11,994,469 Units ALTAIR NANOTECHNOLOGIES INC. PLACEMENT AGENT AGREEMENT
EXHIBIT
1.1
11,994,469
Units
May 22,
2009
LAZARD
CAPITAL MARKETS LLC
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▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear
Sirs:
1. Introduction.
Altair Nanotechnologies Inc., a corporation continued under the
Canada Business Corporations Act (the “Company”), proposes to issue
and sell to the purchasers, pursuant to the terms and conditions of this
Placement Agent Agreement (this “Agreement”) and the
Subscription Agreements in the form of Exhibit A attached hereto
(the “Subscription
Agreements”) entered into with the purchasers identified therein (each a
“Purchaser” and,
collectively, the “Purchasers”), up to an
aggregate of 11,994,469 units (the “Units”) with each Unit
consisting of (i) one common share (the “Shares”), without nominal or
par value, together with associated rights (the “Common Shares”) of the Company
and (ii) one warrant (the “Warrants”) to purchase 0.55
Common Shares. The terms and conditions of the Warrants are set forth
in the form of Exhibit
B attached hereto. The Common Shares issuable upon exercise of
the Warrants are referred to herein as the “Warrant
Shares.” The Warrant Shares, together with the Shares and the
Warrants are referred to herein as the “Securities.” The
Company hereby confirms that Lazard Capital Markets LLC (“LCM,” or the “Placement Agent”) acted as the
Placement Agent in accordance with the terms and conditions hereof.
2. Agreement to Act as Placement Agent;
Placement of Units.
On the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this
Agreement:
2.1 The
Company has authorized and hereby acknowledges that the Placement Agent has
acted as its exclusive agent to solicit offers for the purchase of all or part
of the Units from the Company in connection with the proposed offering of the
Units (the “Offering”). Until
the Closing Date (as defined in Section 4 hereof),
the Company shall not, without the prior written consent of the Placement Agent,
solicit or accept offers to purchase Units otherwise than through the Placement
Agent. LCM may utilize the expertise of Lazard Frères & Co. LLC
in connection with LCM’s placement agent’s activities.
2.2 The
Placement Agent, as agent of the Company, used its reasonable best efforts to
solicit offers to purchase the Units from the Company on the terms and subject
to the conditions set forth in the Prospectus (as defined below). The Placement
Agent shall use its commercially reasonable efforts to assist the Company in
obtaining performance by each Purchaser whose offer to purchase Units was
solicited by the Placement Agent and accepted by the Company, but the Placement
Agent shall not, except as otherwise provided in this Agreement, be obligated to
disclose the identity of any potential purchaser or have any liability to the
Company in the event any such purchase is not consummated for any reason. Under
no circumstances will the Placement Agent be obligated to underwrite or purchase
any Units for its own account and, in soliciting purchases of Units, the
Placement Agent acted solely as the Company’s agent and not as principal.
Notwithstanding the foregoing and except as otherwise provided in Section 2.3, it is
understood and agreed that the Placement Agent (or its affiliates) may, solely
at its discretion and without any obligation to do so, purchase Units as
principal.
2.3 Subject
to the provisions of this Section 2, offers for
the purchase of Units were solicited by the Placement Agent as agent for the
Company at such times and in such amounts as the Placement Agent deemed
advisable. The Placement Agent communicated to the Company, orally or
in writing, each reasonable offer to purchase Units received by it as agent of
the Company. The Company shall have the sole right to accept offers to purchase
the Units and may reject any such offer, in whole or in part. The
Placement Agent has the right, in its discretion reasonably exercised, without
notice to the Company, to reject any offer to purchase Units received by it, in
whole or in part, and any such rejection shall not be deemed a breach of this
Agreement.
2.4 The
Units are being sold to the Purchasers at a price of $1.17 per
Unit. The purchases of the Units by the Purchasers shall be evidenced
by the execution of Subscription Agreements by each of the Purchasers and the
Company.
2.5 As
compensation for services rendered, on the Closing Date (as defined in Section 4 hereof),
the Company shall pay to the Placement Agent by wire transfer of immediately
available funds to an account or accounts designated by the Placement Agent, an
aggregate amount equal to seven percent (7.0%) of the gross proceeds received by
the Company from the sale of the Units on such Closing Date (the “Placement
Fee”). The Placement Agent shall not receive any compensation
with respect to any proceeds from the exercise of any Warrants.
2.6 No
Units which the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and paid for, or
sold by the Company, until such Units shall have been delivered to the Purchaser
thereof against payment by such Purchaser. If the Company shall default in its
obligations to deliver Units to a Purchaser whose offer it has accepted, the
Company shall indemnify and hold the Placement Agent harmless against any loss,
claim, damage or expense arising from or as a result of such default by the
Company in accordance with the procedures set forth in Section 8(c)
herein.
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3. Representations and Warranties of
the Company.
The
Company represents and warrants to, and agrees with, the Placement Agent and the
Purchasers (as provided in the Subscription Agreements) that:
(a) The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and
published rules and regulations thereunder (the “Rules and Regulations”)
adopted by the Securities and Exchange Commission (the “Commission”) a “shelf”
Registration Statement (as hereinafter defined) on Form S-3 (File No.
333-137099), which became effective as of October 3, 2006 (the “Effective Date”), including a
base prospectus relating to the Securities (the “Base Prospectus”), and such
amendments and supplements thereto as may have been required to the date of this
Agreement. The term “Registration Statement” as
used in this Agreement means the registration statement (including all exhibits,
financial schedules and all documents and information deemed to be a part of the
Registration Statement pursuant to Rule 430A of the Rules and Regulations), as
amended and/or supplemented to the date of this Agreement, including the Base
Prospectus. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of
the Registration Statement or suspending or preventing the use of the Prospectus
has been issued by the Commission and no proceedings for that purpose have been
instituted or, to the knowledge of the Company after reasonable inquiry (“Knowledge”), are threatened by
the Commission. The Company, if required by the Rules and Regulations
of the Commission, will file the Prospectus (as defined below), with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. The term “Prospectus” as used in this
Agreement means the Prospectus, in the form in which it is to be filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, or, if the
Prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
Prospectus in the form included as part of the Registration Statement as of the
Effective Date, except that if any revised prospectus or prospectus supplement
shall be provided to the Placement Agent by the Company for use in connection
with the offering and sale of the Units which differs from the Prospectus
(whether or not such revised prospectus or prospectus supplement is required to
be filed by the Company pursuant to Rule 424(b) of the Rules and Regulations),
the term “Prospectus”
shall refer to such revised prospectus or prospectus supplement, as the case may
be, from and after the time it is first provided to the Placement Agent for such
use. Any preliminary prospectus or prospectus subject to completion included in
the Registration Statement or filed with the Commission pursuant to Rule 424 of
the Rules and Regulations is hereafter called a “Preliminary
Prospectus.” Any reference herein to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), on or before the last to occur of the Effective Date, the date of
the Preliminary Prospectus, or the date of the Prospectus, and any reference
herein to the terms “amend,” “amendment,” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include (i) the filing of any document under the Exchange
Act after the Effective Date, the date of such Preliminary Prospectus or the
date of the Prospectus, as the case may be, which is incorporated by reference
and (ii) any such document so filed. If the Company has filed an abbreviated
registration statement to register additional securities pursuant to Rule 462(b)
under the Rules and Regulations (the “462(b) Registration
Statement”), then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement.
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(b) As
of the Applicable Time (as defined below) and as of the Closing Date, neither
(i) any General Use Free Writing Prospectus (as defined below) issued at or
prior to the Applicable Time, and the Pricing Prospectus (as defined below) and
the information included on Schedule A hereto, all
considered together (collectively, the “General Disclosure Package”),
(ii) any individual Limited Use Free Writing Prospectus (as defined below), nor
(iii) any bona fide electronic road show (as defined in Rule 433(h)(5) of the
Rules and Regulations), if any, that has been made available without restriction
to any person, when considered together with the General Disclosure Package,
included or will include, any untrue statement of a material fact or omitted or
as of the Closing Date will omit, to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or
omitted from any Issuer Free Writing Prospectus (as defined below), in reliance
upon, and in conformity with, written information furnished to the Company by
the Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent’s Information (as defined
in Section
17). As used in this paragraph (b) and
elsewhere in this Agreement:
“Applicable
Time” means 5:00 P.M., New York time, on the date of this
Agreement.
“General Use Free
Writing Prospectus” means any Issuer Free Writing Prospectus that is
identified on Schedule
A to
this Agreement.
“Issuer Free
Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Rules and Regulations relating
to the Units in the form filed or required to be filed with the Commission or,
if not required to be filed, in the form retained in the Company’s records
pursuant to Rule 433(g) of the Rules and Regulations.
“Limited Use Free
Writing Prospectuses” means any Issuer Free Writing Prospectus that is
not a General Use Free Writing Prospectus.
“Pricing
Prospectus” means the Preliminary Prospectus, if any, and the Base
Prospectus, each as amended and supplemented immediately prior to the Applicable
Time, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof.
(c) No
order preventing or suspending the use of any Preliminary Prospectus, any Issuer
Free Writing Prospectus or the Prospectus relating to the Offering has been
issued by the Commission, and no proceeding for that purpose or pursuant to
Section 8A of the Securities Act has been instituted or, to the Company’s
Knowledge, threatened by the Commission, and each Preliminary Prospectus (if
any), at the time of filing thereof, conformed in all material respects to the
requirements of the Securities Act and the Rules and Regulations, and did not
contain an 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
the light of the circumstances under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or
omitted from any Preliminary Prospectus, in reliance upon, and in conformity
with, written information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties hereto agree
is limited to the Placement Agent’s Information (as defined in Section 17). No
Canadian securities regulating authority has issued an order, or commenced any
proceeding for the issuance of any order, to cease trading of the Company’s
securities.
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(d) At
the time the Registration Statement became effective, at the date of this
Agreement and at the Closing Date, the Registration Statement conformed and will
conform in all material respects to the requirements of the Securities Act and
the Rules and Regulations and did not and 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 not misleading; the
Prospectus, at the time the Prospectus was issued and at the Closing Date,
conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
foregoing representations and warranties in this paragraph (d) shall
not apply to information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17).
(e) Each
Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Units or until any earlier date that the Company notified or notifies the
Placement Agent as described in Section 5(e), did
not, does not and will not include any information that conflicted, conflicts or
will conflict with the information contained in the Registration Statement,
Pricing Prospectus or the Prospectus, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof that
has not been superseded or modified, or includes an untrue statement of a
material fact or omitted or would omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The foregoing sentence does not apply to statements in or
omissions from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the Placement
Agent specifically for inclusion therein, which information the parties hereto
agree is limited to the Placement Agent’s Information (as defined in Section 17).
(f) The
documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder
(or have been corrected, suspended or modified by a subsequent filing
incorporated by reference in the Prospectus, which subsequent filing conforms in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the Rules and Regulations) and none of such documents
contained any untrue statement of a material fact or omitted 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; and any further documents so filed and incorporated by reference in
the Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and 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.
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(g) The
Company is not an “ineligible issuer” (as defined in Rule 405 under the
Securities Act) as of the eligibility determination date for purposes of Rules
164 and 433 under the Securities Act with respect to the
Offering. The Company has not, directly or indirectly, distributed
and will not distribute any offering material in connection with the Offering
other than any Preliminary Prospectus, the Prospectus and other materials, if
any, permitted under the Securities Act and consistent with Section 5(b)
below. The Company will file with the Commission all Issuer Free
Writing Prospectuses (other than a “road show,” as described in Rule 433(d)(8)
of the Rules and Regulations), if any, in the time and manner required under
Rules 163(b)(2) and 433(d) of the Rules and Regulations.
(h) The
Company has been continued and is existing as a corporation under the Canada
Business Corporations Act and each of its subsidiaries (as defined in Section 15) have been
duly incorporated and are validly existing as corporations or other legal
entities in good standing (or the foreign equivalent thereof) under the laws of
their respective jurisdictions of organization. The Company and each
of its subsidiaries are duly qualified to do business and are in good standing
as foreign corporations or other legal entities in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses require such qualification and have all power and
authority (corporate or other) necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except where
the failure to so qualify or have such power or authority would not (i) have,
singularly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, assets, business or prospects
of the Company and its subsidiaries taken as a whole, or (ii) impair in any
material respect the ability of the Company to perform its obligations under
this Agreement, the Subscription Agreements or the Escrow Agreement (as defined
below) or to consummate any transactions contemplated by such agreements, the
General Disclosure Package or the Prospectus (any such effect as described in
clauses (i) or (ii), a “Material Adverse
Effect”). The Company owns or controls, directly or
indirectly, only the following corporations, partnerships, limited liability
partnerships, limited liability companies, associations or other entities:
Altair US Holdings, Inc., a Nevada corporation, and Altair US Holdings, Inc.
directly or indirectly wholly-owns Altairnano, Inc. (f/k/a) Altair
Nanomaterials, Inc., a Nevada corporation, Mineral Recovery Systems, Inc., a
Nevada corporation, and Alsher Titania, LLC, a Nevada limited liability company
(70% owned by the Company).
(i) The
Company has the full right, power and authority to enter into this Agreement,
each of the Subscription Agreements and that certain Escrow Agreement (the
“Escrow Agreement”)
dated as of the date hereof by and among the Company, the Placement Agent and
the escrow agent named therein, and to perform and to discharge its obligations
hereunder and thereunder; and each of this Agreement, each of the Subscription
Agreements and the Escrow Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, except that such enforcement
may be subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, affecting creditors’ rights
generally.
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(j) The
Units to be issued and sold by the Company to the Purchasers hereunder and under
the Subscription Agreements and the Warrant Shares have been duly and validly
authorized and the Common Shares, when issued and delivered against payment
therefor as provided herein and in the Subscription Agreements and the Warrant
Shares, when issued and delivered against payment therefor as provided in the
Warrants, will be duly and validly issued, fully paid and nonassessable and free
of any preemptive or similar rights and will conform to the description thereof
contained in the General Disclosure Package and the Prospectus.
(k) The
Company has an authorized capitalization as set forth in the Pricing Prospectus,
and all of the issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, have been
issued in compliance with the Canada Business Corporations Act, territorial,
provincial and U.S. Federal and state securities laws, and conform to the
description thereof contained in the General Disclosure Package and the
Prospectus. As of May 15, 2009, there were 93,153,271 Common Shares
issued and outstanding and no shares of Preferred Stock, without nominal or par
value, of the Company issued and outstanding and 5,404,667 Common Shares were
issuable upon the exercise of all options, warrants and convertible securities
outstanding as of such date. Since such date, the Company has not issued any
securities, other than Common Shares of the Company issued pursuant to the
exercise of warrants previously outstanding or stock options previously
outstanding under the Company’s stock option plans or the issuance of restricted
Common Shares. All of the Company’s options, warrants and other
rights to purchase or exchange any securities for shares of the Company’s
capital stock have been duly authorized and validly issued in compliance with
Canadian, if applicable, and U.S. federal and state securities
laws. None of the outstanding Common Shares were issued in violation
of any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. As of May 15,
2009, and except as contemplated by this paragraph with respect to the exercise
of outstanding options and warrants, there are no authorized or outstanding
shares of capital stock, options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any
of its subsidiaries other than those described above or accurately described in
the General Disclosure Package. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, as described in the General Disclosure
Package and the Prospectus, accurately and fairly present the information
required to be shown therein with respect to such plans, arrangements, options
and rights.
(l) All
the outstanding shares of capital stock of each subsidiary of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and,
except to the extent set forth in the General Disclosure Package or the
Prospectus, are owned by the Company directly or indirectly through one or more
wholly-owned subsidiaries, free and clear of any claim, lien, encumbrance,
security interest, restriction upon voting or transfer or any other claim of any
third party.
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(m) The
execution, delivery and performance of this Agreement, the Subscription
Agreements and the Escrow Agreement by the Company, the issue and sale of the
Units by the Company and the consummation of the transactions contemplated
hereby and thereby will not (with or without notice or lapse of time or both)
conflict with or result in a breach or violation of any of the terms or
provisions of, constitute a default or Debt Repayment Triggering Event (as
defined below) under, give rise to any right of termination or other right or
the cancellation or acceleration of any right or obligation or loss of a benefit
under, or give rise to the creation or imposition of any lien, encumbrance,
security interest, claim or charge upon any property or assets of the Company or
any subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation of the
provisions of the charter or by-laws (or analogous governing instruments, as
applicable) of the Company or any of its subsidiaries or any law, statute, rule,
regulation, judgment, order or decree of any court or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets. A “Debt Repayment Triggering
Event” means any event or condition that gives, or with the giving of
notice or lapse of time would give the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.
(n) Except
for the registration of the Shares, Warrants and Warrant Shares under the
Securities Act and such consents, approvals, authorizations, registrations,
exemption related filings or qualifications as may be required under the
Canadian Securities Laws (as defined below) and the Exchange Act and applicable
state or foreign securities laws, the Financial Industry Regulatory Authority
(“FINRA”) and the Nasdaq
Capital Market (the “Nasdaq
CM”) in connection with the offering and sale of the Units by the
Company, the issuance of the Placement Agent Warrant and the listing of the
Common Shares and the Warrant Shares on the Nasdaq CM, no consent, approval,
authorization or order of, or filing, qualification or registration (each an
“Authorization”) with,
any court or governmental agency or body, foreign or domestic, which has not
been made, obtained or taken and is not in full force and effect, is required
for the execution, delivery and performance of this Agreement, the Subscription
Agreements and the Escrow Agreement by the Company, the offer or sale of the
Units or the issuance of the Common Shares issuable upon exercise of the
Warrants or the consummation of the transactions contemplated hereby or thereby;
and no event has occurred that allows or results in, or after notice or lapse of
time or both would allow or result in, revocation, suspension, termination or
invalidation of any such Authorization or any other impairment of the rights of
the holder or maker of any such Authorization. All corporate
approvals (including those of stock holders) necessary for the Company to
consummate the transactions contemplated by this Agreement have been obtained
and are in effect.
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(o) ▇▇▇▇▇-▇▇▇▇▇
LLP, who have certified certain financial statements and related schedules
included or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus, and have audited the Company’s internal
control over financial reporting and management’s assessment thereof, is an
independent registered public accounting firm as required by the Securities Act
and the Rules and Regulations and the Public Company Accounting Oversight Board
(United States) (the “PCAOB”). Certification
by an auditor registered or authorized to practice in Canada is not required
under any legislation in each of the provinces and territories of Canada and the
rules, regulations, blanket rulings, orders and notices made thereunder and the
local, uniform and national published policies adopted by the Canadian
securities regulatory authorities (collectively, as applied and interpreted, the
“Canadian Securities
Laws”) with respect to the financial statements filed by the Company on
the Canadian System for Electronic Document Analysis and
Retrieval. Except as disclosed in the Registration Statement and as
pre-approved in accordance with the requirements set forth in Section 10A of the
Exchange Act, ▇▇▇▇▇-▇▇▇▇▇ LLP has not been engaged by the Company to perform any
“prohibited activities” (as defined in Section 10A of the Exchange
Act).
(p) The
financial statements, together with the related notes and schedules, included or
incorporated by reference in the General Disclosure Package, the Prospectus and
in the Registration Statement fairly present the financial position and the
results of operations and changes in financial position of the Company and its
consolidated subsidiaries and other consolidated entities at the respective
dates or for the respective periods therein specified. Such
statements and related notes and schedules have been prepared in accordance with
the generally accepted accounting principles in the United States (“GAAP”) applied on a consistent
basis throughout the periods involved except as may be set forth in the related
notes included or incorporated by reference in the General Disclosure
Package. The financial statements, together with the related notes
and schedules, included or incorporated by reference in the General Disclosure
Package and the Prospectus comply in all material respects with the Securities
Act, the Exchange Act, and the Rules and Regulations and the rules and
regulations under the Exchange Act. No other financial statements or
supporting schedules or exhibits are required by the Securities Act or the Rules
and Regulations to be described, or included or incorporated by reference in the
Registration Statement, the General Disclosure Package or the
Prospectus. There is no pro forma or as adjusted financial
information which is required to be included in the Registration Statement, the
General Disclosure Package, or and the Prospectus or a document incorporated by
reference therein in accordance with the Securities Act and the Rules and
Regulations which has not been included or incorporated as so
required. The summary and selected financial data included or
incorporated by reference in the General Disclosure Package, the Prospectus and
each Registration Statement fairly present the information shown therein as at
their respective dates and for the respective periods specified and are derived
from the consolidated financial statements set forth or incorporated by
reference from the Registration Statement, the Pricing Prospectus and the
Prospectus and other financial information. All information contained
in the Registration Statement, the General Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as defined in Regulation G) complies
with Regulation G and Item 10 of Regulation S-K, to the extent
possible.
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(q) Neither
the Company nor any of its subsidiaries has sustained, since the date of the
latest audited financial statements included or incorporated by reference in the
General Disclosure Package, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the General Disclosure
Package; and, since such date, there has not been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, assets, general affairs,
management, financial position, prospects, stockholders’ equity or results of
operations of the Company and its subsidiaries taken as a whole, otherwise than
as set forth or contemplated in the General Disclosure Package.
(r) Except
as set forth in the General Disclosure Package, there is no legal or
governmental action, suit, claim or proceeding pending to which the Company or
any of its subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject, including any proceeding
before the U.S. Food and Drug Administration of the U.S. Department of Health
and Human Services (“FDA”) or comparable federal,
state, local or foreign governmental bodies (it being understood that the
interaction between the Company and the FDA and such comparable governmental
bodies relating to the clinical development and product approval process shall
not be deemed proceedings for purposes of this representation), which is
required to be described in the Registration Statement, the General Disclosure
Package or the Prospectus or a document incorporated by reference therein and is
not described therein, or which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby; and to the Company’s Knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others. The Company is in compliance with all
applicable federal, state, local and foreign laws, regulations, orders and
decrees governing its business as prescribed by the FDA, or any other federal,
state or foreign agencies or bodies with jurisdiction over the activities of the
Company engaged in the regulation of pharmaceuticals or biohazardous substances
or materials, except where noncompliance would not, singly or in the aggregate,
have a Material Adverse Effect. All preclinical and clinical studies
conducted by or on behalf of the Company to support approval for
commercialization of the Company’s products have been conducted by the Company,
or to the Company’s Knowledge by third parties, in compliance with all
applicable federal, state, provincial or foreign laws, rules, orders and
regulations, except for such failure or failures to be in compliance as could
not reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect.
(s) Neither
the Company nor any of its subsidiaries is in (i) violation of its charter or
by-laws (or analogous governing instrument, as applicable), (ii) default in any
respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject
(including, without limitation, those administered by the FDA or by any foreign,
federal, state, provincial or local governmental or regulatory authority with
jurisdiction over the activities of the Company performing functions similar to
those performed by the FDA) or (iii) violation in any respect of any law,
ordinance, governmental rule, regulation or court order, decree or judgment to
which it or its property or assets may be subject except, in the case of clauses
(ii) and (iii) of this paragraph (s), for any violations or defaults which,
singularly or in the aggregate, would not have a Material Adverse
Effect.
10
(t) The
Company and each of its subsidiaries possess all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings
with, the appropriate local, state, federal, provincial or foreign regulatory
agencies or bodies (including, without limitation, those administered by FDA or
by any foreign, federal, state, provincial or local governmental or regulatory
authority with jurisdiction over the activities of the Company performing
functions similar to those performed by the FDA) which are necessary or
desirable for the ownership of their respective properties or the conduct of
their respective businesses as described in the General Disclosure Package and
the Prospectus (collectively, the “Governmental Permits”) except
where any failures to possess or make the same, singularly or in the aggregate,
would not have a Material Adverse Effect. The Company and its
subsidiaries are in compliance with all such Governmental Permits; all such
Governmental Permits are valid and in full force and effect, except where the
validity or failure to be in full force and effect would not, singularly or in
the aggregate, have a Material Adverse Effect. All such Governmental
Permits are free and clear of any restriction or condition that are in addition
to, or materially different from those normally applicable to similar licenses,
certificates, authorizations and permits. Neither the Company nor any subsidiary
has received notification of any revocation, modification, suspension,
termination or invalidation (or proceedings related thereto) of any such
Governmental Permit and to the Knowledge of the Company, no event has occurred
that allows or results in, or after notice or lapse of time or both would allow
or result in, revocation, modification, suspension, termination or invalidation
(or proceedings related thereto) of any such Governmental Permit and the Company
has no reason to believe that any such Governmental Permit will not be
renewed. The studies, tests and preclinical or clinical trials
conducted by or on behalf of the Company that are described in the General
Disclosure Package and the Prospectus (the “Company Studies and Trials”)
were and, if still pending, are being, conducted in all material respects in
accordance with experimental protocols, procedures and controls pursuant to,
where applicable, accepted professional scientific standards; the descriptions
of the results of the Company Studies and Trials contained in the General
Disclosure Package and Prospectus are accurate in all material respects; and the
Company has not received any notices or correspondence with the FDA or any
foreign, state or local governmental body exercising comparable authority
requiring the termination, suspension or material modification of any Company
Studies or Trials that termination, suspension or material modification would
reasonably be expected to have a Material Adverse Effect.
(u) Neither
the Company nor any of its subsidiaries is or, after giving effect to the
offering of the Units and the application of the proceeds thereof as described
in the General Disclosure Package and the Prospectus, will become an “investment
company” within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission thereunder.
(v) Neither
the Company, its subsidiaries nor, to the Company’s Knowledge, any of the
Company’s or its subsidiaries’ officers, directors or affiliates has taken or
will take, directly or indirectly, any action designed or intended to stabilize
or manipulate the price of any security of the Company, or which caused or
resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company.
11
(w) The
Company and its subsidiaries own or possess the valid right to use all (i) valid
and enforceable patents, patent applications, trademarks, trademark
registrations, service marks, service ▇▇▇▇ registrations, Internet domain name
registrations, copyrights, copyright registrations, licenses, trade secret
rights (“Intellectual Property Rights”) and (ii) inventions, software, works of
authorship, trade marks, service marks, trade names, databases, formulae, know
how, Internet domain names and other intellectual property (including trade
secrets and other unpatented and/or unpatentable or proprietary confidential
information, systems, or procedures) (collectively, “Intellectual Property”)
necessary to carry on the business of Company and its subsidiaries, taken as a
whole, as currently conducted, and as proposed to be conducted and described in
the General Disclosure Package and the Prospectus, and the Company is
not aware of any claim to the contrary or any challenge by any other person to
the rights of the Company and its subsidiaries with respect to the foregoing
except for those that could not have a Material Adverse Effect. The
Intellectual Property licenses described in the General Disclosure Package and
the Prospectus are valid, binding upon, and enforceable by or against the
parties thereto in accordance to its terms. The Company and each of
its subsidiaries has complied in all material respects with, and is not in
breach nor has received any asserted or threatened claim of breach of, any
Intellectual Property license, and the Company has no knowledge of any breach or
anticipated breach by any other person to any Intellectual Property
license. To the Knowledge of the Company, the Company’s and each of
its subsidiaries’ businesses as now conducted and as proposed to be conducted
does not and will not infringe or conflict with any patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses or other Intellectual
Property or franchise right of any person. No claim has been made
against the Company or any of its subsidiaries alleging the infringement by the
Company or any of its subsidiaries of any patent, trademark, service ▇▇▇▇, trade
name, copyright, trade secret, license in or other intellectual property right
or franchise right of any person. The Company and each of its
subsidiaries has taken all reasonable steps to protect, maintain and safeguard
its rights in all Intellectual Property, including the execution of appropriate
nondisclosure and confidentiality agreements. The consummation of the
transactions contemplated by this Agreement will not result in the loss or
impairment of or payment of any additional amounts with respect to, nor require
the consent of any other person in respect of, the Company’s or any of its
subsidiaries’ right to own, use, or hold for use any of the Intellectual
Property as owned, used or held for use in the conduct of the businesses as
currently conducted. With respect to the use of the software that is
material to the Company’s or any of its subsidiaries’ businesses as they are
currently conducted, the Company nor any of its subsidiaries has experienced any
material defects in such software including any material error or omission in
the processing of any transactions other than defects which have been corrected,
and to the knowledge of the Company, no such software contains any device or
feature designed to disrupt, disable, or otherwise impair the functioning of any
software or is subject to the terms of any “open source” or other similar
license that provides for the source code of the software to be publicly
distributed or dedicated to the public. The Company and each of its
subsidiaries has at all times complied with all applicable laws relating to
privacy, data protection, and the collection and use of personal information
collected, used, or held for use by the Company and any of its subsidiaries in
the conduct of the Company’s and its subsidiaries’ businesses. No
claims have been asserted or threatened against the Company or any of its
subsidiaries alleging a violation of any person’s privacy or personal
information or data rights and the consummation of the transactions contemplated
hereby will not breach or otherwise cause any violation of any law related to
privacy, data protection, or the collection and use of personal information
collected, used, or held for use by the Company or any of its subsidiaries in
the conduct of the Company’s or any of its subsidiaries’
businesses. The Company and each of its subsidiaries takes reasonable
measures to ensure that such information is protected against unauthorized
access, use, modification, or other misuse.
12
(x) The
Company directly or as a result of leasehold interests held by Altairnano, Inc.,
and each of its subsidiaries have good and marketable title in fee simple to, or
have valid rights to lease or otherwise use, all items of real or personal
property which are material to the business of the Company and its subsidiaries
taken as a whole, in each case free and clear of all liens, encumbrances,
security interests, claims and defects that do not, singularly or in the
aggregate, materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries hold properties described in
the General Disclosure Package and the Prospectus, are in full force and effect,
and neither the Company nor any subsidiary has received any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.
(y) There
is (A) no significant unfair labor practice complaint pending against the
Company, or any of its subsidiaries, nor, to the Knowledge of the Company,
threatened against it or any of its subsidiaries, before the National Labor
Relations Board, any state or local labor relation boards or any foreign labor
relations board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Company or any of its subsidiaries, or, to the Knowledge of
the Company, threatened against it and (B) no labor disturbance by the employees
of the Company or any of its subsidiaries exists or, to the Company’s Knowledge,
is imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries’ principal
suppliers, manufacturers, customers or contractors, that could reasonably be
expected, singularly or in the aggregate, to have a Material Adverse
Effect. The Company is not aware that any key employee or significant
group of employees of the Company or any subsidiary plans to terminate
employment with the Company or any such subsidiary.
(z) No
“prohibited transaction” (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of
the Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or “accumulated
funding deficiency” (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect to which
the thirty (30)-day notice requirement under Section 4043 of ERISA has been
waived) has occurred or could reasonably be expected to occur with respect to
any employee benefit plan of the Company or any of its subsidiaries which could,
singularly or in the aggregate, have a Material Adverse Effect. Each
employee benefit plan of the Company or any of its subsidiaries is in compliance
in all material respects with applicable law, including ERISA and the Code. The
Company and its subsidiaries have not incurred and could not reasonably be
expected to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan (as defined in
ERISA). Each pension plan for which the Company or any of its
subsidiaries would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified, and nothing has occurred, whether by
action or by failure to act, which could, singularly or in the aggregate, cause
the loss of such qualification.
13
(aa) The
Company and its subsidiaries are in compliance with all applicable Canadian,
U.S., foreign, federal, state, local, provincial and territorial rules, laws and
regulations relating to the use, treatment, storage and disposal of hazardous or
toxic substances or waste and protection of health and safety or the environment
which are applicable to their businesses (“Environmental
Laws”). There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company or any of its subsidiaries (or, to the Company’s Knowledge, any
other entity for whose acts or omissions the Company or any of its subsidiaries
is or may otherwise be liable) upon any of the property now or previously owned
or leased by the Company or any of its subsidiaries, in violation of any law,
statute, ordinance, rule, regulation, order, judgment, decree or permit or which
would, under any law, statute, ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability; and
there has been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which the
Company or any of its subsidiaries has Knowledge, except for any such disposal,
discharge, emission, or other release of any kind which would not have,
singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect. Although the Company and its subsidiaries do
not conduct periodic reviews of the effect of Environmental Laws on their
business and assets, the Company and its subsidiaries have reasonably concluded
that associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or Governmental Permits issued thereunder,
any related constraints on operating activities and any potential liabilities to
third parties) would not have, singularly or in the aggregate, a Material
Adverse Effect.
(bb) The
Company and its subsidiaries (i) have timely filed (including pursuant to an
extension) all necessary U.S. and Canadian federal, state, local, provincial and
foreign tax returns, and all such returns were true, complete and correct, (ii)
have paid all federal, state, local, provincial and foreign taxes, assessments,
governmental or other charges due and payable for which they are liable,
including, without limitation, all sales and use taxes and all taxes which the
Company or any of its subsidiaries is obligated to withhold from amounts owing
to employees, creditors and third parties, and (iii) do not have any tax
deficiency or claims outstanding or assessed or, to its Knowledge, proposed
against any of them, except those, in each of the cases described in clauses
(i), (ii) and (iii) of this paragraph (bb), that would not, singularly or in the
aggregate, have a Material Adverse Effect. Neither the Company nor
any of its subsidiaries has engaged in any transaction which is a corporate tax
shelter or which could be characterized as such by the Internal Revenue Service
or any Canadian or other taxing authority. The accruals and reserves
on the books and records of the Company and its subsidiaries in respect of tax
liabilities for any taxable period not yet finally determined are adequate to
meet any assessments and related liabilities for any such period, and since
March 31, 2009, neither the Company nor any of its subsidiaries has incurred any
liability for taxes other than in the ordinary course.
14
(cc) The
Company and its subsidiaries carry, or are covered by, insurance in such amounts
and covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for
companies of a similar size engaged in similar businesses in similar
industries. Neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect. All policies of insurance
owned by the Company or any of its subsidiaries are, to the Company’s Knowledge,
in full force and effect and the Company and its subsidiaries are in compliance
with the terms of such policies. Neither the Company nor any of its
subsidiaries has received written notice from any insurer, agent of such insurer
or the broker of the Company or any of its subsidiaries that any material
capital improvements or any other material expenditures (other than premium
payments) are required or necessary to be made in order to continue such
insurance. Neither the Company nor any of its subsidiaries insure
risk of loss through any captive insurance, risk retention group, reciprocal
group or by means of any fund or pool of assets specifically set aside for
contingent liabilities other than as described in the General Disclosure
Package.
(dd) The
Company and its subsidiaries maintain a system of internal control over
financial reporting (as such term is defined in Rule 13a-15 of the General Rules
and Regulations under the Exchange Act (the “Exchange Act Rules”)) that complies
with the requirements of the Exchange Act and has been designed by the Company’s
principal executive officer and principal financial officer, or under their
supervision, to provide reasonable assurances 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 GAAP and to maintain accountability for assets;
(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 existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Company’s internal control
over financial reporting is effective. Except as described in the
General Disclosure Package, since the end of the Company’s most recent audited
fiscal year, there has been (A) no material weakness detected by the Company,
using reasonable due diligence, in its internal control over financial reporting
(whether or not remediated) and (B) no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial
reporting. The Company’s internal control over financial reporting is
overseen by the Audit Committee of the Board of Directors of the Company (the
“Audit Committee”) in accordance with the Exchange Act Rules. The
Company has not publicly disclosed or reported to the Audit Committee or to the
Board, and within the next 90 days the Company does not reasonably expect to
publicly disclose or report to the Audit Committee or the Board, a significant
deficiency, material weakness, change in internal control over financial
reporting or fraud involving management or other employees who have a
significant role in the internal control over financial reporting (each an
“Internal Control
Event”), any violation of, or failure to comply with, the U.S. Securities
Laws, or any matter which, if determined adversely, would have a Material
Adverse Effect.
15
(ee) A
member of the Audit Committee has confirmed to the Chief Executive Officer,
Chief Financial Officer or General Counsel of the Company that, except as set
forth in the General Disclosure Package, the Audit Committee is not reviewing or
investigating, and neither the Company’s independent auditors nor its internal
auditors have recommended that the Audit Committee review or investigate, (i)
adding to, deleting, changing the application of or changing the Company’s
disclosure with respect to, any of the Company’s material accounting policies,
(ii) any matter which could result in a restatement of the Company’s financial
statements for any annual or interim period during the current or prior three
fiscal years, or (iii) any Internal Control Event.
(ff) The
Company and each of its subsidiaries have made and keep books, records and
accounts, which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company and its subsidiaries
in all material respects.
(gg) The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15 of the Exchange Act Rules) that comply with the requirements of the
Exchange Act, such disclosure controls and procedures have been designed to
ensure that information required to be disclosed by the Company and its
subsidiaries is accumulated and communicated to the Company’s management,
including the Company’s principal executive officer and principal financial
officer by others within those entities, and such disclosure controls and
procedures are effective.
(hh) The
minute books of the Company and each of its subsidiaries that would be a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X
under the Exchange Act (such a significant subsidiary of the Company, a “Significant Subsidiary”) have
been made available to the Placement Agent and counsel for the Placement Agent,
and such books (i) contain the complete minutes with respect to all meetings and
actions of the board of directors (including each board committee) and
shareholders of the Company (or analogous governing bodies and interest holders,
as applicable), and each of its Significant Subsidiaries since the time of its
respective incorporation or organization through the date of the latest meeting
and action, and (ii) accurately in all material respects reflect all
transactions authorized in such minutes (which such requirement is deemed to be
satisfied if the minutes refer to transaction documents which are available on
▇▇▇▇▇ or IDEA or have otherwise been provided to the Placement Agent). Since
January 1, 2005, all required filings under the Canada Business Corporations Act
and Canadian Securities Laws have been made in a timely fashion.
(ii) There
is no franchise, lease, contract, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in the General
Disclosure Package and in the Prospectus or a document incorporated by reference
therein or to be filed as an exhibit to the Registration Statement or a document
incorporated by reference therein which is not described or filed therein as
required; and all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statement or in a document
incorporated by reference therein are accurate and complete descriptions of such
documents in all material respects. Other than as described in the
General Disclosure Package, no such franchise, lease, contract or agreement has
been suspended or terminated for convenience or default by the Company or any of
its subsidiaries or any of the other parties thereto, and neither the Company
nor any of its subsidiaries has received notice nor does the Company have
Knowledge of any such pending or threatened suspension or
termination.
16
(jj) No
relationship, direct or indirect, exists between or among the Company and any of
its subsidiaries on the one hand, and the directors, officers, stockholders (or
analogous interest holders), customers or suppliers of the Company or any of its
subsidiaries or any of their affiliates on the other hand, which is required to
be described in the General Disclosure Package and the Prospectus or a document
incorporated by reference therein and which is not so described.
(kk) No
person or entity has the right to require registration of Common Shares or other
securities of the Company or any of its subsidiaries because of the filing or
effectiveness of the Registration Statement or otherwise, except for persons and
entities who have expressly waived such right in writing or who have been given
timely and proper written notice and have failed to exercise such right within
the time or times required under the terms and conditions of such
right. Except as described in the General Disclosure Package, there
are no persons with registration rights or similar rights to have any securities
registered by the Company or any of its subsidiaries under the Securities Act,
other than such registration rights as have been waived or with respect to which
a registration statement is currently effective.
(ll) Except
for such shares of common stock of Spectrum Pharmaceuticals Inc. as are
described as being owned by the Company in the General Disclosure Package,
neither, the Company nor any of its subsidiaries owns any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (the “Federal
Reserve Board”), and none of the proceeds of the sale of the Units will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Units to be considered a “purpose
credit” within the meanings of Regulations T, U or X of the Federal Reserve
Board.
(mm) Neither
the Company nor any of its subsidiaries is a party to any contract, agreement or
understanding with any person that would give rise to a valid claim against the
Company or the Placement Agent for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the Units or any transaction
contemplated by this Agreement, the Registration Statement, the General
Disclosure Package or the Prospectus.
(nn) The
exercise price of each option issued under the Company’s stock option or other
employee benefit plans has been no less than the fair market value of a Common
Share as determined on the date of grant of such option. All grants
of options were validly issued and properly approved by the board of directors
of the Company (or a duly authorized committee thereof) in material compliance
with all applicable laws and regulations and recorded in the Company’s financial
statements in accordance with GAAP and, to the Company’s Knowledge, no such
grants involved “back dating,” “forward dating” or similar practice with respect
to the effective date of grant.
17
(oo) Except
as described in the General Disclosure Package and the Prospectus, no subsidiary
of the Company is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject, from paying
any dividends to the Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary’s properties or assets to the Company or any other subsidiary of the
Company.
(pp) Since
the respective dates as of which information is given in the General Disclosure
Package and the Prospectus through the date hereof, and except as set forth, or
incorporated by reference, in the Prospectus, neither the Company nor any of its
subsidiaries has (i) issued or granted any securities other than options to
purchase Common Shares pursuant to the Company’s stock option plan, (ii)
incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any material transaction other than in the ordinary
course of business or (iv) declared or paid any dividend on its capital
stock.
(qq) All
of the information provided to the Placement Agent or to counsel for the
Placement Agent by the Company, its officers and directors and the holders of
any securities (debt or equity) or options to acquire any securities of the
Company in connection with letters, filings or other supplemental information
provided to FINRA pursuant to NASD Conduct rule 2710 or 2720 is true, correct
and complete.
(rr) The
Company is not a Passive Foreign Investment Company (“PFIC”) within the meaning of
Section 1296 of the U.S. Internal Revenue Code of 1986, and the Company is not
likely to become a PFIC.
(ss) No
forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act and Canadian Securities Laws) contained
in either the General Disclosure Package or the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith.
(tt) The
Company is subject to and in compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act and is
in compliance with all applicable Canadian Securities Laws. The
Common Shares are registered pursuant to Sections 12(b) or 12(g) of the Exchange
Act and are quoted on the Nasdaq CM and the Company has taken no action designed
to, or reasonably likely to have the effect of, terminating the registration of
the Common Shares under the Exchange Act or delisting the Common Shares from the
Nasdaq CM, nor has the Company received any notification that the Commission or
the Nasdaq CM is contemplating terminating such registration or
listing. No consent, approval, authorization or order of, or filing,
notification or registration with, the Nasdaq CM is required for the listing and
trading of the Common Shares on the Nasdaq CM, except for (i) a Notification
Form: Listing of Additional Shares; and (ii) a Notification Form: Change in the
Number of Shares Outstanding. The Company has filed all documents or
information required to be filed by it under applicable Canadian Securities
Laws.
18
(uu) The
Company is in compliance with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 and all rules and regulations promulgated thereunder or implementing
the provisions thereof (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”).
(vv) The
Company is in compliance with all applicable corporate governance requirements
set forth in the Nasdaq Marketplace Rules that are presently in
effect.
(ww) Neither
the Company nor any of its subsidiaries nor, to the best of the Company’s
Knowledge, any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any federal,
state, local or foreign office in violation of any applicable law (including the
Foreign Corrupt Practices Act of 1977, as amended) or of the character required
to be disclosed in the Registration Statement, the General Disclosure Package or
the Prospectus or a document incorporated by reference therein.
(xx) There
are no transactions, arrangements or other relationships between and/or among
the Company, any of its affiliates (as such term is defined in Rule 405 of the
Securities Act) and any unconsolidated entity, including, but not limited to,
any structured finance, special purpose or limited purpose entity that could
reasonably be expected to materially affect the Company’s or any of its
subsidiaries’ liquidity or the availability of or requirements for their capital
resources required to be described in the General Disclosure Package and the
Prospectus or a document incorporated by reference therein which have not been
described as required.
(yy) There
are no outstanding loans, advances (except normal advances for business expenses
in the ordinary course of business) or guarantees of indebtedness by the Company
or any of its subsidiaries to or for the benefit of any of the officers or
directors of the Company, any of its subsidiaries or any of their respective
family members, except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus. All transactions by the
Company with office holders or control persons of the Company have been duly
approved by the board of directors of the Company, or duly appointed committees
or officers thereof, if and to the extent required under U.S. law.
(zz) The
statistical and market related data included in the Registration Statement, the
General Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and such data
agree with the sources from which they are derived.
(aaa) The
operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable Canadian and U.S. money laundering statutes and applicable
rules and regulations thereunder (collectively, the “Money Laundering Laws”), and
no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending, or to the
Knowledge of the Company, threatened.
19
(bbb) Neither
the Company nor any of its subsidiaries nor, to the Knowledge of the Company,
any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by
OFAC.
(ccc) Neither
the Company nor any subsidiary nor, to the Knowledge of the Company, any of
their affiliates (within the meaning of FINRA Conduct Rule 2720(b)(1)(a))
directly or indirectly controls, is controlled by, or is under common control
with, or is an associated person (within the meaning of Article I, Section 1(ee)
of the By-laws of FINRA) of, any member firm of FINRA.
(ddd) No
approval of the shareholders of the Company under the rules and regulations of
Nasdaq (including Rule 5635(d) of the Nasdaq Marketplace Rules) is required for
the Company to issue and deliver to the Purchasers the Units.
(eee) Except
as described in the General Disclosure Package, the Company has not entered into
a material definitive agreement since December 1, 2008 required to be disclosed
in Item 1.01 of Form 8-K.
(fff) Any
certificate signed by or on behalf of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent shall be deemed to be a
representation and warranty by the Company to the Placement Agent and the
Purchasers as to the matters covered thereby.
4. The Closing.
The time
and date of closing and delivery of the documents required to be delivered to
the Placement Agent pursuant to Sections 5 and 7 hereof shall be at
10:00 A.M., New York time, on May 28, 2009 (the “Closing Date”) at the office
of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇▇ P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
5. Further Agreements of the
Company
The
Company agrees with the Placement Agent and the Purchasers:
20
(a) To
prepare the Rule 462(b) Registration Statement, if necessary, in a form approved
by the Placement Agent and file such Rule 462(b) Registration Statement with the
Commission on the date hereof; to prepare the Prospectus in a form approved by
the Placement Agent containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rules 430A, 430B and
430C of the Rules and Regulations and to file such Prospectus pursuant to Rule
424(b) of the Rules and Regulations not later than the second (2nd)
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Rules and
Regulations; to notify the Placement Agent immediately of the Company’s
intention to file or prepare any supplement or amendment to any Registration
Statement or to the Prospectus and to make no amendment or supplement to the
Registration Statement, the General Disclosure Package or to the Prospectus to
which the Placement Agent shall reasonably object by notice to the Company after
a reasonable period to review; to advise the Placement Agent, promptly after it
receives notice thereof, of the time when any amendment to any Registration
Statement has been filed or becomes effective or any supplement to the General
Disclosure Package or the Prospectus or any amended Prospectus has been filed
and to furnish the Placement Agent copies thereof; to file promptly all material
required to be filed by the Company with the Commission pursuant to Rule 433(d)
or Rule 163(b)(2) of the Rules and Regulations, as the case may be; to file
timely all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) of the Rules and Regulations) is required in
connection with the offering or sale of the Units; to file all reports and other
documents in order to comply with the Canadian Securities Laws, if applicable;
to advise the Placement Agent, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus, any Issuer Free Writing
Prospectus or the Prospectus, of the suspension of the qualification of the
Units for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement, the General
Disclosure Package or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus or suspending any such qualification, and promptly to use its best
efforts to obtain the withdrawal of such order.
(b) The
Company represents and agrees that, unless it obtains the prior consent of
the Placement Agent, it has not made and will not make any offer
relating to the Units that would constitute a “free writing prospectus” as
defined in Rule 405 of the Rules and Regulations unless the prior written
consent of the Placement Agent has been received (each, a “Permitted Free Writing
Prospectus”); provided that the prior
written consent of the Placement Agent hereto shall be deemed to have been given
in respect of the Issuer Free Writing Prospectus(es) included in Schedule A
hereto. The Company represents that it has treated and agrees that it
will treat each Permitted Free Writing Prospectus as an Issuer Free Writing
Prospectus, comply with the requirements of Rules 164 and 433 of the Rules and
Regulations applicable to any Issuer Free Writing Prospectus, including the
requirements relating to timely filing with the Commission, legending and record
keeping and will not take any action that would result in the Placement Agent or
the Company being required to file with the Commission pursuant to Rule 433(d)
of the Rules and Regulations a free writing prospectus prepared by or on behalf
of the Placement Agent that the Placement Agent otherwise would not have been
required to file thereunder.
21
(c) If
at any time when a Prospectus relating to the Securities is required to be
delivered under the Securities Act, any event occurs or condition exists as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or the Registration Statement, as
then amended or supplemented, would include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary at any time to amend
or supplement any Registration Statement or the Prospectus to comply with the
Securities Act or the Exchange Act, the Company will promptly notify the
Placement Agent, and upon the Placement Agent’s request, the Company will
promptly prepare and file with the Commission, at the Company’s expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance
and will deliver to the Placement Agent, without charge, such number of copies
thereof as the Placement Agent may reasonably request. The Company
consents to the use of the Prospectus or any amendment or supplement thereto by
the Placement Agent provided that such use is in compliance with governing law
and the terms and conditions of this Agreement.
(d) If
the General Disclosure Package is being used to solicit offers to buy the Units
at a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur as a result of which, in the judgment of the Company or in
the reasonable opinion of the Placement Agent, it becomes necessary to amend or
supplement the General Disclosure Package in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or to make the statements therein not conflict with the information
contained or incorporated by reference in the Registration Statement then on
file and not superseded or modified, or if it is necessary at any time to amend
or supplement the General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if required) and
furnish to the Placement Agent and any dealers an appropriate amendment or
supplement to the General Disclosure Package or (ii) prepare and file with the
Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the General Disclosure Package so that the General
Disclosure Package as so amended or supplemented will not, in the light of the
circumstances under which they were made, be misleading or conflict with the
Registration Statement then on file, or so that the General Disclosure Package
will comply with law.
(e) If
at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or will conflict with the information contained in
the Registration Statement, Pricing Prospectus or Prospectus, including any
document incorporated by reference therein and any prospectus supplement deemed
to be a part thereof and not superseded or modified or included or would include
an untrue statement of a material fact or omitted or would omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the Company has promptly notified or will promptly notify
the Placement Agent so that any use of the Issuer Free Writing Prospectus may
cease until it is amended or supplemented and has promptly amended or will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission. The foregoing sentence does not apply to statements in or
omissions from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the Placement
Agent specifically for inclusion therein, which information the parties hereto
agree is limited to the Placement Agent’s Information (as defined in Section 17).
22
(f) To
the extent not available on the Commission’s ▇▇▇▇▇ or IDEA system or any
successor system, to furnish promptly to the Placement Agent and to counsel for
the Placement Agent a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(g) To
the extent not available on the Commission’s ▇▇▇▇▇ or IDEA system or any
successor system, to deliver promptly to the Placement Agent in New York City
such number of the following documents as the Placement Agent shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission (in each case excluding exhibits), (ii)
each Preliminary Prospectus, (iii) any Issuer Free Writing Prospectus, (iv) the
Prospectus (the delivery of the documents referred to in clauses (i), (ii),
(iii) and (iv) of this paragraph (g) to be
made not later than 10:00 A.M., New York time, on the business day following the
execution and delivery of this Agreement), (v) conformed copies of any amendment
to the Registration Statement (excluding exhibits), (vi) any amendment or
supplement to the General Disclosure Package or the Prospectus (the delivery of
the documents referred to in clauses (v) and (vi) of this paragraph (g) to be
made not later than 10:00 A.M., New York City time, on the business day
following the date of such amendment or supplement) and (vii) any document
incorporated by reference in the General Disclosure Package or the Prospectus
(excluding exhibits thereto) (the delivery of the documents referred to in
clause (vi) of this paragraph (g) to be
made not later than 10:00 A.M., New York City time, on the business day
following the date of such document).
(h) To
make generally available to its shareholders as soon as practicable, but in any
event not later than eighteen (18) months after the effective date of each
Registration Statement (as defined in Rule 158(c) of the Rules and Regulations),
an earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158); and to furnish
to its shareholders as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet and statements of
income, shareholders’ equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and to file with the
Commission on ▇▇▇▇▇ prior to the applicable filing deadline for Form 10-Q after
each of the first three fiscal quarters of each fiscal year (beginning with the
first fiscal quarter after the effective date of such Registration Statement),
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail.
(i) To
take promptly from time to time such actions as the Placement Agent may
reasonably request to qualify the Units for offering and sale under the
securities or Blue Sky laws of such jurisdictions (domestic or foreign) as the
Placement Agent may designate and to continue such qualifications in effect, and
to comply with such laws, for so long as required to permit the offer and sale
of Units in such jurisdictions; provided that the Company and
its subsidiaries shall not be obligated to qualify as foreign corporations in
any jurisdiction in which they are not so qualified or to file a general consent
to service of process in any jurisdiction.
23
(j) Upon
request, during the period of five (5) years from the date hereof, to the extent
not available on the Commission’s ▇▇▇▇▇ or IDEA system or any successor system,
to deliver to the Placement Agent, (i) as soon as they are available, copies of
all reports or other communications furnished to shareholders, and (ii) as soon
as they are available, copies of any reports and financial statements furnished
or filed with the Commission or any national securities exchange or automatic
quotation system on which the Common Shares is listed or
quoted. However, so long as the Company is subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act and is
timely filing reports with the Commission on ▇▇▇▇▇, it is not required to
furnish such reports or statements to the Placement Agent.
(k) That
the Company will not, for a period of ninety (90) days from the date of this
Agreement, (the “Lock-Up
Period”) without the prior written consent of the Placement Agent,
directly or indirectly offer, sell, assign, transfer, pledge, contract to sell,
or otherwise dispose of, any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares, other than the Company’s sale of
the Units and issuance of (i) the issuance of restricted Common Shares, (ii)
options to acquire Common Shares pursuant to the Company’s employee benefit
plans, qualified stock option plans or other employee compensation plans as such
plans are in existence on the date hereof and described in the Prospectus, (iii)
the issuance of Common Shares pursuant to the valid exercises of options,
warrants or rights outstanding on the date hereof and (iv) Common Stock or securities
convertible into or exercisable or exchangeable for shares of Common Stock
issued pursuant to a strategic partnership, acquisition or licensing
arrangement, not to exceed, in the aggregate, five percent (5.0%) of the
Company’s outstanding common stock, provided that the transferee shall furnish
to the Placement Agent a letter, substantially in the form of Exhibit
C hereto.
The Company will cause each executive officer, director and shareholder
listed in Schedule B to furnish to the Placement Agent, prior to the Closing
Date, a letter, substantially in the form of Exhibit C hereto,
pursuant to which each such person shall agree, subject to the terms and
qualifications set forth in Exhibit C, among
other things, not to directly or indirectly offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, or announce the intention to
otherwise dispose of, any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares, not to engage in any swap, hedge
or similar agreement or arrangement that transfers, in whole or in part,
directly or indirectly, the economic risk of ownership of Common Shares or any
such securities and not to engage in any short selling of any Common Shares or
any such securities, during the Lock-Up Period, without the prior written
consent of the Placement Agent. The Company also agrees that during
such period, other than for the sale of the Units hereunder, the Company will
not file any registration statement, preliminary prospectus or prospectus, or
any amendment or supplement thereto, under the Securities Act for any such
transaction or which registers, or offers for sale, Common Shares or any
securities convertible into or exercisable or exchangeable for Common Shares,
except for a registration statement on Form S-8 relating to employee benefit
plans. The Company hereby agrees that (i) if it issues an earnings
release or material news, or if a material event relating to the Company occurs,
during the last seventeen (17) days of the Lock-Up Period, or (ii) if prior to
the expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the sixteen (16)-day period beginning on the last day of
the Lock-Up Period, the restrictions imposed by this paragraph (k) or the letter
shall continue to apply until the expiration of the eighteen (18)-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The Company will provide the
Placement Agent and any stockholder subject to lock-up during the Lock-Up Period
with prior notice (in accordance with Section 14 herein) of
any such announcement that gives rise to an extension of the Lock-Up
Period.
24
(l) To
supply the Placement Agent with copies of all correspondence to and from, and
all documents issued to and by, the Commission in connection with the
registration or qualification of the Shares and Warrant Shares under the
Canadian Securities Laws, if applicable, the Securities Act or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto or document incorporated by reference therein.
(m) Prior
to the Closing Date, to furnish to the Placement Agent, as soon as they have
been prepared, copies of any unaudited interim consolidated financial statements
of the Company for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(n) Prior
to the Closing Date, not to issue any press release or other communication
directly or indirectly or hold any press conference with respect to the Company,
its condition, financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the Company and of
which the Placement Agent is notified), without the prior written consent of the
Placement Agent, unless in the judgment of the Company and its counsel, and
after notification to the Placement Agent, such press release or communication
is required by law.
(o) Until
the Placement Agent shall have notified the Company of the completion of the
offering of the Units, that the Company will not, and will cause its affiliated
purchasers (as defined in Regulation M under the Exchange Act) not to, either
alone or with one or more other persons, bid for or purchase, for any account in
which it or any of its affiliated purchasers has a beneficial interest, any
Common Shares or Warrants or attempt to induce any person to purchase any Common
Shares or Warrants; and not to, and to cause its affiliated purchasers not to,
make bids or purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Common Shares or
Warrants.
(p) Not
to take any action prior to the Closing Date which would require the Prospectus
to be amended or supplemented pursuant to Section
5.
(q) To
at all times comply with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act in
effect from time to time.
(r) To
apply the net proceeds from the sale of the Units as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus under
the heading “Use of Proceeds.”
(s) To
use its best efforts to list, subject to notice of issuance, effect and maintain
the listing of the Common Shares on the Nasdaq CM
(t) To
use its best efforts to assist the Placement Agent or its counsel with any
filings with FINRA and obtaining clearance from FINRA as to the amount of
compensation allowable or payable to the Placement Agent.
(u) To
use its best efforts to do and perform all things required to be done or
performed under this Agreement by the Company prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Units.
25
The
covenants set forth in Sections 5(q) and 5(s) shall expire upon the occurrence
of any event following which the Company’s Common Shares are not registered
under Section 12 of the Exchange Act.
6. Payment of Expenses.
The
Company agrees to pay, or reimburse if paid by the Placement Agent, whether or
not the transactions contemplated hereby are consummated or this Agreement is
terminated: (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Units to the Purchasers and any taxes
payable in that connection; (b) the costs incident to the registration of the
Units, Warrants and Warrant Shares under the Securities Act; (c) the costs
incident to the preparation, printing and distribution of the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Issuer Free
Writing Prospectus, the General Disclosure Package, the Prospectus, any
amendments, supplements and exhibits thereto or any document incorporated by
reference therein and the costs of printing, reproducing and distributing any
transaction document by mail, telex or other means of communications; (d) the
fees and expenses (including related fees and expenses of counsel for the
Placement Agent) incurred in connection with securing any required review by
FINRA of the terms of the sale of the Units and any filings made with FINRA, if
any; (e) any applicable listing, quotation or similar fees; (f) the fees and
expenses, if any, (including related fees and expenses of counsel to the
Placement Agent) of qualifying the Securities under the securities laws of the
several jurisdictions as provided in Section 5(i) and of
preparing, printing and distributing wrappers, “Blue Sky Memoranda” and “Legal
Investment Surveys”; (g) the cost of preparing and printing stock certificates;
(h) all fees and expenses of the registrar and transfer agent of the Common
Shares; (i) the fees, disbursements and expenses of counsel to the Placement
Agent, not to exceed one percent (1%) of the gross proceeds received by the
Company from the sale of the Units on the Closing Date and (j) all other costs
and expenses incident to the offering of the Units or the performance of the
obligations of the Company under this Agreement (including, without limitation,
the fees and expenses of the Company’s counsel and the Company’s independent
accountants and the travel and other expenses incurred by Company’s and
Placement Agent’s personnel in connection with any “road show” including,
without limitation, any expenses advanced by the Placement Agent on the
Company’s behalf (which will be promptly reimbursed)); provided that, except to
the extent otherwise provided in Sections 6, 8 and 10, the Placement Agent shall
pay its own costs and expenses..
7. Conditions
to the Obligations of the Placement Agent and the Purchasers, and the
Sale of the Units.
The
respective obligations of the Placement Agent hereunder and the Purchasers under
the Subscription Agreements, and the Closing of the sale of the Units, are
subject to the accuracy, when made and as of the Applicable Time and on the
Closing Date, of the representations and warranties of the Company contained
herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
26
(a) The
Registration Statement is effective under the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement or any part thereof,
preventing or suspending the use of any Base Prospectus, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part
thereof shall have been issued and no proceedings for that purpose or pursuant
to Section 8A under the Securities Act shall have been initiated or threatened
by the Commission, and all requests for additional information on the part of
the Commission (to be included or incorporated by reference in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Placement Agent; the Rule 462(b) Registration
Statement, if any, each Issuer Free Writing Prospectus, if any, and the
Prospectus shall have been filed with the Commission within the applicable time
period prescribed for such filing by, and in compliance with, the Rules and
Regulations and in accordance with Section 5(a), and the Rule
462(b) Registration Statement, if any, shall have become effective immediately
upon its filing with the Commission; and FINRA shall have raised no objection to
the fairness and reasonableness of the terms of this Agreement or the
transactions contemplated hereby. No cease trade order shall have
been issued by any Canadian securities regulatory authority with respect to the
Company’s securities and no proceeding shall have been initiated seeking the
issuance of such an order.
(b) The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for the Placement Agent, is material or omits to state any fact
which, in the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading, or that
the General Disclosure Package, any Issuer Free Writing Prospectus or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of such counsel, is material or omits to state any
fact which, in the opinion of such counsel, is material and is necessary in
order to make the statements, in the light of the circumstances in which they
were made, not misleading.
(c) All
corporate proceedings on the part of the Company and other legal matters
incident to the authorization, form and validity of each of this Agreement, the
Subscription Agreements, the Escrow Agreement, the Units, the Registration
Statement, the General Disclosure Package, each Issuer Free Writing Prospectus,
if any, and the Prospectus and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Placement Agent, and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such
matters.
(d) ▇▇▇▇
▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇▇ P.C., US counsel to the Company, shall have furnished
to the Placement Agent such counsel’s written opinion and negative assurances
statement, addressed to the Placement Agent and dated the Closing Date, in form
and substance reasonably satisfactory to the Placement Agent.
(e) ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ LLP, Canadian counsel to the Company shall have furnished to
the Placement Agent such counsel’s written opinion, addressed to the Placement
Agent and dated the Closing Date, in form and substance reasonably satisfactory
to the Placement Agent.
(f) The
Placement Agent shall have received from Proskauer Rose LLP, counsel for the
Placement Agent, such opinion or opinions and negative assurances statement,
dated the Closing Date, with respect to such matters as the Placement Agent may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for enabling them to pass upon such
matters.
(g) At
the time of the execution of this Agreement, the Placement Agent shall have
received from ▇▇▇▇▇-▇▇▇▇▇ LLP a letter, addressed to the Placement Agent,
executed and dated such date, in form and substance satisfactory to the
Placement Agent (i) confirming that they are an independent registered
accounting firm with respect to the Company and its subsidiaries within the
meaning of the Securities Act and the Rules and Regulations and
PCAOB and independent auditors within the meaning of the Canadian
Securities Laws and (ii) stating the conclusions and findings of such firm, of
the type ordinarily included in accountants’ “comfort letters” to underwriters,
with respect to the financial statements and certain financial information
contained or incorporated by reference in the Registration Statement, the
General Disclosure Package and the Prospectus.
27
(h) On
the effective date of any post-effective amendment to any Registration Statement
and on the Closing Date, the Placement Agent shall have received a letter (the
“Bring-Down Letter”)
from ▇▇▇▇▇-▇▇▇▇▇ LLP addressed to the
Placement Agent and dated the Closing Date confirming, as of the date of the
Bring-Down Letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the General Disclosure Package and the Prospectus, as the case may be, as of
a date not more than three (3) business days prior to the date of the Bring-Down
Letter), the conclusions and findings of such firm, of the type ordinarily
included in accountants’ “comfort letters” to underwriters, with respect to the
financial information and other matters covered by its letter delivered to the
Placement Agent concurrently with the execution of this Agreement pursuant to
paragraph (g) of this Section
7.
(i) The
Company shall have furnished to the Placement Agent a certificate, dated the
Closing Date, of its Chief Executive Officer and President or a Vice President
and its chief financial officer stating that (i) such officers have carefully
examined the Registration Statement, the General Disclosure Package, any
Permitted Free Writing Prospectus and the Prospectus and, in their opinion, the
Registration Statement and each amendment thereto, at the Applicable Time and as
of the date of this Agreement and as of the Closing Date did not include any
untrue statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the General Disclosure Package, as of the Applicable Time and as
of the Closing Date, any Permitted Free Writing Prospectus as of its date and as
of the Closing Date, the Prospectus and each amendment or supplement thereto, as
of the respective date thereof and as of the Closing Date, did not include any
untrue statement of a material fact and did not omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading, (ii) since the Applicable
Time, no event has occurred which should have been set forth in a supplement or
amendment to the Registration Statement, the General Disclosure Package or the
Prospectus that has not been so set forth therein, (iii) to their Knowledge, as
of the Closing Date, the representations and warranties of the Company in this
Agreement are true and correct and the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, and (iv) there has not been, subsequent to the
date of the most recent audited financial statements included or incorporated by
reference in the General Disclosure Package, any material adverse change in the
financial position or results of operations of the Company and its subsidiaries,
or any change or development that, singularly or in the aggregate, would involve
a material adverse change or a prospective material adverse change, in or
affecting the condition (financial or otherwise), results of operations,
business, assets or prospects of the Company and its subsidiaries taken as a
whole, except as set forth in the Prospectus.
(j) Since
the date of the latest audited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure
Package as of the date hereof, (i) neither the Company nor any of its
subsidiaries shall have sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the General Disclosure Package, and (ii)
there shall not have been any change in the capital stock or long-term debt of
the Company or any of its subsidiaries, or any change, or any development
involving a prospective change, in or affecting the business, general affairs,
management, financial position, stockholders’ equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth in the General
Disclosure Package, the effect of which, in any such case described in clause
(i) or (ii) of this paragraph (j), is, in the
judgment of the Placement Agent, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the Units
on the terms and in the manner contemplated in the General Disclosure
Package.
(k) No
action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would prevent the issuance or sale of the Units or materially and
adversely affect or potentially materially and adversely affect the business or
operations of the Company or its subsidiaries; and no injunction, restraining
order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued which would prevent the issuance or sale of
the Units or materially and adversely affect or potentially materially and
adversely affect the business or operations of the Company or its
subsidiaries.
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(l) Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New
York Stock Exchange, Nasdaq CM or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
materially limited, or minimum or maximum prices or maximum range for prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or market or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Canadian or U.S. Federal or state authorities or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in Canada or the U.S., (iii) the U.S. shall have become
engaged in hostilities in which it is not engaged on the date hereof, or the
subject of an act of terrorism, or there shall have been an outbreak of or
escalation in hostilities involving the U.S., or there shall have been a
declaration of a national emergency or war by the U.S. or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the U.S. or Canada shall be such) as to make it, in the judgment of
the Placement Agent, impracticable or inadvisable to proceed with the sale or
delivery of the Units on the terms and in the manner contemplated in the General
Disclosure Package and the Prospectus.
(m) The
Company shall have filed a Notification Form: Listing of Additional Shares with
the Nasdaq CM with respect to the Common Shares and Warrant Shares and shall
have received no objection thereto from the Nasdaq CM.
(n) The
Placement Agent shall have received the written agreements, substantially in the
form of Exhibit
C
hereto, of the executive officers and directors of the Company listed in Schedule B to this
Agreement.
(o) The
Company shall have entered into Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.
(p) The
Company shall have entered into the Escrow Agreement and such agreement shall be
in full force and effect.
(q) The
Placement Agent shall have received clearance from FINRA as to the amount of
compensation allowable or payable to the Placement Agent as described in the
Pricing Prospectus; or determined that the offering is exempt from the FINRA
Corporate Financing Rule as set forth in FINRA Rules 5110 and 5190.
(r) The
Company shall have prepared and filed with the Commission a Current Report on
Form 8-K including as an exhibit thereto this Agreement.
(s) Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, opinions, certificates (including a Secretary’s
Certificate), letters or documents of customary nature as the Placement Agent
shall have reasonably requested.
(t) On
the date of its first use, the Company shall have prepared and filed with the
Commission an Issuer Free Writing Prospectus, if any, substantially in the form
attached hereto as Schedule
A.
(u) The
Company shall have issued and delivered the Warrants to the
Purchasers.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.
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8. Indemnification and
Contribution.
(a) The
Company shall indemnify and hold harmless the Placement Agent, its affiliates
and each of its and their respective directors, officers, members, employees,
representatives and agents (including, without limitation Lazard Frères &
Co. LLC, (which will provide services to the Placement Agent) and its
affiliates, and each of its and their respective directors, officers, members,
employees, representatives and agents and each person, if any, who controls
Lazard Frères & Co. LLC within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the “Placement Agent Indemnified
Parties,” and each a “Placement Agent Indemnified
Party”) against any loss, claim, damage, expense or liability whatsoever
(or any action, investigation or proceeding in respect thereof), joint or
several, to which such Placement Agent Indemnified Party may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
expense, liability, action, investigation or proceeding arises out of or is
based upon (A) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto or document incorporated
by reference therein, or (B) the omission or alleged omission to
state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of
the Rules and Regulations, any Registration Statement or the Prospectus, or in
any amendment or supplement thereto or document incorporated by reference
therein, 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 or (C) any breach of the representations and warranties of the
Company contained herein, the failure of the Company to perform its obligations
hereunder or pursuant to any law or, any act or failure to act, or any alleged
act or failure to act, by the Placement Agent in connection with, or relating in
any manner to, the Units, the Escrow Agreement or the Offering, and which is
included as part of or referred to in any loss, claim, damage, expense,
liability, action, investigation or proceeding arising out of or based upon
matters covered by subclause (A), (B) or (C) above of this Section 8(a) (provided that the Company
shall not be liable in the case of any matter covered by this subclause (C) to
the extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, expense or liability
resulted directly from any such act or failure to act undertaken or omitted to
be taken by such Placement Agent through its gross negligence or willful
misconduct), and shall reimburse the Placement Agent Indemnified Party promptly
upon demand for any legal fees or other expenses reasonably incurred by that
Placement Agent Indemnified Party in connection with investigating, or preparing
to defend, or defending against, or appearing as a third party witness in
respect of, or otherwise incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding, as such fees
and expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, expense or liability arises out of or is based upon an untrue
statement or alleged untrue statement in, or omission or alleged omission from
any Preliminary Prospectus, any Registration Statement or the Prospectus, or any
such amendment or supplement thereto, or any Issuer Free Writing Prospectus made
in reliance upon and in conformity with written information furnished to the
Company by the Placement Agent specifically for use therein, which information
the parties hereto agree is limited to the Placement Agent’s Information (as
defined in Section
17). This
indemnity agreement is not exclusive and will be in addition to any liability
which the Company might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to each Placement
Agent Indemnified Party.
(b) The
Placement Agent shall indemnify and hold harmless the Company and its directors,
its officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the “Company Indemnified Parties,”
and each a “Company Indemnified
Party”) against any loss, claim, damage, expense or liability whatsoever
(or any action, investigation or proceeding in respect thereof), joint or
several, to which such Company Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, expense,
liability, action, investigation or proceeding arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of
the Rules and Regulations, any Registration Statement or the Prospectus, or in
any amendment or supplement thereto, or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of
the Rules and Regulations, any Registration Statement or the Prospectus, or in
any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent specifically
for use therein, which information the parties hereto agree is limited to the
Placement Agent’s Information as defined in Section 17, and shall
reimburse the Company Indemnified Parties for any legal or other expenses
reasonably incurred by such party in connection with investigating or preparing
to defend or defending against or appearing as third party witness in connection
with any such loss, claim, damage, liability, action, investigation or
proceeding, as such fees and expenses are incurred. Notwithstanding
the provisions of this Section 8(b), in no
event shall any indemnity by the Placement Agent under this Section 8(b) exceed
the total compensation received by the Placement Agent in accordance with Section
2.5.
30
(c) Promptly
after receipt by an indemnified party under this Section 8 of notice
of the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party under this Section 8, notify
such indemnifying party in writing of the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 8 except to
the extent it has been materially prejudiced by such failure; and, provided, further, that the
failure to notify an indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section
8. If any such action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense of such action with counsel reasonably satisfactory to the
indemnified party (which counsel shall not, except with the written consent of
the indemnified party, be counsel to the indemnifying party). After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such action, except as provided herein, the indemnifying
party shall not be liable to the indemnified party under Section 8 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense of such action other than reasonable costs of
investigation; provided,
however, that any indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense of such
action but the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized in writing by the Company in
the case of a claim for indemnification under Section 8(a) or Section 2.6 or LCM in
the case of a claim for indemnification under Section 8(b), (ii)
such indemnified party shall have been advised by its counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party within a reasonable
period of time after notice of the commencement of the action or the
indemnifying party does not diligently defend the action after assumption of the
defense, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of (or, in the case of a failure to diligently defend the action
after assumption of the defense, to continue to defend) such action on behalf of
such indemnified party and the indemnifying party shall be responsible for legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense of such action; provided, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties (in addition to any local counsel), which
firm shall be designated in writing by LCM if the indemnified parties under this
Section 8
consist of any Placement Agent Indemnified Party or by the Company if the
indemnified parties under this Section 8 consist of
any Company Indemnified Parties. Subject to this Section 8(c), the
amount payable by an indemnifying party under Section 8 shall
include, but not be limited to, (x) reasonable legal fees and expenses of
counsel to the indemnified party and any other expenses in investigating, or
preparing to defend or defending against, or appearing as a third party witness
in respect of, or otherwise incurred in connection with, any action,
investigation, proceeding or claim, and (y) all amounts paid in settlement of
any of the foregoing. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of judgment with respect to any pending or threatened action or any
claim whatsoever, in respect of which indemnification or contribution could be
sought under this Section 8 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party in form and substance reasonably satisfactory to such
indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party. Subject to
the provisions of the following sentence, no indemnifying party shall be liable
for settlement of any pending or threatened action or any claim whatsoever that
is effected without its written consent (which consent shall not be unreasonably
withheld or delayed), but if settled with its written consent, if its consent
has been unreasonably withheld or delayed or if there be a judgment for the
plaintiff in any such matter, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, if at any time an
indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated
herein effected without its written consent if (i) such settlement is entered
into more than forty-five (45) days after receipt by such indemnifying party of
the request for reimbursement, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least thirty (30) days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
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(d) If
the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section 8(a) or Section 8(b), then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid, payable or otherwise incurred by such indemnified
party as a result of such loss, claim, damage, expense or liability (or any
action, investigation or proceeding in respect thereof), as incurred, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agent on the other
hand from the offering of the Units, or (ii) if the allocation provided by
clause (i) of this Section 8(d) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) of this Section 8(d) but also
the relative fault of the Company on the one hand and the Placement Agent on the
other with respect to the statements, omissions, acts or failures to act which
resulted in such loss, claim, damage, expense or liability (or any action,
investigation or proceeding in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the Placement Agent on the other with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Units purchased under this Agreement (before
deducting expenses) received by the Company bear to the total Placement Fee
received by the Placement Agent in connection with the Offering, in each case as
set forth in the table on the cover page of the Prospectus. The
relative fault of the Company on the one hand and the Placement Agent on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Placement Agent on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement, omission, act or failure to act; provided that the parties
hereto agree that the written information furnished to the Company by the
Placement Agent for use in any Preliminary Prospectus, any Registration
Statement or the Prospectus, or in any amendment or supplement thereto, consists
solely of the Placement Agent’s Information as defined in Section 17. The
Company and the Placement Agent agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to
be determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage, expense, liability, action, investigation or
proceeding referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating, preparing to defend or defending against or
appearing as a third party witness in respect of, or otherwise incurred in
connection with, any such loss, claim, damage, expense, liability, action,
investigation or proceeding. Notwithstanding the provisions of this
Section 8(d),
the Placement Agent shall not be required to contribute any amount in excess of
the total compensation received by the Placement Agent in accordance with Section 2.5 less the
amount of any damages which the Placement Agent has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement, omission or
alleged omission, act or alleged act or failure to act or alleged failure to
act. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
32
9. Termination.
The
obligations of the Placement Agent hereunder and the Purchasers under the
Subscription Agreements may be terminated by the Placement Agent, in its
absolute discretion by notice given to the Company prior to delivery of and
payment for the Units if, prior to that time, any of the events described in
Sections
7(j),
7(k) or 7(l) have occurred or
if the Purchasers shall decline to purchase the Units for any reason permitted
under this Agreement or the Subscription Agreements. The Company
hereby acknowledges that in the event that this Agreement is terminated by the
Placement Agent pursuant to the terms hereof, the Subscription Agreements shall
automatically terminate without any further action on the part of the parties
thereto.
10. Reimbursement of Placement Agent’s
Expenses.
Notwithstanding
anything to the contrary in this Agreement, if (a) this Agreement shall have
been terminated pursuant to Section 9, (b) the
Company shall fail to tender the Units for delivery to the Purchasers for any
reason not permitted under this Agreement, (c) the Purchasers shall decline to
purchase the Units for any reason permitted under this Agreement or (d) the sale
of the Units is not consummated because any condition to the obligations of the
Purchasers or the Placement Agent set forth herein is not satisfied (other than
a condition solely within the control of the Placement Agent) or because of the
refusal, inability or failure on the part of the Company to perform any
agreement herein or to satisfy any condition or to comply with the provisions
hereof, then, in addition to the payment of any amounts in accordance with Section 6, the
Company shall reimburse the Placement Agent for the documented fees and expenses
of the Placement Agent’s counsel and for such other accountable out-of-pocket
expenses as shall have been reasonably incurred by them in connection with this
Agreement and the proposed purchase of the Units, including without limitations,
travel and lodging expenses of the Placement Agent, and upon demand the Company
shall pay the full amount thereof to the Placement Agent.
11. Absence of Fiduciary
Relationship.
The
Company acknowledges and agrees that:
(a) the
Placement Agent’s responsibility to the Company is solely contractual in nature,
the Placement Agent has been retained solely to act as Placement Agent in
connection with the Offering and no fiduciary, advisory or agency relationship
between the Company and the Placement Agent has been created in respect of any
of the transactions contemplated by this Agreement, irrespective of whether the
Placement Agent or Lazard Frères & Co. LLC has advised or is advising the
Company on other matters;
(b) the
price of the Units set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the Placement Agent, and
the Company is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement;
33
(c) it
has been advised that the Placement Agent and Lazard Frères & Co. LLC and
their affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement Agent has
no obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship; and
(d) it
waives, to the fullest extent permitted by law, any claims it may have against
the Placement Agent for breach of fiduciary duty or alleged breach of fiduciary
duty and agrees that the Placement Agent shall have no liability (whether direct
or indirect) to the Company in respect of such a fiduciary duty claim or to any
person asserting a fiduciary duty claim on behalf of or in right of the Company,
including stockholders, employees or creditors of the Company.
12. Successors; Persons Entitled to
Benefit of Agreement.
This
Agreement shall inure to the benefit of and be binding upon the Placement Agent,
the Company, and their respective successors and assigns. This
Agreement shall also inure to the benefit of Lazard Frères & Co. LLC, the
Purchasers, and each of their respective successors and assigns, which shall be
third party beneficiaries hereof. Notwithstanding the foregoing, as
provided in the Subscription Agreements, the determination as to whether any
condition in Section
7 hereof shall have been satisfied, and the waiver of any condition in
Section 7
hereof, may be made by the Placement Agent in its sole discretion, and any such
determination or waiver shall be binding on each of the Purchasers and shall not
require the consent of any Purchaser. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, other
than the persons mentioned in the preceding sentences, any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Placement Agent Indemnified Parties and the
indemnities of the Placement Agent shall be for the benefit of the Company
Indemnified Parties. It is understood that the Placement Agent’s
responsibility to the Company is solely contractual in nature and the Placement
Agent does not owe the Company, or any other party, any fiduciary duty as a
result of this Agreement.
13. Survival of Indemnities,
Representations, Warranties, etc.
The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the Placement Agent, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agent, the Company, the Purchasers or any person controlling
any of them and shall survive delivery of and payment for the
Units. Notwithstanding any termination of this Agreement, including
without limitation any termination pursuant to Sections 9 or 10, the indemnity and
contribution agreements contained in Section 8 and the
covenants, representations, warranties set forth in this Agreement shall not
terminate and shall remain in full force and effect at all times.
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14. Notices.
All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(a) if
to the Placement Agent, shall be delivered or sent by mail, telex, facsimile
transmission or email to Lazard Capital Markets LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel, Fax: ▇▇▇-▇▇▇-▇▇▇▇; and
(b) if
to the Company, shall be delivered or sent by mail, telex, facsimile
transmission or email to Altair Nanotechnologies, Inc., Attention: ▇▇▇▇
▇▇▇▇▇▇▇, Fax: ▇▇▇-▇▇▇-▇▇▇▇ and email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇, with a copy to
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇▇ PC, Attention: ▇▇▇▇▇
▇▇▇▇▇, Fax: ▇▇▇-▇▇▇-▇▇▇▇, email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇.
provided, however, that any
notice to the Placement Agent pursuant to Section 8 shall be
delivered or sent by mail, telex or facsimile transmission to the Placement
Agent at its address set forth in its acceptance telex to the Placement Agent,
which address will be supplied to any other party hereto by the Placement Agent
upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof, except that any such
statement, request, notice or agreement delivered or sent by email shall take
effect at the time of confirmation of receipt thereof by the recipient
thereof.
15. Definition of Certain
Terms.
For
purposes of this Agreement, (a) “business day” means any day on
which the New York Stock Exchange, Inc. is open for trading and (b) “subsidiary” has the meaning
set forth in Rule 405 of the Rules and Regulations.
16. Governing Law, Agent for Service and
Jurisdiction.
This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, including
without limitation Section 5-1401 of the New York General Obligations
Law. No legal proceeding may be commenced, prosecuted or
continued in any court other than the courts of the State of New York located in
the City and County of New York or in the United States District Court for the
Southern District of New York, which courts shall have jurisdiction over the
adjudication of such matters, and the Company and the Placement Agent each
hereby consent to the jurisdiction of such courts and personal service with
respect thereto. The Company and the Placement Agent each hereby
consent to personal jurisdiction, service and venue in any court in which any
legal proceeding arising out of or in any way relating to this Agreement is
brought by any third party against the Company or the Placement
Agent. The Company and the Placement Agent each hereby waive all
right to trial by jury in any legal proceeding (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final judgment in any such legal
proceeding brought in any such court shall be conclusive and binding upon the
Company and the Placement Agent and may be enforced in any other courts in the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
17. Placement Agent’s
Information.
The
parties hereto acknowledge and agree that, for all purposes of this Agreement,
the Placement Agent’s Information consists solely of the following information
in the Prospectus: (i) the last paragraph on the front cover page concerning the
terms of the offering by the Placement Agent; and (ii) the statements concerning
the Placement Agent contained in the first paragraph under the heading “Plan of
Distribution.”
35
18. Partial
Unenforceability.
The
invalidity or unenforceability of any section, paragraph, clause or provision of
this Agreement shall not affect the validity or enforceability of any other
section, paragraph, clause or provision hereof. If any section,
paragraph, clause or provision of this Agreement is for any reason determined to
be invalid or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and
enforceable.
19. General.
This
Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter
hereof. In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This
Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company and the
Placement Agent.
20. Counterparts.
This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument and such signatures may be delivered by facsimile or in PDF
format by email.
36
If the
foregoing is in accordance with your understanding of the agreement between the
Company and the Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.
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Very
truly yours,
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||
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By:
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Title:
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President
and Chief Executive Officer
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Accepted
as of the date
first
above written:
LAZARD
CAPITAL MARKETS LLC
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By:
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/s/
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Name:
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Title:
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37
SCHEDULE A
General
Use Free Writing Prospectuses
None.
38
SCHEDULE B
List
of officers, directors and shareholders subject to Section
5
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ (Chief Executive Officer and Director)
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▇▇▇▇
▇. ▇▇▇▇▇▇▇ (Chief Financial Officer and Secretary)
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C.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Vice President, Corporate Strategy)
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▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ (Director)
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▇▇
▇▇▇▇▇▇, LLC (5% Shareholder)
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▇▇▇▇▇▇
▇▇▇▇▇▇▇ (Director)
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▇▇▇
▇. ▇▇▇▇▇▇▇▇ (Director)
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ (Director)
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇. (Director)
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▇▇▇▇▇▇
▇▇▇▇▇▇ (Director)
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▇▇▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (Director)
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39
EXHIBIT A
Form
of Subscription Agreement
40
EXHIBIT
B
FORM
OF WARRANT
41
EXHIBIT
C
Form
of Lock Up Agreement
May 22,
2009
LAZARD
CAPITAL MARKETS LLC
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Altair Nanotechnologies Inc.
Offering of Units
Dear
Sirs:
In order
to induce Lazard Capital Markets LLC (“Lazard”), to enter in to a
certain placement agent agreement with Altair Nanotechnologies Inc., a
corporation continued under the Canada Business Corporations Act (the “Company”), with respect to the
public offering (the “Offering”) of Units consisting
of the Company’s Common Shares, without nominal or par value (“Common Shares”) and warrants
to purchase the Common Shares, the undersigned hereby agrees that for a period
(the “Lock-up Period”) of ninety (90) days
following the date of the final prospectus filed by the Company with the
Securities and Exchange Commission in connection with the Offering, the
undersigned will not, without the prior written consent of Lazard, directly or
indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, any Common Shares or securities convertible into or
exercisable or exchangeable for Common Shares (including, without limitation,
Common Shares or any such securities which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations
promulgated under the Securities Act of 1933, as the same may be amended or
supplemented from time to time (such shares or securities, the “Beneficially Owned Shares”)),
(ii) enter into any swap, hedge or other agreement or arrangement that transfers
in whole or in part, the economic risk of ownership of any Beneficially Owned
Shares or (iii) engage in any short selling of any Beneficially Owned
Shares.
The
restrictions set forth in the immediately preceding paragraph shall not apply
to:
(1) if
the undersigned is a natural person, any transfers made by the undersigned
(a) as a bona fide gift to any member of the immediate family (as defined
below) of the undersigned or to a trust, limited liability company or limited
partnership, the beneficiaries or equity owners of which are exclusively the
undersigned or members of the undersigned’s immediate family, (b) by will
or intestate succession upon the death of the undersigned or (c) as a bona
fide gift to a charity or educational institution,
(2) if
the undersigned is a corporation, partnership, limited liability company or
other business entity, any transfers to any shareholder, partner or member of,
or owner of a similar equity interest in, the undersigned, as the case may be,
if, in any such case, such transfer is not for value, and
(3) if
the undersigned is a corporation, partnership, limited liability company or
other business entity, any transfer made by the undersigned (a) in connection
with the sale or other bona fide transfer in a single transaction of all or
substantially all of the undersigned’s capital stock, partnership interests,
membership interests or other similar equity interests, as the case may be, or
all or substantially all of the undersigned’s assets, in any such case not
undertaken for the purpose of avoiding the restrictions imposed by this
agreement or (b) to another corporation, partnership, limited liability company
or other business entity so long as the transferee is an affiliate (as defined
below) of the undersigned and such transfer is not for value.
42
provided, however, that in the case of
any transfer described in clause (1), (2) or (3) above, it shall be a condition
to the transfer that (A) the transferee executes and delivers to the Placement
Agent, not later than one business day prior to such transfer, a written
agreement, in substantially the form of this agreement (it being understood that
any references to “immediate family” in the agreement executed by such
transferee shall expressly refer only to the immediate family of the undersigned
and not to the immediate family of the transferee) and otherwise satisfactory in
form and substance to Lazard, and (B) if the undersigned is required to
file a report under Section 16(a) of the Securities Exchange Act of 1934,
as amended, reporting a reduction in beneficial ownership of Common Shares or
Beneficially Owned Shares during the Lock-Up Period (as the same may be extended
as described above), the undersigned shall include a statement in such report to
the effect that, in the case of any transfer pursuant to clause (1) above,
such transfer is being made as a gift or by will or intestate succession or, in
the case of any transfer pursuant to clause (2) above, such transfer is
being made to a shareholder, partner or member of, or owner of a similar equity
interest in, the undersigned and is not a transfer for value or, in the case of
any transfer pursuant to clause (3) above, such transfer is being made either
(a) in connection with the sale or other bona fide transfer in a single
transaction of all or substantially all of the undersigned’s capital stock,
partnership interests, membership interests or other similar equity interests,
as the case may be, or all or substantially all of the undersigned’s assets or
(b) to another corporation, partnership, limited liability company or other
business entity that is an affiliate of the undersigned and such transfer is not
for value. For purposes of this paragraph, “immediate family” shall
mean a spouse, child, grandchild or other lineal descendant (including by
adoption), father, mother, brother or sister of the undersigned; and “affiliate”
shall have the meaning set forth in Rule 405 under the Securities Act of 1933,
as amended.
In order
to enable this covenant to be enforced, the undersigned hereby consents to the
placing of legends or stop transfer instructions with the Company’s transfer
agent with respect to any Common Shares or securities convertible into or
exercisable or exchangeable for Common Shares.
If (i)
the Company issues an earnings release or material news or a material event
relating to the Company occurs during the last seventeen (17) days of the
Lock-up Period, or (ii) prior to the expiration of the Lock-up Period, the
Company announces that it will release earnings results during the sixteen
(16)-day period beginning on the last day of the Lock-up Period, the
restrictions imposed by this Agreement shall continue to apply until the
expiration of the eighteen (18)-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event.
Anything
contained herein to the contrary notwithstanding, any person to whom Common
Shares, securities convertible into or exercisable or exchangeable for Common
Shares or Beneficially Owned Shares are transferred from the undersigned shall
be bound by the terms of this Agreement.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this agreement and that this agreement has been duly
authorized (if the undersigned is not a natural person), executed and delivered
by the undersigned and is a valid and binding agreement of the
undersigned. This agreement and all authority herein conferred are
irrevocable and shall survive the death or incapacity of the undersigned (if a
natural person) and shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
In
addition, the undersigned hereby waives, from the date hereof until the
expiration of the ninetieth (90th) day
following the date of the Company’s final prospectus, any and all rights, if
any, to request or demand registration pursuant to the Securities Act of 1933,
as amended, of any Common Shares or securities convertible into or exercisable
or exchangeable for Common Shares that are registered in the name of the
undersigned or that are Beneficially Owned Shares. In order to enable
the aforesaid covenants to be enforced, the undersigned hereby consents to the
placing of legends and/or stop transfer orders with the transfer agent of the
Common Shares with respect to any Common Shares, securities convertible into or
exercisable or exchangeable for Common Shares or Beneficially Owned
Shares.
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[Signatory]
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||
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By:
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|
|
|
Name:
|
|
|
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Title:
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43