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
April 7, 2000
------------------------------------------------------------------------
(Dateof earliest event reported}
ALTAIR INTERNATIONAL INC.
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Province of
Ontario,
Canada 1-12497 None
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (307) 587-8245
1
<PAGE>
Item 5. Other Events.
A. Private Placement
-----------------
1. Common Stock Purchase Agreement. On March 31, 2000, Altair
International Inc. and a private equity fund (the "Investor") entered into a
Common Stock Purchase Agreement (the "Agreement") and related agreements. Under
the terms of the Agreement, on April 7, 2000 (the "Closing Date"), Investor
purchased 1,251,303 common shares of the Company (the "Shares") for an aggregate
purchase price of $6,000,000 (or 4.795 per share); provided, however, the number
of shares received by Investor in exchange for its $6,000,000 is subject to
adjustment if the lowest average closing price for any ten days during each of
four 30-day "repricing" periods does not meet a certain threshold.
The Agreement grants the Company the right to redeem any of the Shares
for a period of 90 days following the Closing Date. The redemption price during
the first sixty (60) days following the Closing Date is 110% of the initial
purchase price of such Shares. The redemption price between 61 and 90 days after
the Closing Date is 117% of the initial purchase price of such Shares.
In addition, pursuant the Agreement, the Company grants Investor a
right of first refusal with respect to any issuance of common shares of the
Company during a period commencing on the Closing Date and continuing until the
earlier of (i) the date three hundred and sixty (360) days after the Shares have
been registered with the SEC, or (ii) the date the Company redeems all Shares
subject to the Agreement; provided that the foregoing right does not apply to
shares issued upon the exercise of outstanding rights, shares issued upon the
exercise of employee options, shares issued in connection with a joint venture
or acquisition transaction, or shares issued in connection with a bona fide
public offering.
In addition, pursuant to Section 8.4 of the Agreement, the Company is
limited, with certain exceptions, from issuing any common shares of the Company
for a period of 180 days after the effective date of a registration statement
registering the Shares.
2. Warrants to Purchase Common Shares. In connection with the
Agreement, the Company issued warrants covering 250,261 common shares of the
Company to Investor, exercisable at a price of $6.75 per share through March 31,
2003. In addition, the Company is obligated to issue to Landenburg Thalmaan &
Co., Inc, the placement agent for the transaction, a warrant covering 75,078
common shares of the Company at a price of $6.75 per share through March 31,
2003. The warrant issued to Investor provides a "cashless exercise" option and
establishes a liquidated damages penalty of $1,000 for each trading day that
certificates of common shares of the Company are not delivered after proper
exercise of the warrant, beginning on the third trading day after the exercise
of the warrant.
3. Registration Rights Agreement. In connection with the
Agreement, the Company and Investor executed a Registration Rights Agreement
pursuant to which the Company is required to (i) file a Registration Statement
on Form S-3 within 30 days of the Closing Date with respect to the Shares, an
equal number of additional common shares (to account for the repricing
provisions) and common shares issuable upon exercise of the above- described
warrants, and (ii) cause such registration statement to be effective within 90
days of the Closing Date.
B. Equity Line of Credit.
---------------------
In a separate transaction, the Company and Investor entered into an
agreement, subject to further documentation, establishing a so-called equity
line of credit (the "Equity Agreement"). Pursuant to the Equity Agreement,
Investor agrees to purchase up to Ten Million Dollars ($10,000,000) in
additional common shares of the Company over the course of the eighteen (18)
months following the effective date of a registration statement registering the
Shares. The purchase price for such common shares will be 85% of the average of
the five lowest closing bid prices of the common shares during the ten days
preceding the Company's giving notice of its intent to compel a purchase. The
maximum dollar amount of common shares Investor can be required to purchase in
2
<PAGE>
any single periodic financing is $2,000,000. Investor's obligations under the
Equity Agreement are conditioned upon, among other things, (1) a registration
statement with respect to such common shares being effective, (2) the market
price of common shares of the Company exceeding $2 per share, (3) the dollar
trading volume of the common shares equaling 150% of the amount of the
additional financing, and (4) the shareholders of the Company having approved
the Equity Agreement or approved the transaction to the extent required by any
governing exchange regulations.
The foregoing descriptions do not purport to be complete and are
qualified by reference to the definitive agreements and warrants filed as
Exhibits herewith.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
4.1 Common Stock Purchase Agreement
4.2 Form of Common Stock Purchase Warrant (Investor)
4.3 Registration Rights Agreement
10.1 Letter Agreement Regarding Equity Line of Credit,
dated March 31, 2000
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.
By:/s/ William P. Long
-------------------
Dr. William P. Long
President
Date: April 20, 2000
3
EXHIBIT 4.1
-----------
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT, dated as of March 31, 2000 (this
"Agreement"), by and among ALTAIR INTERNATIONAL INC., an Ontario corporation
(the "Company"), and ANDERSON LLC, a Cayman Islands limited liability company
("Purchaser").
Recitals
A. Purchaser desires to purchase, and the Company desires to issue and
sell, shares ("Shares") of the Company's Common Shares, no par value per share
("Common Stock"), on the terms and conditions set forth below. For purposes of
this Agreement, the Shares shall mean the Initial Shares (as defined below) and
the Repriced Shares (as defined below).
B. The parties hereto intend that the issuance of the Shares as
anticipated by this Agreement shall be accomplished without registration under
the U.S. Securities Act of 1933, as amended (the "Securities Act"), and without
registration or qualification under the securities laws of any state or other
jurisdiction, in reliance on exemptions from the registration requirements of
the Securities Act, including, without limitation, Regulation D under the
Securities Act and Section 4(2) of the Securities Act; provided, however, that
nothing in this Agreement shall act or be construed as a limitation on
Purchaser's right to sell any of the Shares to be acquired pursuant to this
Agreement pursuant to the Registration Statement (the "Registration Statement")
contemplated by the Registration Rights Agreement (as defined below), or other
provisions of the Registration Rights Agreement or in accordance with applicable
laws.
THEREFORE, in consideration of the mutual promises and covenants set
forth below and for other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge by their signatures below, the
parties hereto hereby agree as follows:
AGREEMENT
1. Purchase of Common Stock. Subject to the terms and conditions of
this Agreement, the Company agrees to issue and sell, and Purchaser agrees to
acquire, at the Initial Closing Price such number of fully paid and
non-assessable shares (the "Initial Shares"), in exchange for Purchaser's
payment to the Company of aggregate consideration of Six Million Dollars
($6,000,000) (the "Purchase Price").
1.1 Form of Payment. Purchaser shall pay the Purchase Price
for the Initial Shares by delivering immediately available good funds in United
States Dollars to the escrow agent (the "Escrow Agent") identified in the Joint
Escrow Instructions attached hereto as Exhibit E (the "Joint Escrow
Instructions"). No later than the Closing Date (as defined below), the Company
1
<PAGE>
shall deliver one or more certificates representing the Initial Shares duly
executed on behalf of the Company (collectively, each the "Certificates") to the
Escrow Agent. By signing this Agreement, each Purchaser and the Company, subject
to acceptance by the Escrow Agent, agrees to all of the terms and conditions of,
and becomes a party to, the Joint Escrow Instructions, all of the provisions of
which are incorporated herein by this reference as if set forth in full.
1.2 Method of Payment. Purchasers shall pay into escrow the
Purchase Price for the Initial Shares by wire transfer of funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager, LLP
Account No.: 637-1660567
Purchaser shall deliver payment of the Purchase Price at or before 1:00 p.m.,
New York time, on the date which is one (1) Business Day after the Company
certifies that the conditions contained in Article 12 have been fulfilled, and
returns a signed counterpart of this Agreement to the Escrow Agent by facsimile.
Purchaser shall deposit the Purchase Price for the Initial Shares with the
Escrow Agent in immediately available funds. Time is of the essence with respect
to such payment, and failure by Purchaser to make such payment shall allow the
Company to cancel this Agreement. For purposes of this Agreement, "Business Day"
shall mean a day on which the New York Stock Exchange is open for business.
1.3 Escrow Property. The Purchase Price and the Certificates
delivered to the Escrow Agent as contemplated by Section 1.1 hereof are referred
to as the "Escrow Property."
2. Closing.
-------
2.1 Initial Closing. Upon execution of this Agreement (the
"Initial Closing"), and on the date set forth above (the "Initial Closing Date")
Purchaser and all other Purchasers hereunder shall pay Six Million Dollars
($6,000,000). At the Initial Closing the parties hereto shall execute and
deliver the following documents (incorporated herein by this reference,
collectively with this Agreement, the "Transaction Documents"): (i) the
Registration Rights Agreement (the "Registration Rights Agreement") in the form
attached hereto as Exhibit A; (ii) the Escrow Agreement in the form attached
hereto as Exhibit B; (iii) the Warrant (the "Warrant") in the form attached
hereto as Exhibit C; and (iv) the additional agreements (the "Additional
Agreements") in the form attached hereto as Exhibit D. On the Closing Date (as
defined below), the Escrow Agent shall deliver (i) the Purchase Price to the
Company and (ii) the Certificate to the Purchaser.
2
<PAGE>
2.2 Repriced Shares. Definitions:
(a) As used herein, "Closing Bid Price" shall mean
the closing bid price of the Common Stock as reported by Bloomberg, LP or.
(b) "Effective Date" shall mean date on which the
Securities and Exchange Commission (the "SEC") declares effective the
Registration Statement.
(c) "Initial Closing Price" shall mean 85% of the
average Closing Bid Price for the ten (10) consecutive Business Days immediately
prior to the date of the Initial Closing.
(d) "Repricing Period" shall mean each of the First
Repricing Period, the Second Repricing Period, the Third Repricing Period and
the Fourth Repricing Period, each as defined below.
(e) "Repriced Shares" shall mean the First Repriced
Shares, the Second Repriced Shares, the Third Repriced Shares and the Fourth
Repriced Shares, each as defined below.
2.3 First Repricing Period. The "First Repricing Period" shall
commence on the earlier of (a) the day that is ninety (90) days after the
Closing Date or (b) the Effective Date, and end thirty (30) days after such
date. If the lowest average Closing Bid Price for any ten (10) (not necessarily
consecutive) Business Days during the First Repricing Period (the "First
Repricing Price"), is not equal to or greater than 117.5% of the Initial Closing
Price, then up to one-fourth (1/4) of the Initial Shares shall be repriced (the
"First Repriced Shares"). The Company shall issue to Purchaser the number of
additional Shares as determined according to the following formula:
((1.175 x Initial Closing Price) - First Repricing Price) x (# of the First
Repriced Shares) / First Repricing Price.
2.4 Second Repricing Period. The "Second Repricing Period"
shall commence on the day immediately following the First Repricing Period and
end thirty (30) days thereafter. If the lowest average Closing Bid Price for any
ten (10) (not necessarily consecutive) Business Days during the Second Repricing
Period (the "Second Repricing Price"), is not equal to or greater than 120% of
the Initial Closing Price, then one-fourth (1/4) of the Initial Shares shall be
repriced (the "Second Repriced Shares"). The Company shall issue to Purchaser
the number of additional Shares as determined according to the following
formula:
((1.20 x Initial Closing Price) - Second Repricing Price) x (# of the Second
Repriced Shares) / Second Repricing Price.
3
<PAGE>
2.5 Third Repricing Period. (a) The "Third Repricing Period"
shall commence on the day immediately following the Second Repricing Period and
end thirty (30) days thereafter. If the lowest average Closing Bid Price for any
ten (10) (not necessarily consecutive) Business Days during the Third Repricing
Period (the "Third Repricing Price"), is not equal to or greater than 125% of
the Initial Closing Price, one-fourth (1/4) of the Initial Shares shall be
repriced (the "Third Repriced Shares"). The Company shall issue to Purchaser the
number of additional Shares as determined according to the following formula:
((1.25 x Initial Closing Price) - Third Repricing Price) x (# of the Third
Repriced Shares) / Third Repricing Price.
2.6 Fourth Repricing Period. (a) The "Fourth Repricing Period"
shall commence on the day immediately following the Third Repricing Period and
end thirty (30) days thereafter. If the lowest average Closing Bid for any ten
(10) (not necessarily consecutive) Business Days after the commencement of the
Fourth Repricing Period is not equal to or greater than 130% of the Initial
Closing Price, one-fourth (1/4) of the Initial Shares shall be repriced (the
"Fourth Repriced Shares"). The Company shall issue to Purchaser the number of
additional Shares as determined according to the following formula:
((1.30 x Initial Closing Price) - Fourth Repricing Price) x (# of the Fourth
Repriced Shares) / Fourth Repricing Price.
3. Representations and Warranties of Purchaser. To induce the Company's
acceptance of this Agreement, each of Purchasers hereby severally certifies,
represents and warrants to the Company and its agents and attorneys as follows,
which representations and warranties are solely for the benefit of the Company
and may be waived in whole or in part at any time prior to the Initial Closing
by the Company:
3.1 Intent. Purchaser will be acquiring the Shares for its own
account, and Purchaser has no present arrangement (whether or not legally
binding) to sell any of the Shares to or through any person or entity; provided,
however, that by making the representations herein, Purchaser does not agree to
hold any of the Shares for any minimum or other specific term and reserves the
right to dispose of the Shares at any time in accordance with U.S. federal and
state securities laws applicable to such disposition and any restrictions
imposed on such transfer by the Transaction Documents. Purchaser understands
that the Shares must be held indefinitely unless the Shares are subsequently
registered under the Securities Act or an exemption from registration is
available. Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act.
3.2 Sophisticated Investor. Purchaser is a "sophisticated
investor" (as described in Rule 506(b)(2)(ii) of Regulation D) and an
"accredited investor" (as defined in Rule 501(a) of Regulation D), and Purchaser
has such knowledge and experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Company.
3.3 Ability of Purchaser to Bear Risk of Investment. Purchaser
acknowledges that the Shares are speculative investments and involve a high
4
<PAGE>
degree of risk and Purchaser is able to bear the economic risk of an investment
in the Shares, and, at the present time, is able to afford a complete loss of
such investment.
3.4 Authority. Each of the Transaction Documents (except for
the Warrant) has been duly authorized and validly executed and delivered by
Purchaser and (assuming due authorization and valid execution by the Company) is
a legal, valid and binding agreement of Purchaser enforceable against Purchaser
in accordance with its terms, subject to general principles of equity and to
bankruptcy, insolvency or similar laws relating to, or affecting generally the
enforcement of creditors' rights and remedies or by other equitable principles
of general application. The person or persons executing the Transaction
Documents on behalf of the Purchaser (except for the Warrant) have all requisite
authority to do so on behalf of Purchaser.
3.5 Brokers, Finders. Except with respect to Ladenburg
Thalmann & Co., Inc., Purchaser has taken no action which would give rise to any
claim by any person for brokerage commission, finder's fees or similar payments
by the Company relating to this Agreement or the transactions contemplated
hereby. The Company shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other persons for fees of a type
contemplated in this section that may be due in connection with the transactions
contemplated hereby. Purchaser shall indemnify and hold harmless the Company,
its employees, officers, directors, agents and partners, and their respective
affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorneys' fees) and expenses suffered in respect of
any such claimed or existing fees, as and when incurred.
3.6 Organization; Authority. Purchaser is an entity organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by this Agreement and to carry out its
obligations thereunder. The acquisition of the Shares and the payment of the
Purchase Price therefor by such Purchaser have been duly authorized by all
necessary action on the part of Purchaser.
3.7 Absence of Conflicts. The execution and delivery of each
of the Transaction Documents (except for the Warrant), and the consummation of
the transactions contemplated by this Agreement and such other documents and
instruments, and compliance with the requirements thereof, will not violate any
law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on Purchaser, or the provision of any indenture, instrument or agreement
to which Purchaser is a party or is subject, or by which Purchaser or any of its
assets is bound, or conflict with or constitute a material default thereunder,
or require the approval of any third-party pursuant to any material contract,
agreement, instrument, relationship or legal obligation to which Purchaser is
subject or to which any of its assets, operations or management may be subject.
3.8 Disclosure; Access to Information. Purchaser has received
copies of or has had access to all documents, records, books and other
information pertaining to Purchaser's investment in the Company and the Shares
that have been requested by Purchaser. Purchaser or its representative has been
afforded the opportunity to ask questions of the Company and its management.
Purchaser further acknowledges that it understands that the Company is subject
5
<PAGE>
to the periodic reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and Purchaser has reviewed or received copies
of any such reports that it has requested.
3.9 Manner of Sale. At no time was Purchaser presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising with
respect to the Shares.
3.10 Accuracy of Other Materials. To the extent Purchaser has
received from the Company documents or other materials, which constitute
business plans, summaries, projections, forecasts or estimates, Purchaser
acknowledges the following with respect to such documents or other materials.
Such documents or other materials are intended to illustrate projected financial
and other results based upon a set of assumptions (in some cases based on
information obtained by the Company from outside sources) that the Company views
as reasonable and obtainable. All such business plans, summaries, projections,
forecasts or estimates pertaining to revenue growth, profitability and other
similar financial or market data are forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected. No representations or warranties of
future performance by or market trends for the Company are intended, and such
are expressly disclaimed.
3.11 Accuracy of Representations and Information. All
representations made by Purchaser in the Transaction Documents, and all
information provided by Purchaser to the Company concerning Purchaser are
correct and complete in all material respects as of the date hereof.
3.12 Notwithstanding any other provision hereof, of the
Warrants or of any of the other Transaction Agreements, in no event (except (i)
as specifically provided in this Agreement as an exception to this provision, or
(ii) while there is outstanding a publicly-available tender offer for any or all
of the shares of the Common Stock) shall the Purchaser be entitled to exercise
Repricing Rights or shall the Company have the obligation to deliver Repricing
Shares to the extent that, after such conversion, the sum of (1) the number of
shares of Common Stock beneficially owned by the Purchaser and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of Repricing Shares not yet issued or unexercised portion
of the Warrants), and (2) the number of shares of Common Stock issuable upon the
exercise of Repricing Rights or exercise of the Warrants with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Purchaser and its affiliates of more than 9.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Purchaser upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act , except as otherwise provided
in clause (1) of such sentence. The Purchaser further agrees that if the
Purchaser transfers or assigns any of the Shares to a party who or which would
not be considered such an affiliate, such assignment shall be made subject to
the transferee's or assignee's specific agreement to be bound by the provisions
of this Paragraph 3.12 as if such transferee or assignee were the original
Purchaser hereof.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser as follows, which representations and
warranties are solely for the benefit of Purchaser and may be waived in whole or
in part by Purchaser at any time prior to the Initial Closing:
6
<PAGE>
4.1 Company Status. The Company has registered the Common
Stock pursuant to Section 12(g) of the Exchange Act, is in full compliance with
all material reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued trading of the Common Stock, and
the Common Stock currently trades on the Nasdaq National Market System.
4.2 Current Public Information. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
under Sections 13(a), 14 and 15(d) of the Exchange Act since December 31, 1998
and prior to the date of this Agreement (the "SEC Documents").
4.3 No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Shares.
4.4 Valid Issuance of Common Stock. he authorized capital
stock of the Company consists of an unlimited number of shares of Common Stock,
no par value per share, of which 15,837,882 shares are issued and outstanding as
of March 15, 2000. All of the outstanding shares of Common Stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable. Except as set forth above or as disclosed in Schedule 4.4, as of
the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to redeem or issue additional shares
of capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company, (ii)
there are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company is obligated to register the sale of any of
their securities under the Securities Act. Except as disclosed in Schedule 4.4,
there are no securities or instruments containing any anti-dilution, right of
first refusal, preemptive rights or similar provisions that will be triggered by
the issuance of the Shares as described in this Agreement. Upon issuance of the
Shares, such securities will be duly and validly issued, fully paid and
non-assessable.
4.5 Organization and Qualification. The Company is a
corporation duly incorporated and existing in good standing under the laws of
the Province of Ontario, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company or
its subsidiaries are duly qualified as a foreign corporation to do business and
is in good standing in every jurisdiction in which the nature of the business
conducted or property owned by them makes such qualification necessary, other
than those in which the failure so to qualify would not have a Material Adverse
Effect on the Company or such subsidiaries. "Material Adverse Effect" means any
effect on the business, operations, properties, prospects, or financial
condition of the entity or entities with respect to which such term is used and
which is material and adverse to such entity or to other entities controlling or
controlled by such entity, and/or any condition or situation which would
prohibit or otherwise interfere with the ability of the entity or entities with
respect to which said term is used to enter into and perform its obligations
under the Transaction Documents.
7
<PAGE>
4.6 Authorization: Enforcement. (i) The Company has the
requisite corporate power and authority to enter into and perform under the
Transaction Documents and to issue the Shares and the Warrant in accordance with
the terms of the Transaction Documents, (ii) the execution, issuance and
delivery of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated by the Transaction Documents have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its board of directors or shareholders is
required, (iii) the Transaction Documents have been duly executed and delivered
by the Company, and (iv) the Transaction Documents (assuming due authorization
and valid and legal execution by Purchaser) constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
4.7 [Intentionally Omitted]
4.8 No Conflicts. Except as set forth in Schedule 4.8, the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby,
including, without limitation, the issuance of the Shares, do not and will not
(i) result in a violation of the Company's Articles of Incorporation or Bylaws,
(ii) conflict with, or result in a breach of or forfeiture of any rights (or
result in an event which with notice or lapse of time or both would become a
breach of or forfeiture of any rights) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company is a party or (iii) result in a
violation of any federal or state law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or by which any property or asset of the Company is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company). To the best of the
Company's knowledge, the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations which either singly or in the aggregate do not and will
not have a Material Adverse Effect on the Company. The Company is not required
under federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Shares and the Warrant in
accordance with the terms of this Agreement (other than any SEC, NASD or state
securities filings which may be required to be made by the Company subsequent in
connection with any Closing, and any registration statement which may be filed
pursuant to the provisions of the Registration Rights Agreement); provided that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of Purchaser herein. The Company is not in violation of any material
term of or in material default under its Articles of Incorporation, of any
outstanding series of preferred stock or Bylaws or their organizational charter
or Bylaws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree of order or any statute,
rule or regulation applicable to the Company, which has not been duly waived as
of the date of this Agreement.
8
<PAGE>
4.9 SEC Documents. The Company has not provided to Purchaser
any information which according to applicable law, rule or regulation, should
have been disclosed publicly prior to the date hereof by the Company but which
has not been so disclosed. As of their respective dates, the SEC Documents
complied, and all similar documents filed with the SEC prior to the Closing Date
will comply, in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and rules and regulations of the
SEC promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
contained, nor will any similar document filed with the SEC prior to the Closing
Date contain, any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents, as of the dates thereof, complied, and all similar documents filed
with the SEC prior to the Closing Date will comply, as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC and other applicable rules and regulations with respect
thereto. Such financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary statements
as permitted by Form 10-Q of the SEC) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
4.10 No Undisclosed Liabilities. Except as set forth in
Schedule 4.10, the Company has no liabilities or obligations of a financial
nature (whether accrued, absolute, contingent or otherwise), which are material,
individually or in the aggregate, and are not disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company's business
consistent with past practice since September 30, 1999, and which, individually
or in the aggregate, do not or would not have a Material Adverse Effect on the
Company.
4.11 Litigation and Other Proceedings. Except as may be set
forth in the SEC Documents or set forth in Schedule 4.11, there are no lawsuits
or proceedings pending or, to the best knowledge of the Company, threatened,
against the Company, nor has the Company received any written or oral notice of
any such action, suit, proceeding or investigation, which might have a Material
Adverse Effect on the Company or which likely would have a Material Adverse
Effect on the transactions contemplated by this Agreement. Except as set forth
in the SEC Documents, no judgment, order, writ, injunction or decree or award
has been issued by or, to the best knowledge of the Company, requested of any
court, arbitrator or governmental agency which likely would have a Material
Adverse Effect on the transactions contemplated by this Agreement.
4.12 Other Documents or Materials. With respect to any
document or other materials received by Purchaser from the Company or its
representatives other than the Transaction Documents and the SEC Documents, (i)
the Company has no reason to believe any of such documents and materials or any
projections contained therein, as of the date of such other documents or
materials, contained errors or misstatements or do not adequately describe the
9
<PAGE>
status of the development of the Company's technologies or its business as of
such date, and (ii) such documents, materials and projections were prepared by
the Company and its management in good faith.
4.13 Nature of Company. The Company is not an open-ended
investment company or a unit investment trust, registered or required to be
registered, or a closed end investment company required to be registered, but
not registered, under the Investment Company Act of 1940.
4.14 Brokers, Finders. Except for the payment of consulting
fees and expense reimbursement in the aggregate amount of $395,000 to Ladenburg
Thalmann & Co., Inc., payment of which is the sole responsibility of the
Company, the Company has taken no action which would give rise to any claim by
any person for brokerage commission, finder's fees or similar payments by
Purchaser relating to this Agreement or the transactions contemplated hereby.
Purchaser shall have no obligation with respect to such fees or with respect to
any claims made by or on behalf of other persons for fees of a type contemplated
in this Section 4.14 that may be due in connection with the transactions
contemplated hereby. The Company shall indemnify and hold harmless each of
Purchaser and its employees, officers, directors, agents, partners and
affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees, as and when incurred.
4.15 Absence of Certain Changes. Except as set forth in
Schedule 4.15, since September 30, 1999, no Material Adverse Effect has been
suffered by, and no material adverse development has occurred in the business,
properties, operations, financial condition or results of operations of the
Company. The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law, nor does the
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
4.16 Intellectual Property Rights. To its knowledge without
conducting any special investigation and except as set forth on Schedule 4.16,
the Company owns or possesses adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct its businesses as
now conducted. None of the Company's trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights has expired or terminated, or is expected to
expire or terminate in the near future. Except as set forth on Schedule 4.16,
the Company does not have any knowledge of any infringement by the Company of
trademarks, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade
secrets or other similar rights of others, or of any such development of similar
or identical trade secrets or technical information by others and, there is no
claim, action or proceeding being made or brought against, or to the best
knowledge of the Company, being threatened against, the Company regarding
trademark, trade name, patent, patent rights, invention, copyright, license,
service name, service mark, service mark registration, trade secret or other
infringement; and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
10
<PAGE>
4.17 Internal Accounting Controls. The Company is not aware
that its system of internal accounting controls is not sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
4.18 Tax Status. Except as set forth in Schedule 4.18, the
Company has made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports, declarations, except those being contested in good faith[,] and has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports, or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
4.19 Certain Transactions. Except as set forth in the SEC
Documents and except for arm's length transactions pursuant to which the Company
makes payments in the ordinary course of business upon terms no less favorable
than the Company could obtain from third parties and other than the grant of
stock options, none of the officers, directors or employees of the Company (or
any spouse or relative of any such person) is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
4.20 Dilution. The number of shares of Common Stock issuable
as Repriced Shares may increase substantially in certain circumstances,
including, but not necessarily limited to, the circumstance wherein the trading
price of the Common Stock declines during the period between the Effective Date
and the end of the Fourth Repricing Period. The Company's executive officers and
directors have studied and fully understand the nature of the transactions
contemplated by this Agreement and recognize that they have a potential dilutive
effect. The board of directors of the Company has concluded, in its good faith
business judgment, that such issuance is in the best interests of the Company.
The Company specifically acknowledges that its obligation to issue the Repriced
Shares is binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders of the
Company.
4.21 Market Quotes. The Company's Common Stock is presently
quoted on the Nasdaq National Market System under the symbol "ALTIF". Except as
set forth on Schedule 4.21, the Company is not in receipt of any written notice
from any stock exchange, market or trading facility on which the Common Stock is
or has been listed or traded (or on which it is or has been quoted) to the
11
<PAGE>
effect that the Company is not in compliance with the listing or maintenance
requirements of such stock exchange, market or trading facility or that the
Common Stock will be delisted from such stock exchange, market or trading
facility.
4.22 No Integrated Offering. Neither the Company nor any of
its affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since September 30, 1999, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Shares as contemplated
hereby.
5. Use and Disposition of Proceeds. The Company will use the proceeds
from the sale of the Initial Shares (excluding amounts paid by the Company for
legal fees, finder's fees and escrow agent fees in connection with the sale of
the Initial Shares) for general capital purposes and acquisitions (including
payments associated with the Company's acquisition of certain technology from
BHP Minerals International), but shall not, directly or indirectly, use such
proceeds for investment in any other affiliate or to repay debt to affiliates.
6. Company Reliance on Purchaser's Representations. Purchaser
understands that the Company is relying on the truth and accuracy of the
representations and warranties made herein by Purchaser in offering the Shares
for sale and in relying upon applicable exemptions available under the Act and
applicable state securities laws.
7. Restricted Shares. Purchaser understands and acknowledges that the
Shares have not been, and will not as of the time issued, be registered under
the Securities Act and that they will be issued in reliance upon exemptions from
the registration requirements of the Securities Act, and thus cannot be resold
unless they are included in an effective registration statement filed under the
Securities Act or unless an exemption from registration is available for such
resale. With regard to the restrictions on resales of the Shares, Purchaser is
aware: (a) that the Company will issue stop transfer orders to its stock
transfer agent in the event of attempts to improperly transfer any such Shares,
and (b) that a restrictive legend will be placed on certificates representing
the Shares, which legend will read substantially as follows:
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED.
The legend set forth above shall be promptly removed, and the Company shall
issue a certificate without such legend to the holder of any such Unlegended
Shares (as defined in Section 9.3 below) upon which such legend is stamped, if,
unless otherwise required by state securities laws, (i) such Shares are
registered for resale under the Securities Act and are sold in compliance with
the requirements of the Securities Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of counsel, in a
form reasonably acceptable to the Company, to the effect that a public sale,
12
<PAGE>
assignment or transfer of such Shares may be made without registration under the
Securities Act, or (iii) such holder provides the Company with reasonable
assurances that such Shares can be sold pursuant to Rule 144 promulgated under
the Securities Act without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold.
Notwithstanding the removal of the legend set forth above in the event the
Shares are registered for resale on an effective registration statement, the
Company reserves the right to affix a legend on certificates representing such
Shares that any selling shareholder must comply with the prospectus delivery
requirements of the Securities Act in connection with any resale. The Company
shall bear the cost of the removal of any legend as anticipated by this Section
7.
8. Other Covenants of the Company.
------------------------------
8.1 Furnishing of Information. As long as Purchaser owns any
Shares which cannot be resold without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. If at any time
prior to the date on which Purchaser may resell all of its Shares without volume
restrictions pursuant to Rule 144(k) promulgated under the Securities Act (as
determined by counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company's transfer agent for the
benefit of and enforceable by Purchaser) the Company is not required to file
reports pursuant to such sections, it will prepare and furnish to Purchaser and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as Purchaser may reasonably request, all to the extent required from time
to time to enable Purchaser to sell its Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act.
8.2 Listing of Shares. The Company shall, if required by any
applicable listing agreement, (a) not later than the Effective Date, prepare and
file with any national securities exchange, market or trading facility on which
the Common Stock is then listed an additional shares listing application
covering the Shares, (b) take all steps necessary to cause such shares to be
approved for listing on any other national securities exchange, market or
trading facility on which the Common Stock is then listed as soon as possible
thereafter and (c) provide to Purchaser evidence of such listing, and the
Company shall maintain the listing of its Common Stock on such exchange or
market.
8.3 First Right. The Company shall not, directly or
indirectly, without the prior written consent of Purchaser, offer, sell, grant
any option to purchase, or otherwise dispose of (or announce any offer, sale,
grant or any option to purchase or other disposition) any of its Common Stock or
securities convertible into Common Stock at a price that is less than the market
price of the Common Stock at the time of issuance of such security or investment
(a "Subsequent Financing") for a period of three hundred and sixty (360) days
after the Effective Date, or the redemption of all the Shares, whichever first
occurs, except (i) the granting of options or warrants to employees, officers,
13
<PAGE>
directors and consultants, and the issuance of shares upon exercise of options
granted, under any stock option plan heretofore or hereinafter duly adopted by
the Company, (ii) shares issued upon exercise of any currently outstanding
warrants or options and upon conversion of any currently outstanding convertible
debenture, in each case disclosed in Section 4.4 or Schedule 4.4, (iii)
securities issued in connection with the capitalization or creation of a joint
venture with a strategic partner, (iv) shares issued to pay part or all of the
purchase price for the acquisition by the Company of a person (which, for
purposes of this clause (iv), shall not include an individual or group of
individuals), and (v) shares issued in a bona fide public offering by the
Company of its securities, unless (A) the Company delivers to Purchaser a
written notice (the "Subsequent Financing Notice") of its intention to effect
such Subsequent Financing, which Subsequent Financing Notice shall describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder, the person with whom such Subsequent
Financing shall be effected, and attached to which shall be a term sheet or
similar document relating thereto and (B) Purchaser shall not have notified the
Company by 5:00 p.m. (New York time) on the tenth (10th) Business Day after its
receipt of the Subsequent Financing Notice of its willingness to provide,
subject to completion of mutually acceptable documentation, financing to the
Company on substantially the terms set forth in the Subsequent Financing Notice.
If Purchaser shall fail to notify the Company of its intention to enter into
such negotiations within such time period, then the Company may effect the
Subsequent Financing substantially upon the terms and to the persons (or
affiliates of such persons) set forth in the Subsequent Financing Notice;
provided that the Company shall provide Purchaser with a second Subsequent
Financing Notice, and Purchaser shall again have the right of first refusal set
forth above in this Section 8.3, if the Subsequent Financing subject to the
initial Subsequent Financing Notice shall not have been consummated for any
reason on the terms set forth in such Subsequent Financing Notice within sixty
(60) Business Days after the date of the initial Subsequent Financing Notice
with the person (or an affiliate of such person) identified in the Subsequent
Financing Notice. The rights granted to Purchaser in this Section 8.3 are not
subject to any prior right of first refusal given to any other person except as
disclosed on Schedule 4.4.
8.4 Certain Agreements.(a) The Company covenants and agrees
that it will not, without the prior written consent of Purchaser, enter into any
subsequent or further offer or sale of Common Stock or securities convertible
into Common Stock with any third party until the date which is one hundred
eighty (180) days after the Effective Date, unless all of the Initial Shares and
Additional Shares held by the Investor have been redeemed by the Company.
(b) The provisions of Section 8.4(a) will not apply to: (u)
the grant of any option, warrant or other right to acquire shares of the Common
Stock (including the exercise or conversion of any such option, warrant or
right) granted to employees, officers, directors and consultants of the Company;
(v) Common Stock issued pursuant to an exemption from registration under the
Securities Act, provided the holder thereof is required to hold such Common
Stock for at least one year from the date of issuance; (w) an underwritten
public offering of shares of Common Stock; (x) the offering of shares of Common
Stock at a price equal to the then-prevailing market, not exceeding 10% of the
prior day's trading volume; or (y) the issuance of securities (other than for
cash) in connection with a merger, consolidation, sale of assets, disposition or
the exchange of the capital stock for assets, stock or other joint venture
interests; and provided further, that such securities would not be included in
the Registration Statement relating to the Initial Shares and a registration
statement in respect of such stock shall not be filed prior to sixty (60) days
after the Effective Date.
14
<PAGE>
8.5 Limitation on Issuance of Common Stock.The Company shall
not issue an aggregate number of (i) Shares under this Agreement and (ii) shares
of Common Stock pursuant to the exercise of the Warrant, that exceeds 19.9% of
the shares of Common Stock issued and outstanding on the date of the Initial
Closing (the "Share Limitation"). If, pursuant to this Agreement and the Warrant
the Company otherwise would be required to issue a number of shares of Common
Stock that exceeds the Share Limitation, then (i) the Company will promptly take
all steps reasonably necessary to be in a position to issue Shares and Repricing
Shares upon exercise of the Warrants without violating the Share Limitation, and
(ii) if, despite taking such steps, the Company still cannot issue such Shares
and Repricing Shares without violating the Share Limitation, the Company shall
redeem each Repriced Share for an amount equal to the economic benefit a holder
of Initial Shares would realize before taxes and commissions for selling the
Repricing Shares issuable to him.
8.6 Available Shares.Subject to the provisions of Section
8.5 above, the Company shall have at all times authorized and reserved for
issuance, free from preemptive rights, shares of Common Stock sufficient to
yield the number of shares of Common Stock issuable as may be required to issue
the Repriced Shares.
8.7 Warrant.The Company agrees to issue to Purchaser at the
Closing, the transferable divisible Warrant for the number of shares of Common
Stock equal to 20% of the Purchase Price divided by the Initial Closing Price.
The Warrant shall (i) bear an exercise price per share of Common Stock equal to
120% of the Closing Bid Price for the five (5) Business Days immediately prior
to the Closing Date, (ii) be exercisable immediately upon issuance, and for a
period of three (3) years thereafter, and (iii) have a cashless exercise
provision.
8.8 Reimbursement. If (i) Purchaser, other than by reason of
its gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by any shareholder of the
Company, in connection with or as a result of the consummation of the
transactions contemplated by the Transaction Documents, or if Purchaser is
impleaded in any such action, proceeding or investigation by any person, or (ii)
Purchaser, other than by reason of its gross negligence or willful misconduct or
by reason of its trading of the Common Stock in a manner that is illegal under
the federal securities laws, becomes involved in any capacity in any action,
proceeding or investigation brought by the SEC against or involving the Company
or in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if Purchaser is impleaded in any
such action, proceeding or investigation by any person, then in any such case,
the Company will reimburse Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which Purchaser is a named party, the Company will pay to
Purchaser the charges, as reasonably determined by Purchaser, for the time of
any officers or employees of Purchaser devoted to appearing and preparing to
appear as witnesses, assisting in preparation for hearings, trials or pretrial
matters, or otherwise with respect to inquiries, hearing, trials, and other
proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this Section 8.8 shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliates of Purchaser that are actually named in such
action, proceeding or investigation, and partners, directors, agents, employees
and controlling persons (if any), as the case may be, of Purchaser and any such
15
<PAGE>
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, Purchaser and any
such affiliate and any such person.
8.9 (i) Redemption.(a)] Notwithstanding any other
provision hereof to the contrary, at any time up to ninety (90) days after the
date of Closing, the Company shall have the right to redeem all or any portion
of the Initial Shares then held by Purchaser for which a Repricing Notice has
not been submitted in cash for an amount (the "Redemption Amount") equal to the
Applicable Percentage (as defined below) multiplied by the Initial Closing Price
of the Initial Shares being redeemed.
(ii) The Company shall give ten (10) days' written
notice of such redemption to Purchaser (the "Notice of Redemption"). Anything in
the preceding provisions of this Section 8 to the contrary notwithstanding, the
Redemption Amount shall, unless otherwise agreed to in writing by Purchaser
after receiving the Notice of Redemption, be paid to Purchaser in good funds on
or before the tenth day from the date of the Notice of Redemption.
(iii) Applicable Percentage ("Applicable Percentage")
shall be determined in accordance with the following schedule:
If the Redemption Payment Date is the Applicable Percentage is
--------------------------------- ----------------------------
between 1-60 days after the Closing Date 110%
between 61-90 days after the Closing Date 117%
(but not later than the Effective Date)
9. Transfer Agent Instructions.
---------------------------
9.1 Irrevocable Instructions. The Company will irrevocably
instruct its transfer agent to issue Repriced Shares from time to time in such
amounts as shall be specified from time to time by the Company to the transfer
agent, bearing the restrictive legend specified in Section 7 of this Agreement
prior to registration of the Shares under the Securities Act, registered in the
name of Purchaser or its nominee and in such denominations to be specified by
Purchaser in connection with each Closing. The Company warrants that no
instruction other than such instructions referred to in this Section 9 and stop
transfer instructions to give effect to Section 7 hereof prior to registration
and sale of the Shares under the Securities Act will be given by the Company to
the transfer agent and that the securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement, and applicable
law. Nothing in this Section 9 shall affect in any way Purchaser's obligations
and agreement to comply with all applicable securities laws upon resale of the
Shares.
9.2 [Intentionally Omitted]
9.3 Transmission of Certificates. The Company will transmit
the certificates representing the unlegended securities ("Unlegended Shares") to
be issued to Purchaser via express courier, by electronic transfer or otherwise,
16
<PAGE>
within three (3) Business Days after receipt by the Company of the certificate
representing the legended Common Stock, and a representation by Purchaser that
such shares have been registered and sold in accordance with the provisions of
the Securities Act (the "Delivery Date").
9.4 Delay. The Company understands that a delay in the
issuance of the Unlegended Shares beyond the Delivery Date could result in
economic loss to Purchaser. On and after the Effective Date as compensation to
Purchaser for such loss, the Company agrees to pay late payments to Purchaser
for late issuance of Unlegended Shares in accordance with the following schedule
(where "No. of Days Late" is defined as the number of days beyond five (5)
Business Days from Delivery Date):
Late Payment For Each
No. of Days Late $10,000 of Common Stock
---------------- -----------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late beyond 10 days
The Company shall pay any payments incurred under this Section 9.4 in
immediately available funds upon demand. Nothing herein shall limit Purchaser's
right to pursue actual damages for the Company's failure to issue and deliver
the Unlegended Shares to Purchaser, except to the extent that such late payments
shall constitute payment for and offset any such actual damages alleged by
Purchaser, and any Buy In Adjustment Amount (as defined below).
9.5 Cover.If the Company fails for any reason to deliver the
Unlegended Shares after such Delivery Date and the holder of the Initial Shares
(a "Holder") purchases, in an open market transaction or otherwise, shares of
Common Stock (the "Covering Shares") in order to make delivery in satisfaction
of a sale of Common Stock by such Holder (the "Sold Shares"), which delivery
such Holder anticipated to make using the Unlegended Shares (a "Buy-In"), then
the Company shall pay to such Holder, in addition to all other amounts
contemplated in other provisions of the Transaction Documents, and not in lieu
thereof, the Buy-In Adjustment Amount (as defined below). The "Buy-In Adjustment
Amount" is the amount equal to the excess, if any, of (x) such Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (y) the net proceeds (after brokerage commissions, if any) received by such
Holder from the sale of the Sold Shares. The Company shall pay the Buy-In
Adjustment Amount to such Holder in immediately available funds immediately upon
demand by such Holder. By way of illustration and not in limitation of the
foregoing, if such Holder purchases Covering Shares having a total purchase
price (including brokerage commissions) of $11,000 to cover a Buy-In with
17
<PAGE>
respect to shares of Common Stock that it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount that the Company will be required to pay to such Holder
will be $1,000.
9.6 Electronic Transfer. In lieu of delivering physical
certificates representing the Unlegended Shares issuable upon conversion,
provided the Company's transfer agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer program, upon request of
Purchaser or the Company's election, and the Company's compliance with the
provisions contained in this Section 9.6, so long as the certificates therefor
do not bear a legend and the Purchaser thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock to Purchaser by crediting the account of Purchaser's Prime Broker with DTC
through its Deposit Withdrawal Agent Commission system.
9.7 Transfer Agent. The Company will authorize its transfer
agent to give information relating to the Company directly to the Purchaser or
the Purchaser's representatives upon the request of the Purchaser or any such
representative, to the extent such information relates to (i) the status of
shares of Common Stock issued or claimed to be issued to the Purchaser, or (ii)
the number of outstanding shares of Common Stock of all stockholders as of a
current or other specified date. The Company will provide the Purchaser with a
copy of the authorization so given to the transfer agent.
9.8 Subject to the completeness and accuracy of the
Purchaser's representations and warranties herein, and following the expiration
of any applicable Distribution Compliance Period (as those terms are defined in
Regulation S), the Company, shall, at its expense, take all necessary action
(including the issuance of an opinion of counsel) to assure that the Company's
transfer agent shall issue stock certificates without restrictive legend or stop
orders in the name of Purchaser (or its nominee (being a non-U.S. Person) or
such non-U.S. Persons as may be designated by Purchaser) and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable. Nothing in this
Section, however, shall affect in any way Purchaser's or such nominee's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities.}
10. Closing Date.
------------
10.1 The closing of the issuance and sale of the Initial
Shares shall occur on the date (the "Closing Date"), which is the first Business
Day after the fulfillment or waiver of all closing conditions pursuant to
Sections 11 and 12 hereof or such other date and time as is mutually agreed upon
by the Company and the Purchasers.
10.2 Notwithstanding anything to the contrary contained
herein, the Escrow Agent will be authorized to release the Escrow Property only
upon satisfaction of the conditions set forth in Sections 11 and 12 hereof.
18
<PAGE>
11. Conditions To The Company's Obligation To Sell.
----------------------------------------------
Purchaser understands that the Company's obligation to sell
the Initial Shares on the Closing Date to Purchaser pursuant to this Agreement
is conditioned upon:
11.1 The receipt and acceptance by Purchaser of this
Agreement as evidenced by Purchaser's execution and delivery of this Agreement.
11.2 Delivery by Purchaser to the Escrow Agent of good funds
as payment in full of an amount equal to the Purchase Price for the Initial
Shares in accordance with Section 1.2 hereof;
11.3 The accuracy on the Closing Date of the representations
and warranties of Purchaser contained in this Agreement as if made on the
Closing Date, and the performance by Purchaser on or before the Closing Date of
all covenants and agreements of Purchaser required to be performed on or before
the Closing Date;
11.4 There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
12. Conditions to Purchaser's Obligation to Purchase.
------------------------------------------------
The Company understands that Purchaser's obligation to
purchase the Initial Shares on the Closing Date is conditioned upon:
12.1 Acceptance by the Company of this Agreement for the sale
of the Initial Shares, as indicated by the Company's execution and delivery of
this Agreement;
12.2 Delivery by the Company to the Escrow Agent of the
Certificate in accordance with this Agreement;
12.3 The accuracy in all material respects on the Closing
Date of the representations and warranties of the Company contained in this
Agreement as if made on the Closing Date and the performance by the Company on
or before the Closing Date of all covenants and agreements of the Company
required to be performed on or before the Closing Date; and
12.4 On the Closing Date, Purchaser having received an
opinion of counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to Purchaser, to the effect set forth hereto,
the Registration Rights Agreement, the Warrant and the Additional Agreements.
12.5 No statute, rule, regulation, executive order, decree,
ruling or injunction shall be enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits or
adversely effects any of the transactions contemplated by the Transaction
Documents, and no proceeding or investigation shall have been commenced or
threatened which may have the effect of prohibiting or adversely effecting any
of the transactions contemplated by the Transaction Documents.
19
<PAGE>
12.6 From and after the date hereof to and including the
Closing Date, the trading of the Common Stock shall not have been suspended by
the SEC, or the NASD and trading in securities generally on the New York Stock
Exchange or NASDAQ shall not have been suspended or limited, nor shall minimum
prices have been established for securities traded on NASDAQ, nor shall there be
any outbreak or escalation of hostilities involving the United States or any
material adverse change in any financial market that in either case in the
reasonable judgment of Purchaser makes it impracticable or inadvisable to
purchase the Initial Shares, as the case may be.
13. General Provisions.
------------------
13.1 Assignment. Neither this Agreement nor any rights of
Purchaser hereunder may be assigned by either party to any other person without
the prior written consent of the Company.
13.2 Attorneys' Fees. In the event any dispute arises under
this Agreement or the documents or instruments executed and delivered in
connection with this Agreement, and the parties hereto resort to litigation to
resolve such dispute, the prevailing party in any such litigation, in addition
to all other remedies at law or in equity, shall be entitled to an award of
costs and fees from the other party, which costs and fees shall include, without
limitation, reasonable attorneys' fees and legal costs.
13.3 Choice of Law; Venue. This Agreement will be construed
and enforced in accordance with and governed by the laws of California and the
federal law of the United States[,] without reference to principles of conflicts
of law. The parties agree that, in the event of any dispute arising out this
Agreement or the transactions contemplated thereby, venue for such dispute shall
be in the state or federal courts located in the State of California, and that
each party hereto waives any objection to such venue based on forum non
conveniens.
13.4 Costs and Expenses. The parties shall be responsible for
and shall pay their own costs and expenses, including without limitation
attorneys' fees and accountants' fees and expenses, in connection with the
conduct of the due diligence inquiry, negotiation, execution and delivery of
this Agreement and the instruments, documents and agreements executed in
connection with this Agreement, except that the Company shall pay the legal and
escrow fees of the Purchaser in connection herewith.
13.5 Counterparts/Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which when so signed shall be
deemed to be an original, and such counterparts together shall constitute one
and the same instrument. In lieu of the original, a facsimile transmission or
copy of the original shall be as effective and enforceable as the original.
13.6 Entire Agreement: Amendment. This Agreement, together
with the exhibits to this Agreement and the other instruments and documents
delivered in connection with this Agreement constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth in this Agreement or therein. Except as expressly
provided in this Agreement, neither this Agreement nor any term hereof may be
20
<PAGE>
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
13.7 Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
13.8 Notices.All notices or other communications provided for
under this Agreement shall be in writing, and mailed, telecopied or delivered by
hand delivery or by overnight courier service, as follows:
21
<PAGE>
If to the Company:
-----------------
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Attention: Dr. William P. Long
---------
Tel No.: (307) 587-8024
Fax No.: (307) 587-8357
With a copy to:
--------------
Parr, Waddoups, Brown Gee & Loveless
185 South State St., Suite 1300
Salt Lake City, Utah 84111
Attention: Brian Lloyd, Esq.
---------
Tel No.: (801) 532-7840
Fax No.: (801) 532-7750
If to Purchaser:
---------------
Anderson LLC
c/o Beacon Fund Advisors Ltd.
Harbour House, 2nd Floor
Waterfront Drive, P.O. Box 972
Road Town
Tortola, British Virgin Islands
Tel No.:1-284-494-4770
Fax No.: 1-284-494-4771
With a copy to:
--------------
Krieger & Prager, LLP
39 Broadway, Suite 1440
New York, New York 10006
Attention: Samuel M. Krieger, Esq.
---------
Tel No.: 212-363-2900
Fax No: 212-363-2999
All notices and communications shall be effective as follows: when mailed, upon
three (3) Business Days after deposit in the mail (postage prepaid); when
22
<PAGE>
telecopied, upon confirmed transmission of the telecopied notice; when hand
delivered, upon delivery; and when sent by overnight courier, the next Business
Day after deposit of the notice with the overnight courier.
13.9 Publicity. The Company and Purchaser shall consult with
each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and no party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law, in which such case the disclosing party
shall provide the other parties with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of Purchaser without the prior written consent of such Purchaser, except to the
extent required by law. Purchaser acknowledges that this Agreement and all or
part of the Transaction Documents may be deemed to be "material contracts" as
that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company
may therefore be required to file such documents as exhibits to reports or
registration statements filed under the Securities Act or the Exchange Act.
Purchaser further agrees that the status of such documents and materials as
material contracts shall be determined solely by the Company, in consultation
with its counsel.
13.10 Severability. Should any one or more of the provisions
of this Agreement be determined to be illegal or unenforceable, all other
provisions of this Agreement shall be given effect separately from the provision
or provisions determined to be illegal or unenforceable and shall not be
affected thereby.
13.11 Survival of Representations And Warranties. The
Company's representations and warranties herein shall survive the execution and
delivery of this Agreement for one (1) year, and shall inure to the benefit of
Purchaser and its successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
23
<PAGE>
IN WITNESS WHEREOF, the parties named below have caused this Agreement
to be executed, as of the date first above written.
ANDERSON LLC`
-------------
By:
Its:
THE COMPANY:
-----------
ALTAIR INTERNATIONAL INC.
By:
Its:
24
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
25
<PAGE>
EXHIBIT B
ESCROW AGREEMENT
26
<PAGE>
EXHIBIT C
WARRANT
27
<PAGE>
EXHIBIT D
ADDITIONAL AGREEMENTS
EXHIBIT E
JOINT ESCROW INSTRUCTIONS
28
Exhibit 4.2
-----------
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
ALTAIR INTERNATIONAL INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable consideration, the
receipt of which is hereby acknowledged by ALTAIR INTERNATIONAL INC., a Canadian
corporation (the "Company"), Anderson, LLC or registered assigns (the "Holder")
is hereby granted the right to purchase at any time commencing
____________________ until 5:00 P.M., New York City time, on March 31, 2003 (the
"Expiration Date"), 250,261 fully paid and nonassessable shares of the Company's
Common Stock, no par value per share (the "Common Stock") at an initial exercise
price of $6.75 per share (the "Exercise Price"), subject to further adjustment
as set forth in Section 6 hereof.
2. Exercise of Warrants.(a) This Warrant is exercisable in whole or in
part at the Exercise Price per share of Common Stock payable hereunder, payable
in cash or by certified or official bank check, or by "cashless exercise", by
means of tendering this Warrant Certificate to the Company to receive a number
of shares of Common Stock equal in Market Value to the difference between the
aggregate Market Value of the shares of Common Stock issuable upon exercise of
this Warrant and the total cash exercise price thereof divided by the Market
Value. Upon surrender of this Warrant Certificate with the annexed Notice of
Exercise Form duly executed, together with payment of the Exercise Price for the
shares of Common Stock purchased, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. For the
purposes of this Section 2, "Market Value" shall be an amount equal to the
average closing bid price of a share of Common Stock for the ten (10) days
preceding the Company's receipt of the Notice of Exercise Form duly executed
multiplied by the number of shares of Common Stock to be issued upon surrender
of this Warrant Certificate.
1
<PAGE>
(b) For purposes of Rule 144 promulgated under the Securities
Act, it is intended, understood and acknowledged that the Warrant Shares issued
in a cashless exercise transaction shall be deemed to have been acquired by the
Holder and the holding period for the Warrant Shares shall be deemed to have
been commenced, on the issue date.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise
Price is required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of additional shares of Common Stock as will cause (i) the
total number of shares of Common Stock Holder is entitled to purchase pursuant
to this Warrant, multiplied by (ii) the adjusted purchase price per share, to
equal (iii) the dollar amount of the total number of shares of Common Stock
Holder is entitled to purchase before adjustment multiplied by the total
purchase price before adjustment.
6.2 Capital Adjustments.In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original purchase price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof.
2
<PAGE>
A rights offering to stockholders shall be deemed a stock dividend to the extent
of the bargain purchase element of the rights.
3
<PAGE>
EXHIBIT 4.2
7. Transfer to Comply with the Securities Act; Registration Rights.
(a) This Warrant has not been registered under the Securities
Act of 1933, as amended, (the "Act") and has been issued to the Holder for
investment and not with a view to the distribution of either the Warrant or the
Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
(b) The Company agrees to file a registration statement,which
shall include the Warrant Shares, on Form S-3 or another available form (the
"Registration Statement"), pursuant to the Registration Rights Agreement between
the Company and Holder dated ____________, 2000.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if the to Company, to:
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Attention:
Tel No.: (307) 587-8024
Fax No.: (307) 587-8357
with a copy to:
Parr, Waddoups, Brown Gee & Loveless
185 South State St., Suite 1300
Salt Lake City, Utah 84111
4
<PAGE>
Attention: Brian Lloyd, Esq.
Tel No.: (801) 532-7840
Fax No.:(801) 532-7750
(ii) if to the Holder, to:
Tel No.:
Fax No.:
with a copy to:
Krieger & Prager, LLP
Suite 1440
39 Broadway
New York, New York 10006
Tel No.: (212) 363-2900
Fax No.: (212) 363-2999
Any party may designate another address or person for receipt of notices
hereunder by notice given to the other parties in accordance with this Section.
9. If the Company fails to deliver to the Holder certificate or
certificates representing the Warrant Shares pursuant to Section 3(f) by the
third (3rd) Trading Day after the Date of Exercise, the company shall pay to
such Holder, in cash, as liquidated damages and not as a penalty, $1,000 for
each day after such third 3rd) Trading Day until such certificates are
delivered. Nothing herein shall limit the Holder's right to pursue actual
damages for the Company's failure to deliver certificates representing shares of
Common Stock upon exercise within the period specified herein and the Holder
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.
10. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
5
<PAGE>
hereto. This Warrant of even date herewith contain the full understanding of the
parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
11. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State _____________ and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
12. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
13. Descriptive Headings. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the day of , 2000.
ALTAIR INTERNATIONAL INC.
By:
Its:
Attest:
6
<PAGE>
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ______________, to purchase
__________shares of the Common Stock, par value $_______ per share, of
___________________ and tenders herewith payment in accordance with Section 1 of
said Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:______________________
By:__________________________________
[ ] CASH: $ _______________________
Exhibit 4.3
EXHIBIT A
TO
COMMON STOCK PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 31, 2000
(this "Agreement"), is made by and between ALTAIR INTERNATIONAL INC. an Ontario
corporation, with headquarters located at 1725 Sheridan Avenue, Suite 140, Cody,
Wyoming 82414 (the "Company"), and the entity named on the signature page hereto
(each, an "Initial Investor") (each agreement with an Initial Investor being
deemed a separate and independent agreement between the Company and such Initial
Investor, except that each Initial Investor acknowledges and consents to the
rights granted to each other Initial Investor under such agreement)
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Common Stock Purchase Agreement, dated as of March 31, 2000, between Investor
and the Company (the "Common Stock Purchase Agreement;" terms not otherwise
defined herein shall have the meanings ascribed to them in the Common Stock
Purchase Agreement), the Company has agreed to issue and sell to Investor the
Initial Shares, together with the Repriced Shares (collectively, the "Shares");
WHEREAS, the Company has agreed to issue the Warrant to
Investor in connection with the issuance of the Shares; and
WHEREAS, to induce Investor to execute and deliver the Common
Stock Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act with respect to the Shares and the Warrant
Shares (as defined below).
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Investor hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
1
<PAGE>
(a) "Potential Material Event" means any of the following:(i)
the possession by the Company of material information not ripe for disclosure in
a Registration Statement, which shall be evidenced by determinations in good
faith by the Board of Directors of the Company that disclosure of such
information in the Registration Statement would be detrimental to the business
and affairs of the Company; or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a Registration Statement
at such time, which determination shall be accompanied by a good faith
determination by the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information;
(b) "Register," "Registered," and "Registration" refer to a
Registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis, and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC");
(c) "Registrable Securities" mean the Shares and the Warrant
Shares and the Securities listed on Schedule 5(b); and
(d) "Registration Statement" means a registration statement
of the Company under the Securities Act, or an amendment to an existing
registration statement.
2. Registration.
(a) Mandatory Registration.
(i) The Company shall prepare and file with the SEC, as soon
as possible after the Initial Closing and no later than a date (the "Required
Filing Date"), which is thirty (30) days following the Initial Closing, either a
Registration Statement on Form S-3 or an amendment to an existing Registration
Statement, in either event Registering for resale by Investor a sufficient
number of shares of Common Stock for Investor to sell the Registrable Securities
(or such lesser number as may be required by the SEC, but in no event less than
(i) two hundred percent (200%) of the aggregate number of Initial Shares, and
(ii) the number of shares of Common Stock that would be issued upon exercise of
the Warrant (the "Warrant Shares") at the time of filing of the Registration
Statement (assuming for such purposes that the Warrant had been eligible to be
exercised and had been exercised in accordance with its terms, whether or not
such eligibility or exercise had in fact occurred as of such date). The
Registration Statement shall state that, in accordance with Rule 416 and 457
under the Securities Act, it covers such indeterminate number of additional
shares of Common Stock as may become issuable upon repricing of the Initial
2
<PAGE>
Shares and the exercise of the Warrant to prevent dilution resulting from stock
splits or stock dividends. The Company will use its reasonable best efforts to
cause such Registration Statement to be declared effective on a date (a
"Required Effective Date"), which is no later than the earlier of (y) five (5)
Business Days after notice by the SEC that it may be declared effective or (z)
ninety (90) days after the date of the Initial Closing.
(ii) If at any time (an "Increased Registered Shares Date"),
the number of shares of Common Stock represented by the Registrable Securities ,
issued or to be issued as contemplated by the Transaction Documents, exceeds the
aggregate number of shares of Common Stock then Registered, the Company shall,
within ten (10) Business Days after receipt of a written notice from Investor,
either: (x) amend the Registration Statement filed by the Company pursuant to
the preceding provisions of this Section 2, if such Registration Statement has
not been declared effective by the SEC at that time, to Register two hundred
percent (200%) of such Registrable Shares, computed as contemplated by the
immediately preceding subparagraph (i); or (y) if such Registration Statement
has been declared effective by the SEC at that time, file with the SEC an
additional Registration Statement (an "Additional Registration Statement") to
Register two hundred percent (200%) of the shares of Common Stock represented by
the Registrable Shares, computed as contemplated by the immediately preceding
subparagraph (i), that exceed the aggregate number of shares of Common Stock
already Registered. The Company will use its reasonable best efforts to cause
such Registration Statement to be declared effective on a date (a "Required
Effective Date") which is no later than (q) with respect to a Registration
Statement under clause (x) of this subparagraph (ii), the Required Effective
Date contemplated by the immediately preceding subparagraph (i) and (r) with
respect to an Additional Registration Statement, the earlier of (i) five (5)
Business Days after notice by the SEC that it may be declared effective or (ii)
forty (40) days after the Increased Registered Shares Date.
(b) Payments by the Company.
(i) If the Registration Statement covering the
Registrable Securities is not filed in proper form with the SEC by the Required
Filing Date, the Company will make payment to Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(b);
(ii) If the Registration Statement covering the
Registrable Securities is not effective by thirty (30) days after the relevant
Required Effective Date or if Investor is restricted from making sales of
Registrable Securities covered by a previously effective Registration Statement
at any time (the date such restriction commences, a "Restricted Sale Date")
after the Effective Date other than during a Suspension Period (as defined
below), then the Company will make payments to Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(b);
3
<PAGE>
(iii) The amount (each a "Periodic Amount") to be paid by
the Company to Investor shall be determined as of each Computation Date (as
defined below) and the Periodic Amount shall be equal to the Periodic Amount
Percentage (as defined below) of the Purchase Price for all of the Initial
Shares for the period from the date following the relevant Required Filing Date,
Required Effective Date or Restricted Sale Date, as the case may be, to the
first relevant Computation Date, and thereafter to each subsequent Computation
Date. The "Periodic Amount Percentage" means (A) two percent (2%) of the
Purchase Price for the period from the date following the relevant Required
Filing Date, Required Effective Date or Restricted Sale Date, as the case may
be, to the second relevant Computation Date, and (B) three percent (3%) of the
Purchase Price to each Computation Date thereafter (prorated on a daily basis if
such period is less than thirty (30) days). By way of illustration and not in
limitation of the foregoing, if the Registration Statement for the Registrable
Securities relating to the Common Stock and Warrants issued on the Initial
Closing Date is timely filed but is not declared effective until one hundred
sixty-five (165) days after the date of the Initial Closing, the Periodic Amount
will aggregate five and one-half percent (5 1/2%) of the Purchase Price (2% for
days 91-120, 2% for days 121-150, and 1 1/2% for days 151-165).
(iv) Each Periodic Amount will be payable by the Company
in cash or other immediately available funds to Investor at the end of each
Computation Period, without requiring demand therefor by Investor;
(v) The parties acknowledge that the damages which may
be incurred by Investor if the Registration Statement is not filed by the
Required Filing Date or if the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended, may be difficult to ascertain. The parties agree that the Periodic
Amount represents a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of such damages;
(vi) Notwithstanding the foregoing, the amounts payable
by the Company pursuant to this Section 2(b) shall not be payable to the extent
any delay in the effectiveness of the Registration Statement occurs because of
an act of, or a failure to act or to act timely by Investor or its counsel, or
in the event all of the Registrable Securities may be sold pursuant to Rule 144
or another available exemption under the Securities Act; and
(vii) "Computation Date" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date, any relevant
Required Effective Date or a Restricted Sale Date, as the case may be, or (2)
the date after the Required Filing Date, such Required Effective Date or
Restricted Sale Date on which the Registration Statement is filed (with respect
to payments due as contemplated by Section 2(b)(i) hereof) or is declared
effective or has its restrictions removed (with respect to payments due as
contemplated by Section 2(b)(ii) hereof), as the case may be, and (B) each date
which is the earlier of (1) thirty (30) days after the previous Computation Date
or (2) the date after the previous Computation Date on which the Registration
4
<PAGE>
Statement is filed (with respect to payments due as contemplated by Section
2(b)(i) hereof) or is declared effective or has its restrictions removed (with
respect to payments due as contemplated by Section 2(b)(ii) hereof), as the case
may be.
3. Obligations of the Company. In connection with the
Registration of the Registrable Securities, the Company shall do each of the
following:
(a) Prepare promptly, and file with the SEC by the Required
Filing Date, a Registration Statement with respect to not less than the number
of Registrable Securities provided in Section 2(a) above, and thereafter use its
reasonable best efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earliest of: (i) the date that is
two (2) years after the last day of the calendar month following the month in
which the Final Repricing Period ends; (ii) the date when Investor may sell all
Registrable Securities under Rule 144; or (iii) the date when Investor no longer
owns any of the Registrable Securities, which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) The Company shall permit a single firm of counsel
designated by Investor to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time (but not less than three (3)
Business Days) prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects;
(d) Notify Investor and Investor's legal counsel identified
to the Company (which, until further notice, shall be deemed to be Krieger &
Prager, LLP, ATTN: Samuel Krieger, Esq.; "Investor's Counsel") (and, in the case
of (i)(A) below, not less than five (5) Business Days prior to such filing) and
(if requested by any such person) confirm such notice in writing no later than
one (1) Business Day following the day (i): (A) when a prospectus or any
prospectus supplement or post-effective amendment to the Registration Statement
5
<PAGE>
is proposed to be filed; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC in respect of a Registration Statement (copies or,
in the case of oral comments, summaries of such comments shall be promptly
furnished by the Company to Investor); and (D) with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
prospectus or for additional information; (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of any
proceedings for that purpose; (iv) if at any time any of the representations or
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all material
respects; (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (vi) of the occurrence of
any event that to the best knowledge of the Company makes any statement made in
the Registration Statement or prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, prospectus or other
documents so that, in the case of the Registration Statement or the prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In addition, the Company shall furnish Investor with
copies of all intended written responses to the comments contemplated in clause
(C) of this Section 3(d) not later than one (1) Business Day in advance of the
filing of such responses with the SEC so that Investor shall have the
opportunity to comment thereon;
(e) Furnish to Investor and Investor's Counsel: (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, two (2) copies of the Registration Statement, each
preliminary prospectus and prospectus, and each amendment or supplement thereto;
and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as Investor may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
Investor;
(f) As promptly as practicable after becoming aware thereof,
notify Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
6
<PAGE>
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to Investor as Investor may reasonably request;
(g) As promptly as reasonably practicable after becoming
aware thereof, notify Investor of the issuance by the SEC any notice of
effectiveness or any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from
time to time after the date of effectiveness of the Registration Statement, the
Company notifies Investor in writing of the existence of a Potential Material
Event, Investor shall not offer or sell any Registrable Securities, or engage in
any other transaction involving or relating to the Registrable Securities, from
the time of the giving of notice with respect to a Potential Material Event
until Investor receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however, that the Company may not so
suspend the right to such holders of Registrable Securities for more than two
twenty (20)-day periods in the aggregate during any 12-month period ("Suspension
Period") with at least a ten (10) Business Day interval between such periods,
during the periods the Registration Statement is required to be in effect;
(i) Use its reasonable efforts to secure and maintain the
listing of all the Registrable Securities covered by the Registration Statement
on the Nasdaq National Market System.
(j) Provide a transfer agent for the Registrable Securities
not later than the effective date of the Registration Statement;
(k) Cooperate with Investor to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts as the case
may be, as Investor may reasonably request, and, within three (3) Business Days
after a Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to Investor), an appropriate instruction and opinion of
such counsel; and
(l) Take all other reasonable actions necessary to expedite
and facilitate disposition by Investor of the Registrable Securities pursuant to
the Registration Statement.
4. Obligations of Investor. In connection with the
Registration of the Registrable Securities, Investor shall have the following
obligations:
7
<PAGE>
(a) It shall be a condition precedent to the obligations of
the Company to complete the Registration pursuant to this Agreement with respect
to the Registrable Securities of Investor, that Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of the Registrable Securities held by
it, as shall be reasonably required to effect the Registration of such
Registrable Securities and shall execute such documents in connection with such
Registration as the Company may reasonably request. At least ten (10) days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify Investor of the information the Company requires from Investor (the
"Requested Information") if Investor elects to have any of the Registrable
Securities included in the Registration Statement. If at least two (2) Business
Days prior to the filing date the Company has not received the Requested
Information from Investor, then the Company need not file the Registration
Statement until receiving the response of Investor;
(b) Investor, by accepting the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless Investor has notified the Company in writing of its election
to exclude all of the Registrable Securities from the Registration Statement;
and
(c) Investor agrees that,upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), above, Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until Investor receives the copies of the supplemented or amended
prospectus contemplated by Section 3(f) or 3(g).
5. Expenses of Registration. (a) All reasonable expenses
incurred by the Company in connection with Registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
Registration, listing, and qualifications fees, printers and accounting fees,
and the fees and disbursements of counsel for the Company shall be borne by the
Company; and
(b) Except as otherwise provided for in Schedule 5(b)
attached hereto, the Company nor any of its subsidiaries has, as of the date
hereof, and the Company shall not on or after the date of this Agreement, enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to Investor in this Agreement or otherwise conflicts with the
provisions hereof. Except as otherwise provided for in Schedule 5(b), the
Company has not previously entered into any agreement granting any registration
rights with respect to any of its securities to any person. Except as otherwise
provided for in this Section 5, and without limiting the generality of the
foregoing, without the written consent of Investor, the Company shall not grant
to any person the right to request the Company to Register any securities of the
Company under the Securities Act unless the rights so granted are subject in all
8
<PAGE>
respects to the prior rights in full of Investor set forth herein, and are not
otherwise in conflict or inconsistent with the provisions of this Agreement and
the other Transaction Documents.
6. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless Investor, the directors, if any, of Investor, the
officers, if any, of Investor, each person, if any, who controls Investor within
the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (each, an "Indemnified Party"), against any losses,
claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any Investor may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post-effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; (ii) any untrue statement or alleged
untrue statement of a material fact contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not
misleading; or (iii) any material violation or alleged material violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to Section 6(b), the Company shall
reimburse Investor, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not: (I) apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Indemnified Party expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; (II) be available to the extent such Claim is based on a failure of
Investor to deliver or cause to be delivered the prospectus made available by
the Company; or (III) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Investor will indemnify the Company
and its officers, directors and agents (each, an "Indemnified Party") against
any claims arising out of or based upon a Violation which occurs in reliance
9
<PAGE>
upon and in conformity with information furnished in writing to the Company, by
or on behalf of Investor, expressly for use in connection with the preparation
of the Registration Statement, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company to this Section 6.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Party.
(b) Promptly after receipt by an Indemnified Party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Party, as
the case may be. In case any such action is brought against any Indemnified
Party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and after
notice from the indemnifying party to such Indemnified Party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
Indemnified Party under this Section 6 for any legal or other reasonable
out-of-pocket expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action of its
final conclusion. The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and reasonable out-of-pocket expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the Indemnified
Party. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that: (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
10
<PAGE>
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. Reports under Securities Act and Exchange Act. (i) With a
view to making available to Investor the benefits of Rule 144 promulgated under
the Securities Act or any other similar rule or regulation of the SEC that may
at any time permit Investor to sell securities of the Company to the public
without Registration ("Rule 144"), until such time as all of the Registrable
Securities may be sold without volume limitation pursuant to subsection (k) of
Rule 144, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to Investor promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such other information as may be reasonably requested
to permit Investor to sell such securities pursuant to Rule 144 without
Registration.
(ii) The Company will, at the request of any Holder of
Registrable Securities, upon receipt from such Holder of a certificate
certifying (a) that such Holder has held such Registrable Securities for a
period of not less than two (2) years, (b) that such Holder has not been an
affiliate (as defined in Rule 144) of the company for more than the ninety (90)
preceding days, and (c) as to such other matters as may be appropriate in
accordance with such Rule, remove from the stock certificate representing such
Registrable Securities that portion of any restrictive legend which relates to
the registration provisions of the Securities Act, provided, however, counsel to
Investor may provide such instructions and opinion to the transfer agent
regarding the removal of the restrictive legend.
9. Assignment of the Registration Rights. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any permitted transferee of the
Registrable Securities pursuant to the Common Stock Purchase Agreement.
11
<PAGE>
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor. Any
amendment or waiver effected in accordance with this Section 9 shall be binding
upon Investor and the Company.
11. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall
be given in the manner contemplated by the Common Stock Purchase Agreement, if
to the Company or to Investor, to their respective addresses contemplated by
this Agreement, or at such other address as each such party furnishes by notice
given in accordance with this Section 10(a).
(b) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(c) This Agreement shall be governed by and interpreted in
accordance with the laws of California for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal and state courts of California in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non coveniens, to the
bringing of any such proceeding in such jurisdictions. In the event of any
dispute, the prevailing party shall be entitled to recover its reasonable
attorneys' fees.
(d) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.
(f) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
12
<PAGE>
(h) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(i) The Company acknowledges that any failure by the Company
to perform its obligations under Section 3(a) hereof, or any delay in such
performance, could result in loss to Investor, and the Company agrees that, in
addition to any other liability the Company may have by reason of such failure
or delay, the Company shall be liable for all direct damages caused by any such
failure or delay, offset by any Periodic Amount paid to Investor pursuant to
Sections 2(b)(i)-(ii), unless the same is the result of force majeure. Neither
party shall be liable for consequential damages.
(j) This Agreement, together with the Common Stock Purchase
Agreement and the other Transaction Documents, constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the Common Stock
Purchase Agreement and the other Transaction Documents, supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
COMPANY:
ALTAIR INTERNATIONAL INC.
By:
Name:
Title:
ANDERSON LLC
By:
Name:
Title:
14
<PAGE>
SCHEDULE 5(b)
OTHER REGISTRABLE SECURITIES
----------------------------
15
Exhibit 10.1
------------
March 31, 2000
Altair International Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Re: Altair International Inc. (the "Company")
- -----------------------------------------
Gentlemen:
Reference is made to the Common Stock Purchase Agreement (the "Purchase
Agreement"), of even date hereof, between the Company and the undersigned (the
"Purchasers"). Capitalized terms used without definition in this letter shall
have their respective meanings set forth in the Purchase Agreement.
During the eighteen (18) month period following the Effective Date, the
Purchasers additionally commit, subject to and upon the terms and conditions
hereof, to purchase from the Company, and the Company shall sell to the
Purchasers shares of Common Stock (the "Additional Shares") for an aggregate
purchase price of up to $10,000,000 at a price equal to 85% of the five (5)
lowest closing bid prices of the Common Stock (not necessarily consecutive) for
the ten (10) trading days following each Additional Financing Notice.
The commitment of the Purchasers set forth in this letter is subject to
the terms, conditions and qualifications set forth below:
1
<PAGE>
1. Additional Documentation. In order to effectuate a purchase and sale
of the Additional Shares, prior to their issuance, the Company and the
Purchasers shall enter into the following agreements: (a) a Private Equity
Credit Agreement (the "Private Equity Credit Agreement") setting forth the terms
and conditions of the purchase and sale, and (b) a registration rights agreement
substantially similar to the Registration Rights Agreement (the "Additional
Registration Rights Agreement", and together with the Private Equity Credit
Agreement, collectively the "Additional Transaction Documents"). The Purchasers
shall prepare the Additional Transaction Documents, subject to the mutual
approval of the Purchasers and the Company.
2. The Additional Closing. (i) The Company shall have the right to
deliver one or more written notices to the Purchasers (the "Additional Financing
Notice") requiring such parties to buy the Additional Shares not to exceed
$2,000,000 per Additional Financing Notice. An Additional Financing Notice may
be delivered no earlier than fifteen (15) Trading Days following the Effective
Date or the prior Additional Financing Notice. The closing of the purchase and
sale of the Additional Securities (the "Additional Closing") shall take place at
the offices of Krieger & Prager, LLP, Suite 1440, 39 Broadway, New York, New
York 10006 on the eleventh (11th) Business Day after the Additional Financing
Notice is received by the Purchasers or the Company, as the case may be, or on
such other date as otherwise agreed to by the parties hereto; provided, however,
that in no case shall the Additional Closing take place unless and until all of
the conditions listed in Section 3 of this letter and the Additional Purchase
Agreement shall have been satisfied by the Company or waived by the Purchasers.
The date of each Additional Closing is hereinafter referred to as the
"Additional Closing Date." Notwithstanding anything to the contrary contained in
this letter, each Purchaser may designate an Affiliate thereof to acquire all or
any portion of the Additional Securities.
(ii) At the Additional Closing, the parties shall deliver or
shall cause to be delivered the following: (a) the Company shall deliver to (x)
each Purchaser or its designated Affiliate, (1) the number of Additional Shares
registered in the name of such Purchaser or its designated Affiliate,
representing the shares of Common Stock to be issued and sold to such Purchaser
at the Additional Closing; (2) a legal opinion in form and substance mutually
acceptable to the Purchasers and the Company, and (3) executed Additional
Transaction Documents and the Transfer Agent Instructions relating to the
Additional Securities, and to Krieger & Prager, LLP, $10,000 at the First
Additional Closing and $2,500 at each Additional Closing thereof, as payment of
the legal fees and expenses incurred by the Purchasers to prepare the Additional
Transaction Documents, which amount shall be deducted by the Purchasers from the
amount due to the Company for the Additional Securities and shall be paid
directly to Krieger & Prager, LLP., the fees of Ladenburg Thalmaan Co., Inc.;and
(b) each Purchaser shall deliver to the Company (1) its pro rata portion of the
Additional Purchase Price, in United States dollars in immediately available
funds by wire transfer to an account designated in writing by the Company for
such purpose prior to the Additional Closing Date and (2) the executed
Additional Transaction Documents.
2
<PAGE>
3. Conditions precedent to the Additional Closing. Notwithstanding
anything to the contrary contained in this letter, the commitment of a Purchaser
to purchase the Additional Securities is subject to the satisfaction or waiver
by the Purchasers of each of the following conditions:
(a) Closing of Initial Shares and Initial Warrants. The Initial Closing
shall have occurred;
(b) Performance by the Company. The Company shall have performed,
satisfied and complied with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company between the Closing Date and the Additional Closing Date and no
Potential Material Event (as defined in the Registration Rights Agreement )
shall have occurred;
(c) Underlying Shares Registration Statement. The registration
statement with respect to the Additional Shares shall have been declared
effective under the Securities Act by the Commission and shall have remained
effective at all times, not subject to any actual or threatened stop order or
subject to any actual or threatened suspension at any time prior to the
Additional Closing Date;
(d) Any shareholder consent required by the rules of the Principal
Market shall have been secured;
(e) Shares of Common Stock. The Company shall have duly reserved the
number of shares of Common Stock as required by the Additional Transaction
Documents;
(f) Closing Threshold. For the twenty (20) Trading Days immediately
preceding both the Additional Financing Notice and the Additional Closing Date,
the average daily weighted dollar trading volume of the Common Stock on the
Principal Market, based on the Closing Bid Price, shall be at least 150 % of the
amount of the Additional Financing Notice and the average of the Per Share
Market Value for such twenty (20)Trading Day period shall be greater than $2.00.
3
<PAGE>
(g) Deliveries pursuant to Additional Transaction Documents. At the
Additional Closing, the Company shall deliver the Additional Shares and executed
Additional Transaction Documents relating to the Additional Shares in the forms
contemplated by this letter.
(h) Restriction on Future Financing. (i) The Company covenants and
agrees that it will not, without the prior written consent of the Purchasers,
enter into any subsequent or further offer or sale of Common Stock or securities
convertible into Common Stock (collectively, _New Common Stock_) with any third
party on any date which is sixty (60) trading days prior or subsequent to any
Additional Closing Date.
(ii) The provisions of subparagraph (g)(i) will not
apply to (v) the grant of any option, warrant or other right to acquire shares
of the Company's capital stock (including the exercise or conversion of any such
option, warrant or right) granted to employees, officers, directors and
consultants of the Company (w) Common Stock issued pursuant to an exemption from
registration under the Securities Act, (x) an underwritten public offering of
shares of Common Stock ; (y) an offering of convertible Preferred Stock or
Debentures at market or above; or (z) the issuance of securities (other than for
cash) in connection with an acquisition, merger, consolidation, sale of assets,
disposition or the exchange of the capital stock for assets, stock or other
joint venture interests.
4. Governing Law. This letter shall be governed by and construed and
enforced in accordance with the internal laws of the State of California,
without regard to the principles of conflicts of law thereof.
5. Execution. This letter may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4
<PAGE>
Please indicate your agreement with the foregoing by executing
a countersigned copy of this letter and returning the same to our attention,
whereupon effective immediately thereafter this letter shall become a legally
valid and binding agreement between the Purchasers and the Company.
We look forward to our continuing relationship.
Sincerely,
ANDERSON LLC
By:
Name:
Title:
Agreed and accepted
___________________, 2000
ALTAIR INTERNATIONAL INC.
By:
Name:
Title:
5
