
[Form of Rights Certificate]
Certificate No.
Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
CORPORATION, ON THE TERMS SET FORTH IN THE AMENDED AND
RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF SUCH
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON,
CERTAIN RELATED PARTIES OF AN ACQUIRING PERSON OR A TRANSFEREE
OF AN ACQUIRING PERSON OR ANY SUCH RELATED PARTIES WILL BECOME
VOID WITHOUT FURTHER ACTION.
RIGHTS CERTIFICATE
This certifies that is the registered holder of the number of Rights
set forth above, each of which entitles the registered holder thereof, subject
to the terms, provisions and conditions of the Amended and Restated Shareholder
Rights Plan Agreement made as of October ____, 1999 (the "Rights Agreement")
between Altair International Inc., a corporation subsisting under the laws of
the Province of Ontario (the "Corporation") and Equity Transfer Services Inc., a
company incorporated under the laws of Ontario, as Rights Agent (the "Rights
Agent"), which term shall include any successor Rights Agent under the Rights
Agreement, to purchase from the Corporation, at any time after the Separation
Time and prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one-half of one fully paid common share of the Corporation (a
"Common Share") at the Exercise Price referred to below, upon presentation and
surrender of this Rights Certificate, together with the Form of Election to
Exercise appropriately completed and duly executed, to the Rights Agent at its
principal office in Toronto. Until adjustment thereof in certain events as
provided in the Rights Agreement, the Exercise Price shall be US$20 per Right
(payable by certified cheque or money order payable to the order of the
Corporation). The number of Common Shares which may be purchased for the
Exercise Price is subject to adjustment as set forth in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holder of the Rights Certificates. Copies
of the Rights Agreement are on file at the registered office of the Corporation
and are available upon written request.
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<PAGE>
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent in Toronto, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement the Rights evidenced
by this Certificate may be redeemed by the Corporation at a redemption price of
$0.0000001 per Right subject to adjustment in certain events.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a payment by certified
cheque, banker's draft or money order will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Shares or any other securities which may at any time be issuable upon the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
any meeting or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights or otherwise,
until the Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.
This Rights Certificate shall not be valid for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation.
Date:
ALTAIR INTERNATIONAL INC.
By:
Countersigned:
EQUITY TRANSFER SERVICES INC.
Per:
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<PAGE>
FORM OF ELECTION TO EXERCISE
ALTAIR INTERNATIONAL INC.
The undersigned hereby irrevocably elects to
exercise______________ whole Rights represented by this Rights
Certificate to purchase the Common Shares issuable upon the exercise
of such Rights and requests that certificates for such Common Shares
be issued in the name of and delivered to:
Rights Certificate No.
------------------
Name
Address
City and Province
Social Insurance No. or other taxpayer
identification number
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Name
Address
City and Province
Social Insurance No. or other taxpayer
identification number
Date:
--------------------------
Signature
Signature Guaranteed
(Signature must correspond to name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or
any change whatsoever)
Signature must be guaranteed by a Canadian chartered bank or major
Canadian trust company, or a member of the Securities Transfer Association
Medallion Program (STAMP).
(To be completed by the holder if true)
The undersigned hereby represents, for the benefit of the Corporation
and all holders of Rights and Common Shares, that the Rights evidenced by this
Rights Certificate are not and, to the knowledge of the undersigned, have never
been, Beneficially Owned by an Acquiring Person or by an Affiliate or Associate
of an Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are defined in the Rights Agreement).
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<PAGE>
Signature
NOTICE
In the event that the certifications set forth above in the Form of
Election to Exercise and Assignment are not completed, the Corporation shall
deem the Beneficial Owner of the Rights represented by this Rights Certificate
to be an Acquiring Person (as defined in the Rights Agreement) and, accordingly,
such Rights shall be null and void.
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein.
Date:
----------------------
Signature
(Signature Guaranteed
(Signature must correspond to name as written upon the face of
this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever)
Signature must be guaranteed by a Canadian chartered bank or major
Canadian trust company, or a member of the Securities Transfer Association
Medallion Program (STAMP).
(To be completed by the assignor if true)
The undersigned hereby represents, for the benefit of the Corporation
and all holders of Rights and Common Shares, that the Rights evidenced by this
Rights Certificate are not and, to the knowledge of the undersigned have never
been, Beneficially Owned by an Acquiring Person or by an Affiliate or Associate
of an Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are deemed in the Rights Agreement).
Signature
------------------------------------
------------------------------------
(Please print name below signature)
NOTICE
In the event that the certifications set forth above in the Form of
Election to Exercised Assignment are not completed, the Corporation shall deem
the Beneficial Owner of the Rights represented by this Rights Certificate to be
an Acquiring Person (as defined in the Rights Agreement) and, accordingly, such
Rights shall to be null and void.
46
LEASE
OF
PROPERTY LOCATED AT 240 EDISON WAY, RENO, NEVADA
This Lease is made and entered by and between BHP MINERALS
INTERNATIONAL INC., a Delaware corporation ("Lessor") and ALTAIR INTERNATIONAL
INC., an Ontario, Canada, corporation (or a subsidiary designated by Altair
International, Inc.) ("Tenant").
RECITALS
A. Lessor is the owner of that certain real property and improvements
thereon located at 240 Edison Way, Reno, Nevada, hereinafter referred to as "BHP
Facilities".
B. Lessor desires to lease to Tenant and Tenant desires to lease from
Lessor office and laboratory space in the BHP Facilities, consisting of
approximately twenty thousand (20,000) square feet.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein, the parties agree as follows:
1. DEFINITIONS. For purposes of this Lease the following definitions
shall apply:
1.1 "BHP Facilities" shall mean the real property and improvements
constructed thereon located at 240 Edison Way, Reno, Nevada.
1.2 "Lessor" shall mean BHP Minerals International Inc., a Delaware
corporation, and its successors and assigns.
1.3 "Premises" shall mean approximately 20,000 square feet of office
and laboratory space located in the BHP Facilities designated from time to time
by mutual agreement of Lessor and Tenant and which is subject to the exclusive
use, occupation and control of the Tenant.
1.4 "Rent" shall mean the amount of compensation payable by the Tenant
to the Lessor in U.S. Dollars for use and occupancy of the Premises during the
term of the Lease. Rent is payable on a monthly basis and shall be determined as
a product of the "Rental Rate" as defined in Section 4 for each square foot of
space occupied as a part of the entire Premises.
1.5 "Tenant" shall mean Altair International Inc., an Ontario, Canada,
corporation (or a subsidiary designated by Altair International, Inc.), and its
successors and assigns.
2. LEASE OF PREMISES. Lessor leases to Tenant and Tenant leases from
Lessor the Premises in the BHP Facilities upon the terms and
conditions described herein, which Premises shall be subject to
the
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<PAGE>
Exhibit 10.2
exclusive use, occupation and control of the Tenant. In addition to the
Premises, Tenant shall have the right, without payment of any additional rent,
to jointly utilize the BHP Facilities with Lessor, including loading docks,
shipping facilities and out-parcel storage Nareas. It is expressly understood
that Lessor and Tenant shall jointly use the entire BHP Facilities and that,
except for the Premises, the entire BHP Facilities shall be utilized by both
parties at the same time. As required by the parties, additional specific areas,
upon agreement, will be specifically reserved for each party. Lessor and Tenant
agree that neither party will unreasonably interfere with the other party's use
and enjoyment of the BHP Facilities; it being the intention of Lessor and Tenant
that each party shall be authorized to simultaneously conduct its business
within the BHP Facilities with a minimum of interference from the other party.
2.1 Option to Expand. In the event that Lessor vacates the BHP
Facilities or any part thereof, Tenant shall have the option to expand the
Premises, or the space otherwise subject to use by the Tenant, to include some
or all of the space vacated by Lessor. If Tenant makes such election, the
monthly Rent for the remainder of the initial term or extended term shall be
increased by an amount equal to the product of the additional square footage
included in the Premises multiplied by one-twelfth (1/12th) of the Rental Rate.
Tenant shall exercise its option to expand the Premises by written notice of
its election to do so given to Lessor, or its successor, not less than thirty
(30) days after Tenant's receipt of a written notice from Lessor describing the
portion of the BHP Facilities to be vacated by Lessor and offering the same to
Tenant for lease.
3. INITIAL TERM. The initial term of this Lease shall commence on
November 15, 1999, and terminate on December 31, 2000.
3.1 Tenant's Option to Exercise at Market Rent. The term of the lease
shall automatically extend for successive six-month periods unless terminated by
Tenant by written notice of its election to do so given to Lessor at least
ninety (90) days prior to the expiration of the then expiring term. Except as
provided in Paragraph3.2, Tenant's use and occupancy of the Premises and the BHP
Facilities during the extended term will be on all of the terms and conditions
of the Lease applicable at the expiration of the then expiring term.
3.2 Extended Term Monthly Rent. The initial monthly rent for an
extended term will be determined as follows:
(a) Not later than the date which is seventy-five (75) days
prior to the expiration of the initial term or the applicable extended term,
Lessor and Tenant shall agree on the then-fair market rental value of the
Premises; provided, however, that in no event shall the monthly rent for any
extended term be more than 102.5% of the monthly rent for the initial term or
the then expiring extended term. If Lessor and Tenant agree on the monthly rent
for the extended term before such date, they will amend this Lease by stating
the monthly rent for the extended term.
(b) If Tenant and Lessor are unable to agree on the monthly
rent pursuant to Paragraph 3.2(a), then the monthly rent for the extended term
will be the then-fair market rental value of the Premises as determined in
accordance with Paragraph 3.2(d).
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<PAGE>
Exhibit 10.2
(c) The "then-fair market rental value of the Premises" means
what a Lessor under no compulsion to lease the Premises and a Tenant under no
compulsion to lease the Premises would determine as rents for the extended term,
as of the commencement of the extended term, taking into consideration the uses
permitted under this Lease, the quality, size, design, and location of the
Premises, and the rent for comparable buildings located in Washoe County,
Nevada. The then-fair market rental value of the Premises will not be less than
that provided during the initial term nor more than 102.5%% of the monthly rent
for the preceding initial term or extended term.
(d) Within seven (7) days after the expiration of the time
period set forth in Paragraph 3.2(A), Lessor and Tenant will each appoint a real
estate appraiser with at least five (5) years' full-time commercial appraisal
experience in the area in which the Premises are located to appraise the
then-fair market rental value of the Premises. If either Lessor or Tenant does
not appoint an appraiser within ten (10) days after the other has given notice
of the name of its appraiser, the single appraiser appointed will be the sole
appraiser and will set the then-fair market rental value of the Premises. If two
appraisers are appointed pursuant to this Paragraph, they will meet promptly and
attempt to set the then-fair market rental value of the Premises. If they are
unable to agree within thirty (30) days after the second appraiser has been
appointed, they will attempt to elect a third appraiser meeting the
qualifications stated in this Paragraph within ten (10) days after the last day
the two appraisers are given to set the then fair market rental value of the
Premises. If they are unable to agree on the third appraiser, either Lessor or
Tenant, by giving ten (10) days' prior notice to the other, can apply to the
then presiding judge of the Washoe County Court for the selection of a third
appraiser who meets the qualifications stated in this Paragraph. Lessor and
Tenant will bear one-half (1/2) of the cost of appointing the third appraiser
and of paying the third appraiser's fee. The third appraiser, however selected,
must be a person who has not previously acted in any capacity for either Lessor
or Tenant.
Within thirty (30) days after the selection of the third appraiser, a
majority of the appraisers will set the then-fair market rental value of the
Premises. If a majority of the appraisers are unable to set the then-fair market
rental value of the Premises within thirty (30) days after selection of the
third appraiser, the three appraisals will be averaged and the average will be
the then-fair market rental value of the Premises.
4. RENT. The monthly rental payable by Tenant hereunder shall be equal
to Seventy-Five Cents ($.75 U.S.) per square foot (the "Rental Rate") of leased
space included within the Premises which the parties agree shall be up to twenty
thousand (20,000) square feet, unless the Premises is expanded pursuant to the
terms of Paragraph 2.1. The rent therefore shall be Fifteen Thousand and 00/100
Dollars ($15,000.00) per month, payable in advance.
4.1 Time for Payment of Rent. Rent is payable in advance. Tenant shall
pay the rent described herein, without prior notice or demand, on or before the
first day of the first full calendar month after the effective date (as defined
below) and a like sum on or before the first day of each and every successive
calendar month thereafter during the term hereof. Rent for the period before the
first day of the first full calendar month after the effective date which is for
less than one (1) month shall be a pro rated portion of the monthly rent herein,
based upon a thirty (30) day month and shall be payable on the first day of the
first full calendar month after the effective date. All rental shall be paid to
Lessor, without deduction or offset, in lawful money of the United States of
America, which shall be legal tender at the time of payment, at the
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<PAGE>
Exhibit 10.2 America, which shall be legal tender at the time of payment, at the
address described herein for delivery of notice to Lessor, or to such other
person or at such other place as Lessor may from time to time designate in
writing.
4.2 Rent includes water, sanitation, heat, electricity, air
conditioning, security, outdoor landscaping and janitorial services.
5. TENANT IMPROVEMENT COSTS. It is fully acknowledged by the parties
hereto that there shall be no required tenant improvements. If either Lessor or
Tenant specifically require improvements for that party's specific needs, then
the party desiring such improvements shall pay the total cost thereof.
6. USE. Tenant shall use the Premises for general office, laboratory,
research and manufacturing purposes. Tenant shall not do or permit anything to
be done in or about the Premises which will in any way obstruct or interfere
with the rights of other tenants or occupants of the BHP Facilities or injure or
annoy them or use or allow the Premises to be used for any improper, immoral, or
unlawful purposes, nor shall Tenant cause, maintain or permit any nuisance in,
on or about the Premises.
7. ENVIRONMENTAL WARRANTIES. Each party warrants to the other as
follows:
(a) Lessor warrants to Tenant that to the best of Lessor's
knowledge, after diligent search and inquiry, the BHP Facilities, and Lessor's
operation thereof, are in compliance with all "Applicable Law" (as defined
below), and there are no "Environmental Conditions" (as defined below) existing
or that have existed on, to or with respect to the BHP Facilities. Lessor has
made available concurrently with the execution of this Lease and shall make
available to Tenant for its review and inspection any and all documents,
information, reports, photographs, or recordings concerning or relating to the
"Environmental Condition" (as defined below) of the BHP Facilities known to or
within the possession of Lessor. To the best of Lessor's knowledge, there are no
underground storage tanks, septic tanks, or underground injection wells in, at,
on, or under the BHP Facilities. To the best of Lessor's knowledge, the BHP
Facilities contain no material which contains and may emit formaldehyde into the
air, no polychlorinated biphenyls ("PCBs") or PCB-containing equipment or
articles. To the best of Lessor's knowledge, neither Lessor nor, to its
knowledge, any third party has:
(i) caused or permitted the BHP Facilities to be used
to generate, manufacture, refine, transport, treat, store,
use, handle, dispose of, transfer, produce, process, contain,
or be constructed of a "Hazardous Material" (as defined
below), except in compliance with all Applicable Law (as
defined below).
(ii) caused, permitted, authorized, or has knowledge
of the presence or release or threat of release of any
Hazardous Material in, on, under, or migrating to or from the
BHP Facilities;
(iii) received any notice or other information,
whether written or oral and whether actual or threatened,
except for the attached two notices, one dated February 28,
1996 from the City of Reno, the other being the warning letter
dated August 3, 1999 sent by the State of Nevada, Division of
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<PAGE>
Exhibit 10.2
Environmental Protection, from any governmental agency or
authority or any other entity or individual, whether
governmental or private, concerning or alleging any liability
of Lessor or other persons or entities with respect to the BHP
Facilities, any intentional or unintentional act or omission
or any fact or condition which has resulted or which may
result in any Environmental Condition in, on, under, or
adjacent to the BHP Facilities.
For purposes of this Lease, "Environmental Condition" means
(i) contamination or pollution of soil, air, or surface or ground
waters, (ii) the disposal, placement, existence, presence, or release
or threat of release of a Hazardous Material and the affects thereof,
(iii) noncompliance with or violation of Applicable Law, including,
without limitation, any lack or required governmental permits or
approvals, "Hazardous Material" means (i) any substance, the presence
of which requires investigation, remediation, or other response or
corrective action under Applicable Law, or (ii) any substance which is
or hereafter becomes defined as a hazardous waste, hazardous substance,
extremely hazardous substance, hazardous material, hazardous matter,
hazardous chemical, toxic substance, toxic chemical, pollutant or
contaminant, or other similar term in or pursuant to applicable Law, or
(iii) PCBs or equipment or articles containing PCBs, petroleum, diesel
fuel, gasoline, or other petroleum hydrocarbons, and "Applicable Law"
means all existing or hereafter enacted or amended Federal, State, or
local laws, common law, statutes or regulations, including, without
limitation, those relating to the protection of human health and
safety, protection of the environment, or prevention of pollution.
(b) Lessor warrants to Tenant that after a diligent search it
believes it is operating the BHP Facilities in compliance of all local, state
and federal laws and regulations, and is totally unaware of any Environmental
Condition or other environmental problems, hazards, spills, discharges or
intentional violations of such statutes or ordinances.
(c) Tenant warrants that as part of its due diligence search
of the BHP Facilities, including conversations with some Lessor employees, it is
of the belief that no environmental problems, of any kind or nature, exist on
the BHP Facilities.
(d) Lessor and Tenant warrant to each other that if either
party learns of any Environmental Condition, environmental hazards, violations
of Applicable Law or environmental permits before or during the period of this
lease, it will immediately notify the other party. The parties agree to fully
cooperate to remediate the Environmental Condition or environmental hazards on
the BHP Facilities. It is further understood that the party causing the
Environmental Condition or environmental hazard is financially responsible for
all remediation thereof. Each party agrees that, to the extent that an
Environmental Condition is caused by such party (the "Indemnifying Party"), the
Indemnifying Party shall indemnify, defend and hold harmless the other party
(the "Indemnified Party") and the Indemnified Party's employees and agents from
and against all demands, claims, causes of action, judgments, losses, damages,
liabilities, fines, penalties, costs and expenses, including, without
limitation, reasonable attorneys' fees, arising from an Environmental Condition
with respect to the BHP Facilities. In addition, Lessor shall indemnify, defend
and hold harmless Tenant and the Tenant's employees and agents from and against
all demands, claims, causes of action, judgments, losses, damages, liabilities,
fines, penalties, costs and expenses, including, without limitation, reasonable
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<PAGE>
Exhibit 10.2
attorneys' fees, arising from an Environmental Condition existing upon, or the
origin of which arose prior to, the commencement of the initial term of this
Lease with respect to the BHP Facilities. If any action or proceeding is brought
against the Indemnified Party or the Indemnified Party's employees or agents by
reason of any of the matters set forth in the preceding sentence, the
Indemnifying Party, on written notice from the Indemnified Party, shall defend
the Indemnified Party at the Indemnifying Party's expense with counsel
reasonably satisfactory to the Indemnified Party. This Paragraph 7(b) is subject
to the waiver of subrogation provisions set forth in Paragraph 12.
8. COMPLIANCE WITH THE LAW. Neither Lessor with respect to the BHP
Facilities nor Tenant with respect to the Premises shall permit anything to be
done in or about the Premises or the BHP Facilities, as the case may be, which
will in any way conflict with any law, statute, permit, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated. Lessor and Tenant shall, to the extent that compliance is
required of either and at their respective sole cost and expense, promptly
comply with all laws, statutes, ordinances, and governmental rules, regulations
or requirements now in force or which may hereafter be in force, and with the
requirement of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to or affecting the conditions, use or
occupancy of the Premises and the BHP Facilities, as the case may be, excluding,
with respect to the Tenant, structural changes not related to or affected by
Tenant's improvements or acts. The judgment of any court of competent
jurisdiction or the admission of either party to this Lease in any action
against such party, whether the other party to this Lease be a party to such
action or not, that said party to this Lease has violated any law, statute,
ordinance or governmental rule, regulation or requirement, shall be conclusive
of that fact as between said party and the other. Tenant and Lessor each agree
to diligently ascertain, obtain and operate in accordance with all permits of
every kind or nature required to operate their respective businesses within the
BHP Facilities.
9. TENANT'S OBLIGATIONS. By taking possession of the Premises, Tenant
shall be deemed to have accepted the Premises as being in good, sanitary order,
condition and repair. Tenant shall upon the expiration or sooner termination of
this Lease hereof surrender the Premises to the Lessor in good condition,
ordinary wear and tear and damage from causes beyond the reasonable control of
Tenant excepted. Except as specifically provided in an addendum, if any, to this
Lease, Lessor shall have no obligation whatsoever to alter, remodel, improve,
repair, decorate or paint the Premises or any part thereof and the parties
hereto affirm that Lessor has made no representations to Tenant respecting the
condition of the Premises or the building except as specifically herein
described. It is expressly understood that upon termination of this Lease and
return of the Premises to Lessor, Tenant shall, at its effort and expense,
remedy and/or clean up any violation of Applicable Law or Environmental
Condition with respect to the BHP Facilities to the extent that such
Environmental Condition or violation of Applicable Law is caused by the acts or
omissions of Tenant. It is expressly understood that upon Tenant's exercise of
its option to purchase pursuant to Paragraph 28 of this Lease, Lessor shall, at
its effort and expense, surrender the BHP Facilities to the Tenant in good
condition, ordinary wear and tear excepted, and that Lessor shall remedy and/or
clean up any violation of Applicable Law or Environmental Condition with respect
to the BHP Facilities to the extent that such Environmental Condition or
violation of Applicable Law is caused by the acts or omissions of Lessor. Raw
materials and chemicals received by Lessee from Lessor or subsequently purchased
by Lessee and utilized on the Premises are the responsibility of Lessee, said
responsibility to survive this Lease.
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<PAGE>
Exhibit 10.2
10. LESSOR'S OBLIGATIONS. Lessor shall repair and maintain the
structural portions of the BHP Facilities (but not the pilot plant equipment),
including the basic plumbing and electrical systems, installed or furnished by
Lessor, except to the extent that such maintenance and repairs are caused by the
negligence or wilful misconduct of Tenant, its agent, servants, employees or
invitees, in which case Tenant shall pay to Lessor the reasonable cost of such
maintenance and repairs. Lessor shall not be liable for any failure to make any
such repairs or to perform any maintenance unless such failure shall persist for
an unreasonable time after written notice of the need of such repairs or
maintenance is given to Lessor by Tenant. There shall be no abatement of rent
and no liability of Lessor by reason of any injury to or interference with
Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the BHP Facilities or the Premises or in or
to fixtures, appurtenances and equipment therein. Lessor specifically agrees to
expeditiously repair and/or replace when necessary the electrical, HVAC,
telephone, mechanical, roof, plumbing, and sewer connections.
11. LIENS. Tenant shall keep the Premises and the property in which the
Premises are situated free from any subsequent liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. Lessor may
require, at Lessor's sole option, Tenant to provide to Lessor, at Tenant's sole
cost and expense, a lien and completion bond in an amount equal to one and
one-half (1 1/2) times any and all estimated cost of any improvements, additions
or alterations made by Tenant in the Premises, to insure Lessor against any
liability for mechanic's and materialmen's liens and to insure completion of the
work. Tenant shall give notice to Lessor sufficiently in advance of any proposed
improvement, addition or alteration so that Lessor may properly record a Notice
of Non-Responsibility with the Washoe County Recorder.
12. ASSIGNMENT AND SUBLETTING. Tenant shall not either voluntarily or
by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber
this Lease or any interest therein, and shall not sublet the said Premises or
any part thereof, or any right or privilege appurtenant thereto, or suffer any
other person (the employees, agents, servants and invitees of Tenant excepted)
to occupy or use the said Premises, or any portion thereof, without the prior
written consent of Lessor, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant may, without the consent of Lessor, assign
this Lease to any subsidiary of Tenant. Lessor's consent to one assignment,
subletting, occupation or use by any other person shall not be deemed to be a
consent to any subsequent assignment, subletting, occupation or use by another
person. Any such assignment or subletting without such consent shall be void,
and shall, at the option of the Lessor, constitute a default under this Lease.
Lessor shall be entitled to receive fifty percent (50%) of any additional rent
paid by a sublessee over and above the amount of rent specified herein to be
paid by Tenant.
13. TENANT'S HOLD HARMLESS. Tenant shall indemnify and hold harmless
Lessor against and from any and all claims arising from Tenant's use of the BHP
Facilities for the conduct of its business or from any activity, work or other
thing done, permitted or suffered by the Tenant (except for claims arising out
of Lessor's use and occupancy of the BHP Facilities) in or about the BHP
Facilities, and shall further indemnify and hold harmless Lessor against and
from any and all claims arising from any breach or default in the performance of
any obligation on Tenant's part to be performed under the terms of this Lease,
or arising from any act or negligence of the Tenant, or any officer, agent,
employee, guest, or invitee of Tenant (except for claims arising out of Lessor's
use and occupancy of the BHP Facilities), and from all and against
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<PAGE>
Exhibit 10.2
all cost, attorney's fees, expenses and liabilities incurred in or about any
such claim or any action or proceeding brought thereon. In any case, action or
proceeding brought against Lessor by reason of any such claim, Tenant shall,
upon notice from Lessor, defend the same at Tenant's expense by counsel
reasonably satisfactory to Lessor. Tenant as material part of the consideration
to the Lessor hereby assumes all risk or damage to property or injury to persons
in, upon or about the Premises, from any cause other than Lessor's negligence or
wilful misconduct, and Tenant hereby waives all claims in respect thereof
against Lessor.
Lessor or its agents shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the BHP Facilities or
from the pipes, appliances or plumbing works therein or from the roof, street or
subsurface or from dampness or any other cause whatsoever, unless caused by or
due to the negligence or wilful misconduct of Lessor, its agents, servants or
employees. Lessors or its agents shall not be liable for interference with the
light or other incorporeal hereditaments pertaining to the Premises or loss of
business by Tenant, nor shall Lessor be liable for any latent defect in the
Premises or in the BHP Facilities. Tenant shall give prompt notice to Lessor in
case of fire or accidents in the Premises or in the BHP Facilities or of defects
therein in the fixtures or equipment.
14. LESSOR'S HOLD HARMLESS. Lessor shall indemnify and hold harmless
Tenant against and from any and all claims arising from Lessor's use of the BHP
Facilities for the conduct of its business or from any activity, work or other
thing done, permitted or suffered by the Lessor (except for claims arising out
of Tenant's use and occupancy of the BHP Facilities) in or about the BHP
Facilities, and shall further indemnify and hold harmless Tenant against and
from any and all claims arising from any breach or default in the performance of
any obligation on Lessor's part to be performed under the terms of this Lease,
or arising from any act or negligence of the Lessor, or any officer, agent,
employee, guest, or invitee of Lessor (except for claims arising out of Tenant's
use and occupancy of the BHP Facilities), and from all and against all cost,
attorney's fees, expenses and liabilities incurred in or about any such claim or
any action or proceeding brought thereon. In any case, action or proceeding
brought against Tenant by reason of any such claim, Lessor shall, upon notice
from Tenant, defend Tenant at Lessor's expense by counsel reasonably
satisfactory to Tenant. Lessor as material part of the consideration to the
Tenant hereby assumes all risk or damage to property or injury to persons in,
upon or about the BHP Facilities, from any cause other than Tenant's negligence
or wilful misconduct, and Lessor hereby waives all claims in respect thereof
against Tenant.
Tenant or its agents shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the BHP Facilities or
from the pipes, appliances or plumbing works therein or from the roof, street or
subsurface or from dampness or any other cause whatsoever, unless caused by or
due to the negligence or wilful misconduct of Tenant, its agents, servants or
employees. Tenant or its agents shall not be liable for interference with the
light or other incorporeal hereditaments pertaining to the BHP Facilities or
loss of business by Lessor, nor shall Tenant be liable for any latent defect in
the Premises or in the BHP Facilities. Lessor shall give prompt notice to Tenant
in case of fire or accidents in the Premises or in the BHP Facilities or of
defects therein in the fixtures or equipment.
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<PAGE>
Exhibit 10.2
15. SUBROGATION. As long as their respective insurers so permit, Lessor
and Tenant hereby mutually waive their respective rights of recovery against
each other for any loss insured by fire, extended coverage and other property
insurance policies existing for the benefit of the respective parties. Each
party shall obtain any special endorsements, if required by their insurer, to
evidence compliance with the aforementioned waiver.
16. LIABILITY INSURANCE. Each party shall, at such party's expense,
obtain and keep in force during the term of this Lease a policy of comprehensive
public liability insurance insuring such party against any liability arising
from said party's use, occupancy or maintenance of the Premises and/or the BHP
Facilities. Such insurance shall be written as a primary policy, not
contributing with and not in excess of the coverage which the other party may
carry, and shall name the other party as an additional insured. The limit of
insurance obtained by either party shall not limit the liability of either party
hereunder. Either party may carry said insurance under a blanket policy. If
either party shall fail to procure and maintain said insurance, the other party
may, but shall not be required to, procure and maintain such insurance, but at
the expense of the defaulting party. Insurance required hereunder shall be in
companies rated A+AAA or better in "Best's Insurance Guide". Each party shall
deliver to the other before occupancy of the Premises by Tenant copies of
policies of liability insurance required herein or certificates evidencing the
existence and amounts of such insurance with loss payable clauses satisfactory
to the other. No policy shall be cancelable or subject to reduction of coverage
except after ten (10) days' prior written notice to each party. The minimum
coverage shall be One Million Dollars ($1,000,000.00). Equipment owned by either
party and utilized on the BHP Facilities shall, if the owning party desires to
insure the same, be insured under a separate insurance policy maintained by such
party. Lessor shall procure and continue in force hazard insurance with special
causes of loss, insuring against fire, extended coverage risks, vandalism and
malicious mischief, in an amount equal to the full replacement cost of the BHP
Facilities (but not any furnishings, equipment and other personal property
installed in the Premises by Tenant). It is expressly understood that Tenant
shall acquire insurance for the Tangible Assets as defined in the Asset Purchase
and Sale Agreement dated November 15, 1999.
17. SERVICES AND UTILITIES. Provided that Tenant is not in default
hereof, Lessor agrees to provide utility services for water and sanitation,
electricity, heat, air conditioning, security, outdoor landscaping, and
janitorial services on weekdays. On weekends, Lessor agrees to provide utility
services for water and sanitation, electricity, heat and air conditioning.
18. PROPERTY TAXES. Lessor shall pay, or cause to be paid, before
delinquency, any and all real estate taxes levied or assessed, and which become
payable during the term hereof, upon the BHP Facilities. Tenant shall pay, or
cause to be paid, before delinquency, any and all taxes levied or assessed, and
which become payable during the term hereof, upon all Tenant's equipment,
furniture, fixtures and personal property located in the Premises, except that
which has been paid for by Lessor and is the standard of the building. In the
event any or all of the Tenant's equipment, furniture, fixtures and personal
property shall be assessed and taxed with the building, Tenant shall pay to
Lessor its share of such taxes within ten (10) days after delivery to Tenant by
Lessor of a statement in writing setting forth the amount of such taxes
applicable to Tenant's property.
19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with all reasonable non-discriminatory rules and regulations that Lessor shall
from time to time promulgate in
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<PAGE>
Exhibit 10.2
writing; provided, however, that such rules and regulations shall not interfere
with Tenant's quite use and enjoyment of the Premises and joint use of the BHP
Facilities in accordance with the terms of this Lease. Lessor reserves the right
from time to time to make all reasonable modifications to said rules. The
additions and modifications to those rules shall be binding upon Tenant upon
delivery of a written copy of the same to Tenant. Lessor shall not be
responsible to Tenant for the nonperformance of any said rules by any other
tenants or occupants unless such nonperformance materially interferes with
Tenant's quiet use and enjoyment of the Premises and joint use of the BHP
Facilities.
20. HOLDING OVER. If Tenant remains in possession of the Premises or
any part thereof after the expiration of the term hereof, with the express
written consent of Lessor, such occupancy shall be a tenancy from month to month
at a rental in the amount of the last monthly rental, plus all other charges
payable hereunder, and upon all the terms hereof applicable to a month to month
tenancy.
21. ENTRY BY LESSOR. Lessor, inasmuch as it will be sharing the BHP
Facilities, shall at any and all times have the right to enter the Premises,
inspect the same, supply any service to be provided by Lessor to Tenant
hereunder, submit said Premises to prospective purchasers or tenants, post
notices of non- responsibility, and alter, improve or repair the Premises and
any portion of the building of which the Premises are a part that Lessor may
deem necessary or desirable, without abatement of rent and may for that purpose
erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed, always providing that the entrance to
the Premises shall not be blocked thereby, and further providing that the
business of the Tenant shall not be interfered with unreasonably. Lessor
covenants that it shall maintain as strictly confidential any proprietary
information, trade secrets or trade processes that Lessor might have access to
by reason of Lessor's right of access granted pursuant to this Paragraph21 or
Lessor's joint use of the BHP Facilities with Tenant.
22. DEFAULT. The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease by Tenant:
22.1 Abandonment. The vacating or abandonment of the Premises without
benefit of sublease or assignment of the Premises by Tenant.
22.2 Failure to Pay Rent. The failure by Tenant to make any payment of
rent or any other payment required to be made by Tenant hereunder, as and when
due, where such failure shall continue for a period of twenty (20) days after
written notice thereof by Lessor to Tenant.
22.3 Breach of Covenants, Conditions and Terms. The failure by Tenant
to observe or perform any of the covenants, conditions or terms of this Lease to
be observed or performed by the Tenant, other than described in Paragraph21.2
above, where such failure shall continue for a period of thirty (30) days after
written notice thereof by Lessor to Tenant; provided, however, that if the
nature of Tenant's default is such that more than thirty (30) days are
reasonably required for its cure, then Tenant shall not be deemed to be in
default if Tenant commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion.
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<PAGE>
Exhibit 10.2
22.4 Tenant Insolvency. The making by Tenant of any general assignment
or general arrangement for the benefit of creditors, or the filing by or against
Tenant of a petition to have Tenant adjudged a bankrupt, or a petition or
reorganization or arrangement under any law relating to bankruptcy, unless, in
the case of a petition filed against the Tenant, the same is dismissed within
ninety (90) days; or the appointment of a trustee or a receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within thirty (30) days of the attachment, execution or other judicial seizure
of substantially Lease, where such seizure is not discharged in thirty (30)
days.
23. REMEDIES IN DEFAULT. In the event of any such material default or
breach by Tenant, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of a right or remedy which
Lessor may have by reason of such default or breach:
23.1 Termination. Lessor may terminate Tenant's right to possession of
the Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Tenant all damages incurred by
Lessor by reason of Tenant's default, including, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting including necessary
renovation and alteration of the Premises, reasonable attorney's fees, any real
estate commission actually paid; the worth at the time of award by the court
having jurisdiction thereof the amount by which the unpaid rent for the balance
of the term after the time of such award exceeds the amount of such rental loss
for the same period that Tenant proves could be reasonably avoided; that portion
of the leasing commission paid by Lessor and applicable to the unexpired term of
this Lease. Unpaid installments of rent or other sums shall bear interest from
the date due at the rate of twelve percent (12%) per annum. In the event Tenant
shall have abandoned the Premises, Lessor shall have the option of (a) taking
possession of the Premises and recovering from Tenant the amount specified in
this Paragraph, or (b) proceeding under the provisions of the following
Paragraph 22.2.
23.2 Recovery of Rent. Lessor may maintain Tenant's right to
possession, in which case this Lease shall continue in effect whether or not
Tenant shall have abandoned the Premises. In such event Lessor shall be entitled
to enforce all of Lessor's rights and remedies under this Lease, including the
right to recover the rent as it becomes due hereunder.
23.3 Other Remedies. Pursue any other remedy now or hereafter available
to Lessor under the laws or judicial decisions of the State of Nevada.
24. DEFAULT BY LESSOR. Lessor shall not be in default under this Lease
unless Lessor or the holder of any mortgage or deed of trust covering the BHP
Facilities whose name and address have been furnished to Tenant in writing fails
to perform an obligation required of Lessor under this Lease within thirty (30)
days after written notice by Tenant to Lessor and to such holder, specifying the
respects in which Lessor has failed to perform such obligation. If the nature of
Lessor's obligation is such that more than thirty (30) days are reasonably
required for performance or cure, Lessor shall not be in default if Lessor or
such holder commences performance within such thirty (30) day period and after
such commencement diligently prosecutes the same to completion.
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<PAGE>
Exhibit 10.2
25. OFFSET STATEMENT. Tenant shall at any time and from time to time
upon not less than ten (10) days' prior written notice from Lessor execute,
acknowledge and deliver to Lessor a statement in writing (a) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified,
is in full force and effect), and the date to which the rental and other charges
are paid in advance, if any, and (b) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of the Lessor hereunder, or
specifying such defaults if any are claimed. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises are a part.
26. PARKING. Tenant shall have the right to use in common with other
tenants or occupants of the BHP Facilities the parking facilities of the BHP
Facilities, subject to rules and regulations which may be established by Lessor.
Lessor reserves the right to designate, in its sole discretion, certain parking
spaces for the exclusive use by visitors to the BHP Facilities, which parking
spaces shall not be used by members or employees of Tenant or other tenants of
the BHP Facilities. Other parking spaces at the BHP Facilities not so designated
for visitors' use shall be allocated among Tenant and other tenants of BHP
Facilities in the proportion that each tenant's rented square footage bears to
the total rented square footage in the BHP Facilities, including any
alterations, additions or expansions of the BHP Facilities. Tenant shall also
have use of the loading docks and shipping facilities associated with the BHP
Facilities, and Lessor shall not designate parking facilities for exclusive use
if such exclusive use shall materially interfere with Tenant's use of such
loading docks and shipping facilities.
27. AUTHORITY OF PARTIES. The parties acknowledge that Tenant and
Lessor are corporations and each individual executing this Lease on behalf of
said corporations represents and warrants that, with respect to said
corporation, he is duly authorized to execute and deliver this Lease on behalf
of said corporation, in accordance with a duly adopted authorization of said
corporation or in accordance with the articles of incorporation of said
corporation, and that this Lease is binding upon the said corporation in
accordance with its terms.
28. RIGHT OF FIRST REFUSAL.
(a) Lessor shall not sell the BHP Facilities prior to May 15,
2000. If at any time after May 15, 2000 Lessor receives a bona fide offer to
purchase the BHP Facilities, it shall promptly present such offer to Tenant.
Tenant will thereupon have sixty (60) days within which to acquire the BHP
Facilities on similar economic terms and conditions as presented by the offeror.
Notice of election to purchase and therefore exercise this right of first
refusal shall be given to Lessor in writing, actual delivery to occur within the
above stated 60-day period. If Tenant fails to exercise its right under this
paragraph 28, Lessor shall be free to sell the BHP Facilities upon the terms and
conditions offered to Tenant notwithstanding the option to purchase granted to
Tenant in paragraph 28 of this Lease. If Lessor desires to sell the BHP
Facilities on terms more favorable to the proposed purchaser than the terms
offered to Tenant, Lessor shall again re-offer the BHP Facilities to Tenant
under this paragraph 28.
(b) In addition to the right of first refusal granted herein,
the parties hereto agree to negotiate, in good faith, for the purpose of
Tenant's possible purchase of the BHP Facilities. The legal description of the
property the subject of this right of first refusal is "Parcel A of Parcel Map
No. 2242,
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<PAGE>
Exhibit 10.2
according to the map thereof, filed in the Office of the County Recorder of
Washoe County, State of Nevada, on March 2, 1988 as File No. 1229829."
29. GENERAL PROVISIONS.
29.1 Plats and Riders. Clauses, plats and riders, if any, signed by the
Lessor and the Tenant and endorsed on or affixed to this Lease are a part
hereof.
29.2 Waiver. The waiver by Lessor of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition on any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of the
Tenant to pay the particular rental so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of the acceptance of such rent.
29.3 Notices. All notices and demands which may or are to be required
or permitted to be given by either party to the other hereunder shall be in
writing. All notices and demands by the Lessor to the Tenant shall be sent by
United States certified mail, return receipt requested, postage prepaid,
addressed to the Tenant at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414
or to such other place as Tenant may from time to time designate in a notice to
the Lessor. All notices and demands by the Tenant to the Lessor shall be sent by
United States certified mail, return receipt requested, postage prepaid,
addressed to BHP Minerals International Inc., 204 Edison Way, Reno, Nevada
89502, or to such other person or place as the Lessor may from time to time
designate in a notice to the Tenant.
29.4 Joint Obligation. If there be more than one Tenant, the
obligations hereunder imposed upon Tenants shall be joint and several.
29.5 Marginal Headings. The marginal headings and Paragraph titles to
the Paragraphs of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
29.6 Time. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
29.7 Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
29.8 Recordation. Neither Lessor nor Tenant shall record this Lease
without the prior written consent of the other party. At the request of either
party, the parties shall execute a short form memorandum which may be recorded
in the Office of the Washoe County Recorder,
29.9 Quiet Possession. Upon Tenant paying the rent reserved hereunder
and observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed
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<PAGE>
Exhibit 10.2
hereunder, Tenant shall have quiet possession of the Premises and the right to
use the BHP Facilities in accordance with the terms hereof for the entire term
hereof, subject to all the provisions of this Lease.
29.10 Late Charge. Tenant hereby acknowledges that the late payment by
Tenant to Lessor of rent or other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to
processing and accounting charges, and late charges may be imposed upon Lessor
by terms of any mortgage or trust deed covering the Premises. Accordingly, if
any installment of rent or of a sum due from Tenant shall not be received by
Lessor or Lessor's designee within twenty (20) days after written notice that
said amount is past due, then Tenant shall pay to Lessor a late charge equal to
five percent (5%) of such overdue amount. The parties hereby agree that such
late charges represent a fair and reasonable estimate of the cost that Lessor
will incur by reason of the late payment by Tenant. Acceptance of such late
charges by the Lessor shall in no event constitute a waiver of Tenant's default
with respect to such overdue amount, nor prevent Lessor from exercising any of
the other rights and remedies granted hereunder.
29.11 Prior Agreements. This Lease is being executed in connection with
the execution of that certain Asset Purchase and Sale Agreement, dated of even
date herewith (the "Acquisition Agreement"), between Lessor and Tenant. This
Lease and the Acquisition Agreement contain all of the agreements of the parties
with respect to any matter covered or mentioned in this Lease or the Acquisition
Agreement, and no prior agreements or understanding pertaining to any such
matters shall be effective for any purpose. No provision of this Lease may be
amended or added to except by an agreement in writing signed by the parties or
their respective successors in interest. This Lease shall not be effective or
binding on any party until fully executed by both parties.
29.12 Inability to Perform. This Lease and the obligations of the
Tenant hereunder shall not be affected or impaired because the Lessor is unable
to fulfill any of its obligations hereunder or is delayed in doing so, if such
inability or delay is caused by reason of strike, labor troubles, acts of God or
any other cause beyond the reasonable control of the Lessor; provided, however,
if Lessor's ability to perform extends beyond a period of sixty (60) days or
more, Lessor shall be entitled to terminate this Lease upon fifteen (15) days
written notice to Lessor.
29.13 Attorneys' Fees. In the event of any action or proceeding brought
by either party against the other under this Lease, the prevailing party shall
be entitled to recover all costs and expenses including the fees of its
attorneys in such action or proceeding in such amount as the court may adjudge
reasonable as attorneys' fees.
29.14 Sale of Premises by Lessor. Except as specifically contemplated
by this Lease or in the event of Tenant's purchase of the BHP Facilities, Lessor
shall be and is hereby entirely freed and relieved of all liability under any
and all of its covenants and obligations contained in or derived from this Lease
arising out of any act, occurrence or omission occurring after the consummation
of such sale; and the purchaser at such sale or any subsequent sale of the
Premises shall be deemed, without any further agreement between the parties or
their successors in interest or between the parties and any such purchaser, to
have assumed and agreed to carry out any and all of the covenants and
obligations of the Lessor under this Lease.
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<PAGE>
Exhibit 10.2
29.15 Name. Tenant shall not use the name of the building or of the
development in which the building is situated for any purpose other than as an
address of the business to be conducted by the Tenant in the Premises.
29.16 Severability. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof and such other provision shall remain in full force and effect.
29.17 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive, but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
29.18 Choice of Law. This Lease shall be governed by the laws of the
State of Nevada.
29.19 Signs. Tenant shall not place any sign upon the Premises or
building or conduct any auction thereon without Lessor's prior written consent.
Should Lessor construct an outdoor sign (s) , then the sign (s) shall describe
Tenant's business in the same manner as Lessor's and other tenants' business are
described.
29.20 Effective Date. The effective date of this Lease shall be the
date on which Tenant commences occupancy of the Premises.
The parties hereto have executed this Lease at the place and on the
dates specified immediately adjacent to their respective signatures.
LESSOR:
BHP MINERALS INTERNATIONAL INC.,
a Delaware corporation
By _______________________________________
Its _____________________________
TENANT:
ALTAIR INTERNATIONAL INC.,
an Ontario corporation
By _______________________________________
Its _____________________________
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SERVICES AGREEMENT
This Services Agreement (this "Agreement") is entered into as of this
15th day of November, 1999 (the "Effective Date"), by and between BHP Minerals
International Inc, a Delaware corporation ("BHP"), and Altair International
Inc., an Ontario corporation ("Altair").
Recitals:
A. BHP and Altair have entered into an Asset Purchase and Sale
Agreement dated of even date herewith (the "Asset Purchase Agreement"), pursuant
to which Altair has purchased certain "Assets" (as defined in the Asset Purchase
Agreement) related to the production of titanium dioxide and other products from
various feed materials. Capitalized terms used in this Agreement without
definition shall have the respective meanings set forth in the Asset Purchase
Agreement.
B. The Assets are located at an office and manufacturing facility owned
by BHP and located at 204 Edison Way, Reno, Nevada. BHP has leased portions of
such facility (such leased portions, including common areas, the "Facility") to
Altair pursuant to a Lease Agreement dated as of even date herewith.
C. The individuals presently operating the Assets to develop the
Technology are employed by BHP. BHP desires to provide to Altair the services
necessary to operate the Assets and develop the Technology, and Altair desires
to utilize such services provided by BHP, subject to the terms and conditions of
this Agreement.
Agreement:
NOW, THEREFORE, for and in consideration of the covenants and
agreements hereinafter set forth and Altair's payment of the Purchase Price, the
receipt and legal sufficiency of which are hereby acknowledged, BHP and Altair
hereby agree as follows:
1. Term. The term (the "Term") of this Agreement shall be for a period
commencing on the Effective Date and continuing until December 31, 2000.
2. Services. BHP shall provide to Altair the development and operation
services described in this Section 2 (the "Services") on a full-time basis
during the Term, subject to the terms and conditions of this Agreement. Subject
to the limitations of Section 6(a), the Services shall include use of the Assets
to continue testing of the Technology, augmentation of the test results and all
other services necessary to develop the Technology and operate the Assets in a
manner consistent with the operation of the Assets during the six-month period
prior to the commencement of the Term. BHP shall provide such Services in
consideration of the Purchase Price paid by Altair for the Assets, and, except
as provided in Section 9, Altair shall not be required to pay any additional
fees for the Services. BHP warrants that all employees providing the Services
are qualified, competent and experienced in their respective capacities and
possess and maintain valid certification of training associated with their
respective fields of expertise.
3. Standard of Performance. BHP shall perform the Services with due
diligence and care, in a good and workmanlike manner, in accordance with best
industry standards, without undue delays and in conformity in all respects with
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<PAGE>
the terms and conditions of this Agreement. BHP shall ensure that the employees
providing the Services comply with all applicable laws and regulations and local
customs as well as with the employment contract between the employee and BHP and
that they do not engage in any activities which may be prejudicial to the
maintenance of harmonious relations between Altair and/or BHP and/or
governmental, local or other authorities. The presence of any of Altair's
personnel and any supervisory activity carried out by them shall not relieve BHP
of any of its obligations, liability, or responsibilities in respect of
performance of the Services.
4. Safety, Health and Environment. BHP shall, and shall ensure that all
BHP's employees shall, at all times, strictly observe and comply with BHP's
Safety Policy as the same may be amended from time to time, a current copy of
which has previously been supplied to Altair and addresses both safety and
environmental issues (the "Safety Policy"). BHP covenants and agrees that it
shall provide to Altair a copy of any revision or modification of the Safety
Policy not less than twenty (20) days prior to the effective date of the
revision or modification.
5. Equipment. Altair shall make available to BHP the equipment and
other items described as the "Tangible Assets" on Exhibit A to the Asset
Purchase Agreement (the "Equipment"). BHP shall make available for Altair's use
a Jeol scanning electron microscope located at the Facility and shall maintain
such microscope in accordance with the following sentence. BHP shall maintain
the Equipment and any other machinery or tools used by BHP to provide the
Services in accordance with industry practice and to the manufacturer's
specifications. Any maintenance work or repairs deemed necessary for safe and
efficient operation of the Equipment in accordance with this Agreement shall be
performed by BHP; provided, however, Altair shall pay or reimburse BHP for all
reasonable service, maintenance and repair fees charged by third-party
independent contractors if, and to the extent, Altair approved the use of a
third-party contractor to provide such service, maintenance or repair and the
amount of the fee is supported by adequate documentation. Altair may inspect the
Equipment at any time or from time to time.
6. Termination of Employment.
(a) Voluntary Termination. Notwithstanding the provisions of
Section 2, in the event any employee identified as a Service Provider on Exhibit
A (each such employee, any substitutes for any such employee, and each other
employee or agent of BHP that provides any of the Services to Altair under this
Agreement a "Service Provider") voluntarily terminates his or her employment
relationship with BHP during the Term, BHP shall have no obligation to continue
to provide the Services previously provided by such Service Provider. Altair
may, at its discretion, hire, as its own employee and at its own expense, a
replacement for any Service Provider who voluntarily terminates his or her
employment with BHP. In such event, Altair shall be responsible for compliance
with applicable laws and statutes, whether local, state or federal, relating to
Altair's employment of such individuals.
(b) Involuntary Termination. During the Term, BHP shall not
(i) terminate, constructively or actually, its employment relationship with any
Service Provider, except as required by Section 6(d) below, (ii) encourage,
advise, coerce or provide any financial or other incentive for any Service
Provider to terminate his or her employment with BHP, (iii) reduce the wages,
salary or any other benefits of any Service Provider. If the employment of any
Service Provider is terminated in violation of the preceding sentence, BHP shall
promptly hire and train a substitute Service Provider at no expense to Altair.
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(c) Notice and Training. BHP shall give Altair a minimum of
fourteen (14) days advance notice of the termination of any Service Provider's
employment with BHP (which notice shall specify the cause of such termination)
or, if BHP has fewer than fourteen (14) days advance notice, BHP shall give
Altair notice as promptly as reasonably possible upon learning of such
termination. Altair and BHP shall cooperate in the training of any employee
hired by Altair or BHP to provide the Services previously provided by a Service
Provider whose employment relationship with BHP has been voluntarily or
involuntarily terminated. Altair may terminate its use of any or all of the
Services at any time during the Term for any reason; provided that, in the event
Altair completely terminates its use of all Services provided by an identifiable
Service Provider, BHP may terminate the employment of such Service Provider
without hiring or training a substitute Service Provider.
(d) Mandatory Termination. No later than October 15, 2000,
Altair shall provide BHP with a list of the Service Providers Altair intends to
hire following the expiration of the Term. BHP shall terminate its employment
relationship with each employee on said list on or before the last day of the
Term and shall not solicit or otherwise attempt to hire any such employee for a
period of one year after the expiration of the Term; provided, however, BHP's
obligations under this subsection (d) are conditioned upon Altair's extension to
all such employees at least five days prior to the end of the Term of an offer
of employment on terms and conditions commensurate with such employee's
experience and abilities and Altair's status as a development stage company.
7. Altair Not Employer. Nothing in this Agreement creates an employment
relationship between Altair and any Service Provider. BHP shall at all times
retain all Service Providers in its employment and remain liable to fulfill its
contractual and other legal obligations to them. BHP shall pay the salaries of
the Service Providers, withhold and pay any taxes related to the employment of
such Service Providers, carry all related workers compensation, unemployment and
other employee-related insurance required by law for the Service Providers, and,
except as inconsistent with this Agreement, fulfill all other obligations of an
employer with respect to each of the Service Providers. In order to clarify to
the Service Providers that they are employees of BHP, BHP shall give written
notice to each Service Provider stating that, although he or she is requested to
perform the Services for Altair's benefit pursuant to this Agreement, he or she
shall at all times during the Term remain in the employment of BHP. Neither BHP
nor Altair shall take a contrary position in any filing, lawsuit, hearing,
application, or any other document or proceeding.
(a) This Service Agreement is not intended to nor does it create any
third party beneficiary relationship between any Service Provider, and with
either BHP or Altair.
8. Offers of Employment. Altair may, at its discretion, extend an offer
of employment to any Service Provider at any time during or following the Term
on any terms or conditions it deems appropriate. BHP hereby consents to, and
waives any claims with respect to, any such offer of employment by Altair to any
of the Service Providers. This Agreement shall not create, or purport to create,
any obligation on the Service Providers to accept employment with Altair or for
BHP to cause any Service Provider to accept employment with Altair. Altair may
hire persons other than the Service Providers to work on the Assets at any time,
and from time to time, during or after the Term.
9. Additional Costs. In the event Altair causes a Service Provider to
work overtime, Altair shall reimburse BHP the additional salary BHP is required
to pay such Service Provider as a result of such overtime. BHP shall have no
obligation to pay any bonus to any Service Provider, except any bonus that may
be required by any agreement between BHP and a Service Provider.
10. Employee Additional Time. At any time that Altair is not using the
services provided by any Service Provider, BHP may cause such Service Provider
to work on projects of BHP unrelated to the Assets or Technology (as defined in
the Asset Purchase Agreement); provided, however, Altair may, at any time,
without notice, cause BHP to redirect the services of such Service Provider to
the development or operation of the Assets.
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Exhibit 10.3
11. Direction of Service Providers.
(a) BHP shall be responsible for the day-to-day supervision,
direction, instruction and training of the Service Providers, and the Service
Providers shall remain subject to all rules, regulations and limitations
governing employees of BHP. Notwithstanding the foregoing, upon Altair's
request, BHP shall redirect the efforts of a Service Provider from one or more
tasks to one or more different tasks.
(b) BHP hereby authorizes Altair to act on its behalf, as its
designated agent, to enforce strict discipline and good order and to remove from
the Facility any person employed by BHP who is incompetent, disorderly or
intemperate, or who violates the Safety Policy. Altair shall not be liable to
BHP for any costs incurred by BHP resulting from such removal, including any
indemnity or compensation or replacement cost.
(c) Each of Altair and BHP shall use commercially reasonable
efforts to ensure that their employees do not interfere with the operations of
the other entity.
12. Representations and Warranties. BHP represents and warrants to
Altair as follows:
(a) Benefit Plans. Altair will at no time have any obligation
or liability, either immediately or upon the occurrence of a subsequent event,
to any Service Provider under any Benefit Plan (as hereinafter defined) as a
result of either the consummation of the transaction contemplated by the Asset
Purchase Agreement or Altair's use of the Services pursuant to this Agreement.
"Benefit Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workers' compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, established, arranged or maintained by BHP or
any corporate group of which BHP is or was a member, to which BHP contributes or
has contributed, or under which any employee, officer, director or former
employee, officer or director of BHP or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
(b) Labor Matters. None of the Service Providers has filed or,
to BHP's Knowledge, threatened to file, any action against BHP under the Fair
Labor Standards Act, the Occupational Safety and Health Act, or any other law,
regulation, order or other legal requirement governing the conditions of such
person's employment with BHP, and there is no basis or ground for any such
claim. None of the Service Providers is employed with BHP pursuant to any
collective bargaining agreement or other labor contract. There has not been,
and, to the Knowledge of BHP, there is not presently pending, existing or
threatened, any strike, slowdown, or picketing, and there is no work stoppage,
by any of the Service Providers or labor arbitration or proceeding in respect of
the grievance of any Service Provider. With respect to each of the Service
Providers, BHP is, and will be throughout the Term, in material compliance with
all applicable laws relating to the employment of such Service Provider,
including provisions thereof relating to wages, insurance, occupational safety
and health, hours, equal opportunity, collective bargaining, age and sex
discrimination and the withholding and payment of social security and other
taxes.
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(c) Services and Service Providers. The Services described on
in Section 2 above are all of the services necessary to utilize, operate and
develop the Assets in the same manner, and at the same level, as BHP has
utilized and operated the Assets and developed the Technology during the six
calendar months prior to the date first set forth above. Other than services
provided by management of BHP or independent contractors, BHP does not use any
services in connection with its utilization and operation of the Assets and its
development of the Technology. The Service Providers described on Exhibit A are
all of thepersonnel necessary to utilize and operate the Assets and develop the
Technology in the same manner, and at the same level, as BHP has utilized and
operated the Assets and developed the Technology during the six calendar months
prior to the date first set forth above.
(d) Employment Agreements, Except as set forth on Exhibit B
hereto, BHP has not entered into, and is not bound by, any agreement, judgment,
order or other obligation (written or oral) with respect to the employment of,
or provision of benefits to, any of the Service Providers.
13. Confidentiality and Inventions.
(a) Neither Seller nor any of the Service Providers shall at
any time during the term or thereafter use for the benefit of any person other
than Altair or disclose directly or indirectly to any person or entity not in
the employ of Altair any Altair Confidential Information (as hereinafter
defined).
(b) All technical advances, improvements, developments,
substitutions and/or modifications by BHP, Altair or any Service Provider which
(i) are reduced to practice, (ii) relate to the Technology and (iii) originate
with the work of any Service Provider or any other person working at the
Facility for the benefit of Altair shall be the sole property of Altair and
shall be deemed to be "Altair Confidential Information."
(c) As requested by Altair, BHP shall use its best efforts to
cause each of the Service Providers to enter into an agreement in a form
designated by Altair reflecting the confidentiality and ownership provisions of
this Section 13 and prohibiting such Service Provider from competing with
Altair, the Technology or the Assets for a period of two (2) years following the
later of termination of such Service Provider's employment with BHP or, if such
Service Provider is subsequently hired by Altair, termination of such Service
Provider's employment with Altair. A copy of BHP's Employee Confidential
Information and Inventions Agreement is attached hereto as Exhibit C and BHP has
entered into such an Agreement with each Service Provider.
(d) BHP shall not permit persons other than the Service
Providers or Altair full-time employees to visit the Facility without the
express written consent of Altair.
(e) "Altair Confidential Information" means (i) any and all
patents, process, technical data, know-how, intellectual property, trade
secrets, operating instructions and any additional information with respect to
the Assets, and (ii) any and all technical data, patents, processes, know-how,
intellectual property, trade secrets, operating instructions and any additional
information which relates to research, products, services, hardware or software,
developments, inventions, processes, designs, drawings, engineering, business
plans, marketing or finances of Altair; provided, however, Altair Confidential
Information shall not include information that (i) is or becomes generally
usable by the public other than as a result of a disclosure by Seller or a
Service Provider, (ii) was in the possession of BHP or a Service Provider on a
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non-confidential basis prior to its disclosure by Altair (other than information
related to the Assets), or (iii) was given to BHP or a Service Provider by a
person who is not otherwise bound by a confidentiality agreement with Altair or
is not otherwise prohibited from transmitting the information to BHP or a
Service Provider.
14. Amounts Payable. Any amounts that come to be owed under this
Agreement shall be due and payable within thirty (30) days of the receipt by the
payor of an invoice detailing the amount owed and providing reasonable
supporting documentation.
15. Default. If either party shall breach or default under any of its
representations, warranties or covenants contained in this Agreement, the
non-defaulting party shall give written notice of such breach or default to the
defaulting party, after which the defaulting party shall have fifteen days to
cure the default or breach. If the defaulting party shall not cure such default
or breach within fifteen days, the non-defaulting party shall be entitled to
pursue any remedy available at law or equity, including the indemnification
relief set forth in Sections 16 and 17 below. Notwithstanding anything in this
Section 15 to the contrary, the notice requirement and fifteen day right to cure
provided for in this Section 14 shall not apply if the non-defaulting party has
been sued or is threatened with legal action as a result of the alleged breach
or default. In addition, the fifteen day cure period shall not apply to a breach
by Seller or any Service Provider of the covenants contained in 13 hereof.
16. Indemnification by BHP. BHP unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Altair from
and against, and shall reimburse Altair for, each and every Loss (as defined in
the Asset Purchase Agreement) paid, imposed on or incurred by Altair, directly
or indirectly, relating to, resulting from or arising out of: (a) any inaccuracy
in any representation or warranty or any breach or nonfulfillment of any
covenant, agreement or other obligation of BHP under this Agreement, or (b) any
Loss, injury or damage that arises from the activities of any Service Provider
while such Service Provider is acting under BHP's supervision and direction or
on any project other than the operation or development of the Assets. The
provisions of Section 7.2 (other than the first sentence) and Section 7.4 of the
Asset Purchase Agreement shall apply to any claim of indemnification made under
this Section. The provisions of this Section 16 shall not be construed to
relieve any insurer of its obligations to pay any insurance claims in accordance
with the provisions of any valid insurance policy.
17. Indemnification by Altair. Altair unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless BHP from and
against, and shall reimburse BHP for, each and every Loss paid, imposed on or
incurred by BHP, directly or indirectly, relating to, resulting from or arising
out of: (a) any inaccuracy in any representation or warranty or any breach or
nonfulfillment of any covenant, agreement or other obligation of Altair under
this Agreement, or (b) any Loss, injury or damage that arises from the
activities of any Service Provider while such Service Provider is acting under
Altair's direct supervision. The provisions of Section 7.3 (other than the first
sentence) and Section 7.4 of the Asset Purchase Agreement shall apply to any
claim of indemnification made under this Section. The provisions of this Section
17 shall not be construed to relieve any insurer of its obligations to pay any
insurance claims in accordance with the provisions of any valid insurance
policy.
18. Insurance. Each of Altair and BHP shall provide and keep in force
until this Agreement is terminated (i) Comprehensive General Liability Insurance
with a limit of liability of not less than $2,000,000, combined single limit,
per occurrence, for bodily injury and property damage, and (ii) Comprehensive
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Automobile Liability Insurance covering all vehicles, hired, owned and
non-owned, with a limit of liability of not less than the minimum required by
Nevada law per occurrence for bodily injury and property damage.
19. Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement signed
by the parties hereto.
20. Waiver; Consents. Any failure of a party to comply with any
obligation, covenant, agreement or condition herein may be waived by each party
affected thereby only by a written instrument signed by the party granting such
waiver. No waiver, or failure to insist upon strict compliance, by any party of
any term or condition or any breach of any term or condition contained in this
Agreement, in any one or more instances, shall be construed to be a waiver of,
or estoppel with respect to, any other term or condition or any other breach of
the same.
21. Effect of Expiration/Termination. Following the expiration or
termination of this Agreement, the parties shall no longer be bound by the terms
and conditions hereof except, (a) to the extent necessary for the payment or
reimbursement for funds advanced before such expiration or termination, (b)
obligations of the parties hereunder with respect to confidentiality and
indemnification, which shall survive the expiration or termination of this
Agreement; and (c) to the extent necessary to enforce the rights and obligations
of the parties arising before such expiration or termination or, if pursuant to
clauses (a) or (b).
22. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when (i) delivered
personally, or (ii) sent by telecopier (with receipt confirmed), provided that a
copy is mailed by regular or express mail or (iii) received by the addressee, if
sent by Express Mail, Federal Express or other express delivery service or (iv)
three (3) days after being sent by registered or certified mail, return receipt
requested, in each case to the other party at the following addresses and
telecopier numbers (or to such other address or telecopier number for a party as
shall be specified in writing; provided that notices of a change of address or
telecopier number shall be effective only upon receipt thereof):
if to BHP, to:
BHP Minerals International Inc.
204 Edison Way
Reno, Nevada 89502
Attn: General Manager
Facsimile: (775) 856-1619
if to Altair, to:
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Attn: President
Facsimile: (307) 587-8357
with a copy to :
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Mineral Recovery Systems
230 South Rock Boulevard
Suite 21
Reno, Nevada 89502
Attn: Chief Financial Officer
Facsimile (775) 857-1920
23. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
party without the prior written consent of the other party hereto.
Exhibit 10.3
24. Severability. Any provision hereof prohibited by or deemed
unlawful or unenforceable under any applicable law of any jurisdiction shall, as
to such jurisdiction, be ineffective without affecting any other provision of
this Agreement. To the full extent, however, that the provisions of such
applicable law may be waived, they are hereby waived to the end that this
Agreement be deemed to be a valid and binding agreement enforceable in
accordance with its terms. In the event that any term or provision of this
Agreement shall be held invalid by a competent court or government agency, the
remainder of this Agreement shall not be affected thereby and the parties hereto
shall continue to be bound by the remaining terms hereof. In such event, the
relevant term or provision (or should such term(s) or provision(s) be a crucial
element of this Agreement, then the entire Agreement) shall be renegotiated by
the parties in a good faith effort to achieve mutual agreement consistent with
such holding and the parties shall continue to perform under this Agreement in a
manner consistent with its intent and objectives.
25. Governing Law. This Agreement shall be deemed to have been
executed in the State of Nevada and shall be governed by the laws of the State
of Nevada, (regardless of the laws that might otherwise govern under applicable
Nevada principles of conflicts of law) as to all matters, including matters of
validity, construction, effect, performance, and remedies. The parties hereby
submit to the jurisdiction of the courts in the State of Nevada and the United
States District Court, District of Nevada, any claims or lawsuits arising form
this Agreement, and waive any objections based on inconvenient forum.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement. This Agreement may be
executed by facsimile signatures, each of which will be deemed an original.
27. Entire Agreement. This Agreement, including the instruments,
memoranda, certificates, schedules, exhibits, and other documents referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties, covenants, or undertakings other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, including without limitation, the Letter Agreement dated
September 23, 1999 between BHP and Altair.
28. Attorneys' Fees. In the event any party hereto institutes an
action against any other party hereto for a claim arising out of or to enforce
this
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Agreement, the party that prevails shall be entitled to recover reasonable
attorneys' fees, costs and expenses incurred, in addition to any other relief to
which they may be entitled.
29. Construction. This Agreement shall be construed as though all
parties had drafted it. The boldfaced section descriptions shall be and are for
reference only and shall not be deemed to alter to limit the meaning of this
Agreement in any way.
30. Non-Exclusivity of Remedies. The rights and remedies of the parties
hereto shall not be mutually exclusive, and the exercise of one or more of the
provisions of this Agreement shall not preclude the exercise of any other
provision. Each of the parties confirms that damages at law may be an inadequate
remedy for a breach or threatened breach of any of the provisions hereof. The
respective rights and obligations hereunder shall be enforceable by specific
performance, injunction, or other equitable remedy, and nothing herein contained
is intended to or shall limit or affect any rights at law or by statute or
otherwise of any party hereto as against the other party for a breach or
threatened breach of any provision hereof.
31. Nature of Relationship. Nothing contained in this Agreement shall
be deemed to create a partnership, joint venture, agency or fiduciary
relationship of any kind between BHP and Altair. Neither Altair no BHP shall
have authority to act for, bind, create or assume any obligation or
responsibility on behalf of the other party.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
"Altair"
Altair International Inc.,
an Ontario corporation
By:
Its:
"BHP"
BHP Minerals International Inc.,
a Delaware corporation
By:
Its:
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Exhibit 10.3
Exhibit A
to
Services Agreement
Service Providers
-----------------
Name Position
- ---- --------
Brief, Kevin Met. Technician
Burkholder, Jim Sr. Technician
Chou, Ka-Leung Met.Engineer
Dobson, Jerry Sr. Process Engineer
Duyvesteyn, Willem General Manager
Ellsworth, Doug Manager, Tech. Support
Fox, Bill Lab Supervisor
Franzen, Gus Mechanic's Assistant
Lutch, Jamie Met. Engineer
Membrado, Jackie Technician
Ortega, Ed Engineer
Prochazka, Jan Met. Engineer
Sabacky, Bruce Manager Process Development
Schauer, Ed Chemist
Spitler, Tim Sr. Project Engineer
Verhulst, Dirk Sr. Met Engineer
VreNon, Anita Office Supervisor
West-Sells, Paul Met. Engineer
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Exhibit 10.3
Exhibit B
to
Services Agreement
Employment Arrangements
All of the Service Providers are employed by BHP on an at-will basis
that is terminable by either party at any time without notice or
penalty. BHP has not entered into any written agreement with respect to
the employment of any Service Provider.
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ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
THIS ASSET PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of November 15, 1999 (the "Effective Date"), by and between
Altair International Inc., an Ontario corporation ("Buyer") and BHP Minerals
International Inc., a Delaware corporation ("Seller"). All capitalized terms not
otherwise specifically defined in the text hereof shall have the meanings set
forth in Article X below.
Background
1. Seller owns certain technology and other assets related to use
of hydrometallurgical processes developed by Seller in
connection with Seller's ilmenite upgrading project work
conducted at BHP's Reno Facility (as defined in this
Agreement).
2. Buyer and Seller have entered into a certain Letter Agreement
dated September 23, 1999 (the "Letter Agreement") with respect
to Buyer's purchase, and Seller's sale, of the Technology (as
defined in this Agreement) and related assets of Seller.
3. Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the Technology and related assets of Seller,
all as more particularly set forth below.
Agreement
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS; CLOSING
1.1 Assets. Subject to the terms and conditions of this Agreement, at
the Closing, Seller shall sell, transfer, assign, and deliver to Buyer, and
Buyer shall purchase from Seller, all right, title and interest in and to the
Technology, the Tangible Assets, and the Other Assets, each as described and
defined on Exhibit A hereto (collectively, the "Assets"), which exhibit is
expressly incorporated herein.
1.2 Exclusion of Liabilities. Seller understands, agrees and
acknowledges that Buyer shall not assume or have any responsibility, liability
or obligation for any obligation, commitment, responsibility, or other Liability
of any kind or nature (a) incurred by Seller, (b) related to the operation or
development of the Assets prior to the Closing Date, or (c) resulting from any
action or omission of Seller prior to the Closing Date, including, without
limitation, Liabilities for real property, income, franchise and all other taxes
of Seller, Liabilities for contractual obligations of Seller which are not
specifically assumed by Buyer under this Agreement, Liabilities for pending or
threatened litigation, or Liabilities related in any way to any profit sharing,
401(k) savings, employee pension plans, deferred compensation plan, severance
pay, cafeteria plan, life insurance, medical, dental, disability, welfare or
vacation plan of Seller or any other plan or arrangement of Seller of any kind
or character related to its employees.
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1.3 Purchase Price.
(a) Unless otherwise specified, all amounts set forth in this
Agreement are in Australian Dollars. Nonetheless, Buyer may pay any
Australian Dollar denominated obligation under this Agreement using
United States Dollars, and such United States Dollar payments shall be
converted into Australian Dollars based upon the noon buying rate in
New York City for Australian Dollars on the date such payment is made
certified by the Federal Reserve Bank of New York.
(b) The total purchase price for all of the Assets (the
"Purchase Price") shall be Fifteen Million Dollars ($15,000,000),
payable as follows: (i) Three Million Seven Hundred and Fifty Thousand
Dollars ($3,750,000) in cash payable at Closing, (ii) Three Million
Seven Hundred and Fifty Thousand Dollars ($3,750,000) in cash payable
on or before February 15, 2000, (iii) Three Million Seven Hundred and
Fifty Thousand Dollars ($3,750,000) in cash payable on or before May
15, 2000, and (iv) Three Million Seven Hundred and Fifty Thousand
Dollars ($3,750,000) in cash payable on or before August 15, 2000.
(c) The Purchase Price shall be allocated among the Assets for
all purposes in accordance with the following percentages: Ten Percent
(10%) of the Purchase Price ($1,500,000) shall be allocated to the
Services Agreement described in Section 1.5(a)(v) below; Twenty Percent
(20%) of the Purchase Price ($3,000,000) shall be allocated to the
Tangible Assets; and Seventy Percent (70%) of the Purchase Price
($10,500,000) shall be allocated to the Technology .
(d) All payments of the Purchase Price shall be made by wire
transfer to an account designated by Seller.
1.4 Closing. The parties agree to close the purchase and sale of the
Assets and the consummation of the other transactions contemplated by this
Agreement (the "Closing") on November 16, 1999 or such later date as the parties
shall mutually agree (the "Closing Date").
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1.5 Closing Deliveries.
(a) At the Closing, Seller shall deliver to Buyer the
following:
(i) An executed Bill of Sale in the form of Exhibit
B, transferring to Buyer all of the Tangible Assets, free and
clear of all Encumbrances arising by, through or under the
actions of Seller prior to the Closing;
(ii) An executed counterpart of an Assignment
Agreement in the form of Exhibit C, assigning to Buyer the
Technology free and clear of all past Encumbrances;
(iii) An executed counterpart of an Assignment and
Assumption Agreement in the form of Exhibit D, assigning to
Buyer the Asset Related Contracts free and clear of all past
Encumbrances;
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(iv) An executed counterpart of a Lease Agreement in
the form attached hereto as of Exhibit E;
(v) An executed counterpart of a Services Agreement
in the form attached hereto as Exhibit F;
(vi) Possession of all of the Assets;
(vii) An executed Receipt in substantially the form
of Exhibit G;
(viii) Such other documents, agreements, assignments,
instruments and certificates as may be required by this
Agreement or as may be reasonably requested by Buyer to carry
out the terms and conditions of this Agreement.
(b) At the Closing, Buyer shall deliver to Seller the
following:
(i) A wire transfer to an account designated by
Seller in the amount of $3,750,000;
(ii) An executed counterpart of an Assignment and
Assumption Agreement in the form of Exhibit D, assigning to
Buyer the Asset Related Contracts free and clear of all
Encumbrances;
(iii) An executed counterpart of a Lease Agreement in
the form attached hereto as Exhibit E;
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(iv) An executed counterpart of a Services Agreement
in the form attached hereto as Exhibit F.
1.6 Risk of Loss. Seller shall retain all risk of loss with respect to
the Assets until the Assets have been tendered to Buyer at Closing.
1.7 Buyer's Rights and Obligations. Upon Closing, Buyer shall have
ownership and possession of the Assets and the right to use the Assets for any
purpose and to realize all benefits, known or unknown, that may be derived from
the ownership or application thereof, subject to Section 6.5 and 6.6.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, as of the Closing
Date:
2.1 Organization, Existence and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
Delaware and has full corporate power and authority to carry on its business as
now being conducted, to own and operate its properties and assets, and to
perform all of its obligations under the Transaction Documents. Seller is
qualified to do business in Nevada and any other jurisdiction in which failure
to qualify could have a Material Adverse Effect on the Assets or the rights of
Buyer under this Agreement.
2.2 Authority. Seller has the absolute and unrestricted right, power,
authority and capacity to execute and deliver this Agreement and all other
Transaction Documents, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. No corporate
proceedings or authorization by Seller or its shareholders, which have not
already been taken, are necessary to authorize the execution and delivery of
this Agreement or the Transaction Documents, the performance of Seller's
obligations hereunder or thereunder, or the consummation of the transactions
contemplated hereby or thereby. This Agreement has been, and the Transaction
Documents, when executed and delivered by Seller will have been, duly and
validly executed and delivered by Seller, and this Agreement and each of the
Transaction Documents constitutes the legal, valid and binding agreement of
Seller enforceable against Seller in accordance with its terms. Each individual
executing this Agreement and the other Transaction Documents on behalf of Seller
has the legal power, right and actual authority to bind Seller to the terms and
conditions hereof and thereof.
2.3 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement or the other Transaction Documents, the consummation
of the transactions contemplated hereby and thereby, nor the compliance by
Seller with any of the provisions hereof and thereof (i) conflicts with or
violates any provision of the Certificate of Incorporation, Bylaws, or other
charter or governing documents of Seller, (ii) will result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, contract,
agreement, commitment, bond, mortgage, indenture, license, lease, pledge
agreement or other instrument or obligation to which Seller is a party or by
which Seller or any of its properties or assets may be bound, including, without
limitation, any agreement with respect to the sale by Seller of any of its
properties or assets, (iii) violates or conflicts with any provision of any
Legal Requirement binding upon Seller, or (iv) will result in, or require, the
creation or imposition of, any Encumbrance upon or with respect to any of the
Assets, or impair the ability of Seller to carry out its obligations under this
Agreement or the Transaction Documents.
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2.4 Absence of Undisclosed Liabilities. Seller does not have any
Liabilities, including, without limitation, any Liabilities resulting from
failure to comply with any Legal Requirement applicable to Seller or measured by
the income or sales of Seller for any period, which could adversely affect the
Assets, give rise to an Encumbrance against the Assets or adversely affect
Seller's ability to carry out the transactions contemplated by this Agreement
and the Transaction Documents. As of the Closing Date there was no transaction
previously entered into or any state of facts or circumstances existing which
could give rise to, cause, or result in any Liability of Seller which could
adversely affect the Assets, give rise to an Encumbrance against the Assets or
adversely affect Seller's ability to carry out the transactions contemplated by
this Agreement and the Transaction Documents.
2.5 Title to Assets and Related Matters.
(a) Seller owns all of the Assets. Seller owns all of the
Technology free and clear of all Encumbrances and claims or rights of any other
Person. Seller owns all of the Tangible Assets and Other Assets free and clear
of all Encumbrances and the claims or rights of any other Person arising by,
through or under Seller. At Closing, upon the consummation of all transactions
and deliveries required by Article I of this Agreement, Seller shall have
conveyed to Buyer, and Buyer shall have acquired, (i) all right, title and
interest in and to the Technology, free and clear of all Encumbrances, claims or
rights of any other Person, and (ii) all right, title and interest in and to the
Tangible Assets and Other Assets, free and clear of all Encumbrances and the
claims or rights of any other Person arising by, through or under Seller.
(b) All plants, property, equipment and other capital assets
included in the Assets are structurally sound with no known Material defects and
are in good operating condition and repair (subject to normal wear and tear) so
as to permit the operation of the Assets as presently operated. No such plant,
property, equipment or other capital asset to the best of Seller's knowledge is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs which are not Material in nature or cost.
(c) There are no outstanding or, to the Knowledge of Seller,
threatened, claims of infringement, actions, disputes, or disagreements with
respect to the Technology. Seller has delivered to Buyer a complete and accurate
copy (or the original where available) of each registration, certificate,
application or other document relating to the Technology. Neither Seller nor any
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predecessor in interest of Seller has granted any Person any rights with respect
to the Technology under any license agreement or other arrangement. No Person
has a right to receive a royalty or other payment in respect of any item of the
Technology pursuant to any contractual or other arrangement. Seller has not
granted any license, sublicense or other right relating in whole or in part to
any of the Technology. Seller has not received any notice that its or any other
Person's use of any item of the Technology is interfering with, infringing upon
or otherwise violating the rights of any Person in or to such Technology, and no
proceedings have been instituted against or notices received by Seller alleging
that any use or proposed use of any item of the Technology infringes upon or
otherwise violates any rights of any Person in or to the Technology.
(d) To the Knowledge of Seller, there are no existing patents
or applications for patents, provisional applications to patent and other patent
rights filed with respect to a process that is similar to the Technology. With
respect to the patent applications, provisional applications to patent and other
patent rights identified in Section A.6. of Exhibit A hereto, Seller reasonably
believes the applications, provisional applications to patent and other patent
rights represent work eligible for patent protection and Seller has no Knowledge
of information which would preclude the issuance of such patents.
(e) Notwithstanding anything to the contrary in Sections
2.5(a) through (d) above, Seller does not represent or warrant (a) that the
Technology does not infringe any third party rights, (b) that the Assets are
merchantable or fit for a particular purpose, (c) that the Technology is valid,
enforceable or has any particular scope, or (d) that Buyer can or will be able
to understand, use or commercialize the Technology. Seller has previously
delivered to Buyer a copy of a letter dated July 28, 1997 from Dupont, as well
as a copy of a reply dated July 31, 1997. The matter involves Tim Spitler.
2.6 Compliance With Laws. Seller is, to its Knowledge, in compliance
with all Legal Requirements applicable to the ownership of the Assets. Seller
has no basis to expect, nor has it received, any Order, notice, or other
communication from any Governmental Authority of any alleged, actual, or
potential violation and/or failure to comply with any such Legal Requirement.
Seller has obtained all applicable testing Permits and has informed Buyer that
Buyer may possibly be required to obtain a production permit or permits from
applicable Governmental Authorities.
2.7 Litigation. (i) Seller is not subject to any Order in which relief
is sought involving, affecting, or relating to the ownership, operation, or use
of the Assets or the matters covered by the Transaction Documents which would
prevent, delay, or make illegal the transactions contemplated by this Agreement
or the Transaction Documents; (ii) there are no Proceedings pending or, to the
Knowledge of Seller, threatened against, involving, affecting or relating to
Seller's ownership, operation, use or proposed transfer of the Assets before any
mediator, arbitrator or Governmental Authority, and (iii) to the Knowledge of
Seller, there exist no facts to serve as a basis for the institution of any
Proceeding against Seller or any of the Assets or the conduct of the business of
Seller or which would prohibit or adversely affect the ability of Seller to
carry out its obligations under this Agreement or the Transaction Documents.
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2.8 Governmental Authorization. Seller has, to its Knowledge, obtained
each federal, state, county, local or foreign governmental consent, license,
permit, grant, or other authorization of a Governmental Authority (i) pursuant
to which Seller currently operates or holds any interest in any of the Assets,
and (ii) that is required for the operation or holding of the Assets ((i) and
(ii) collectively referred to as "Seller Authorizations"), and all of such
Seller Authorizations are in full force and effect.
2.9 No Broker's or Finder's Fees. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Seller in
connection with this Agreement or the transactions contemplated hereby, and no
Person, including Seller, is or will be entitled to any broker's or finder's fee
or any other commission or similar fee or expense, directly or indirectly, in
connection with this Agreement, the Transaction Documents or the transactions
contemplated hereby or thereby.
2.10 Bankruptcy. Seller has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator or
trustee of it or any of its property or assets, or commenced any proceeding
under any reorganization arrangement, readjustment of debt, conservation,
dissolution or liquidation law or statute of any jurisdiction; and no such
action or proceeding has been commenced or threatened against Seller by any
creditor, claimant, governmental authority or any other person.
2.11 Personal Property. There is no personal property necessary to the
use of the Technology or any other Assets that is not included in the Assets.
All of the Assets are located at the Seller's offices at 204 Edison Way, Reno,
NV 89502 ("BHP's Reno Facility").
2.12 Tax Matters. All federal, state and local taxes, assessments,
excises, interests, penalties, and other levies owed by Seller with respect to
the Assets or Seller's development or operation of the Assets have been fully
paid. Except as contemplated by Section 6.7 (regarding proration of property
taxes and payment by Buyer of transfer taxes), no event has occurred that could
reasonably be expected to impose on Buyer any liability accruing prior to the
Closing Date or arising as a result of Seller's use or ownership of the Assets
for any taxes, penalties or interest due or to become due from any taxing
authority.
2.13 Environmental Matters. The Assets have at all times been owned and
operated in compliance with all "Environmental Laws" (as defined below), and, to
the Knowledge of Seller, there are no circumstances which may prevent or
interfere with such compliance in the future or require a substantial
expenditure in order to ensure substantial compliance. In the last five (5)
years, Seller has not received any communication (whether written or oral),
whether from a Governmental Authority, citizen group, employee or otherwise,
that alleges that any of the Assets is not in full compliance with Environmental
Laws. All permits, licenses, certificates, authorizations, approvals,
registrations, and other similar consents granted or issued by any Governmental
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Authority (collectively, the "Permits"), registrations and other Governmental
Authorizations currently held by Seller with respect to the Assets are as
follows: (i) special use permit issued by the City of Reno to operate a minerals
testing laboratory, Case No. 127-93 and (ii) special use permit issued by the
City of Reno to allow expansion to existing facility that generates hazardous
waste, Case No. 127-93/File 2, which are, to the Knowledge of Seller, all
Permits necessary for the ownership and operation of the Assets (including,
without limitation, the use and development of the Technology). Seller has not
been notified by any Governmental Authority that any Permit will be modified,
suspended or revoked or cannot be renewed in the Ordinary Course of Business,
and to the Knowledge of Seller, no Permit will be modified, suspended or
revoked, or cannot be renewed in the Ordinary Course of Business of Buyer.
Seller has obtained all applicable testing Permits and has informed Buyer that
Buyer may possibly be required to obtain a production permit or permits from
applicable Governmental Authorities.
(a) There is no "Environmental Notice" (as defined below) that
is (i) pending or, to the Knowledge of Seller, threatened with respect to the
Assets or (ii) to the Knowledge of Seller, pending or threatened against any
Person whose liability for such Environmental Notice may have been retained or
assumed by or could reasonably be imputed or attributed to Buyer as a result of
its acquisition of the Assets or consummation of the transaction contemplated by
this Agreement.
(b) To Seller's Knowledge, there is no past or present action,
activity, circumstance, condition, event or incident arising from the operation,
ownership or use of any Asset by Seller, including, without limitation, the
release, emission, discharge or disposal of any "Pollutant Material" (as defined
below) into the "Environment" (as defined below), that (i) could reasonably be
expected to result in the incurrence of costs under Environmental Laws or (ii)
could reasonably be expected to form the basis of any Environmental Notice
against or with respect to Seller or against any Person whose liability for any
Environmental Notice may have been retained or assumed by or could be imputed or
attributed to Buyer as a result of its acquisition of the Assets or the
consummation of the transactions contemplated by this Agreement.
(c) For purposes of this Section 2.13:
(i) "Environment" means any surface water, ground
water, drinking water supply, land surface or subsurface strata,
ambient air and any indoor workplace.
(ii) "Environmental Notice" means any written notice
by any Person alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental costs, harm or damages to person, property, natural
resources or other fines or penalties) arising out of, based on or
resulting from (a) the emission, discharge, disposal, release or
threatened release in or into the Environment of any Pollutant Material
or (b) circumstances forming the basis of any violation, or alleged
violation, of any applicable Environmental Law.
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(iii) "Environmental Laws" means all national, state,
local and foreign laws, codes, regulations, common law, requirements,
directives, Orders, and administrative or judicial interpretations
thereof, all as in effect on the date hereof or on the Closing Date,
relating to pollution, the protection of the Environment or the
emission, discharge, disposal, release or threatened release of
Pollutant Material in or into the Environment, including without
limitation the Clean Air Act, 42 U.S.C. ss. 7401, et seq., the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. ss. 9601, et seq., the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1321, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., and the
Toxic Substances Control Act, ss. 15 U.S.C. ss. 2601, et seq.
(iv) "Pollutant Material" means pollutants,
contaminants or chemical, industrial, hazardous or toxic materials or
wastes, including, without limitation, petroleum and petroleum
products.
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2.14 Contracts. Except for contracts described under the heading "Other
Assets" on Exhibit A, Seller is not a party to or bound by an contract or
agreement, whether written or oral, related in any way to the Assets
(collectively, the "Asset Related Contracts"), including without limitation, any
contract or agreement related to the lease, maintenance, operation, or use of
any of the Assets . Seller has (i) performed all of the obligations required to
be performed by it, (ii) is entitled to all benefits under, and (iii) is not
alleged to be in default in respect of, any Asset Related Contract. Each of the
Asset Related Contracts is in full force and effect, unamended, and there exists
no default or event of default or event, occurrence, condition or act, with
respect to Seller or with respect to the other contracting party, or otherwise
that, with or without the giving of notice, the lapse of the time or the
happening of any other event or conditions, could reasonably be expected to (A)
become a default or event of default under any Asset Related Contract, or (B)
result in the loss or expiration of any Material right or option by Seller (or
the gain thereof by any third party) under any Asset Related Contract. True,
correct and complete copies of all Asset Related Contracts have been delivered
to Buyer. Exhibit A lists each Asset Related Contract for which the consent,
waiver or approval of any third party to such Asset Related Contract is required
thereunder in connection with the transactions contemplated by this Agreement or
for such Asset Related Contract to remain in effect without modification after
the Closing. Such list is complete and accurate.
2. Flood of 1997. Seller has informed Buyer that in January of 1997, a
100-year flood occurred causing water damage to BHP's Reno Facility. Subsequent
to that flood, Seller has installed equipment and various barriers in the pilot
plant located at BHP's Reno Facility to preclude damage caused by a flood of
equal or lesser magnitude than the 1997 flood.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows as of the Closing Date:
3.1 Organization, Existence and Good Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
Province of Ontario, is qualified to transact business in the State of Nevada
and has full corporate power and authority to carry on its business as now being
conducted, to own and operate its properties and assets, and to perform all of
its obligations under the Transaction Documents.
3.2 Authority. Buyer has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, as evidenced by
the attached Resolution of Buyer's Board of Directors attached as Exhibit H.
This Agreement has been duly and validly executed and delivered by Buyer and
constitutes the legal, valid and binding agreement of Buyer enforceable against
Buyer in accordance with its terms, except as such enforceability may be limited
by bankruptcy and the laws affecting the enforcement of creditors' rights
generally or equitable principles.
3.3 Consents and Approvals; No Violation. Neither Buyer's execution and
delivery of this Agreement, nor Buyer's consummation of the transactions
contemplated hereby will (i) require Buyer to make any filing or registration
with, give notice to, or obtain any consent, approval or authorization from any
Governmental Authority or any other Person (including creditors), other than
obligations arising under United States federal, Canadian federal, state and
provincial securities laws, or (ii) result in a breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any provision of the
Articles of Incorporation or Bylaws of Buyer, any Legal Requirement binding upon
Buyer, any contract, agreement, license, lease, instrument or other arrangement,
or any Governmental Authorization or other instrument or obligation to which
Buyer is a party, or by which Buyer may be bound or to which any of its assets
may be subject.
3.4 No Broker's or Finder's Fees. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Buyer in
connection with this Agreement or the transactions contemplated hereby, and no
Person, is or will be entitled to any such broker's or finder's fee or any other
commission or similar fee or expense, directly or indirectly, in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE IV
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement at the Closing are subject to fulfillment of the following
conditions, any one or more of which may be waived in whole or in part by Buyer
in the manner provided for herein.
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4.1 Representations and Warranties True at Closing. The representations
and warranties of Seller contained in this Agreement, including any exhibits or
attachments hereto, shall be true, correct and complete in all Material respects
as of the Closing Date.
4.2 Seller's Performance; Compliance with Agreement. Seller shall have
performed and complied with all obligations, agreements, covenants, deliveries
and conditions required by this Agreement to be performed or complied with by it
on or before the Closing Date.
4.3 Authorization; Third Party Consents. Seller shall have obtained all
consents or approvals necessary to transfer the Assets to Buyer.
4.4 Good Title to Seller. Seller shall have transferred and delivered
all of the Technology free and clear of all Encumbrances and all of the Tangible
Assets and Other Assets free and clear of all Encumbrances arising by, through
or under Seller,
4.5 No Litigation. No known Proceeding shall be pending or threatened
before any Governmental Authority, in any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, Order, decree, ruling, or charge would (a) prevent consummation of any
of the transactions contemplated by this Agreement, (b) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (c) affect adversely the right of Buyer to own, use and develop
the Assets.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
by this Agreement at the Closing are subject to the fulfillment of the following
conditions, any one or more of which may be waived by Seller in the manner
provided for herein:
5.1 Representations and Warranties True at Closing. The representations
and warranties of Buyer contained in this Agreement, including any exhibits or
attachments hereto, shall be true, correct and complete in all Material respects
as of the Closing Date.
5.2 Buyer's Performance; Compliance with Agreement. Buyer shall have
performed and complied with all obligations, agreements, covenants and
conditions required by this Agreement to be performed or complied with by Buyer
on or before the Closing Date, including qualification to do business in Nevada.
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ARTICLE VI
COVENANTS OF PARTIES AFTER CLOSING
Each of the parties hereto agrees as follows with respect to the period
beginning immediately after the Closing:
6.1 Further Assurances of Seller. Seller shall, upon the request of
Buyer from time to time after the Closing, execute and deliver, and use its best
efforts to cause other Persons to execute and deliver, all such further
documents and instruments, and will do or use its best efforts to cause to be
done such other acts, as Buyer may reasonably request in order to consummate
more completely and make effective the transactions contemplated hereby.
6.2 Noncompetition and Nonsolicitation.
(a) As a Material term of this Agreement and in order to
protect the value of the Assets and any and all trade secrets associated
therewith, Seller covenants and agrees that, during the period commencing on the
Closing Date and continuing until the fifth anniversary of the Closing Date (the
"Covenant Period"):
(i) Except as permitted by Section 6.6, neither
Seller nor any Affiliate of Seller shall, directly or indirectly,
either individually or on behalf of or with any Person, use or engage
in the development of hydrometallurgical methods and processes that
incorporate or relate to the Technology, or any technology derivative
of or similar to the Technology, or otherwise compete anywhere in the
world with the businesses or processes for which the Technology is
designed or used by Buyer.
(ii) Neither Seller nor any Affiliate of Seller shall
employ, or make any solicitation with respect to the employment of, any
person presently or subsequently employed by Buyer in connection with
Buyer's development, operation or utilization of any of the Assets,
unless Buyer first terminated the employment of such person.
(b) Seller and Buyer agree that the scope, duration and
geographic area for which the covenants in this Section 6.2 are to be effective
are reasonable. In the event that any court of competent jurisdiction finally
determines that the scope, time period or geographic area of any such covenant
is unreasonable or excessive and that any covenant is to that extent made
unenforceable, the parties agree that the restrictions of this Section 6.2 shall
remain in full force and effect for the greatest scope, the greatest time
period, and within the greatest geographic area that would not render it
unenforceable (and such court is hereby authorized to so modify this Section
6.2).
(c) The covenants of Seller contained in this Section 6.2 are
joint and several and independent of any covenants of Buyer contained herein or
in any other document or instrument delivered in connection herewith or pursuant
hereto, and no breach by Buyer of any such covenant shall justify any breach by
Seller of its covenants under this Section 6.2.
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(d) The Purchase Price paid to Seller and the other
consideration provided by Buyer to Seller hereunder and pursuant to the
Transaction Documents constitute adequate and sufficient consideration for
Seller's covenants under this Section 6.2.
(e) Nothing in this Section 6.2 shall preclude Seller from
independently developing or acquiring any materials or rights, irrespective of
their similarity to the Assets, following the expiration of the Covenant Period;
provided that this Section 6.2(e) is not, and shall not be construed as, a
waiver by Buyer of any rights existing or hereafter arising under any future
agreements, patents, statutes, regulations or doctrines of common law.
6.3 NonUse and NonDisclosure by Seller. Unless otherwise required by
law or expressly authorized in writing by Buyer, neither Seller nor any
Affiliate of Seller shall use for the benefit of any person other than Buyer or
disclose directly or indirectly to any Person not in the employ of Buyer any
Buyer Confidential Information. "Buyer Confidential Information" means (a) any
and all technical data or know-how, intellectual property, trade secrets,
operating instructions and any additional information with respect to the
Technology, (b) any and all technical data or know-how, intellectual property,
trade secrets, operating instructions and any additional information which
relates to research, products, services, hardware or software, developments,
inventions, processes, designs, drawings, engineering, business plans, marketing
or finances of Buyer which is or was supplied by Buyer to Seller in connection
with this Agreement and was designated in writing as proprietary or
confidential, and (c) any information or data obtained by Seller or any
representative of Seller pursuant to Seller's exercise of its rights under
Section 6.5(d) ; provided, however, Buyer Confidential Information shall not
include information that (d) is or becomes generally usable by the public other
than as a result of a disclosure by Seller or an Affiliate of Seller, (e) was in
the possession of Seller on a non-confidential basis prior to its disclosure by
Buyer (other than information related to the Technology), (f) was given to
Seller by a Person who is not otherwise bound by a confidentiality agreement
with Buyer or is not otherwise prohibited by Buyer from transmitting the
information to Seller, or (g) was or is independently developed by Seller (other
than any information related to or included in the Technology).
6.4 Non-Use and Non-Disclosure by Buyer. Unless otherwise required by
law or expressly authorized in writing by Seller, neither Buyer nor any
Affiliate of Buyer shall use for the benefit of any Person other than Seller or
disclose directly or indirectly to any Person not in the employ of Seller any
"Seller Confidential Information". "Seller Confidential Information" means any
and all technical data or know-how, intellectual property, operating
instructions and any additional information which relates to research, products,
services, hardware or software, developments, inventions, processes, designs,
drawings, engineering, business plans, marketing or finances of Seller which is
or was supplied by Seller to Buyer in connection with this Agreement and was
designated in writing as proprietary or confidential; provided, however, Seller
Confidential Information shall not include information that (i) is or becomes
generally usable by the public other than as a result of a disclosure by Buyer
or an Affiliate of Buyer, (ii) was in the possession of Buyer on a
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non-confidential basis prior to its disclosure by Seller, (iii) was given to
Buyer by a Person who is not otherwise bound by a confidentiality agreement with
Seller or is not otherwise prohibited by Seller from transmitting the
information to Buyer, (iv) was or is independently developed by Buyer, or (v) is
included in or related in any manner to the Technology.
6.5 Royalty.
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(a) Payment of Royalties. During the period commencing on the
Closing Date and continuing until the earlier to occur of (i) the fifteenth
(15th) anniversary of the Closing Date, or (ii) the date Buyer has paid an
aggregate royalty pursuant to this Section 6.5 of $105,000,000, Buyer shall pay
to Seller a royalty (the "Royalty") determined in the following manner:
(i) unless subsections (ii), (iii) or (iv) below
apply (in which case the Royalty shall be as set forth therein), Buyer shall pay
to Seller an amount equal to three percent (3%) of the Benchmark Price for all
uncoated titanium dioxide pigment produced and sold as a result of the use of
the Technology by Buyer, an Affiliate of Buyer, or a Transferee of the
Technology from Buyer;
(ii) Buyer shall pay to Seller an amount equal to
one and one-half percent (1.5%) of the Benchmark Price for all uncoated titanium
dioxide pigment produced and sold as a result of the use of the Technology by
Buyer, an Affiliate of Buyer, or a Transferee of the Technology from Buyer at
any mineral properties in Tennessee presently or hereafter owned, leased, or
otherwise controlled by Buyer or an Affiliate of Buyer;
(iii) Buyer shall pay to Seller an amount equal to
one and one-half percent (1.5%) of the Benchmark Price for all uncoated titanium
dioxide pigment produced and sold as a result of the use of the Technology
pursuant to a license granted under Section 6.6 by Buyer or an Affiliate of
Buyer or Transferee of such license at Seller's heavy mineral sands operation
that is located in Auckland, New Zealand (the "BHP New Zealand Plant") and feeds
Seller's New Zealand steel plant; and
(iv) Buyer shall pay to Seller an amount equal to
three percent (3%) of the sales proceeds (F.O.B. Buyer's facility, reduced by
the amount of any product returns) received by Buyer or an Affiliate of Buyer or
a Transferee of the Technology from the sale of any products (except any
products identified in subsections (i), (ii) or (iii) above) produced through
Buyer's use of the Technology.
(b) Definition of Benchmark Price. For purposes of this
Section 6.5, "Benchmark Price" means for each calendar quarter beginning January
1, March 1, July 1, and October 1, the average international market price for
uncoated titanium dioxide published quarterly by IBMA Inc. or any successor
during such calendar quarter, calculated by dividing the sum of all such prices
reported on specific days during such calendar quarter by the number of specific
days for which such prices were reported. If IBMA Inc. or any successor ceases
to report such prices, all such references shall be replaced with references to
the international market price for uncoated titanium dioxide in the most nearly
comparable established market reasonably selected by Buyer and agreed to by
Buyer as published in a similar publication.
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(c) Payments.
(i) Buyer shall be obligated to make Royalty
payments to Seller on a quarterly basis within forty-five (45) days of the end
of each calendar quarter during which sales of products described in Section
6.5(a) occur. Payment shall be made by check to the address set forth in Section
9.3 of this Agreement, or upon 48 hours prior written notice from Seller, by
wire transfer to the account specified by Seller in such notice.
(ii) Together with each Royalty payment , Buyer
shall deliver to Seller a statement ("Production Statement") which shall set
forth (A) the quantity of uncoated titanium dioxide pigment produced and sold in
each of the three categories described in Sections 6.5(a)(i), (ii) and (iii)
above during the calendar quarter, (B) the Benchmark Price for the calendar
quarter (C) the sales proceeds received by Buyer from the sale of products
described in Section 6.5(a)(iv) above, and (D) the calculation of the Royalty
for the calendar quarter.
(iii) Each Production Statement and any payment of
Royalty made in respect thereof shall be considered final and in full
satisfaction of all obligations of Buyer with respect thereto, unless Seller
gives Buyer written notice describing and setting forth a specific objection
thereto within six (6) months after the calendar quarter to which such
Production Statement applies.
(d) Records. Buyer shall keep accurate records of data
necessary for preparation of Production Statements and computation of the
Royalty, including records relating to the transfer of the Technology to a
Transferee by Buyer and of production of uncoated titanium dioxide pigment and
other mineral product as a result of the use of the Technology by such
Transferee. Buyer shall retain such records for a period of at least two (2)
years after the calendar quarter for which the Production Statement based
thereon is delivered to Seller. Buyer's records, books, and accounts that are
related to the computation and payment of the Royalty shall be open to the
inspection of and copying by Seller or its designated representatives at times
selected by Seller upon not less than five (5) days prior written notice to
Buyer during normal business hours, but such right of inspection shall not
extend the deadline for giving notice of objection to a Production Statement
established by subsection (c)(iv) above. Any review of Buyer's records hereunder
shall be made at the expense of Seller (including the costs of any copies or
other reproductions produced by or for Seller) and shall be conducted in a
manner that does not unreasonably disrupt the business of Buyer.
(e) Transfer or Pledge of Royalty No assignment of other
transfer of the Royalty, or any portion thereof, shall be binding upon Buyer
until thirty (30) days after Buyer has received a certified copy of the
instrument of transfer that is satisfactory, in the reasonable opinion of Buyer,
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to evidence the change of ownership and to establish the right, title, or
interest of the claiming party and the extent thereof.
(f) Control of Operations. Subject to the terms of any license
agreement negotiated in accordance with section 6.6, Buyer shall have the sole
and exclusive right to determine the timing and the manner of any mining, ore
treatment, or other operations for the production of uncoated titanium dioxide
pigment that may be subject to the Royalty.
(g) Buyer Not Responsible for Accuracy of Transferee Reports.
Buyer makes no representations or warranties as to the completeness or accuracy
of the information provided in the future by Transferees of Buyer and furnished
to Seller by Buyer in a Production Statement or any other document or record or
furnished to Seller directly by a Transferee of Buyer, and Buyer shall not be
liable to Seller or any other Person for any inaccuracy in any such information.
Buyer shall be under no obligation to conduct any independent audit or
investigation of the titanium dioxide pigment production information or any
other information provided to Buyer and included in a Production Report or other
document or furnished directly from a Transferee of Buyer to Seller. It is
expressly understood that Buyer shall remain liable under the obligations of
this Agreement should a Transferee of Buyer fail to perform any of the terms and
conditions of this Agreement.
6.6 License of Technology. Subject to mutually acceptable terms and
conditions in a definitive license agreement to be negotiated between Buyer and
Seller or its designed Affiliate, Buyer shall license to Seller or its
designated Affiliate, the right to use the Technology at the BHP New Zealand
Plant for such license fee and on such other terms and conditions as the parties
to such license, acting in good faith, shall agree; provided, however, (i) such
license shall be non-exclusive, irrevocable, perpetual, and not transferable (by
operation of law or otherwise) by the licensee to any Person without the prior
express written consent of Buyer which shall not be unreasonably withheld, and
(ii) the license shall include an agreement by Buyer to process, at the Reno
Facility (or such successor facility at which Buyer develops the Assets), in
exchange for a normal and customary fee, for testing purposes only, titaniferous
concentrates from the licensee's operation in such amounts and at such times as
the parties to the license may agree.
6.7 Proration of Taxes/Costs.
(a) All personal property taxes and assessments for the year
ended December 31, 1999 pertaining directly to the Assets shall be prorated as
of the Closing Date. All personal property taxes and all taxes and assessments
to be prorated in accordance herewith shall be deemed to be equal to the amounts
assessed to Seller with respect to such taxes and assessments for the last full
period for which such taxes or assessments were assessed. Seller shall be
responsible for all taxes and assessments relating to the period prior to
January 1, 1999, and Buyer shall be responsible for all taxes and assessments
related to the period after December 31, 1999. In the event the amount of any
tax or assessment to be prorated in accordance herewith is not ascertainable at
the Closing, such amount shall be deemed to be equal (on a pro rata basis for
partial periods) to the amounts paid by Seller for the last full billing period
relating to each of such items immediately preceding the Closing Date.
(b) Buyer shall pay all transfer taxes, if any, imposed by the
laws of the State of Nevada with respect to the transactions contemplated by
this Agreement.
(c) Except as expressly provided in Section 6.7(a) and Section
6.7(b), Buyer shall not be responsible for, and Seller shall indemnify and hold
harmless Buyer from, any federal, state and local taxes, assessments, excises,
interests, penalties, and other levies arising or accruing with respect to the
Assets or Seller's development or operation of the Assets prior to the Closing
Date or arising or accruing with respect to the business, income, existence,
employment contracts or other aspects or functions of Seller.
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6.8 Payment of Costs. Each of Buyer and Seller shall bear its own costs
and expenses (including, without limitation, fees and expenses of business
brokers, legal counsel, accountants and other facilitators and advisors, except
as otherwise specifically set forth herein) incurred at any time in connection
with this Agreement and the transactions contemplated hereby.
6.9 Patent Prosecution. Subsequent to the Closing, Buyer and Seller
shall work together in good faith to prepare and file patent applications in
Buyer's name for the purpose of obtaining patent protection of elements of the
Technology identified by Buyer. Buyer and Seller estimate that the expense of
preparing and filing such applications will be approximately Ten Thousand
Dollars ($10,000) per application. Buyer and Seller agree that the obligation to
file such applications is a Material element of the transactions contemplated by
this Agreement. Buyer agrees to reimburse Seller for the actual and reasonable
expenses (in U.S. Dollars) incurred by Seller in performing its obligations
requested by Buyer under this Section 6.9.
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ARTICLE VII
DEFAULT/INDEMNIFICATION
7.1 Default.
(a) Seller Default. If Seller shall breach any of Seller's
representations, warranties or covenants contained in this Agreement, Buyer
shall give written notice of such breach to Seller, and Seller shall have thirty
(30) days after receipt of such notice to cure the default or breach. If Seller
does not cure such default or breach within such thirty (30) day cure period,
Buyer shall be entitled to pursue the indemnification relief set forth in
Sections 7.2 through 7.5 of this Article VII or any other remedy available to
Buyer at law; provided that, notwithstanding anything in this Section 7 to the
contrary, (i) the notice requirement and thirty (30) day right to cure period
provided for in this Section 7.1 shall not apply if Buyer has been sued or is
threatened with legal action as a result of Seller's default or breach under
this Agreement and, in such case, Buyer shall be immediately entitled to pursue
the provisions of Sections 7.2 through 7.5; (ii) the thirty (30) day cure period
shall not apply to a breach by Seller of the covenants contained in Sections 6.2
and 6.3 hereof and, in the event Seller shall breach the provisions of Section
6.2 or 6.3, Buyer shall be entitled to the remedies set forth in Sections 7.2
through 7.5 and all other remedies available at law or in equity immediately
upon Buyer becoming aware of such breach; and (iii) Seller shall not be liable
to Buyer or its Affiliates or agents for any consequential damages of any kind
(including lost profits) suffered by Buyer or its Affiliates or agents,
regardless of the form of action, even if Seller has been advised of the
possibility of such damages.
(b) Buyer Payment Default. If Buyer shall breach any of
Buyer's payment obligations under Section 1.3(b) of this Agreement, Seller shall
give written notice of such breach to Buyer, and Buyer shall have thirty (30)
days after receipt of such notice to cure the default or breach. If Buyer does
not cure such default or breach within such thirty (30) day cure period, Seller
may, as its sole and exclusive remedy with respect to a default under Section
1.3(b), elect to retain all amounts paid under this Agreement and demand that
Buyer transfer to Seller all right, title and interest of Buyer in the Assets.
Upon Seller's demand, (i) Buyer shall forfeit all right, title and interest of
Buyer in and to the Assets at no cost to Seller, (ii) title to the Assets shall
be transferred to Seller, at no cost to Seller and free of all liens and
encumbrances created by, through or under Buyer, (iii) Seller shall have no
obligation to reimburse Buyer for any payment made by Buyer to Seller or any
costs incurred by Buyer under this Agreement, and (iv) Buyer shall have no
further right or interest in the Assets. If Seller so elects to retain all
amounts paid under this Agreement and demand that Buyer transfer to Seller all
right, title and interest of Buyer in the Assets, as provided above, such remedy
shall, notwithstanding anything to the contrary in this Agreement, be Seller's
sole remedy in lieu of any other right to damages or right to specific
performance of this Agreement, and Seller waives any further right to claim
damages from Buyer or seek other legal or equitable remedies as a result of
Buyer's default under Section 1.3(b) of this Agreement; provided, however,
nothing contained in this section shall terminate, vitiate or otherwise abrogate
Seller's right to seek indemnification for Buyer's breach of its representations
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and warranties set forth in Article III of this Agreement. Buyer and Seller
agree that, based upon the circumstances now existing, the foregoing amount is
reasonable as liquidated damages. Retention of such amount by Seller shall
constitute liquidated damages to Seller, and not as a penalty to Buyer.
(c) Buyer's Other Default. If Buyer shall breach any of
Buyer's representations, warranties or covenants contained in this Agreement
other than those set forth in Section 1.3(b), Seller shall give written notice
of such breach to Buyer, and Buyer shall have thirty (30) days after receipt of
such notice to cure the default or breach. If Buyer does not cure such default
or breach within such thirty (30) day cure period, Seller shall be entitled to
pursue the indemnification relief set forth in Sections 7.2 through 7.4 of this
Article VII or any other remedy available to Seller at law; provided that,
notwithstanding anything in this Section 7 to the contrary, (i) the notice
requirement and thirty (30) day right to cure period provided for in this
Section 7.1 shall not apply if Seller has been sued or is threatened with legal
action as a result of Buyer's default or breach under this agreement and, in
such case, shall be immediately entitled to pursue the provisions of Sections
7.2 through 7.4; (ii) the thirty (30) day cure period shall not apply to a
breach by Buyer of the covenants contained in Section 6.3 hereof, and in the
event Buyer shall breach the provisions of Section 6.3, Seller shall be entitled
to the remedies set forth in Sections 7.2 through 7.4 and all other remedies
available at law or in equity immediately upon Seller becoming aware of such
breach; and (iii) Buyer shall not be liable to Seller or its Affiliates or
agents for any consequential damages of any kind (including lost profits)
suffered by Seller or its Affiliates or agents, regardless of the form of
action, even if Seller has been advised of the possibility of such damages.
7.2 Indemnification by Seller. Seller unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Buyer, each
Affiliate of Buyer, and each of their officers, directors, employees,
successors, or assigns (Buyer and such persons are collectively referred to as
the "Buyer's Indemnified Persons") from and against, and shall reimburse the
Buyer's Indemnified Persons for, each and every Loss threatened against, paid or
incurred by, or imposed on, any Buyer's Indemnified Person, directly or
indirectly, relating to, resulting from or arising out of: (a) any Material
inaccuracy in any representation or warranty or any Material breach or
nonfulfillment of any covenant, agreement or other obligation of Seller under
this Agreement, the other Transaction Documents or any agreement, certificate or
other document delivered or to be delivered by Seller pursuant hereto in any
respect; (b) any claim made based on facts alleged which, if true, would have
constituted any such inaccuracy, breach or nonfulfillment; (c) the development,
acquisition, ownership or operation of the Assets prior to the Closing Date or
any activities or omissions of Seller with respect to the Assets ; or (d) the
application or any violation by Seller of, or failure of Seller to comply with,
any Material Legal Requirement. With respect to matters not involving
Proceedings brought or asserted by third parties, within thirty (30) days after
notification from any of Buyer's Indemnified Persons supported by reasonable
documentation setting forth the nature of the circumstances entitling any or all
of Buyer's Indemnified Persons to indemnity hereunder, Seller, at no cost or
expense to Buyer's Indemnified Persons, shall diligently commence resolution of
such matters in a manner reasonably acceptable to Buyer's Indemnified Persons
and shall diligently and timely prosecute such resolution to completion;
provided, however, with respect to those valid claims that may be satisfied by
payment of a liquidated sum of money and which are not disputed reasonably and
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in good faith by Seller, Seller shall promptly pay the amount so claimed. If
litigation or any other Proceeding is commenced or threatened by a third party,
the provisions of Section 7.4 below shall control over the immediately preceding
sentence.
7.3 Indemnification by Buyer. Buyer unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Seller from
and against, and shall reimburse Seller for, each and every Loss paid, imposed
on or incurred by Seller, directly or indirectly, relating to, resulting from or
arising out of: (a) any Material inaccuracy in any representation or warranty or
any Material breach or nonfulfillment of any covenant, agreement or other
obligation of Buyer under this Agreement, any other Transaction Document or
under any agreement, certificate or other document delivered or to be delivered
by Buyer pursuant hereto in any respect, or (b) Buyer's ownership, management,
operation or control of the Assets after the Closing Date. With respect to
matters not involving Proceedings brought or asserted by third parties, within
thirty (30) days after notification from Seller supported by reasonable
documentation setting forth the nature of the circumstances entitling Seller to
indemnity hereunder, Buyer, at no cost or expense to Seller, shall diligently
commence resolution of such matters in a manner reasonably acceptable to Seller
and shall diligently and timely prosecute such resolution to completion;
provided, however, with respect to those valid claims that may be satisfied by
payment of a liquidated sum of money and which are not disputed reasonably and
in good faith by Buyer, Buyer shall promptly pay the amount so claimed. If
litigation or any other Proceeding is commenced or threatened by a third party,
the provisions of Section 7.4 below shall control over the immediately preceding
sentence.
7.4 Notice and Defense of Third Party Claims. If any Proceeding shall
be brought or asserted under this Article VII against an indemnified party or
any successor thereto (the "Indemnified Person") by a third party in respect of
which indemnity may be sought under this Article VII from an indemnifying person
or any successor thereto (the "Indemnifying Person"), the Indemnified Person
shall undertake the defense, compromise or settlement of such Proceeding with
counsel reasonably satisfactory to the Indemnified Person, and the Indemnifying
Person shall assume and pay all fees, costs and expenses relating to or
associated with the Indemnified Person's defense thereof, including all fees and
costs of counsel and the payment of all costs and expenses in connection
therewith. The Indemnified Person shall not compromise or settle any such
litigation without the consent of the Indemnifying Person, which shall not be
unreasonably withheld. The Indemnified Person shall give prompt written notice
of such Proceeding to the Indemnifying Person; provided, that any delay or
failure to so notify the Indemnifying Person shall relieve the Indemnifying
Person of its obligations hereunder only to the extent, if at all, that the
Indemnifying Person is Materially prejudiced by reason of such delay or failure.
Actual or threatened action by a Governmental Authority or other Person is not a
condition or prerequisite to the Indemnifying Person's obligations under this
Article VII. In connection with the Indemnified Person's defense of any such
Proceeding, the Indemnifying Person shall, reasonably and in good faith, assist
and cooperate in the defense thereof. As a condition to asserting any rights
under this Article VII, each of Buyer's Indemnified Persons must appoint Buyer
as its sole agent for all matters relating to any claim under this Article VII.
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7.5 Environmental Indemnification. Notwithstanding anything in this
Agreement to the contrary, Seller shall indemnify, reimburse, defend and hold
harmless the Buyer's Indemnified Persons for, from and against all
"Environmental Losses" (as defined herein). "Environmental Losses" shall mean
the aggregate amount of all Damages (including, without limitation, all costs of
taking remedial or corrective action in response to any private or Governmental
Authority claim concerning the violation of any Environmental Laws) asserted
against or incurred by Buyer or any Buyer's Indemnified Person as a result of
any breach of any representation or warranty set forth in Section 2.13 above,
including all Liabilities, contingent or otherwise, arising out of actions or
omissions of Seller prior to the Closing Date. The process, limitations,
obligations and other provisions set forth in Section 7.2 and Section 7.4 shall
apply to any claim made under this Section 7.5.
7.6 Limitation on Indemnification. Notwithstanding anything in this
Agreement to the contrary,
(a) except as set forth in Section 7.5 above, the
representations and warranties of Seller in Article II above and the
representations and warranties of Buyer in Article III above shall survive the
Closing Date and shall continue in full force and effect for a period of two (2)
years after the Closing Date, after which time they shall expire;
(b) the representations and warranties set forth in Section
2.13 and Buyer's rights under Section 7.5 shall continue in full force and
effect indefinitely and shall apply to any Losses that any Buyer's Indemnified
Person asserts in writing against Seller at any time, and the amount of such
Losses shall not be limited by clause (c) below; and
(c) except as provided by Section 7.6(b), Seller shall have no
liability for amounts payable to any Buyer's Indemnified Person pursuant to its
indemnification obligations in this Section 7 in excess of the aggregate amount
of the Purchase Price received by Seller as of the date the subject claim is
presented to Seller for payment. Buyer shall have no liability for amounts
payable to Seller or any Transferees of Seller pursuant to its indemnification
obligations in this Section 7 in excess of the amount of the Purchase Price paid
by Buyer as of the date the subject claim is presented to Seller for payment.
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. This Agreement may be terminated as
provided below:
(a) Buyer and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
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(b) Notwithstanding the provisions of Section 7.1, if,
following Seller's satisfaction of all conditions precedent to Closing set forth
in Article IV of this Agreement and tender of closing by Seller on or after
November 15, 1999, Buyer fails to pay the portion of the Purchase Price due at
Closing or otherwise to close, Seller may terminate this Agreement, after which
(i) Buyer shall have no further right to close the escrow, (ii) Seller shall
have no further obligation under this Agreement to sell the Assets to Buyer and
(iii) Seller shall retain the entire sums advanced as liquidated damages.
8.2 Effect of Termination. If either party terminates this Agreement
pursuant to Section 8.1 above, all rights and obligations of such party
hereunder shall terminate without any Liability of any such party to the other
party, provided that Seller may retain the deposit in the amount of $25,000 paid
in connection with the Letter Agreement. In the event that a condition precedent
to its obligations is not satisfied, nothing contained herein shall be deemed to
require either party to terminate this Agreement, rather than to waive such
condition precedent and proceed with the Closing or, if Section 8.1(b) applies,
to seek specific performance of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement signed
by the parties hereto.
9.2 Waiver; Consents. Any failure of a party to comply with any
obligation, covenant, agreement or condition herein may be waived by the party
affected thereby only by a written instrument signed by the party granting such
waiver. No waiver, or failure to insist upon strict compliance, by any party of
any term or condition or any breach of any term or condition contained in this
Agreement, in any one or more instances, shall be construed to be a waiver of,
or estoppel with respect to, any other term or condition or any other breach of
the same. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver.
9.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when (i) delivered
personally, or (ii) sent by telecopier (with receipt confirmed), provided that a
copy is mailed by regular or express mail or (iii) received by the addressee, if
sent by Express Mail, Federal Express or other express delivery service (receipt
requested) or (iv) three (3) days after being sent by registered or certified
mail, return receipt requested, in each case to the other party at the following
addresses and telecopier numbers (or to such other address or telecopier number
for a party as shall be specified in writing; provided that notices of a change
of address or telecopier number shall be effective only upon receipt thereof):
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if to Seller, to:
BHP Minerals International Inc.
204 Edison Way
Reno, Nevada 89502
Attn: General Manager
Facsimile: (775) 856-1619
if to Buyer, to:
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Attn: President
Facsimile: (307) 587-8357
with a copy to :
Mineral Recovery Services
230 South Rock Boulevard
Suite 21
Reno, Nevada 84414
Attn: Chief Financial Officer
Facsimile (775) 857-1920
9.4 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Either Seller or Buyer may assign
all of its rights and obligations under this Agreement without the written
consent of the other party, provided however, (i) the assigning party shall
provide written notice of such assignment to the other party within five (5)
days after the consummation of such assignment, (ii) notwithstanding such
assignment, Seller shall remain liable (jointly and severally with the assignee)
for all obligations of "Seller" arising under this Agreement, whether arising
before or after such assignment, and (iii) notwithstanding such assignment,
Buyer shall remain liable (jointly and severally with the assignee) for all
obligations of "Buyer" arising under this Agreement, whether arising before or
after such assignment.
9.5 Severability. Any provision hereof prohibited by or deemed unlawful
or unenforceable under any applicable law of any jurisdiction shall, as to such
jurisdiction, be ineffective without affecting any other provision of this
Agreement. To the full extent, however, that the provisions of such applicable
law may be waived, they are hereby waived to the end that this Agreement be
deemed to be a valid and binding agreement enforceable in accordance with its
terms. In the event that any term or provision of this Agreement shall be held
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invalid by a competent court or government agency, the remainder of this
Agreement shall not be affected thereby and the parties hereto shall continue to
be bound by the remaining terms hereof. In such event, the relevant term or
provision (or should such term(s) or provision(s) be a crucial element of this
Agreement, then the entire Agreement) shall be renegotiated by the parties in a
good faith effort to achieve mutual agreement consistent with such holding and
the parties shall continue to perform under this Agreement in a manner
consistent with its intent and objectives.
9.6 Governing Law. This Agreement has been executed in the State of
Nevada and shall be governed by the laws of the State of Nevada, (regardless of
the laws that might otherwise govern under applicable Nevada principles of
conflicts of law) as to all matters, including matters of validity,
construction, effect, performance, and remedies. The parties hereby submit to
the jurisdiction of the courts in the State of Nevada and the United States
District Court, District of Nevada, any claims or lawsuits arising in connection
with this Agreement, and waive any objections based on inconvenient forum.
9.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement. This Agreement may be
executed by facsimile signatures, each of which will be deemed an original.
9.8 Entire Agreement. This Agreement, including the instruments,
memoranda, certificates, schedules, exhibits, and other documents referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties, covenants, or undertakings other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, including without limitation, the Letter Agreement.
9.9 Attorneys' Fees. In the event any party hereto institutes a
Proceeding against any other party hereto for a claim arising out of or to
enforce this Agreement, the party that prevails shall be entitled to recover
reasonable attorneys' fees, costs and expenses incurred, in addition to any
other relief to which it may be entitled.
9.10 Construction. This Agreement shall be construed as though all
parties had drafted it. Whenever the context may require, any pronoun used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns, pronouns and verbs shall include the plural and vice
versa. Each of the foregoing genders and plurals is understood to refer to a
corporation, partnership or other legal entity when the context so requires. The
boldfaced section descriptions shall be and are for reference only and shall not
be deemed to alter or limit the meaning of this Agreement in any way.
9.11 Non-Exclusivity of Remedies. Except as set forth in Section
7.1(b), the rights and remedies of the parties hereto shall not be mutually
exclusive, and the exercise of one or more of the provisions of this Agreement
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shall not preclude the exercise of any other provision. Each of the parties
confirms that damages at law may be an inadequate remedy for a breach or
threatened breach of any of the provisions hereof, including, without
limitation, Sections 6.2 or 6.3. The respective rights and obligations hereunder
shall be enforceable by specific performance, injunction, or other equitable
remedy, but nothing herein contained is intended to or shall limit or affect any
rights at law or by statute or otherwise of any party hereto as against the
other party for a breach or threatened breach of any provision hereof.
9.12 Nature of Relationship. Nothing contained in this Agreement shall
be deemed to create a partnership, joint venture, agency or fiduciary
relationship of any kind between Seller and Buyer. Neither Buyer no Seller shall
have authority to act for, bind, create or assume any obligation or
responsibility on behalf of the other party.
ARTICLE X
DEFINITIONS
10.1 For the purposes of this Agreement, the following terms shall have
the meanings specified or referred to below whether or not capitalized when used
in this Agreement. Any reference or citation to a law, statute or regulation
shall be deemed to include any amendments to that law, statute or regulation and
judicial and administrative interpretations of it.
(a) "Affiliate" means with respect to a specified Person, (a)
any Entity of which such Person is an executive officer, director, partner,
trustee or other fiduciary or is directly or indirectly the beneficial owner of
30% or more of any class of equity security thereof or other financial or voting
interest therein; (b) if such Person is an individual, any relative or spouse of
such individual, or any relative of such spouse (such relative of such
individual or spouse being related to the individual or spouse in question
within the second degree), and any other natural person who resides with such
person, and any Entity of which any such relative, spouse, or relative of spouse
is an executive officer, director, partner, trustee or other fiduciary or is
directly or indirectly the beneficial owner of 30% or more of any class of
equity security thereof or other financial or voting interest therein; (c) if
such Person is an Entity, any director, executive officer, partner, trustee or
other fiduciary or any direct or indirect beneficial owner of 30% or more of any
class of equity security of, or other financial or voting interest in, such
Entity; or (d) any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
Person specified. For purposes of this definition, "control" (including
"controlling", "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) "Agreement" means this Asset Purchase and Sale Agreement,
including the attachments, exhibits and appendices hereto, which are hereby
incorporated herein.
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(c) "Encumbrance" means any lien, pledge, hypothecation,
charge, mortgage, deed of trust, security interest, encumbrance, equity, trust,
equitable interest, claim, easement, right-of-way, servitude, right of
possession, lease tenancy, license, encroachment, burden, intrusion, covenant,
infringement, interference, proxy, option, right of first refusal, community
property interest, legend, defect, impediment, exception, condition,
restriction, reservation, limitation, impairment, imperfection of title,
restriction on the transfer of any security or other asset, restriction on the
receipt of any income derived from any security or other asset, and restriction
on the possession, use, exercise or transfer of any other attribute of
ownership, whether based on or arising from common law, constitutional
provision, statute, contract or otherwise.
(d) "Entity" means any corporation (including any non-profit
corporation), limited liability company, general partnership, limited
partnership, joint venture, joint stock association, estate, trust, cooperative,
foundation, union, syndicate, league, consortium, coalition, committee, society,
firm, company or other enterprise, association, organization or entity of any
nature, other than a Governmental Authority.
(e) "Governmental Authority" means any foreign governmental
authority, the United States of America, any State of the United States of
America, any local authority and any political subdivision of any of the
foregoing, any multi-national organization or body, any agency, department,
commission, board, bureau, court or other authority thereof, or any
quasi-governmental or private body exercising, or purporting to exercise, any
executive, legislative, judicial, administrative, police, regulatory or taxing
authority or power of any nature.
(f) "Governmental Authorization" means any permit (including
any Environmental Permit), license, franchise, approval, certificate, consent,
ratification, permission, confirmation, endorsement, waiver, certification,
registration, transfer, qualification or other authorization issued, granted,
given or otherwise made available by or under the authority of any Governmental
Authority or pursuant to any Legal Requirement.
(g) "Knowledge" or "known" - An individual shall be deemed to
have "knowledge" of or to have "known" a particular fact or other matter if (i)
such individual is actually aware of such fact or other matter; or (ii) a
prudent individual should have become aware of such fact or other matter in the
course of conducting the business of Seller. An Entity shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if any
individual who is serving or who has at any time served as an officer, director,
employee, partner, executor, trustee or agent (or in any similar capacity) has,
or at any time had, knowledge of such fact or other matter.
(h) "Legal Requirement" means any law (including any
Environmental Law), statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
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(i) "Liability" means any debt, obligation, duty, or liability
of any nature (including any unknown, undisclosed, unfixed, unliquidated,
unsecured, unmatured, unaccrued, unasserted, contingent, conditional, inchoate,
implied, vicarious, joint, several or secondary liability), regardless of
whether such debt, obligation, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with generally accepted
United States accounting principles consistently applied.
(j) "Loss" means any loss, damage, injury, harm, detriment,
Liability, claim, demand, Proceeding, settlement, judgment, award, punitive
damage award, fine, penalty, tax, fee, charge, cost or expense (including costs
of attempting to avoid or in opposing the imposition thereof, interest,
penalties, costs of preparation and investigation, and the fees, disbursements
and expenses of attorneys, accountants and other professional advisors), as well
as, with respect to compliance with any Environmental Law.
(k) "Material" or "Materially" for purposes of this Agreement
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts, and, where the context suggests that the term may involve or be based
upon a dollar amount, shall be deemed to mean any amount in excess of $100,000,
unless otherwise specifically stated.
(l) "Material Adverse Effect" means, for any Person, (a) a
Material adverse effect, whether individually or in the aggregate, on the
business, operations, financial condition, assets, liabilities or prospects of
such Person (b) the effect of causing the Person to incur a cost or expense or
lose anticipated revenue in an amount in excess of $100,000 or (c) the effect of
preventing such Person from consummating the transactions contemplated hereby.
(m) "Order" means any order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, sentence,
subpoena, consent decree, writ or award issued, made, entered or rendered by any
court, administrative agency or other Governmental Authority or by any
arbitrator.
(n) "Ordinary Course of Business" means the ordinary course of
the Business consistent with past custom and practice of Seller, including with
respect to quantity and frequency.
(o) "Person" means any individual, Entity, or Governmental
Authority.
(p) "Proceeding" means any action, suit, litigation,
arbitration, mediation, lawsuit, claim, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit,
examination, investigation, challenge, controversy or dispute commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Authority or any arbitrator.
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(q) "Transaction Documents" means this Agreement, the Bill of
Sale attached hereto as Exhibit B, the Assignment Agreement attached hereto as
Exhibit C, the Assignment and Assumption Agreement attached hereto as Exhibit D,
the Lease attached hereto as Exhibit E, the Services Agreement attached hereto
as Exhibit F, the Receipt attached hereto as Exhibit G, and all other documents,
instruments, certificates, and other agreements required by this Agreement or
necessary to effect the transactions contemplated by this Agreement.
(r) "Transferee" means any heir, successor, assigns,
transferee, licensee or other Person who is transferred (by operation of law or
otherwise) any rights of Seller or Buyer, as applicable, with respect to the
Technology or under this Agreement.
10.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Agreement Introduction
Asset Related Contracts 2.14
Assets 1.1
Benchmark Price 6.5(a)
BHP's Reno Facility 2.11
Production Statement 6.5(c)
Buyer Residual Information 6.4
Buyer Confidential Information 6.3
Buyer Introduction
Buyer's Indemnified Persons 8.2
Closing 1.4
BHP New Zealand Plant (6.5(a)(iii)
Closing Date 1.4
Covenant Period 6.2
Effective Date Introduction
Environment 2.13(d)
29
<PAGE>
Term Section
---- -------
Environmental Permits 2.13
Environmental Notice 2.13(d)
Environmental Losses 7.5(a)
Environmental Laws 2.13(d)
Indemnified Person 8.4
Indemnifying Person 8.4
Letter Agreement Background
Material 2.13(D)
Other Assests Attachment A
Permits 2.13
Production Statement 6.5(c)
Purchase Price 1.3(b)
Royalty 6.5(a)
Seller Authorizations 2.8
Seller Confidential Information 6.4
Seller Residual Information 6.3
Seller Production Statement 6.5(c)
Seller Introduction
Tangible Assets Attachment A
Technology Attachment A
30
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
Buyer
Altair International Inc.,
an Ontario corporation
By:
Its:
Seller
BHP Minerals International Inc.,
a Delaware corporation
By:
Its:
31
<PAGE>
Exhibit A
---------
to
Asset Purchase and Sale Agreement
A. The Technology. For purposes of this Agreement, the "Technology"
shall consist of the following intellectual property, rights, methods and
processes developed, acquired or utilized by Seller in connection with Seller's
ilmenite upgrading project work conducted at BHP's Reno Facility (the "BHP
Project"):
1. All processes covered by the provisional applications
to patent and patent applications described in
Section A.6. of this Exhibit A;
2. All unpatented processes, technology, know-how,
inventions (whether or not in the form of invention
disclosures), copyrights, trade secrets, royalty
rights, confidential information, formulas, recipes,
licenses and other intellectual property used in or
related to the intellectual property, rights, methods
and processes developed, acquired or utilized by
Seller in connection with the BHP Project that are
related to the production of chemical compounds,
whether metallic or non-metallic, or the production
of any other type of compound from various feedstocks
in connection with the BHP Project;
3. All hydrometallurgical methods and processes
developed, acquired or utilized by Seller in
connection with the BHP Project ;
4. To the extent they relate to, are included in, or
derive from the elements identified in provision A of
this Exhibit A, all inventions, trademarks, trade
names, service marks, assumed names, trade dress,
copyrights, United States, Foreign, state and other
applications and registrations and renewals and
continuations thereof, business information, trade
secrets, royalty rights, confidential information,
formulas, recipes, processes, techniques, know-how,
licenses, income, royalties, damages, claims,
payments now or hereafter receivable, permits,
permissions, and authorizations, consents, easements,
rights of way, software, domain names, web sites,
e-mail addresses, goodwill, and all other rights of
any kind, including all rights to sue;
5. Any information relating to or concerning the other
elements identified in this Exhibit A and related to
the BHP project or implementation and use of such
elements, whether in hard copy, magnetic media or
another form, including without limitations,
invention records, research records and reports, test
procedures, test data, development reports,
experimental and other engineering reports,
32
<PAGE>
production processes, equipment and plant designs,
product specifications, quality control reports and
specifications, and users' and operators' manuals,
drawings and photographs, computer programs,
manufacturing and production techniques, process,
methods and marketing surveys;
6. Without limitation, the following patent applications
and equivalent patents and patent applications under
any treaty or statute in any region or in any country
of the world, and related design, construction,
operating, and maintenance information:
Portions of pages 33, 34, 35, and 36 of the Asset Purchase and
Sale Agreement have been omitted from this Exhibit 10.4 to the
Current Report on Form 8-K filed with the Securities and
Exchange Commission (the "Commission") by Altair International
Inc. The omitted portions, which are the subject of an
application for confidential treatment and have been filed
separately with the Commission, are identified in this Exhibit
10.4 by the placement of this legend.
e. Any other patents related to,
derived from, or incorporating any
of the elements indentified in
provision A of this Exhibit A,
together with the yet-to-be filed
application as set forth in A.1. of
this exhibit A; and
f. All applications, division
applications, continuations or
continuations-in-part, renewals,
modifications, reexaminations,
reissues, or extensions related to
any of the foregoing;
B. The Tangible Assets. For purposes of this Agreement, the "Tangible
Assets" shall include all equipment, apparatus and other tangible personal
property of any kind, whether or not owned by Seller, located in BHP's Reno
Facility, and used in the operation or development of the Technology, including
without limitation, the following:
33
<PAGE>
Portions of pages 33, 34, 35, and 36 of the Asset Purchase and
Sale Agreement have been omitted from this Exhibit 10.4 to the
Current Report on Form 8-K filed with the Securities and
Exchange Commission (the "Commission") by Altair International
Inc. The omitted portions, which are the subject of an
application for confidential treatment and have been filed
separately with the Commission, are identified in this Exhibit
10.4 by the placement of this legend.
34
<PAGE>
Portions of pages 33, 34, 35, and 36 of the Asset Purchase and
Sale Agreement have been omitted from this Exhibit 10.4 to the
Current Report on Form 8-K filed with the Securities and
Exchange Commission (the "Commission") by Altair International
Inc. The omitted portions, which are the subject of an
application for confidential treatment and have been filed
separately with the Commission, are identified in this Exhibit
10.4 by the placement of this legend.
35
<PAGE>
Portions of pages 33, 34, 35, and 36 of the Asset Purchase and
Sale Agreement have been omitted from this Exhibit 10.4 to the
Current Report on Form 8-K filed with the Securities and
Exchange Commission (the "Commission") by Altair International
Inc. The omitted portions, which are the subject of an
application for confidential treatment and have been filed
separately with the Commission, are identified in this Exhibit
10.4 by the placement of this legend.
C. The Other Assets. For purposes of this Agreement, the "Other
Assets" shall include the following:
1. All Permits, registrations and other Governmental
Authorizations currently held by Seller with respect
to the Assets.
2. The following Asset Related Contracts:
a. None
36
<PAGE>
Exhibit B
---------
to
Asset Purchase and Sale Agreement
Bill of Sale
------------
[see attached Bill of Sale]
37
<PAGE>
Exhibit C
---------
to
Asset Purchase and Sale Agreement
Assignment Agreement
--------------------
[see attached Assignment Agreement]
<PAGE>
Exhibit D
---------
to
Asset Purchase and Sale Agreement
Assignment and Assumption Agreement
[see attached Assignment and Assumption Agreement]
--------------------------------------------------
38
<PAGE>
Exhibit E
---------
to
Asset Purchase and Sale Agreement
Lease Agreement
---------------
[see attached Lease Agreement]
39
<PAGE>
Exhibit F
---------
to
Asset Purchase and Sale Agreement
Services Agreement
------------------
[see attached Services Agreement]
40
<PAGE>
Exhibit G
---------
to
Asset Purchase and Sale Agreement
Receipt
-------
[see attached Receipt]
41
<PAGE>
Exhibit H
--------
to
Asset Purchase and Sale Agreement
Resolution of Buyer's Board of Directors
[see attached Resolution]
42
<PAGE>
Exhibit 10.3
Exhibit C
---------
to
Services Agreement
------------------
Form of BHP Employee Confidential Information and Inventions Agreement
[Attached]
43
[GRAPHIC OMITTED]
1725 Sheridan Avenue, Suite 140, Cody, WY 82414
Tel: (307)587-8245 Fax: (307)587-8357
FOR IMMEDIATE RELEASE: November 17, 1999
ALTAIR ACQUIRES TITANIUM PIGMENT TECHNOLOGY
CODY, WY -- Altair International Inc. (NASDAQ:ALTIF) today announced that it has
purchased a proprietary titanium pigment processing technology from BHP Minerals
International, Inc. The purchase includes patents and inventions, as well as the
operating BHP demonstration plant. BHP will also provide the services of 18 key
BHP employees for a one year transition period. Altair intends to immediately
use the demonstration plant to produce titanium dioxide (Ti02 ) nanoparticles, a
high-margin specialty pigment product, and to continue BHP's work on the
proprietary Ti02 pigment process. The new technology can produce Ti02 pigment
directly from an ilmenite feedstock at a cost forecast to be substantially lower
than commercial technologies employed today.
Altair plans to market Ti02 nanoparticles, which command a price of about
$35,000 per ton. Nanoparticles are used in specialty paint, cosmetics, and other
high technology applications due to their unique photo-catalytic activity.
Current plans are to commence production in the next few weeks and to become a
low-cost supplier for the U.S., Japan and Europe.
"Because the existing demonstration plant can make nanoparticles which have a
high margin potential, management believes this acquisition can generate early
cash flow," said Dr. William P. Long, president of Altair. "In the longer term,
the Ti02 pigment market represents a much larger opportunity, and we have the
potential to integrate these operations with our Camden titanium mineral
property."
Titanium dioxide is a versatile white pigment, used in a wide range of
applications. It coats the pages of quality magazines. It is essential for
paints. It's an important ingredient in suntan lotion. It is used in hospital
gloves as well as eye shadow and other cosmetics. Picnic forks and many plastic
products contain it. It is essential for coating synthetic fabrics so they do
not shine. It is even found in chocolate candies and in non-dairy products.
Worldwide pigment markets approximate $7 billion annually.
In addition to producing products at costs that are below existing technologies,
the acquired technology offers precise control of crystal size, structure and
chemical composition to produce a variety of products that are "tailored" to
each market application. Unlike existing conventional technologies, the process
is environmentally friendly and recycles waste products.
The acquisition complements Altair's current business activities, potentially
allowing the integration of ilmenite mining and processing at Camden with
pigment production. "As we move forward with pilot plant operations and final
feasibility at Camden, applications for the pigment technology will be
considered", said Dr. Long.
"BHP is refining its portfolio and, in the process, selling non-core assets.
Divestiture of this titanium pigment technology presented an excellent business
opportunity for Altair", explained Dr. Long. "The bulk of the purchase price is
based on royalty payments, which in turn, are contingent on successful
commercialization of the technology." Altair intends to finance fixed payment
2
<PAGE>
ALTAIR ACQUIRES TITANIUM PIGMENT TECHNOLOGY
requirements through nanoparticle operating profits and limited placement of
equity securities."
The purchase agreement provides for Altair's purchase of all technology rights,
including patents and inventions, as well as for the transfer of BHP Mineral's
demonstration plant located in Reno, Nevada. BHP will also provide the services
of 18 key BHP employees for one year at no fee. The initial acquisition price of
$15 million Australian dollars ("AUD$") (Approx. U.S.$9.7 million) is payable in
four equal installments of AUD$3.75 million (Approx. U.S.$2.43 million) each;
first payment at closing and subsequent payments on February 15, 2000, May 15,
2000, and August 15, 2000. Altair is also obligated to pay a royalty fee ranging
from 1.5% to 3.0% of a benchmark price for Ti02 pigment and 3% of sales for
other products produced using the technology. Royalty payments continue for a
period of 15 years or until they aggregate AUD$105 million, whichever occurs
first.
Altair International is the 100% leasehold owner of a large titanium/zircon
deposit in Tennessee. Titanium and zircon are contained in mineralized sand
deposits which are estimated to total 540 million tons grading 3.6% heavy
minerals. Altair is in the final development stages of commercializing its
state-of-the-art technology, the Altair Centrifugal Jig, which recovers
extremely fine, heavy particulate matter using a combination of a mechanical jig
and centrifugal force. In addition to heavy mineral sand, potential applications
include gold/mineral recovery, coal cleaning and environmental remediation.
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, Altair's ability to obtain necessary capital,
performance and reliability of the acquired technology, market acceptance of
products using the technology, variance in anticipated production costs and
unanticipated effects of regulatory requirements related to the technology, as
well as those identified in the Company's press releases or discussed from time
to time in the Company's Securities and Exchange Commission filings including a
current report on Form 8-K relating to the transaction described in this
release. Actual results may vary materially.
FOR MORE INFORMATION CONTACT:
William P. Long, President Patrick MacMullen
Altair International Inc. Altair International Inc.
(307) 587-8245 (775) 857-1966
News releases and other information on Altair can be accessed
at no charge at Web Site www.altairint.com.
