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Exhibit
10.1
Certain portions of this exhibit have been omitted pursuant to Rule
24b-2 and are subject to a confidential treatment request. Copies
of this exhibit containing the omitted information have been filed
separately with the Securities and Exchange Commission. The omitted
portions of this document are marked with a
***.
Warrant Issuance Agreement
This Warrant Issuance
Agreement (this “Agreement”) dated as of July 20,
2007 is among AES Energy Storage, LLC, (“AES”),
Altairnano, Inc., a Nevada corporation
(“Altairnano”) and Altair Nanotechnologies Inc.,
a Canadian corporation
(“Parent”). AES, Parent and Altairnano
shall be collectively referred to herein as the
“Parties” and each such entity a
“Party.”
RECITALS
WHEREAS, AES and Altairnano have entered into a Joint
Product Development and Equipment Purchase Agreement dated as of
July 20, 2007 (the “Joint Development Agreement”) with
respect to the design, development and manufacture of Energy
Storage Systems;
WHEREAS , Altairnano is a second-tier wholly-owned
subsidiary of Parent, and Parent believes that it will benefit if
the project contemplated by the Joint Development Agreement is
successful; and
WHEREAS ,
Parent desires to provide AES with an incentive to complete
the project contemplated by the Joint Development Agreement
and purchase Energy Storage Systems from
Altairnano;
AGREEMENT
NOW, THEREFORE , in consideration of the
premises and covenants and agreements set forth herein and in
the Joint Development Agreement and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereto agree as
follows:
ARTICLE I
WARRANTS
1.1
Definitions . Capitalized terms used but not
defined herein will have the meaning set forth in the Joint
Development Agreement
1.2
Initial Warrant . On the date of this
Agreement, Parent shall issue and deliver to AES a warrant
(the “Initial Warrant”) in substantially the form
attached as Exhibit A (the “Form of Warrant”) to
purchase common shares of Parent (“Common
Shares”); provided that the following all-capitalized
terms set forth in the Form of Warrant shall be completed
with the following terms:
(a)
ISSUE DATE: the date hereof;
(b)
NUMBER OF SHARES: 200,000;
(c)
VESTING DATE: the earlier of the date of delivery
of the Pilot Project Storage System by Altairnano pursuant to
the Joint Development Agreement and December 31, 2007;
and
(d)
EXERCISE PRICE: the Execution Date Closing Price
(as defined below).
For
purposes of this Agreement, the “Execution Date Closing
Price” shall be the closing price of the Common Shares
on the principal U.S. market on which such shares are traded
or quoted on the trading day prior to the date
hereof.
1.3
Milestone Warrants . On or before March 31
of each calendar year during the term of the Joint
Development Agreement, and so long as the Joint Development
Agreement has not been terminated (but AES shall be entitled
to receive what it has earned under this Agreement up until
any such termination of the Joint Development Agreement),
Parent shall issue and deliver to AES a warrant (each a
“Milestone Warrant”) in substantially the form of
the Form of Warrant to purchase Common Shares; provided that
the following all-capitalized placeholders in the Form of
Warrant shall be filled in with the following
terms:
(a)
ISSUE DATE: March 31 st of
each year;
(b)
NUMBER OF SHARES: a number equal to the quotient of
(i) revenues earned during the preceding calendar year from
sales of Product to AES and its Affiliates, (ii) divided by
*** (such amount, the "Warrants Earned"); provided, however,
notwithstanding the foregoing, Parent shall not be required to
issue Milestone Warrants with respect to any calendar year (1)
in excess of the (Y) lesser of Milestone Warrants to Purchase
500,000 Common Shares, and Milestone Warrants with respect to
which Parent’s associated expense, determined in
accordance with United States generally accepted accounting
principles consistent with past practice, exceeds 10% of
revenues earned during the preceding calendar year from sales
of Product to AES and its Affiliates, or (2) in an amount less
than 20,000; provided, further, that any Milestone Warrants
which were not issued as to any calendar year as a result of
the maximum and minimum amounts set forth in the foregoing
proviso shall be added to the Warrants Earned in the
subsequent calendar year provided Warrants Earned equal or
exceed 20,000 in such subsequent year or any subsequent
contract year thereafter until issued by
Parent;
(c)
VESTING DATE: date the Milestone Warrant is issued;
and
(d)
EXERCISE PRICE: the greater of (i) the Execution
Date Closing Price, and (ii) the difference determined by
subtracting $5.00 from the Closing Price on January 31 (or if
such day is not a Business Day, the immediately preceding
Business Day) following the applicable calendar
year.
Notwithstanding
anything to the contrary in this Agreement, Parent shall have
no obligation to issue any additional Milestone Warrants if
the aggregate number of the Initial Warrants and Milestone
Warrants issued pursuant to this Agreement equals 2,000,000
(the “Warrant Cap”). In no event shall
Milestone Warrants be issued under this Agreement once
warrants equaling the Warrant Cap have been
issued.
1.4
Equitable Adjustments .
(a) With
respect to each Milestone Warrant, if any of the events set
forth in subsections (a), (b), (c) and (d) below occur on or
before the date of issuance of the respective Milestone
Warrant, the numbers set forth in Section 1.3 used to
determine the Number of Shares and the Exercise Price for a
Milestone Warrant (and the Warrant Cap) shall be subject to
adjustment as follows: In case Parent shall (a) declare a
dividend or make a distribution on its outstanding Common
Shares in Common Shares or any other security, (b) subdivide
or reclassify its outstanding Common Shares into a greater
number of shares, (c) combine or reclassify its outstanding
Common Shares into a smaller number of shares, or (d) enter
into any transaction whereby the outstanding Common Shares
are at any time changed into or exchanged for a different
number or kind of shares or other securities of Parent or of
another corporation through reorganization, merger,
consolidation, liquidation or recapitalization, then
proportionate adjustments in the numbers set forth in Section
1.3 used to determine the Number of Shares and the Exercise
Price for a Milestone Warrant (and the Warrant Cap) shall be
made so the Milestone Warrant will relate to the aggregate
number and kind of shares or other securities (subject to the
appropriately adjusted Warrant Cap), and will have the
Exercise Price it would have related to or had if it had been
issued immediately prior to the date of such
event.
(b) If,
as a result of an adjustment made pursuant to the provisions
of this Section 1.4, AES shall become entitled to receive any
shares of Parent other than Common Shares, the number of such
other shares so receivable upon exercise of the Milestone
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Shares contained in
Section 1.4(a) above.
ARTICLE II
REGISTRATION RIGHTS
2.1.
Registration Rights . Parent covenants and
agrees that: (subject to the provisions of this Section 2.1),
within 30 days from receipt of a written request from AES, it
will prepare and file with the United States Securities and
Exchange Commission (the “Commission”) a
registration statement on Form S-3 (or if such form is not
available, a Form S-1) (a “Registration
Statement”) covering all of the Common Shares (or, if
applicable, other shares of the Parent) issuable upon the
exercise of any Initial Warrant or Milestone Warrant
outstanding at the time (the “Registrable
Securities”) for a secondary or resale offering to be
made on a continuous basis pursuant to Rule
415. Parent will use its commercially reasonable
efforts to cause each Registration Statement to be declared
effective under the Securities Act of 1933 (the
“Securities Act”) Act within 120 days of the
purchase of the relevant shares of Parent and to keep the
Registration Statement continuously effective until the
earlier of (a) such time that all of the Registrable
Securities have been sold or (b) the date when the
Registrable Securities are eligible for resale pursuant to
paragraph (k) of Rule 144 promulgated under the Securities
Act. In addition, Parent shall timely supplement
and amend each Registration Statement if required by the
rules, regulations or instructions applicable to the
registration form used for each Registration Statement or if
required by the Securities Act. If (a) at any time
when a prospectus relating to Registrable Securities is
required to be made available under the Securities Act,
Parent discovers that, or any event occurs as a result of
which, the prospectus (including any supplement thereto)
included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to
state any 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, or
(b) the Commission issues any stop order suspending the
effectiveness of the Registration Statement or proceedings
are initiated or threatened for that purpose, then Parent
shall promptly deliver a written notice to such effect to
AES, and AES shall immediately upon receipt of such notice
discontinue its disposition of Registrable Securities
pursuant to the Registration Statement until the copies of
the supplemented or amended prospectus contemplated by the
immediately following sentence is made available and, if so
directed by Parent, shall deliver to Parent (at Parent's
expense), if applicable, all copies, other than permanent
file copies, then in AES's possession of the prospectus or
prospectus supplement relating to such Registrable Securities
current at the time of receipt of such notice. As promptly as
practicable following the event or discovery referred to in
clause (a) of the immediately preceding sentence, Parent
shall prepare and make available to AES the amendment or
supplement of such prospectus so that, as thereafter made
available to purchasers of such Registrable Securities, such
prospectus shall not include 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. Notwithstanding anything to the
contrary in this Section 2.1 if the filing or maintenance of
the Registration Statement would require Parent to make a
disclosure that would, in the good faith, reasonable judgment
of Parent's Board of Directors, have a material adverse
effect on the business, operations, properties, prospects or
financial condition of Parent or on pending or imminent
transactions, Parent shall have the right, upon delivery to
AES of a certificate executed by Parent's chief executive
officer certifying the Board of Directors' finding (a
"Blackout Notice") to delay the filing (but not the
preparation) of the Registration Statement or of any
amendment or supplement thereto, to suspend its obligation to
maintain the effectiveness of the Registration Statement and
to suspend the use of any prospectus or prospectus supplement
in connection with the Registration Statement, in each case
for a reasonable amount of time not to exceed thirty (30)
days (the "Blackout Period") within the ninety (90) day
period beginning on the first day of a Blackout Period;
provided, however, that Parent shall not deliver a Blackout
Notice more than twice in any 365-day period; and provided,
further that any Blackout Period shall only be effective when
and for so long as other holders, if any, of registration
rights with respect to Parent's securities are restricted
from exercising their registration rights to the same or
greater extent as AES. AES agrees that upon
receipt of a Blackout Notice, it shall immediately cease all
efforts to dispose of Registrable Securities pursuant to the
Registration Statement until such time as Parent shall notify
it of the end of such restrictions or, if earlier, the
expiration of the Blackout Period.
2.2 Parent’s
obligations under Article II are conditioned upon AES
providing any information regarding AES reasonably requested
by Parent in order for Parent to complete the Registration
Statement.
2.3 With
respect to any offering and sale pursuant to the Registration
Statement, Parent agrees to indemnify and hold AES, each
Person who "controls" AES within the meaning of Section 15 of
the Securities Act, and any directors and officers of the
foregoing, harmless against any and all losses, claims,
damages or liabilities (including reasonable legal fees and
other reasonable expenses incurred in the investigation and
defense thereof) to which they or any of them may become
subject under the Securities Act or otherwise (collectively,
"Losses"), insofar as any such Losses shall arise out of or
shall be based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the
Registration Statement, or any amendment or supplement
thereto, or any prospectus relating to the Registration
Statement, or the omission or alleged omission to state in
any of the foregoing a material fact required to be stated
therein or necessary to make the statements contained therein
not misleading, or (ii) any violation or alleged violation by
Parent of the Securities Act, the Exchange Act, any
applicable state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
applicable state securities law; provided, however, that the
indemnification contained in this Section 2.3 shall not apply
to such Losses which shall arise out of or shall be based
upon any such untrue statement, or any such omission or
alleged omission, which shall have been made in reliance upon
and in conformity with information furnished in writing to
Parent by AES specifically for use in connection with the
preparation of the Registration Statement or prospectus
contained in the Registration Statement or any such amendment
or supplement thereto.
2.4 With
a view to making available to AES the benefits of Rule 144
and any other rule or regulation of the Commission that may
permit AES to sell securities of Parent to the public without
registration, Parent agrees to use its reasonable best
efforts until such time as all of the Registrable Securities
have been sold under the Registration Statement or are
eligible for re-sale under subsection (k) of Rule 144, to (a)
make and keep public information available, as those terms
are understood and defined in Rule 144, at all times, and
take all action as may be required as a condition to the
availability of Rule 144, (b) file with the Commission in a
timely manner all reports and other documents required of
Parent under the Securities Act and the Exchange Act, and (c)
facilitate and expedite transfers of Registrable Shares sold
pursuant to Rule 144, including providing timely notice to
Parent's transfer agent to expedite such
transfer.
2.5 Parent
shall not be obligated to effect, or to take any action to
effect, any registration this Section 2 after Parent has
effected two registrations pursuant to this Section 2
and such registrations have been declared or ordered
effective (except that a registration shall be deemed to have
been “declared or ordered effective” if Parent
withdraws a Registration Statement at the request of AES
after it has been filed).
2.6 Parent
shall not grant, and represents that it has not granted, any
other person or entity rights to register securities of
Parent on terms that would be reasonably likely to restrict
the ability of Parent to fully perform its obligations to AES
under this Section 2. Parent shall not amend any
registration rights agreement with any other person or entity
nor shall Parent waive any provision under any registration
rights agreement that it would be entitled to waive
thereunder if such waiver would be reasonably likely to
adversely affect the registration rights contemplated by this
Article II.
ARTICLE III
INVESTOR REPRESENTATIONS
3.1
Investment Purposes . AES is acquiring the
Initial Warrants and Milestone Warrants identified above and
the Common Shares issuable upon the exercise thereof (the
“Securities”) for its own account for investment
and not with a view to, or for sale in connection with, any
public distribution thereof within the meaning of the
Securities Act of 1933, as amended (the “Securities
Act”).
3.2
Sophistication . AES is an
“accredited investor” as defined in Rule 501(a)
promulgated under the Securities Act. AES has such
knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an
investment in the Securities and making an informed
investment decision.
3.3
Restrictions on Transfer . AES understands that the
Securities will not be registered under the Securities Act,
or any state securities laws, and will be issued in reliance
upon exemptions from registration for certain private
offerings. AES understands and agrees that the
Securities, or any interest therein, may not be resold or
otherwise disposed of by AES unless the resale of the
Securities is subsequently registered under the Securities
Act and under all applicable state securities laws or unless
the Parent receives an opinion of counsel, satisfactory to
it, that an exemption from registration is
available.
3.4
Access to Information . AES acknowledges and
represents that it has reviewed a copy of the most recent
Annual Report on Form 10-K and Quarterly Report on Form 10-Q
(and all subsequently filed Current Reports on Form 8-K) of
Parent, has been given a reasonable opportunity to review all
documents, books, and records of Parent pertaining to this
investment, has been supplied with all additional information
concerning Parent and the Securities that has been requested
by it, has had a reasonable opportunity to ask questions of
and receive answers from Parent or its representatives
concerning this investment, and that all such questions have
been answered to the full satisfaction of
AES. Except for the representations and warranties
set forth in the Joint Development Agreement, AES has
received no representations, written or oral, from Parent, a
placement agent or any officer, director, employee, attorney
or agent thereof, other than those contained in the Form
10-K, Form 10-Q and Forms 8-K referenced above and has relied
solely on the same in making its decision to purchase the
Securities.
3.5
Restrictive Legends . AES understands and agrees that
the following restrictions and limitations are applicable to
its resales, pledges, hypothecations, or other transfers of
the Securities: (a) the Securities shall not be sold,
pledged, hypothecated, or otherwise transferred unless
registered under the Securities Act and applicable state
securities laws or an exemption from registration is
available; and (b) each certificate or other document
evidencing or representing the Securities shall be stamped or
otherwise imprinted with a legend in substantially the
following form:
"THE
SECURITIES OF THE COMPANY EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND VARIOUS APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR ASSIGNED OR A SECURITY INTEREST
CREATED THEREIN, UNLESS THE PURCHASER, TRANSFEREE, ASSIGNEE,
PLEDGEE OR HOLDER OF SUCH SECURITY INTEREST COMPLIES WITH ALL
STATE AND FEDERAL SECURITIES LAWS (I.E., SUCH SECURITIES ARE
REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE THEREUNDER) AND UNLESS THE SELLER, TRANSFEROR,
ASSIGNOR, PLEDGOR OR GRANTOR OF SUCH SECURITY INTEREST
PROVIDES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT THE TRANSACTION CONTEMPLATED WOULD NOT BE IN
VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS."
"UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MUST NOT TRADE THE SECURITY BEFORE [insert date that
is four (4) months and one day after issue date]"
3.6
Canadian Representations . The offer and
sale of the Securities to AES was not made in
Canada. AES is not subject to the securities laws
of any province or territory of Canada, and AES is not
purchasing, and will not purchase, any of the Securities for
the account or benefit of any resident of any province or
territory of Canada.
ARTICLE IV
TERM AND TERMINATION
The term of this
Agreement shall commence as of the date hereof and shall
terminate upon the occurrence of the last Expiration Date of
the Initial Warrants and all Milestone Warrants issued in
accordance herewith.
ARTICLE V
MISCELLANEOUS
5.1
Notices . All notices or other
communications which are required or permitted hereunder shall
be in writing and shall be deemed sufficiently given if
delivered personally (as confirmed by signature of receiving
party) or sent by nationally recognized overnight courier
postage prepaid (as confirmed by signature of receiving party)
to the address set forth below or to such other address as any
Party may have specified in a notice duly given to the other
Party as provided herein. Such notice of communication shall
be deemed to have been given as of the date
received.
If
to Altairnano:
Altairnano,
Inc.
204
Edison Way
Reno,
Nevada 89502
Attn: Alan
Gotcher, CEO and President
If
to AES:
AES
Energy Storage, LLC
c/o
The AES Corporation
4300
Wilson Boulevard
Arlington,
Virginia 22203
Attention:
Chris Shelton
With
a copy to:
AES
Energy Storage, LLC
c/o
The AES Corporation
4300
Wilson Boulevard
Arlington,
Virginia 22203
Attention:
General Counsel
5.2
Amendment; Interpretation . No change or
modification of this Agreement shall be valid unless the same
shall be in writing and signed by all of the P
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