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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ALTAIR INTERNATIONAL INC.
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(Name of Small Business Issuer inits charter)
PROVINCE OF
ONTARIO, CANADA NONE
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(State or other jurisdication (I.R.S. Employer
of incorporation or Identification No.)
organization)
1725 SHERIDAN AVENUE
SUITE 140
CODY, WYOMING 82414
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(Address of principal executive offices) (Zip Code)
(307) 587-8245
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(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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(Title of Class)
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TABLE OF CONTENTS
EXCHANGE RATE INFORMATION.................................................. 1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS ........................... 1
PART I..................................................................... 2
Item 1. Description of Business....................................... 2
Target Markets .............................................. 3
Technology and Proprietary Rights ........................... 4
Competition ................................................. 4
Subsidiaries ................................................ 5
Recent Merger ............................................... 6
Government Regulation and Environmental Concerns ............ 6
Employees ................................................... 7
Glossary of Terms ........................................... 7
Item 2. Plan of Operation............................................. 8
Business Development ........................................ 8
Research, Testing and Development ........................... 9
Item 3. Description of Property....................................... 10
Item 4. Security Ownership of Certain Beneficial Owners and
Management.................................................... 11
Item 5. Directors, Executive Officers, Promoters and Control
Persons....................................................... 12
Item 6. Compensation of Directors and Officers........................ 13
Summary Compensation Table .................................. 13
Option Grants in 1995 ....................................... 14
Options Exercised and Aggregate Remaining at Year-End ....... 14
Compensation of Directors ................................... 14
Employment Agreements ....................................... 15
Stock Option Plan ........................................... 15
Item 7. Certain Relationships and Related Transactions................ 16
Item 8. Description of Securities..................................... 16
PART II.................................................................... 18
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder
Matters....................................................... 18
Market Price ................................................ 18
Dividends ................................................... 19
Restrictions on Transfer .................................... 19
Transfer Agent and Registrar ................................ 19
Taxation Considerations ..................................... 19
Item 2. Legal Proceedings............................................. 20
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Item 3. Changes in and Disagreements with Accountants................. 20
Item 4. Recent Sales of Unregistered Securities....................... 20
Item 5. Indemnification of Officers and Directors..................... 22
PART F/S................................................................... 22
PART III................................................................... 22
Item 1. Index to Exhibits............................................. 22
Item 2. Description of Exhibits....................................... 23
SIGNATURES................................................................. 24
INDEX TO FINANCIAL STATEMENTS ............................................. F-1
Audited Financial Statements........................................... F-2
Management Financial Statements........................................ F-14
INDEX TO EXHIBITS
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EXCHANGE RATE INFORMATION
EXCEPT AS OTHERWISE INDICATED, ALL DOLLAR AMOUNTS HEREIN, INCLUDING
AMOUNTS SET FORTH IN THE FINANCIAL STATEMENTS APPEARING ON PAGES F-1 TO F-32
HEREOF, ARE EXPRESSED IN CANADIAN DOLLARS. IN ADDITION, THE FINANCIAL
STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN CANADA, WHICH DIFFER IN CERTAIN RESPECTS FROM THOSE
GENERALLY ACCEPTED IN THE UNITED STATES. SEE NOTE 11 TO THE MANAGEMENT
FINANCIAL STATEMENTS WHICH APPEARS ON PAGE F-27 HEREOF.
The following exchange rates represent the noon buying rate in New York
City for cable transfers in Canadian dollars, as certified for customs
purposes by the Federal Reserve Bank of New York. The following table sets
forth, for each of the years indicated, the period end exchange rate, the
average exchange rate (i.e., the average of the exchange rates on the last
day of each month during the period), and the high and low exchange rates of
the Canadian dollar in exchange for U.S. currency for the years indicated
below, based on the noon buying rates.
YEAR ENDED DECEMBER 31,
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1996* 1995 1994 1993 1992 1991
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(US dollar per Canadian dollar)
High.................... .7391 .7527 .7632 .8046 .8757 .8926
Low..................... .7235 .7023 .7103 .7439 .7761 .8587
Average................. .7305 .7305 .7299 .7729 .8235 .8726
Year End................ .7307 .7323 .7128 .7744 .7865 .8652
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* Data through August 30, 1996.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-SB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act"). All statements, other than statements of historical fact, included in
this Form 10-SB, including, without limitation, statements under "Description
of Business" and "Plan of Operation" regarding the Company's business
strategy and plans and objectives of management of the Company for future
operations, are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations are disclosed in this Form
10-SB, including, without limitation, in conjunction with the forward-looking
statements included in this Form 10-SB. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by this section.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
A glossary of technical terms used in the following description of the
Company's business is set forth at the conclusion of this Item 1.
Altair International Inc. (the "Company" or "Altair") was incorporated
under the laws of the province of Ontario, Canada in April 1973 for the purpose
of acquiring and developing mineral properties. Since 1994, the Company has
increasingly shifted its emphasis from acquisition and development of mineral
properties to the acquisition, development and testing of mineral processing
equipment for use in the recovery of fine, heavy mineral particles, including
gold and environmental contaminants. In furtherance of this purpose, the
Company has recently acquired the rights to the Campbell Centrifugal Jig,
through a merger involving the Company, Fine Gold Recovery Systems, Inc., a
wholly owned subsidiary of the Company, and Trans Mar, Inc., a Washington
corporation ("TMI"). See "--Recent Merger." The Campbell Centrifugal Jig (the
"CJ") is a patented device capable of segregating and recovering extremely fine
mineral particles or contaminants which are not presently commercially
recoverable utilizing conventional techniques or processes. See "--Technology
and Proprietary Rights."
Management of the Company views the acquisition of TMI as strategically
significant. As a result of the acquisition, the Company now owns patented
technology believed to be state-of-the-art in the commercial recovery of
extremely fine, heavy particulate matter. The acquisition has added to the
Company's historical minerals acquisition and exploration operations an
opportunity to become a developer of unique minerals processing technology.
The CJ segregates particles based on differences in their specific gravity.
Such technology may be categorized as a "gravity separation" process. Gravity
separators are widely used in minerals beneficiation because of their relative
simplicity, low cost of operation and ability to continuously treat large
tonnage throughput. What makes the CJ unique, in management's opinion, is the
ability to economically recover smaller particles than can be presently
recovered by competing gravity technologies due to the fact that density
variations are accentuated when particles are subjected to centrifugal force.
Several prototype and demonstration jigs have been built and tested by the
Company and TMI. Continued field testing of the CJ is being undertaken to
identify any design problems that may reside in the CJ technology, evaluate the
CJ's ability to perform sustained operations, determine the potential for
downtime during such operations and estimate the anticipated maintenance costs
associated with continued operations. In addition, field testing is being
carried out to improve operating design for specific applications. There can be
no assurance that the testing program will be successful for all applications or
that testing will demonstrate the CJ to be economically attractive to end users.
Most recently, the Company has focused on testing of its Series 12 CJ,
designed to be capable of processing 120 tons of solids per day. A
demonstration unit of the Series 24 CJ, designed to be capable of processing 500
tons of solids per day, is currently in the final design stage and testing is
planned for the first quarter of 1997. See "Item 2. Plan of Operation." The
volume of solids per day that the Series 12 and Series 24 CJs are actually
capable of processing has not yet been established through testing; however, the
Company expects that planned testing over the next twelve months will confirm
that the CJs can actually process the volumes they have been designed to
process. Larger CJ units may be designed and, the Company believes, can be
readily constructed. Also, multiple units may be used in series or parallel
configurations to process high volume operations.
Demonstration tests conducted by the Company and TMI suggest economic
potential for the use of the CJ in a number of applications, including:
- Recovery of ultrafine gold from waste streams or former tailings
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- Recovery of zircon, rutile, leucoxene, and other valuable fractions
from heavy minerals and operations, especially from finely sized waste
piles
- Sulfur and ash removal from fine coal
- Recovery of iron ore fines from fine tailings
- Concentration of heavy minerals, such as anatase, aparite, barite,
cassiterite, chromite, columbite, industrial diamonds, fluorite,
various garnets, monazite, tantalite and wolframite
- Remediation of nuclear waste
The Company is a development stage firm and has been since its inception.
The Company to date has derived no revenues from product sales or otherwise.
TARGET MARKETS
The Company's present focus is on developing markets for the CJ that have
the greatest near-term profit potential-- minerals recovery, coal washing and
environmental remediation. In the minerals arena, the Company is seeking
royalty or limited licensing agreements with mineral producers where there is
potential for value added to the beneficiation process, especially heavy mineral
sands and placer gold operations. Verification testing with the CJ is currently
underway to evaluate the CJ's potential for recovery of zircon from heavy
minerals sand dry mill tails in Florida and titanium dioxide (TiO2) from a
pigment processing plant in the southern United States. Phase 1 and 2 trials
conducted by the Company during 1996 have separated commercial grade zircon
products while withdrawing a larger portion of zircon from the feed ore than
other high volume processing equipment in use today. There can be no assurance
that testing will demonstrate the CJ to be economically attractive to end users.
See "Item 2. Plan of Operation -- Research, Development and Testing." Zircon is
used primarily for foundry molds and in the manufacture of certain types of
glass and ceramics. Titanium is used primarily as a basic component of paint.
The Company believes the domestic and international markets for both of these
products are significant and well established. Both are commodities traded in
bulk, usually under long term contracts. There is also a market for "bag
material," often traded as a spot-priced product. The U.S. Geologic Survey has
reported that production of titanium dioxide in the United States during 1995
was approximately 1,280,000 metric tons, representing a market value of
approximately $2.6 billion. The U.S. Geologic Survey does not report zirconium
production for the United States, however, according to the 1993 Mineral
Commodities Summaries prepared by the U.S. Department of the Interior, Bureau of
Mines, consumption of zirconium in the United States during 1992 was
approximately 75,000 metric tons, representing a market value of approximately
$16.1 million.
Additionally, the Company believes there are a number of proven mineral
deposits in the United States which have not been developed because they have
very fine particle sizes which current gravity separation technology cannot
recover economically. The Company intends to acquire and process these deposits
with the CJ, and believes that acquisition costs will be relatively low, as
these deposits have limited value without an economical means to process them.
To this end, the Company has recently leased approximately 2,000 acres of land
containing fine heavy minerals in the eastern United States. The Company
intends to use the CJ to extract the minerals from this site. The Company has
previously processed heavy mineral sands similar in character to the deposits
located on the Company's leased property, and believes the CJ is an appropriate
technology for this site. Verification testing with the CJ at the site is
planned to commence in the last quarter of 1996. Such testing is designed to
evaluate the CJ's potential to recover the valuable heavy minerals contained in
the leased property. There can be no assurance that testing will demonstrate
the CJ to be able to economically process the fine heavy minerals at this site.
See "Item 2. Plan of Operation" and "Item 3. Description of Property."
The Company has commenced testing of the CJ to evaluate its ability to
remove fine pyrite particles and ash from coal fines, creating a saleable
product from material currently discharged as mine waste. Tests conducted
during 1990 in Montana removed about 85% of the pyrite and about 50% of the ash
from high sulphur coals. Based on these test results, the Company believes
utilities in the eastern United States may be able to use the CJ to remove
pyrite from high sulphur eastern coals, potentially reducing the need to incur
the expense of transporting low-sulphur western coals. The cost of transporting
coal from Wyoming coal mining areas to the midwestern United States typically
comprises 75% of the cost of the delivered coal product. In addition, removal
of ash from coal offers other benefits to utilities, as ash reduces the thermal
value of coal and causes undesirable environmental impacts. Verification
testing with the CJ to demonstrate its ability to remove fine pyrite particles
and ash is currently
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underway at Southern Illinois University with the participation of the
Company and a United States coal producer. The CJ has been installed and
extensive testing will take place over the next several months. See "Item 2.
Plan of Operation." There can be no assurance that testing will demonstrate
the CJ to be economically attractive to end users.
Testing of the CJ conducted under a grant from the U.S.Environmental
Protection Agency at Montana College of Mineral Science and Technology during
1994 indicated that the CJ may be effective in removing heavy minerals from old
mine and mill tailing sites. The 1994 tests indicated that the CJ removed
approximately 64% of the fine pyrite contained in mill tailings in a single pass
through the machine. Nearly 80% of the fine pyrite content of such tailings was
removed in two passes through the machine. In 1995, the U.S. Department of
Energy (the "D.O.E.") sponsored tests suggesting that the CJ may be capable of
removing dense nuclear particles from radioactive waste. The tests conducted by
the D.O.E. reported that the CJ was able to remove up to 54% of the contained
nuclear contaminate in a single pass. Company management is currently exploring
these potential environmental remediation applications.
TECHNOLOGY AND PROPRIETARY RIGHTS
In operation, the CJ utilizes a combination of standard mechanical jig and
centrifugal technologies. The CJ is a simple, yet sophisticated piece of
equipment. Containing only one moving part, the CJ is relatively economical to
manufacture and management believes production machines, if completed, will be
capable of sustaining high reliability and low maintenance costs in a production
environment. See "Item 2. Plan of Operation." Use of the CJ requires no
chemical additives. The Series 12 CJ stands about six feet tall, requires floor
space of about 25 square feet and weighs approximately 2,000 lbs. Recently
constructed jigs are mounted on a metal frame along with jig auxiliary
equipment--pulse water pump and tank and control panel--for transport by truck
and rapid on-site installation.
A conventional jig separates a slurry of mineral particles as it flows
across the top of a screen. Water is periodically pulsed up through the screen
to eliminate interparticle friction and allow differential settling according to
the variations in the net specific gravities of the ore. Heavier minerals are
allowed to pass downward through the screen while lighter materials flow across
the screen to a discharge point. Basically, the CJ operates according to
conventional jig principles except that the screen surface is cylindrical and is
rotated to subject the particles to centrifugal forces. As currently designed,
materials to be processed by the CJ are introduced into the top of the CJ in a
slurry mix with water. The slurry is diffused across the top of the interior of
a vertical cylindrical screen which is rotating. Water is pulsed through the
screen allowing differential separation in the slurry material. Heavy particles
pass through the screen, are collected, and exit the machine in a "concentrate"
stream. Lighter particles flow down the screen interior, are collected and exit
out the bottom of the machine in a separate "tails" stream.
The Company does not intend to establish its own manufacturing facility.
Management is considering options for manufacture of the CJ, including
manufacturing under contract, exclusive licensing, or a joint venture. The
arrangement could eventually include an exclusive license for manufacture,
warehousing and distribution of spare parts, as well as maintenance and
leasing of the CJ. Currently, the Company has entered into an agreement with
Herboth's Machine Shop, a full service machine shop located in Marysville,
California, to manufacture the initial production models of the CJ.
Under the terms of the agreement, Herboth's has constructed two Series
12 CJs and is in the process of constructing two additional machines.
Initial patents on the CJ have been issued in the United States, South
Africa, United Kingdom, Australia, and Canada. A second patent has been issued
with respect to a critical component of the CJ in the United States, Australia,
Canada, Great Britain, General European, and South Africa. There are patents in
process on the CJ in Germany, France, and Japan.
COMPETITION
ALTERNATIVE TECHNOLOGIES. Minerals processing technologies are predicated
on the physical and chemical characteristics of the materials being processed.
Contrasts in size, specific gravity, hardness, magnetic
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susceptibility, and electrical conductivity are physical characteristics that
the processor exploits to selectively extract and concentrate mineral
constituents. Variations in chemical reactivity and molecular affinity are
also used to selectively segregate feed components.
The CJ competes in an arena in which particle specific gravity is the
primary criteria for particle segregation and capture. Spirals and cones are
mechanical gravity separation devices commercially used in the recovery of heavy
minerals from sand-sized feeds and are most effective when feed sizes are larger
than 100 mesh. Recovery efficiency falls dramatically, however, with smaller
feeds. In contrast, the Company's tests indicate that the CJ will separate
particles sized from 20 to 400 mesh.
Froth floatation is a minerals beneficiation process used to selectively
separate sulfide particles by introducing chemical agents which attach to
certain sulfides; once attached, the sulfides are separated by floatation. This
method may be effective on particles as small as 200 mesh. Froth floatation
requires the use of chemical agents and does not separate particles based on
density as does the CJ. Froth floatation applications are limited to certain
sulfide particles, and will not work on a broad range of heavy minerals.
Heavy media separation is a process in which a feed containing both dense
and light particles is fed into a solution whose specific gravity is midway
between the particles to be separated. The light particles float to the surface
of the solution, while the heavy particles sink. Heavy media separation is used
primarily in the removal of ash from coal and in small scale analytic laboratory
applications. Its application elsewhere is limited because the process is time
consuming where the media required is highly viscous. Also, the cost of the
media may limit the commercial usefulness of this method.
COMPETING PRODUCTS. The Company believes that the CJ currently has
limited competition in the commercial segregation of dense particles
contained in feeds between 100 and 400 mesh. A second centrifugal jig
device, the Kelsey jig, has been developed in Australia subsequent to the
invention of the CJ. The Kelsey machine is more complicated in design, which
the Company believes makes it more expensive to manufacture, operate and
maintain in a production environment. As of mid-1995, according to the
Kelsey jig's manufacturer, Geologics Pty. Ltd., 36 Kelsey jigs were in
service at 28 sites worldwide, including two machines at one site in the
United States. In addition, there exists another device that separates dense
particles from feeds sized between 50 and 400 mesh, the Knelsen Bowl. The
Knelsen unit is a batch concentrator best suited to small volumes. Knelsen
units have been installed in various mining applications, primarily gold
mining, throughout the world.
The Company is a small player in an industry comprised of major mining
companies possessing tremendous capital resources. The Company is an
insignificant competitive factor in the industry. There is no assurance that
competitors, many of whom may have significant capital and resources, will not
develop or are not now in the process of developing competitive equipment.
SUBSIDIARIES
Altair International Inc.(1) was incorporated under the laws of the
province of Ontario, Canada in April 1973. The Company currently has two
wholly owned subsidiaries: (i) Fine Gold Recovery Systems, Inc. ("Fine
Gold") and (ii) Mineral Recovery Systems, Inc., a Nevada corporation ("MRS").
Fine Gold was acquired by the Company in April 1994. Fine Gold is a
development stage company with no operating revenues earned and no operating
expenses incurred. The Company's acquisition of TMI in February 1996 was
effected by merging TMI with and into Fine Gold. See "--Recent Merger." Fine
Gold also now includes the operations of a wholly owned subsidiary of the
Company formerly known as Mineral Recovery Systems, Inc. which was merged with
and into Fine Gold in June 1996. As discussed below, another wholly owned
subsidiary of the Company formerly known as Carlin Gold Company is now operated
under the name Mineral Recovery Systems, Inc. The Company intends that Fine
Gold will hold and maintain CJ technology rights, including patents,
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(1) The Company was incorporated in April 1973 under the name
Diversified Mines Limited which was subsequently changed to Tex-U.S. Oil &
Gas Inc. in February 1981, then to Orex Resources Ltd. in November 1986, then
to Carlin Gold Company Inc. in July 1988, to Altair International Gold Inc.
in March 1994, and to Altair International Inc. in November 1996.
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and that Fine Gold will enter into a royalty arrangement to allow MRS to
manufacture and commercially utilize the CJ.
MRS(2) was incorporated by the Company in April 1987. MRS previously
has been involved in the exploration for minerals and development of
unpatented mining claims in Nevada, Oregon and California. All mining claims
have now been abandoned. The Company currently intends that MRS will
manufacture or arrange for the manufacture of the CJ for commercial sales,
rental or royalty arrangements with end users. In addition the Company
intends that MRS will lease or acquire and develop mineral properties,
particularly properties that contain mineral resources that may be processed
with the CJ.
RECENT MERGER
The Company's recent acquisition of TMI was effected through a merger of
TMI with and into Fine Gold (the "TMI Merger"). See "--Corporate Subsidiaries."
The TMI Merger was effected pursuant to the terms and conditions of a Merger
Agreement, dated as of February 8, 1996, entered into by and among the Company,
Fine Gold and TMI (the "TMI Merger Agreement"), and approved by the shareholders
of TMI at a special meeting of shareholders held on February 29, 1996.
As a result of the TMI Merger: (i) TMI was merged with Fine Gold in
accordance with the laws of the States of Washington and Nevada, with Fine Gold
surviving as a wholly owned subsidiary of the Company; (ii) the Articles of
Incorporation of Fine Gold became the Articles of Incorporation of the surviving
corporation and the officers and directors of Fine Gold became the officers and
directors of the surviving corporation, (iii) all outstanding options to
purchase TMI stock were terminated and, in exchange therefor, the Company issued
580,000 Series E warrants, each entitling the holder thereof to purchase one
share of the Common Stock, no par value, of the Company (the "Common Stock"),
for $2.00 until January 31, 1997; (iv) all shares of the capital stock of TMI
were converted into and exchanged for 1,919,957 shares of the Common Stock,
which were issued and deposited into escrow pursuant to the terms of two escrow
agreements. Of the 1,919,957 shares, 1,170,000 are to be released dependent
upon Altair receiving revenues from the assets formerly held by TMI. The basis
for share release is one share of Common Stock for each $1.80 in cash flow
received by Altair, provided that no more than one-third of the original number
of shares of Common Stock escrowed may be released in any one year over the
first three years of the escrow. Shares of Common Stock still in escrow at the
end of five years may be canceled by the Alberta Stock Exchange. The remaining
749,957 shares of Common Stock will be released from escrow to each former TMI
shareholder at a rate equal to the greater of 15,000 shares or 5% of such
shareholder's total escrowed holdings each calendar quarter. In addition, each
former TMI shareholder or warrant holder is restricted from selling more than
the greater of 15,000 shares or 10% of such holder's holdings in any calendar
quarter.
The holder of a Series E warrant is not entitled to any right or interest
as a shareholder of the Company prior to exercise of the Series E warrant. The
number of shares of Common Stock subject to each Series E warrant may be
adjusted in the event the Company enters into certain extraordinary corporate
transactions, on the terms and subject to the conditions described in the Series
E warrant Certificates. All of the Series E warrants remained outstanding and
unexercised as of July 31, 1996.
GOVERNMENT REGULATION AND ENVIRONMENTAL CONCERNS
The Company's activities are subject to extensive federal, state and
local laws and regulations controlling the exploration and mining of mineral
properties as well as the processing and production of mineral products, and
the possible effects of Company activities upon the environment. In
addition, the Company's activities in the manufacture, development and
testing of CJ equipment are also subject to extensive federal, state and
local regulation. Permits from a variety of regulatory authorities are
required for many aspects of mine operation and reclamation, and equipment
manufacture and distribution. Environmental and other government regulations
at the federal, state and local level pertaining to the Company's business
and properties may include: (1) surface impact,
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(2) MRS was formerly known as Carlin Gold Company. The name change was
effective in June 1996.
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(2) water acquisition and discharge, (3) site access, (4) reclamation, (5)
wildlife preservation, (6) licenses and permits, and (7) maintaining fees for
unpatented mining claims.
The Company is committed to complying with and, to its knowledge, is in
compliance with all governmental regulations. The Company's primary product,
the CJ, does not require the addition of chemicals in its processing of
minerals. However, the Company cannot predict the extent to which future
legislation and regulation could cause the Company to incur additional operating
expenses, capital expenditures, and/or restrictions and delays in the
development of the Company's products and properties, including those with
respect to unpatented mining claims.
EMPLOYEES
The business of the Company is currently managed by Dr. William P. Long,
President and Chief Executive Officer of the Company, Mr. C. Patrick Costin,
Vice President of the Company and President of MRS and Fine Gold, and Mr. Edward
Dickinson, Director of Finance of MRS. In addition, MRS employs a senior
process engineer, a technician and one part-time employee in an office
management and administrative assistance capacity. There are no other employees
of the Company or the Subsidiaries.
Other than the employment agreements of Dr. Long and Mr. Costin described
below, there are no employment agreements between the Company or its
Subsidiaries and their respective executive officers. See "Item 6. Compensation
of Directors and Officers -- Employment Agreements." The future success of the
Company will depend, in part, on its ability to attract and retain highly
qualified technical, marketing and management personnel. There is no assurance
the Company will be successful in retaining or attracting highly qualified
individuals in key positions.
GLOSSARY OF TERMS
AMENABILITY means responsiveness of an ore deposit to processing.
ASH means inorganic residue remaining after coal combustion. Ash is an
undesirable component of coal because it reduces thermal value and produces a
waste product after combustion.
BENIFICIATE means to improve the grade of ore by processing.
CENTRIFUGAL FORCE means the component of force on a body in curvilinear
motion that is directed away from the axis of rotation.
COAL FINES means finely pulverized coal particles which will pass through a
50 mesh screen.
COAL WASHING means processing of pulverized coal to remove ash and pyrite.
ENVIRONMENTAL REMEDIATION means removal of harmful mineral particles from a
site previously altered by human activities.
HEAVY MINERALS SANDS means beach or dune sands which contain a small
fraction of heavy particles. Heavy mineral sands are commercially mined to
produce titanium minerals and zircon.
JIG means a device for concentrating minerals based on specific gravity and
particle size.
MESH means one of the openings or spaces in a screen. The value (size) of
the mesh is given as the number of openings per linear inch.
MILL means a building with machinery for processing ore. (Dry mill refers
to heavy minerals sand processing of dry materials.)
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PLACER means deposits of sand, gravel and other detrital or residual
material containing a valuable mineral which has accumulated through weathering
and natural mechanical concentration processes.
PYRITE means a yellowish-brown mineral sulfide containing iron and sulphur.
Pyrite is an undesirable component of coal because sulphur dioxide gas is
released when it is burned with coal.
SPECIFIC GRAVITY means the ratio of the mass of a solid or liquid to the
mass of an equal volume of water at a specified temperature.
TAILS OR TAILINGS means those portions of washed ore that are regarded as
too poor to be treated further, as distinguished from material (concentrates)
that is to be smelted or otherwise utilized.
THERMAL VALUE means a measure of the ability of a fuel (coal) to produce
energy when ignited.
ITEM 2. PLAN OF OPERATION
BUSINESS DEVELOPMENT
Testing conducted to date by the Company indicates may have the CJ may have
economic potential in a wide variety of industries, and management believes the
CJ can be used for finely sized heavy minerals recovery, coal cleaning and
environmental remediation. See "Item 1. Description of Business -- Target
Markets". During the upcoming 12 months, the Company plans to continue
developing these target markets, which may have near-term profit potential,
through implementation of the following critical steps:
(1) Continued field testing and demonstration of the CJ to improve
operating design for specific applications. In addition, sustained
operational testing is critical in determining if any material design
problems reside in the CJ technology, if the CJ is capable of
sustained operation with little downtime, and if its maintenance costs
are low. See "--Research, Testing and Development."
(2) Development of royalty, rental or limited licensing agreements with
prospective industrial users and introduction of the Company's
products into targeted markets.
(3) Acquisition and development of undervalued proven mineral deposits for
which the Company's patented technology may provide an economic means
of recovery.
The Company's market efforts in the near future will continue to be
directed to opportunities within North America, with future expansion into
foreign markets developing over time. Because the Company does not intend to
engage in the actual manufacture of its own products, the Company does not
expect to purchase any manufacturing facility or significant manufacturing
equipment. The Company currently does not expect a significant increase in
employees, but anticipates recruitment of several additional professional
staff to execute the Company's plans for CJ testing and development, product
manufacturing and licensing, sales and marketing. Management does not
anticipate that the number of Company employees will significantly increase
until the Company has sufficient sales and business activity to warrant
additional employees. Management hopes that circumstances will warrant the
addition of as many as nine new employees during the next 12-month period.
Such new employees would be primarily engineering and technical staff to
support testing programs.
As of September 30, 1996, the Company had $2,267,808 in cash and
short-term investments available to meet its near-term development and
operating needs. In addition, the Company has issued and outstanding
warrants to purchase shares of Common Stock at various prices, which expire
at various dates through June 20, 1998. See "Item 8. Description of
Securities." Proceeds in the amount of $4,640,278 would be received by the
Company pursuant to the exercise of warrants, if all outstanding warrants
were exercised. If all outstanding warrants expiring prior to September 30,
1997 are exercised, the Company would receive $2,147,156 in proceeds. There
can be no assurance, however, as to the number of warrants, if any, that may
be exercised. The Company has not yet earned
8
<PAGE>
revenues, although revenue from the sale or rental of CJs now being
fabricated is anticipated during late 1996 or early 1997 and additional revenue
generation is expected during 1997. See " -- Research, Testing and
Development." While the Company hopes to derive additional liquidity from the
exercise of warrants and revenue generated from the CJ, cash and short term
investments on hand as of September 30, 1996 are expected to be adequate to
continue current levels of testing and staffing through approximately September
30, 1997. If the Company is not successful in raising additional capital to
fund its operations beyond September 30, 1997, product revenues would be
required to fund the Company's operations beyond that date. There can be no
assurance that the Company will be successful in its efforts to raise additional
capital or that the Company would be able to generate product sales necessary to
fund the Company's operations beyond September 30, 1997.
While the Company has no definite plans to do so at this time, the Company
is considering raising up to $5 million additional capital through private
placements of its Common Stock sometime during the next six months. Such
proceeds would allow the Company to expand and accelerate its activities to
develop, test and market the CJ, and to invest in mineral properties suitable
for development and processing with the CJ. The funds are expected to be
targeted for specific testing efforts at several test sites, for development of
commercial marketing opportunities and for the acquisition and development of
proven mineral deposits. See "Research, Testing and Development." While the
Company believes that the additional funds necessary to continue the full scope
of activities to develop and market its products for the next twelve months will
be available, there can be no assurance that the Company's planned capital
efforts will be successful.
RESEARCH, TESTING AND DEVELOPMENT
Field testing to date suggests that the CJ possesses the ability to process
continuous tonnage throughput in several applications. The CJ has multiple
operating parameters -- primarily rotational speed, pulsing pressure, and screen
characteristics -- which must be adjusted to fit the processing requirements of
the particular feed stream being treated. Management believes that more
extensive testing is needed to identify the most efficient operating parameters
for specifically identified applications. Further, demonstration of sustained
operation is critical to marketing efforts. To this end, the Company has
installed or is in the process of installing the CJ in several test sites.
Specifically designed research, testing and development efforts planned for the
upcoming twelve months include the following:
(1) The Company plans continued testing of the Series 12 CJ currently
installed at a large heavy minerals sand processor located in Northern
Florida for recovery of zircon from dry mill tails. Future testing is
designed to increase CJ processing capacity and improve other
operating design parameters. Also, sustained operational testing is
intended to determine whether the CJ is capable of sustained
operations with little downtime. Access to the Florida test site is
controlled by a large heavy minerals sand producer that supplies test
materials for processing. On-site testing, which is expected to be
completed during the first half of 1997, is being conducted by a
single Company employee. In addition, two additional Company
employees provide periodic testing analysis and engineering services
at the site. The Series 12 CJ unit will also be used to perform
testing for removal of titanium dioxide (TiO2) from the tails stream
of a pigment processing plant located in Mississippi. TiO2 to be
processed from the pigment plant is extremely finely sized (from less
than 10 mesh to less than 400 mesh) and testing is required to
determine amenability of the material to processing by the CJ.
Testing of this application is being performed by Company personnel
at sites controlled by the owner of the pigment plant. Completion
of this testing is scheduled to occur by the end of 1996.
(2) A newly constructed Series 12 CJ has recently been installed at the
Southern Illinois University high bay coal test facility to test the
CJ's capability to remove of fine pyrite and ash from high sulfur
coals. A large, respected coal producer is co-sponsoring this testing
effort, which is being performed by two Southern Illinois University
test facility employees with periodic reviews conducted by Company
employees as required. Altair management has planned the testing
procedure and monitors test performance. Completion of this testing
is scheduled to occur during the first half of 1997.
9
<PAGE>
(3) The Company has commenced mineral deposit characterization studies at
its eastern U.S. minerals resource property. These studies should be
completed during late 1996 at which time the Company intends to
install a Series 12 CJ at the site to commence amenability testing.
The Company's studies are being conducted by two independent
consultants with periodic geologic characterization analysis provided
by a Company employee. Altair plans to utilize a combination of
Company employees and consultants for this testing. Amenability
testing is scheduled to be completed during the first half of 1997.
(4) The Company plans to establish a CJ testing facility near Reno, Nevada
to test samples supplied by mineral companies and other geographically
diverse users. Establishment of the test facility is planned for the
first quarter of 1997.
(5) Additional testing of fine gold recovery in placer operations is
planned during 1997. The Company plans to use Company personnel,
located at operating mine sites, to perform these tests.
(6) The Company is currently in the final design stage of constructing a
Series 24 CJ which the Company believes may be capable of more
efficiently handling larger processing volumes than the smaller Series
12 CJ. The Company currently intends to retain Herboth's Machine
Shop, the current manufacturer of the Series 12 CJ, to manufacture
the Series 24 CJ; however, the Company has not entered into a formal
manufacturing agreement. The Company presently anticipates that
construction of the new CJ will be completed during the first half of
1997 and the Company plans to install and test the machine at one of
its test sites.
Provided that the planned testing over the next twelve months as described
above is successful, the Company believes the CJ would be ready for commercial
use in the foregoing applications at that time, and no additional testing would
be required. While the foregoing capabilities of the CJ could then be
"marketed," the Company expects that the CJ's multiple operating parameters
would need to be adjusted to fit each particular customer's and application's
requirements. In the event any of the foregoing tests are not successful, the
Company expects that it would conduct additional testing, the nature of which
would depend upon the results obtained in the above-described tests.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company maintains a registered office at 67 Richmond Street West, Suite
500, Toronto, Ontario M5H 1Z5. In addition, the Company maintains an office at
1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414, which serves as the
corporate headquarters for the Company and its Subsidiaries. Fine Gold and MRS
maintain offices at 230 South Rock Boulevard, Suite 21, Reno, Nevada 89502. All
three of these offices are leased from unrelated parties and are believed by
management to be adequate for the Company's current needs. In the event that
alternative or additional office space is required, the Company believes it will
be readily available.
The Company has leased approximately 2,000 acres of real property
containing heavy minerals in the eastern United States, pursuant to leases
entered into by MRS and multiple owners of the real property. The leases grant
MRS certain exclusive rights, including the right to explore, test, mine,
extract, process and sell any minerals or other materials found on the land, in
exchange for the payment of certain production royalties to the lessors for
minerals mined and sold from the property. The leases typically are for a
minimum term of ten years, and may be extended indefinitely provided the Company
is actively conducting exploration, development or mining operations. The
leases are cancelable by MRS at any time, and are cancelable by the lessor in
the event of MRS's breach of the terms of the lease.
10
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Following is information with respect to beneficial ownership of shares
of the Common Stock as of September 30, 1996 by persons known to the Company
to own more than 5% of the outstanding Common Stock, each of the Company's
executive officers and directors, and by all officers and directors of the
Company as a group. Unless otherwise indicated, each of the shareholders
named in the table has sole voting and investment power with respect to the
shares identified as beneficially owned. The Company is not aware of any
arrangements, the operation of which may at a subsequent date result in a
change in control of the Company.
- -----------------------------------------------------------------------------
Amount and
Nature of
Title of Name and Address of Beneficial Percent
Class Beneficial Owner Ownership(1) of Class(2)
- -----------------------------------------------------------------------------
Common William P. Long 2,267,862(3) 16.5%
57 Sunset Rim
Cody, Wyoming 82414
Common C. Patrick Costin 1,046,833(4) 7.7%
1850 Aquila Avenue
Reno, Nevada 89509
Common James I. Golla 15,000(5) *
829 Terlin Boulevard
Mississauga, Ontario
L5H 1T1
Common Christopher J. Proud 0 *
7225 Woodbine Avenue,
Suite 111
Markham, Ontario L3K 1A3
Common All Directors and Officers 3,329,695(6) 23.7%
as a Group (4 persons)
____________________
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Includes all shares issuable pursuant to the exercise or conversion of
options and warrants that are exercisable within 60 days.
(2) Based on 13,331,588 shares outstanding as of September 30, 1996. Shares of
Common Stock underlying options or other convertible securities are deemed
to be outstanding for purposes of calculating the percentage ownership of
the owner of such securities, but not for purposes of calculating any other
person's percentage ownership.
(3) Includes 387,000 shares subject to presently exercisable options granted to
Dr. Long pursuant to the Altair International Inc. Stock Option Plan (the
"Option Plan") and 130,500 shares held in an irrevocable trust for the
benefit of the children of Dr. Long. Dr. Long disclaims any beneficial
interest in such 130,500 shares.
(4) Includes 617,500 shares held in escrow and to be released dependent upon
net income adjusted for non-cash items ("Cash Flow"), as defined in the
escrow agreement, generated by Fine Gold. The basis for share release is
one share of Common Stock for $0.45 of Cash Flow. Shares still in escrow
on April 21, 1999 are subject to cancellation by the Company. Mr. Costin
is entitled to exercise all voting rights applicable to the escrowed
shares. As of September 30, 1996, none of such shares had been released
from escrow. See "Item 7. Certain Relationships and Related
Transactions". The 1,064,833 shares held by Mr. Costin also includes
335,000 shares subject to presently exercisable options granted to Mr.
Costin pursuant to the Option Plan.
(5) Represents shares subject to presently exercisable options granted to Mr.
Golla pursuant to the Option Plan.
(6) Includes 737,000 shares subject to presently exercisable options granted to
officers and directors pursuant to the Option Plan.
11
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth certain information regarding the executive
officers and directors of the Company.
HELD POSITION
NAME OFFICE SINCE
- --------------------------- -------------------------- -------------
William P. Long............ President, Chief Executive 1988
Officer and Director
C. Patrick Costin.......... Vice President 1996
Christopher D. Proud....... Director 1990
James I. Golla............. Secretary and Director 1994
The directors of the Company are elected at the annual meeting of
shareholders of the Company. Each director of the Company holds office until
his successor is elected and qualified or until his earlier death, resignation
or removal. The executive officers of the Company serve at the discretion of
the Company's Board of Directors. None of the foregoing officers and directors
of the Company was selected pursuant to any arrangement or understanding between
him and any other person.
WILLIAM P. LONG, 49, has been the President, Chief Executive Officer and a
director of the Company since 1988, and the Secretary and a director of Fine
Gold since the Merger. Dr. Long also served as the Vice President of the wholly
owned subsidiary of the Company formerly known as Mineral Recovery Systems, Inc.
which was merged with and into Fine Gold in June 1996. Dr. Long has been an
executive officer and director of Carlin Gold Company, now MRS, since its
formation in April 1987. From 1987 to 1988, Dr. Long was a mineral and energy
consultant, providing various services to clients in the mining and energy
industries, including arranging precious metal property acquisitions,
supervising mineral evaluations, and providing market analyses. From 1980 to
1986, Dr. Long served as the Executive Vice President and Chief Financial
Officer of Thermal Exploration Company. From 1974 to 1980, Dr. Long was
employed by Amax Exploration, Inc. in various capacities, including Systems
Engineer, Business Analyst and Business Manager. Dr. Long is affiliated with
the American Institute of Chemical Engineers and the American Institute of
Mining Engineers. He obtained a bachelors degree in Chemical and Petroleum
Refining Engineering and a Ph.D. in Mineral Economics from the Colorado School
of Mines in 1969 and 1974, respectively.
C. PATRICK COSTIN, 53, was appointed a Vice President of the Company in
June 1996, and also currently serves as the President and a director of Fine
Gold and MRS. Mr. Costin also served as the President of the wholly owned
subsidiary of the Company formerly known as Mineral Recovery Systems, Inc. from
March 1995 until its merger with and into Fine Gold in June 1996. Mr. Costin is
the chief executive officer of Costin and Associates, a minerals consulting
organization founded by Mr. Costin in 1992 which specializes in identification
and evaluation of North American mine and mineral deposit acquisition
opportunities. From 1982 to 1992, Mr. Costin served as the manager of U.S.
exploration for Rio Algom Ltd. Mr. Costin's additional experience in the mining
and minerals industry includes Senior Mineral Economist for the Stanford
Research Institute from 1977 to 1982, Senior Geologist for Chevron Resources
from 1975 to 1976, Senior Geologist for Newmont Mining Corporation of Canada
from 1967 to 1975, and Geologist for United Keno Hill Mines Ltd. from 1965 to
1967. Mr. Costin obtained a bachelors degree in Geological Engineering and a
masters degree in Minerals Economics from the Colorado School of Mines in 1965
and 1975, respectively. He is a member of the American Institute of Mining
Engineers, and a member of the Colorado Mining Association, for which he served
as director from 1987 to 1992.
CHRISTOPHER D. PROUD, 50, has been a director of the Company since 1990.
Mr. Proud is President of Proud Enterprises Inc., an Ontario corporation engaged
in executive counseling and relocation services, which he founded in 1977. He
is also currently Vice President of Belmont Rose Granite Corporation, an
industrial minerals corporation located in Canada, and serves as a director of
two publicly traded Canadian corporations, Garrison Gold Inc. and Canreos
Mineral (1980) Ltd. Mr. Proud has been employed in the Canadian mining industry
since 1967 in various capacities, including geology, engineering and production.
12
<PAGE>
JAMES I. GOLLA, 64, was appointed Secretary of the Company in November
1996 and has been a director of the Company since February, 1994. He also
currently serves as a director of Nova Beaucage Resources Ltd., and Thornburg
Capital Ltd. Mr. Golla has been a journalist with the Globe and Mail, a
Toronto business newspaper, since 1954, specializing in business news for the
past five years.
ITEM 6. COMPENSATION OF DIRECTORS AND OFFICERS.
SUMMARY COMPENSATION TABLE
The following table sets forth all annual and long-term compensation for
services rendered in all capacities to the Company for the fiscal years ended
December 31, 1995, 1994 and 1993 by William P. Long, the President of the
Company. The Company had no other executive officers whose total salary and
bonuses during the fiscal year ended December 31, 1995 exceeded $100,000.
<TABLE>
Annual Compensation (1) Long Term Compensation
------------------------------------- -----------------------------------
Restricted
Other Securities Shares or
Fiscal Annual Under Restricted LTIP All Other
Name and Year Compensa- Options Share Units Payouts Compensa-
Title Ended Salary ($)(2) Bonus ($) tion Granted (3) ($) ($) tion
- -------- ------ ------------- --------- --------- ----------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William 1995 91,200 9,120 -0- 166,000 -0- -0- -0-
P. Long 1994 91,200 9,120 -0- 221,000(4) -0- -0- -0-
1993 91,200 9,120 -0- 143,333(5) -0- -0- -0-
</TABLE>
- -------------------------
(1) All compensation paid is stated in United States dollars.
(2) Bonus and salary amounts reflect amounts accrued and payable to Dr. Long
for each fiscal year in accordance with the terms of his employment
agreement with the Company. See "--Employment Agreements." Amounts
actually paid to Dr. Long in fiscal years 1995, 1994 and 1993 were U.S.
$110,000, U.S. $120,200 and U.S. $15,200, respectively. Such payments
include payment of earned but unpaid salary and bonus for 1992 of U.S.
$16,720. At December 31, 1995 U.S. $75,016 remained outstanding and
payable to Dr. Long, including interest on unpaid bonuses ($2,736).
(3) Options to purchase shares of Common Stock granted pursuant to the Option
Plan. See "--Stock Option Plan."
(4) These options were granted following the cancellation of the 143,333
options granted in 1993. The 1993 options were canceled and new options
granted in 1994 in order that the exercise price of the options would more
closely reflect the then-current market price of the Common Stock.
(5) These options were canceled by a resolution of the directors on August 1,
1994, which was subsequently approved by the shareholders of the Company on
June 22, 1995.
13
<PAGE>
OPTION GRANTS IN 1995
The following table provides detailed information regarding options to
purchase shares of Common Stock granted to Dr. Long during the year ended
December 31, 1995:
<TABLE>
% of Total
Options Market Value of
Securities Granted to Securities
Under Employees Underlying
Options in Financial Exercise Options on the Expiration Date
Name Granted ($) Year Price ($) Date of Grant ($) (2)
- ---------------------- ---------- ------------ --------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
William P. Long, 166,000 44% 0.65 0.65(1) 11/13/00
President and Director
</TABLE>
- -------------------------
(1) Reflects the closing price of the shares of Common Stock on November 13,
1995, as reported by the Alberta Stock Exchange.
(2) Unexercised options are subject to early expiration upon the termination of
employment of the optionee with the Company or its affiliates and on the
optionee's retirement or death.
OPTIONS EXERCISED AND AGGREGATE REMAINING AT YEAR-END
The following table provides detailed information regarding options held by
Dr. Long as of December 31, 1995. No options were exercised by Dr. Long during
the year ended December 31, 1995.
<TABLE>
Securities
Acquired Aggregate
on Value Value of Unexercised In-the-
Exercise Realized Unexercised Options at money Options at
Name ($) ($) December 31, 1995 December 31, 1995(1)
- ----------------------- ---------- --------- --------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
(#) (#) ($) ($)
----------- ------------- ----------- --------------
William P. Long, -0- -0- 221,000(2) -0- 386,750 -0-
President and Director 166,000(3) -0- 215,800 -0-
</TABLE>
- -------------------------
(1) The closing price of the Common Stock on December 31, 1995, as reported by
The Alberta Stock Exchange was $1.95.
(2) Exercisable at $0.20 per share until 5:00 p.m. (Toronto time) on August 1,
1999.
(3) Exercisable at $0.65 per share until 5:00 p.m. (Toronto time) on November
13, 2000.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company are not currently paid any
fees for their services as directors. Directors who are not officers are
entitled to receive compensation to the extent that they provide services to
the Company at rates that would be charged by such directors for such
services to arm's length parties. Christopher D. Proud, a director of the
Company, was paid an aggregate of $20,000 in 1996 for management consulting
services rendered to the Company during the period from April through August
of 1996.
14
<PAGE>
Directors also have been and currently are entitled to participate in
the Option Plan. See "--New Stock Option Plan." As of July 31, 1996, the
Company had outstanding options to purchase 1,307,000 Common Shares pursuant
to the Option Plan, 652,000 of which are held by directors of the Company.
EMPLOYMENT AGREEMENTS
William P. Long, President of the Company, has entered into an
employment agreement with the Company dated January 1, 1988, as amended June
30, 1990 and April 1, 1996 (the "Employment Agreement"). The 1990 and 1996
amendments have not been reflected in a written amendment to the Employment
Agreement. Pursuant to the Employment Agreement, Dr. Long is paid a salary
of $7,600 per month and an annual bonus, determined by the board of directors
of the Company, of not less than 10% of Dr. Long's annual compensation. In
the event of a takeover, merger or consolidation of the Company and provided
that (i) the voting control of over 35% of the issued and outstanding Common
Stock is acquired by an individual or group, and (ii) the Employment
Agreement is terminated by the Company within 180 days before or one year
thereafter, or by Dr. Long within one year thereafter, then Dr. Long shall be
issued 200,000 shares of Common Stock.
C. Patrick Costin, a Vice President of the Company and the President of
Fine Gold, is employed by Fine Gold pursuant to the terms of an employment
agreement entered into August 15, 1994. Unless sooner terminated in
accordance with the terms of the agreement, the agreement will terminate on
December 31, 1997. The agreement provides that Mr. Costin shall be paid a
salary of at least $5,000 per month and may be entitled to bonuses as
determined by the Board of Directors of Fine Gold.
STOCK OPTION PLAN
In May 1996, the shareholders of the Company approved the adoption by
the board of directors of a stock option plan (the "Option Plan") for
directors, officers, employees and consultants of the Company, which replaced
the stock option plan initially adopted in 1990 (the "1990 Option Plan").
The Option Plan will comply with revised rules and regulations of certain
stock exchanges in Canada regarding share incentive arrangements. Options
granted under the 1990 Option Plan remain outstanding under the Option Plan
and form part of the shares of Common Stock reserved for issuance under the
Option Plan. The purpose of the Option Plan is to attract, retain and
motivate Company management, staff and consultants by providing them with the
opportunity, through share options, to acquire a proprietary interest in the
Company and benefit from its growth. The options are non-assignable and may
be granted for a term not exceeding five years. Other material aspects of
the Option Plan are described below:
- A total of 2,000,000 shares of Common Stock may be reserved for issue
under the Option Plan;
- Options granted under the Option Plan will terminate three months
following the termination of an optionee's employment or, in the case
of options granted to a director, three months following the optionee
ceasing to be a director, unless the directors of the Company
otherwise determine;
- Options granted under the Option Plan will terminate one year
following the death of an optionee;
- The total number of shares of Common Stock which may be reserved for
issuance to any one individual under the Option Plan shall not exceed
5% of the total number of issued and outstanding shares of Common
Stock and the total number of shares which may be reserved for
issuance to insiders under the Option Plan shall not exceed 10% of the
total number of issued and outstanding shares of Common Stock;
- Options may not be granted at prices that are less than the market
price, where "market price" shall mean the most recent closing price
of the shares on any exchange or over the counter market in Canada on
which the shares of Common Stock are listed or quoted for unlisted
trading privileges; and
- Any extension of the terms of an option shall be subject to regulatory
approval.
15
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Included in accounts payable and accrued liabilities of the Company for
fiscal years 1995 and 1994 are approximately $64,000 and $86,000,
respectively, owing to Dr. William P. Long, the President of the Company.
Such amounts represent accrued salary and bonuses payable to Dr. Long. No
terms of repayment have been negotiated with respect to such amounts.
In May 1994, the Company effected a private placement of 600,000 shares
of Common Stock with William P. Long, President of the Company, for aggregate
proceeds of $180,000. The private placement was approved by the shareholders
of the Company at a special meeting of shareholders held June 22, 1995.
Pursuant to an agreement dated April 21, 1994, the Company issued
750,000 shares of Common Stock, with a deemed value of $0.47 ($352,500) per
share for all of the outstanding common shares of Fine Gold. Mr. Costin
owned 95% of the Fine Gold common shares and, as a result, was issued 712,500
shares of Common Stock. Of the shares of Common Stock issued to Mr. Costin,
617,500 are held in escrow, to be released dependent upon cash flow generated
by Fine Gold, pursuant to the terms of an escrow agreement among the Company,
Equity Transfer Services, Inc., Thomas P. Campbell and Mr. Costin, dated June
1, 1994 (the "Fine Gold Escrow Agreement"). See "Item 4. Security Ownership
of Certain Beneficial Owners and Management".
During the 1995 fiscal year, the Company advanced to Dr. Long
approximately $45,000, which does not bear interest and is not subject to a
repayment schedule. This amount was paid to Dr. Long as an advance against
expenses to be incurred by Dr. Long on behalf of the Company. As of July
1996, $23,000 of this amount remained outstanding. Other than the 1995
advance to Dr. Long, no officer or director of the Company, nor any associate
thereof, has been indebted to the Company or its subsidiaries at any time
during the last three years.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company's Articles of Incorporation (the "Articles") authorize the
issuance of an unlimited number of shares of Common Stock. As of August 12,
1996, there were 13,325,166 shares of Common Stock issued and outstanding and
held by approximately 384 registered holders of the Company. Holders of
shares of Common Stock are entitled to one vote per share on all matters to
be voted on by shareholders of the Company. The holders of Common Stock are
entitled to receive dividends, if any, as may be declared from time to time
by the Company's Board of Directors in its discretion from funds legally
available therefor. Upon liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to receive ratably any
assets available for distribution to shareholders. The shares of Common
Stock have no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to
such shares. All of the outstanding shares of Common Stock are fully paid
and nonassessable. Neither the Articles nor the Bylaws of the Company
contains any provision that would delay, defer or prevent a change in control
of the Company.
Pursuant to the terms of the TMI Merger Agreement, all of the 1,919,957
shares of Common Stock issued in the TMI Merger were deposited into escrow
(the "TMI Escrowed Shares"), and are governed by terms of two escrow
agreements dated as of February 27, 1996 and February 29th, respectively,
among the Company, Hage Corporate Services, Inc., and the former TMI
shareholders (collectively, the "TMI Escrow Agreements"). Of such 1,919,957
TMI Escrowed Shares, 1,170,000 (the "Performance Shares") are to be released
based on the revenues, if any, received by the Company from the assets
formerly held by TMI. For each $1.80 in revenue received by Altair from such
assets, one TMI Escrowed Share will be released; provided, however, that no
more than one-third of the original number of TMI Escrowed Shares may be
released in any one year during the first three years of the escrow. As of
September 30, 1996, none of such 1,170,000 TMI Escrowed Shares had been
released from escrow. The remaining 749,957 TMI Escrowed Shares (the
"Principal Shares") will be released from escrow in increments of the greater
of 15,000 shares or 5% of each former TMI shareholder's total escrowed
holdings each calendar quarter. As of September 30, 1996, approximately
442,961 of such 749,957 Principal Shares had been released from escrow. Any
TMI Escrowed Shares still held in escrow at the end of five years will be
cancelled by the Company upon the instruction of the Alberta Stock Exchange.
16
<PAGE>
Holders of TMI Escrowed Shares are entitled to exercise all voting
rights associated with such shares. Holders are entitled to receive any
cash dividends paid in respect of the Principal Shares, but are not entitled
to receive cash dividends paid in respect of the Performance Shares. Shares
of Common Stock distributed as dividends to Holders of the TMI Escrowed
Shares are added to the TMI Escrowed Shares and governed by all of the terms
and conditions of the TMI Escrow Agreement. Except as may be required by
reason of the death or bankruptcy of a holder of TMI Escrowed Shares, holders
may not sell, assign or otherwise transfer TMI Escrowed Shares without the
prior written consent of the Alberta Stock Exchange and in accordance with
all applicable U.S. and Canadian securities laws.
The TMI Escrow Agreement also provides that the TMI Escrowed Shares
secure certain indemnification obligations of TMI set forth in Article 4 of
the TMI Merger Agreement. Accordingly, in the event that the Company or Fine
Gold incurs any loss, claim, damage, expense or liability for which TMI has
agreed to indemnify the Company or Fine Gold, all or a portion of the TMI
Escrowed Shares may be sold to satisfy the amount of such indemnification
obligations.
In connection with the Company's acquisition of Fine Gold, the Company
and the former shareholders of Fine Gold entered into the Fine Gold Escrow
Agreement, pursuant to which 650,000 shares of Common Stock of Altair issued
to the former shareholders of Fine Gold were deposited in escrow pursuant to
the terms of the Fine Gold Escrow Agreement (the "Fine Gold Escrowed
Shares"). The Fine Gold Escrow Agreement provides that one Fine Gold
Escrowed Share may be released for each $0.45 of (i) cash flow (as defined
therein) or (ii) certain expenditures incurred by Fine Gold to maintain its
assets. As of September 30, 1996, no Fine Gold Escrowed Shares had been
released from escrow. Other than as may be required by reason of the death
or bankruptcy of a holder of Fine Gold Escrowed Shares, such shares may not
be sold, assigned or otherwise transferred. Holders of Fine Gold Escrowed
Shares are entitled to exercise all voting rights accorded to such shares,
but do not receive dividends, if any, declared with respect to such shares.
As of September 30, 1996, the Company had issued and outstanding options
to acquire 1,307,000 shares of Common Stock issued pursuant to the Option
Plan, and 1,399,272 warrants to purchase shares of Common Stock issued in
five series. As of such date, there were outstanding 166,667 Series D
warrants, 573,578 Series E warrants, 100,000 Series F warrants, 494,027
Series G warrants and 60,000 Series H warrants.
Each Series D warrant outstanding as of September 30, 1996 entitled the
holder thereof to purchase one share of Common Stock at a price of $0.90 per
share until October 10, 1996. All such Series D warrants were exercised on
such date. Each Series E warrant entitles the holder thereof to purchase one
share of Common Stock at a price of $2.00 until March 1, 1997. Each Series F
warrant entitles the holder thereof to purchase one share of Common Stock at
a price of $7.00 until December 26, 1996 (the "Initial Exercise Period");
provided, however, that (i) only 50,000 of the Series F warrants may be
exercised during the Initial Exercise Period and (ii) if the Common Stock
trades at or in excess of $8.00 per share during the Initial Exercise Period,
the exercise price shall be adjusted to $10.00 and the Initial Exercise
Period shall terminate on the forty-fifth day following the date on which the
Common Stock first trades at or in excess of $8.00. Thereafter, the Series F
warrants may be exercised at a price of $10.00 from the date of termination
of the Initial Exercise Period until September 26, 1997 (the "Final Exercise
Period"), provided, however, that (i) the number of Series F warrants
exercised during the Final Exercise Period may not exceed the number of
Series F warrants exercised during the Initial Exercise Period and (ii) if
the Common Stock trades at or in excess of $11.00 per share during the Final
Exercise Period, the Series F warrants shall expire and the Final Exercise
Period shall terminate on the forty-fifth day following the date on which the
Common Stock first trades at or in excess of $11.00. Each Series G warrant
entitles the holder thereof to purchase one share of Common Stock at a price
of $4.50 per share until June 26, 1998; provided, however, that if shares of
Common Stock trade on the Alberta Stock Exchange at or in excess of $6.50 per
share on five days prior to such date, the Series G warrants shall expire on
the thirtieth day following the fifth day on which the Common Stock so trades
at or in excess of $6.50. Each Series H warrant entitles the holder thereof
to purchase one share of Common Stock at a price of $4.50 until December 26,
1997.
Holders of Series E, F, G and H warrants are not entitled to any right
or interest as a shareholder of the Company prior to exercise of such
warrants. The number of shares of Common Stock subject to such warrants may
be adjusted in certain events, including, without limitation, distribution by
the Company of shares, rights, options,
17
<PAGE>
warrants or other securities to holders of Common Stock, a capital
reorganization of the Company, reclassification of the Common Stock, or a
consolidation or merger of the Company with or into another entity.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
MARKET PRICE
The Common Stock is publicly traded under the symbol "AIG" on the
Alberta Stock Exchange (the "ASE"). The following tables set forth, on a
quarterly basis, the high and low closing sales prices during the last two
fiscal years and the first three quarters of 1996 for shares of the Common
Stock on the ASE. All amounts are stated in Canadian dollars, the currency in
which the prices are quoted.
Low High
------- --------
1994:
1st Quarter......... .30 .72
2nd Quarter......... .28 .75
3rd Quarter......... .04 .28
4th Quarter......... .07 .19
1995:
1st Quarter......... .10 .48
2nd Quarter......... .195 .70
3rd Quarter......... .42 .87
4th Quarter......... .60 2.20
1996:
1st Quarter......... 1.78 4.25
2nd Quarter......... 2.70 6.50
3rd Quarter......... 3.90 6.20
In the United States, the shares of Common Stock are quoted under the
symbol AIGDF on the over-the-counter Bulletin Board maintained by the
National Association of Securities Dealers. The prices listed below are
stated in U.S. dollars, the currency in which they are quoted, and represent
the closing high and low bid prices for shares of the Common Stock on the
over-the-counter Bulletin Board during the first three quarters of 1996. No
information on bid prices for the Common Stock prior to such time is
available. In addition, quotes for the first quarter of 1996 represent only
trading from March 27 through March 29. The bid prices are market quotations
based on interdealer bid prices, without markup, markdown or commission, and
may not represent actual transactions.
18
<PAGE>
Low High
------- --------
1996:
1st Quarter......... 2.30 2.30
2nd Quarter......... 1.375 4.125
3rd Quarter......... 2.85 4.625
As of September 30, 1996, there were 13,331,588 outstanding shares of
Common Stock, held by 386 holders of record.
DIVIDENDS
The Company has never declared or paid dividends on the Common Stock.
Moreover, the Company currently intends to retain any future earnings for use
in its business and, therefore, does not anticipate paying any dividends on
the Common Stock in the foreseeable future.
RESTRICTIONS ON TRANSFER
None of the shares of Common Stock or warrants to purchase shares of
Common Stock issued by the Company have been registered under the Securities
Act of 1933, as amended (the "Securities Act"). Accordingly, such shares and
warrants constitute restricted securities and may not be resold or otherwise
transferred in the United States unless they are registered under the
Securities Act or an exemption from such registration is available. The
Transfer Agent and Registrar for the Common Stock has been instructed that
all shares sold by the Company in the United States must bear a legend
advising the holder thereof of the foregoing restrictions. In addition,
transfer of the shares of Common Stock in Canada are subject to Canadian
provincial securities laws and exchange regulations, which may impose a
holding period on shares of Common Stock acquired in certain private sales
transactions.
Certain shares of Common Stock are held in escrow in accordance with the
terms and conditions of the TMI Merger and the Fine Gold Merger, and their
transfer and release from escrow are subject to the terms of the escrow
agreements governing such shares. See "Item 8. Description of Securities."
In addition, the TMI Merger Agreement imposes certain additional limitations
on the transferability of shares of Common Stock received in the TMI Merger.
The TMI Merger Agreement limits the number of such shares that may be
transferred by any holder thereof in any calendar quarter for one year after
the closing of the TMI Merger to the greater of (i) 15,000 shares or (ii) the
sum of (a) 5% of the aggregate number of shares received by such holder in
the TMI Merger plus 10% of the aggregate number of Warrant Shares (shares
acquired upon exercise of the Series E warrants issued in the TMI Merger)
then by held by such holder. Commencing one year from the closing of the TMI
merger, the number of shares described in subsection (ii)(a) of the foregoing
sentence shall be increased to 10%.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Equity Transfer
Services, Inc., Suite 800, 120 Adelaide, Toronto, Ontario, M5H 3V1.
TAXATION CONSIDERATIONS
Dividends paid on shares of Common Stock owned by non-residents of
Canada are subject to Canadian withholding tax. The rate of withholding tax
on dividends under the Income Tax Act (Canada) (the "Act") is 25%. However,
Article X of the reciprocal tax treaty between Canada and the United States
of America (the "Treaty") generally limits the rate of withholding tax on
dividends paid to United States residents to 15%. The Treaty further
generally limits the rate of withholding tax to 5% (6% in 1996 only) if the
beneficial owner of the dividends is a U.S. corporation which owns at least
10% of the voting shares of the Company.
19
<PAGE>
If the beneficial owner of the dividend carries on business in Canada
through a permanent establishment in Canada, or performs in Canada
independent personal services from a fixed base in Canada, and the shares of
stock with respect to which the dividends are paid is effectively connected
with such permanent establishment or fixed base, the dividends are taxable in
Canada as business profits at rates which may exceed the 5% (6% in 1996 only)
or 15% rates applicable to dividends that are not so connected with a
Canadian permanent establishment or fixed base. Under the provisions of the
Treaty, Canada is permitted to apply its domestic law rules for
differentiating dividends from interest and other disbursements.
A capital gain realized on the disposition of shares of Common Stock by
a person resident in the United States ("a non-resident") will be subject to
tax under the Act if the shares held by the non-resident are "taxable
Canadian property." In general, shares of Common Stock will be taxable
Canadian property if the particular non-resident used (or in the case of a
non-resident insurer, used or held) the shares of Common Stock in carrying on
business in Canada or, pursuant to proposed amendments to the Act, where at
any time during the five-year period immediately preceding the realization of
the gain, not less than 25% of the issued and outstanding shares of any class
or series of shares of the Company were owned by the particular non-resident,
by persons with whom the particular non-resident did not deal at arms'
length, or by any combination thereof. If the shares of Common Stock
constitute taxable Canadian property, relief nevertheless may be available
under the Treaty. Under the Treaty, gains from the alienation of shares of
Common Stock owned by a non-resident who has never been resident in Canada
generally will be exempt from Canadian capital gains tax if the shares do not
relate to a permanent establishment or fixed base which the non-resident has
or had in Canada, and if not more than 50% of the value of the shares was
derived from real property (which includes rights to explore for or to
exploit mineral deposits) situated in Canada.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not involved in any suit, action or other legal
proceedings, nor is it aware of any threatened suit, action or other legal
proceedings, which management believes will materially and adversely affect
the business or operations of the Company or its subsidiaries.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Following is a summary of all securities of the Company sold within the
past three years (since August 1, 1993) which were not registered under the
Securities Act. Unless otherwise indicated, all amounts set forth below are
stated in Canadian dollars. In addition, all share amounts have been
adjusted to reflect the one-for-three reverse stock split of the Common Stock
effected in March 1994.
On October 6, 1993, the Company issued 16,666 shares to a U.S. investor
in consideration of mineral property valued at $25,000. The transaction was
effected in reliance upon the exemption for sales of securities not involving
any public offering set forth in Section 4(2) of the Securities Act ("Section
4(2)").
On January 31, 1994, the Company issued in two transactions, exempt from
registration pursuant to Section 4(2), 16,667 shares of Common Stock and
66,666 shares of Common Stock in consideration of the forgiveness of U.S.
$10,000 and $25,000, respectively, of certain obligations incurred by the
Company in connection with the Company's acquisition of certain mineral
rights. On May 25, 1994, the Company sold 600,000 shares of Common Stock to
William P. Long, President of the Company, for cash consideration of $180,000
in a transaction exempt from registration pursuant to Section 4(2). See
"Item 7. Certain Relationships and Related Transactions." On June 1, 1994,
the Company acquired Fine Gold by issuing 750,000 shares of Common Stock to
the two shareholders of Fine Gold in consideration for all of the outstanding
shares of the common stock of Fine Gold, 650,000 of which are held in escrow,
to be released dependent upon Cash Flow generated by Fine Gold. Of the
750,000 shares issued
20
<PAGE>
in the Fine Gold acquisition, 712,500 were issued to C. Patrick Costin, who
is now an officer of the Company. See "Item 7. Certain Relationships and
Related Transactions." The transaction was exempt from registration by
virtue of Section 4(2).
On March 14, 1995, the Company privately placed with two U.S. corporate
investors an aggregate of 1,000,000 units, each consisting of one share of
Common Stock and a Series A warrant to purchase one share of Common Stock,
for cash consideration totaling $200,000. The Company issued an additional
500,000 shares on February 27, 1996 and 500,000 shares on February 29, 1996
to such investors upon the exercise of the Series A warrants and the payment
of cash consideration of $100,000 on each of such dates. The transactions
were exempt from registration by virtue of Section 4(2).
On May 15, 1995, the Company privately placed 200,000 units, each
consisting of one share of Common Stock and a Series B warrant to purchase
one share of Common Stock, with one offshore corporate investor resident in
Hong Kong, for cash consideration of $100,000. The Company issued an
additional 100,000 shares of Common Stock on November 16, 1995 and 100,000
shares on April 19, 1996 to such investor upon the exercise of the Series B
warrants and the payment of cash consideration of $60,000 and $75,000,
respectively, on such dates. The transactions were effected pursuant to the
exemption from registration provided by Regulation S promulgated under the
Securities Act.
On June 22, 1995, the Company privately placed with one U.S. investor
500,000 units, each consisting of one share of Common Stock and a Series C
warrant to purchase one share of Common Stock, for cash consideration of
$300,000. The Company issued an additional 250,000 shares of Common Stock on
December 18, 1995 and 250,000 shares on June 19, 1996 pursuant to the
exercise of Series C warrants and the payment of cash consideration of
$175,000 and $200,000, respectively, on such dates. The transactions were
exempt from registration pursuant to Section 4(2).
On October 10, 1995, the Company privately placed with two U.S.
investors, in transactions exempt from registration pursuant to Section 4(2),
an aggregate of 1,000,000 units, each consisting of one share of Common Stock
and a Series D warrant to purchase one share of Common Stock, for total cash
consideration of $600,000. The Company has issued additional shares of
Common Stock upon the exercise of Series D warrants and the payment of cash
consideration as follows: 250,000 shares on each of February 16 and March 29,
1996 for a total of $375,000; 250,000 shares on April 22, 1996 for $225,000;
and 83,333 shares on June 5, 1996 for $75,000.
On February 8, 1996, the Company entered into an agreement to acquire
TMI (the "Merger Agreement"), which was approved by the shareholders of TMI
on February 29, 1996, providing for the issuance of Common Stock and Series E
warrants to purchase Common Stock in exchange for all of the outstanding
shares of the common stock of TMI and the cancellation of outstanding options
to purchase shares of the common stock of TMI. Pursuant to the Merger
Agreement, the Company issued 1,920,000 shares of Common Stock to the 45
shareholders of TMI (10 of which were accredited investors) and issued
580,000 Series E warrants to purchase one share of Common Stock. The
transaction was effected in reliance upon the exemption from registration
provided by Section 4(2), based on a number of considerations, including the
following.
Each former shareholder of TMI received a proxy statement which
contained, among other things, descriptions of (i) the business and
management of Altair, (ii) the shares of Common Stock to be issued in the TMI
Merger, (iii) the terms and conditions of the TMI Merger Agreement, (iv)
certain risk factors associated with the TMI Merger, (v) the reasons for and
effects of the TMI Merger and the favorable recommendation of the Board of
Directors regarding the TMI Merger, (vi) the tax consequences of the TMI
Merger, (vii) the restrictions on transferability of the shares of Common
Stock to be received in the TMI Merger, including those imposed by securities
laws, the escrow to which the shares would be subject and the additional sale
restrictions imposed by the TMI Merger Agreement itself, and (viii) the
dissenters' rights afforded to the shareholders by Washington law. Audited
financial statements of Altair for the year ended December 31, 1995, a copy
of the TMI Merger Agreement, and the Washington dissenters' rights provisions
were included, among other things, as exhibits to the proxy statement. The
former TMI Shareholders voted to approve the TMI Merger; none of the former
TMI Shareholders exercised dissenters' rights.
21
<PAGE>
No general advertising or solicitation preceded the distribution of the
Common Stock in the TMI Merger. Rather, the TMI Merger was a negotiated
agreement which developed as a natural outgrowth of the pre-existing
relationship between Altair and TMI. At the time the TMI Merger negotiations
commenced, Altair was working with TMI on the development of the CJ pursuant
to a license granted to Altair by TMI. It was this prior business
relationship, rather than any general form of solicitation, that resulted in
the TMI Merger.
In connection with the TMI Merger, each former TMI shareholder was
required to execute a subscription agreement and questionnaire, which
solicited information as to each shareholder's status as an accredited
investor and/or background, education and experience which would enable the
shareholder individually, or with the assistance of a qualified purchaser
representative, to effectively evaluate the merits and risks of acquiring
shares of Common Stock in the TMI Merger. Each subscription agreement
included customary representations and warranties regarding the shareholder's
intent to acquire the shares of Common Stock as an investment, and covenants
not to serve as a conduit for further distribution of the Common Stock.
On March 27, 1996, the Company privately placed with one U.S. corporate
accredited investor, 100,000 units, each consisting of one share of Common
Stock and a Series F warrant to purchase one share of Common Stock, for total
cash consideration of $350,000. To date, no additional shares of Common
Stock have been issued pursuant to the exercise of Series F warrants. The
transaction was effected in reliance upon the exemption from registration
provided by Section 4(2).
On June 27, 1996, the Company privately placed 60,000 units, each
consisting of one share of Common Stock and a Series H warrant to purchase
one share of Common Stock, with one non-U.S. investor resident in Bermuda,
for cash consideration of $210,000 pursuant to Regulation S. Also on June
27, the Company privately placed with seven U.S. accredited investors,
including the two owners of the U.S. corporate accredited investor that
purchased shares of Common Stock in the March 27, 1996 placement, an
aggregate of 494,027 units, each consisting of one share of Common Stock and
a Series G warrant to purchase one share of Common Stock, for total cash
consideration of $1,729,095. The placements were effected in reliance upon
Section 4(2).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws provide that every director and officer of the
Company shall be indemnified by the Company against (i) any liability and all
costs, charges and expenses that he or she may incur in respect of any
action, suit or proceeding that is proposed or commenced against him or her
for, or in respect of, anything the officer or director has done or permitted
in respect of the execution of the duties of his or her office, and (ii) all
other costs, charges and expenses that he or she sustains or incurs in
respect of the affairs of the Company, except costs, charges or expenses that
are occasioned by the director or officer's own willful neglect or default.
PART F/S
Please refer to the Consolidated Financial Statements and the index
thereto which appear on pages F-1 to F-30 hereof.
PART III
ITEM 1. INDEX TO EXHIBITS.
See the "Index to Exhibits" which appears immediately after page F-30.
22
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
EXHIBIT
NO. DESCRIPTION
----------- --------------------------------------------------------------
2.1 Articles of Incorporation of Altair International Inc.
2.2 Bylaws of Altair International Inc.
3.1 Form of Common Stock Certificate
3.2 Form of Series D Warrant Certificate
3.3 Form of Series E Warrant Certificate
3.4 Form of Series F Warrant Certificate
3.5 Form of Series G Warrant Certificate
3.6 Form of Series H Warrant Certificate
6.1 Articles of Merger of Mineral Recovery Systems, Inc. with and
into Fine Gold Recovery Systems Inc. dated June 21, 1996,
including Exhibit A thereto, Plan of Merger and Merger
Agreement
6.2 Merger Agreement among Fine Gold Recovery Systems Inc., Altair
International Inc. and Trans Mar, Inc. dated February 8, 1996,
as amended February 22, 1996 (the "TMI Merger Agreement")
6.2.1 Exhibit 1.1(c) to the TMI Merger Agreement--Articles of Merger
6.2.2 Exhibit 1.1(e)(1) to the TMI Merger Agreement -- Principal
Escrow Agreement dated February 29, 1996
6.2.3 Exhibit 1.1(e)(2) to the TMI Merger Agreement -- Performance
Escrow Agreement dated February 27, 1996
6.2.4 Exhibit 1.1(h) to the TMI Merger Agreement -- Warrant
Certificate
6.2.5 Schedule 1.1(e)(ii) to the TMI Merger Agreement -- Principal
Escrow Release Schedule
6.2.6 Schedule 1.1(e)(iii) to the TMI Merger Agreement -- Performance
Escrow Release Schedule
6.3 Employment Agreement between Altair International Inc. and
William P. Long dated January 1, 1988
6.4 Employment Agreement between Fine Gold Recovery Systems Inc.
and C. Patrick Costin dated August 15, 1994
6.5 Altair International Inc. Stock Option Plan adopted by
shareholders May 10, 1996
6.6 Share Purchase Agreement between Altair International Inc. and
Fine Gold Recovery Systems, Inc. dated April 21, 1994
6.7 Escrow Agreement among Altair International Inc., Equity
Transfer Services Inc., Thomas P. Campbell and C. Patrick
Costin dated June 1, 1994
13 Irrevocable Consent and Power of Attorney on Form F-X
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements
for filing on Form 10-SB and has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
ALTAIR INTERNATIONAL INC.
By: /s/ William P. Long
-------------------------------
William P. Long, President
Date: November 22, 1996
24
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page No.
--------
AUDITED FINANCIAL STATEMENTS...............................................F-2
Auditors' Report......................................................F-3
Consolidated Balance Sheets as at December 31, 1995 and 1994..........F-4
Consolidated Statements of Administrative Expenditures and Deficit
for the years ended December 31, 1995 and 1994........................F-5
Consolidated Statements of Changes in Financial Position for the
years ended December 31, 1995 and 1994................................F-6
Notes to the Consolidated Financial Statements........................F-7
MANAGEMENT FINANCIAL STATEMENTS............................................F-14
Consolidated Balance Sheets as at September 30, 1996 and 1995, and
December 31, 1995.....................................................F-15
Consolidated Statements of Administrative Expenditures and Deficit
for the nine-month periods ended September 30, 1996 and 1995, and
for the years ended December 31, 1995 and 1994........................F-16
Consolidated Statements of Changes in Financial Position for the
nine-month periods ended September 30, 1996 and 1995, and for the
years ended December 31, 1995 and 1994................................F-17
Notes to the Consolidated Financial Statements........................F-18
Proforma Combined Financial Information...............................F-29
Pro Forma Combined Statements of Income for Altair International
Inc. and Trans Mar, Inc. for the year ended December 31, 1995.........F-30
Pro Forma Combined Statements of Income for Altair International
Inc. and Trans Mar, Inc. for the nine months ended
September 30, 1996....................................................F-31
Attachment A to the Consolidated Financial Statements --
Consolidated Statement of Cash Flows for the nine-month periods
ended September 30, 1996 and 1995, and/or the years ended
December 31, 1995 and 1994, prepared in accordance with U.S.
GAAP..................................................................F-32
All financial statements, unless otherwise stated, are presented in
accordance with generally accepted accounting principles applicable in
Canada. See Note 11 to the Management Financial Statements for certain
reconciliations to accounting principles generally accepted in the United
States.
F-1
<PAGE>
AUDITED FINANCIAL STATEMENTS
F-2
<PAGE>
[LETTERHEAD]
PAGE 1
AUDITORS' REPORT
To the Shareholders of
Altair International Gold Inc.
(Carlin Gold Company Inc.)
We have audited the consolidated balance sheets of Altair International Gold
Inc. (formerly Carlin Gold Company Inc.) as at December 31, 1995 and 1994 and
the consolidated statements of administrative expenditures and deficit, and
changes in financial position for the years then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1995
and 1994 and the results of its operations and the changes in its financial
position for the years then ended in accordance with generally accepted
accounting principles.
MCGOVERN, HURLEY, CUNNINGHAM
/s/ McGovern, Hurley Cunningham
CHARTERED ACCOUNTANTS
NORTH YORK, Canada
January 15, 1996
F-3
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 2
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 1995
- -------------------------------------------------------------------------------
1995 1994
$ $
- -------------------------------------------------------------------------------
ASSETS
CURRENT
Cash 424,185 9,816
Advances and accounts receivable (Note 6(b)) 130,102 59,940
---------- ----------
554,287 69,756
MINERAL PROPERTIES AND DEFERRED EXPLORATION
EXPENDITURES (NOTE 2) - 1
CAPITAL
Office equipment, net of accumulated
amortization of $6,664 (1994; $3,167) 33,365 5,630
OTHER
Option agreement costs (Note 3) 373,955 82,247
Centrifugal jig (Note 4(a)) 359,475 353,509
Goodwill, net 15,609 16,431
---------- ----------
1,336,691 527,574
---------- ----------
---------- ----------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities
(Note 6(b)) 124,605 224,791
---------- ----------
SHAREHOLDERS' EQUITY
CAPITAL STOCK (NOTE 5)
Issued
8,497,849 Common shares 5,779,016 4,270,616
DEFICIT (4,566,930) (3,967,833)
---------- ----------
1,212,086 302,783
---------- ----------
1,336,691 527,574
---------- ----------
APPROVED ON BEHALF OF THE BOARD:
"CHRISTOPHER I. PROUD" , Director
- -------------------------------
"JAMES GOLLA" , Director
- -------------------------------
F-4
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 3
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED STATEMENT OF ADMINISTRATIVE EXPENDITURES AND DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
1995 1994
$ $
- -------------------------------------------------------------------------------
ADMINISTRATIVE AND GENERAL EXPENSES
General exploration 222,350 -
Wages and administration 141,494 3,402
Professional fees 91,257 31,711
General and office 29,379 20,781
Public relations 28,812 21,148
Financing fees 17,810 -
Insurance 11,457 6,520
Transfer agent's fees 9,378 7,991
Loss on foreign exchange 8,894 5,621
Accounting and corporate services 8,348 8,120
Shareholders' meeting 6,946 9,768
Stock exchange fees 5,091 3,100
Government fees and taxes 2,650 3,343
Travel 1,027 -
Royalties - 46,109
Amortization 4,319 1,408
---------- ----------
589,212 169,022
Less: Interest Income 1,370 1,342
---------- ----------
NET ADMINISTRATIVE EXPENSES 587,842 167,680
DEFICIT, beginning of year 3,967,833 3,183,755
Write-off of mineral properties and
related exploration expenditures 11,255 616,398
---------- ----------
DEFICIT, end of year 4,566,930 3,967,833
---------- ----------
---------- ----------
Loss per share
Basic (Note 7) $(0.09) $(0.17)
------ ------
------ ------
F-5
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 4
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
1995 1994
$ $
- -------------------------------------------------------------------------------
CASH WAS PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net administrative expenses (587,842) (167,680)
Charges not involving cash:
Amortization 4,319 1,408
---------- ----------
(583,523) (166,272)
Changes in noncash working capital balances:
Decrease (increase) in advances and
accounts receivable (70,162) 5,351
Increase (decrease) in accounts payable (100,186) 62,943
---------- ----------
(170,348) 68,294
---------- ----------
(753,871) (97,978)
---------- ----------
FINANCING ACTIVITIES
Issuance of common shares for cash 1,200,000 180,000
Issuance of common shares for shares of
subsidiary - 352,500
Issuance of common shares for royalties owed - 46,109
Exercise of stock options 73,400 -
Exercise of warrants 235,000 -
---------- ----------
1,508,400 578,609
---------- ----------
INVESTING ACTIVITIES:
Mineral properties and deferred exploration
expenditures (11,255) (144,625)
Purchase of capital assets (31,232) -
Centrifugal jig (5,965) (353,509)
Goodwill - (16,431)
Option agreement costs (291,708) (81,398)
---------- ----------
(340,160) (595,963)
Increase (decrease) in cash 414,369 (115,332)
Cash, beginning of year 9,816 125,148
---------- ----------
Cash, end of year 424,185 9,816
---------- ----------
F-6
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 5
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Consolidation:
The financial statements include the accounts of the company and its
wholly owned subsidiaries, Carlin Gold Company, Fine Gold Recovery
Systems, Inc., Mineral Recovery Systems, Inc. and 660250 Ontario Limited.
Nature of Operations and Going Concern Considerations:
The company and its subsidiaries are in the process of exploring their
mineral properties and have not yet determined whether the properties
contain economically recoverable reserves. The recovery of the amounts
shown for the mineral properties and the related deferred expenditures is
dependent upon the existence of economically recoverable reserves,
confirmation of the company's interest in the underlying mining claims,
the ability of the company and its subsidiaries to obtain necessary
financing to complete the development, and future profitable production.
Mineral Properties:
Mineral properties are carried at cost until they are brought into
production at which time they are depleted on a unit-of-production basis.
Exploration expenses relating to mineral properties are deferred until
the properties are brought into production at which time they are
amortized on a unit-of-production basis.
The cost of the mineral properties abandoned or sold and the deferred
exploration costs relating to properties abandoned or sold are charged
to operations in the current year.
Administrative Expenditures:
Administrative expenditures are charged to operations as incurred.
Capital Assets and Amortization:
Office equipment is stated at acquisition cost. Amortization is provided
on the diminishing balance basis at 20% per annum.
Continued...
F-7
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 6
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill
Goodwill is the excess of the cost of investment in subsidiaries over the
estimated fair value of net assets acquired and is amortized on a
straight-line basis over 20 years.
Translation of Foreign Currency:
The accounts of the U.S. subsidiaries are translated using the temporal
method, under which monetary assets and liabilities are translated at the
rate of exchange prevailing at the year end; capital assets are
translated at the rates prevailing at the acquisition dates; and, revenue
and expenses at average rates of exchange during the year, with the
exception of amortization, which is translated at historical exchange
rates. Exchange gains and losses are included in the consolidated
statement of administrative expenditures and deficit.
2. MINERAL PROPERTIES AND DEFERRED EXPLORATION EXPENDITURES
NEAWANGANK LAKE
The company holds a 100% interest in 17 unpatented claims in the Patricia
Portion, District of Kenora, Ontario, Canada subject to the reservation of
a 10% net profit interest. The company has the option to purchase the 10%
net profit interest for the issuance of 100,000 common shares. During the
year the claims were written off.
3. OPTION AGREEMENT COSTS
Pursuant to an option agreement dated November 15, 1994, the company has
the option to acquire all of the shares of Trans Mar, Inc., a Washington
corporation (see Note 9). Trans Mar, Inc. is the owner of all patent and
other rights relating to the Campbell Centrifugal Jig (CCJ).
Total consideration for the option is as follows:
a) U.S. $25,000 on signing of agreement (paid).
b) U.S. $25,000 six months after signing the agreement (paid).
c) U.S. $15,000 per month commencing March 1, 1995 continuing until the
exercise or termination of the option.
The option is exercisable at any time prior to April 1, 1996 at which time
the option expires.
Continued...
F-8
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 7
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
3. OPTION AGREEMENT COSTS (Continued)
The exercise price is U.S.$7,000,000 payable in quarterly instalments to
October 1, 1999. The exercise price can be satisfied by a combination of
cash and/or common shares of the company.
In the event that the company elects to exercise the option, commencing on
April 1, 1998, the company is obligated to pay a gross revenue payment
equal to 2.5% of the aggregate gross revenues to a maximum of
U.S.$13,000,000.
As a condition to the exercise of the option, the company is also obligated
to expend U.S.$600,000 on the development and marketing of the CCJ prior
to April 1, 1996. The U.S.$15,000 monthly payments will be credited
against this obligation. The company has paid U.S.$268,898 to Trans Mar,
Inc. in accordance with the agreement. The company is in compliance with
all the terms of the definitive option agreement as of December 31, 1995.
(See Note 9).
4. ACQUISITIONS
(a) FINE GOLD RECOVERY SYSTEMS, INC. (FINE GOLD)
Pursuant to an agreement dated April 21, 1994 the company issued
750,000 common shares, with a deemed value of $0.47 ($352,000) per
share for all of the outstanding common shares of Fine Gold, a
corporation incorporated in the State of Nevada and involved in the
development of a "Centrifugal Jig"; an apparatus designed to recover
the fine gold from mineral properties. As at December 31, 1995, Fine
Gold was still in the development stage in that no operating revenues
have been earned and no operating expenses have been incurred. Costs
relating to the development of the centrifugal jig have been
capitalized. (See Note 3).
Continued...
F-9
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 8
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
5. CAPITAL STOCK
The capital stock is as follows:
Authorized
Unlimited common shares
Issued
8,497,849 common shares $5,779,016
----------
----------
Transaction during the year are as follows:
Shares Amount
Balance, December 31, 1994 5,200,849 $4,270,616
Common shares issued for cash 2,700,000 1,200,000
Exercise of stock options 247,000 73,400
Exercise of warrants 350,000 235,000
---------- ----------
Balance, December 31, 1995 8,497,849 $5,779,016
---------- ----------
---------- ----------
STOCK OPTIONS
As at December 31, 1995, 677,000 common shares are reserved for issuance to
directors, officers and employees under the company's stock option plan.
The exercise price and expiry dates of options outstanding as of December
31, 1995 are as follows:
Number
of Shares Price Expiry Date
--------- ----- -----------
271,000 $0.20 August 1, 1999
110,000 0.60 August 8, 1998
166,000 0.65 November 13, 2000
30,000 0.50 March 30, 2000
100,000 0.50 March 28, 2000
Continued...
F-10
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 9
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
5. CAPITAL STOCK (Continued)
WARRANTS
i) Series A
Issued 1,000,000
Pursuant to a subscription agreement, the company issued 1,000,000
units at $0.20 per unit for total proceeds of $200,000. Each unit
consists of one common share and one Series A share purchase warrant.
Each Series A share purchase warrant entitles the holder to purchase
one common share at $0.20 per share to March 14, 1996.
ii) Series B
Issued 100,000
Pursuant to a subscription agreement, the company issued 200,000 units
at $0.50 per unit for total proceeds of $100,000. Each unit consists
of a common share and one Series B share purchase warrant. Each
Series B share purchase warrant entitles the holder to purchase one
common share at a price of $0.60 per share to November 15, 1995
provided that only 50% of the warrants may be exercised during the
initial period, and at a price of $0.75 per share to May 15, 1996
provided that the number of warrants that may be exercised after
November 15, 1995 may not exceed the number of warrants exercised
prior to November 15, 1995.
Prior to November 15, 1995, 100,000 warrants were exercised for total
proceeds of $60,000.
iii) Series C
Issued 250,000
Pursuant to a subscription agreement, the company issued 500,000 units
at $0.60 per unit for total proceeds of $300,000. Each unit consists
of a common share and one Series C share purchase warrant. Each
Series C share purchase warrant entitles the holder to purchase one
common share at a price of $0.70 per share to December 21, 1995
provided that only 50% of the warrants may be exercised during the
initial period, and at a price of $0.80 per share to June 22, 1996
provided that the number of warrants that may be exercised after
December 22, 1995 may not exceed the number of warrants exercised
prior to December 22, 1995.
Prior to December 22, 1995, 250,000 warrants were exercised for total
proceeds of $175,000.
Continued...
F-11
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 10
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
5. CAPITAL STOCK (Continued)
iv) Series D
Issued 1,000,000
Pursuant to a subscription agreement, the company issued 1,000,000
units at $0.60 per unit for total proceeds of $600,000. Each unit
consists of a common share and one Series D share purchase warrant.
Each Series D share purchase warrant entitles the holder to purchase
one common share at a price of $0.75 per share to April 10, 1996
provided that only 50% of the warrants may be exercised during the
initial period, and at a price of $0.90 per share to October 10, 1996
provided that the number of warrants that may be exercised after April
10, 1996 may not exceed the number of warrants exercised prior to
April 10, 1996.
6. RELATED PARTY TRANSACTIONS
Pursuant to an employment agreement dated January 1, 1988 and as amended
June 30, 1990 the company hired the current president in accordance with
the following terms:
A minimum monthly salary of U.S.$7,600 and an annual bonus to be
determined by the Board of Directors of not less than 10% of the annual
compensation.
In the event of a takeover, merger or consolidation and if the voting
control of over 35% of the issued stock is acquired by an individual or a
group of individuals and this agreement is terminated by the company
within 180 days before or one year thereafter, or by the president one
year thereafter, then the president shall be paid U.S.$250,000 and given
200,000 shares of the company's common stock.
Included in accounts payable and accrued liabilities is U.S.$64,384 (1994;
U.S.$85,843) owing to the president. Included in advances and accounts
receivable is U.S.$45,000 (1994; $Nil) owing from the president.
Continued...
F-12
<PAGE>
ALTAIR INTERNATIONAL GOLD INC. PAGE 11
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
7. LOSS PER SHARE
The existence of stock options affects the calculation of loss per share on
a fully diluted basis. As the effect of this dilution is to reduce the
reported loss per share, the fully diluted loss per share has not been
calculated.
8. INCOME TAXES
As at December 31, 1995, the company has approximate non-capital losses
carried forward for income tax purposes which are available to reduce
certain future year's income for tax purposes as follows:
1996 $ 53,000
1997 76,000
1998 138,000
1999 93,000
2000 44,000
2001 54,000
2002 76,000
--------
$534,000
--------
--------
9. SUBSEQUENT EVENT
Subsequent to the year end, the company reached an agreement in principle
to acquire 100% of the issued and outstanding common shares of Trans Mar,
Inc. (TMI) as referred to in Note 3, for total consideration of 1,920,000
common shares with a deemed value of $1.80 per share ($3,456,000) and
580,000 share purchase warrants. Each share purchase warrant will entitle
the holder to purchase one common share at $2.00 per share to January 31,
1997.
The vendors of TMI have agreed to warrant in the definitive agreement that
TMI has no short-term debt and the total long-term debt does not exceed
U.S.$1,300,000.
F-13
<PAGE>
MANAGEMENT FINANCIAL STATEMENTS
F-14
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and 1995, and December 31, 1995
<TABLE>
September 30, September 30, December 31,
1996 1995 1995
------------ ------------ ------------
(Unaudited) (Unaudited) (Audited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 2,267,808 $ 535,687 $ 424,185
Advances and accounts receivable 52,703 12,308 130,102
------------ ------------ ------------
2,320,511 547,995 554,287
------------ ------------ ------------
INVESTMENTS 382,961 - -
MINERAL PROPERTIES AND DEFERRED
EXPLORATION EXPENDITURES 20,777 1 -
PROPERTY AND EQUIPMENT
Office, automotive and mining equipment,
net of accumulated amortization 62,961 4,258 33,365
OTHER
Centrifugal jig patents and development cost, net of
accumulated amortization 6,036,398 262,559 359,475
Option agreement costs - 251,393 373,955
Goodwill, net 15,609 16,431 15,609
------------ ------------ ------------
6,052,007 530,383 749,039
------------ ------------ ------------
$ 8,839,217 $ 1,082,637 $ 1,336,691
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 876,935 $ 101,841 $ 124,605
------------ ------------ ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Issued
13,331,588, 7,024,849 and 8,497,849 common
shares, respectively 12,744,379 5,495,416 5,779,016
ACCUMULATED DEFICIT (4,782,097) (4,514,620) (4,566,930)
------------ ------------ ------------
7,962,282 980,796 1,212,086
------------ ------------ ------------
$ 8,839,217 $ 1,082,637 $ 1,336,691
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-15
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED STATEMENT OF ADMINISTRATIVE EXPENDITURES AND DEFICIT
For the Nine-Month Periods Ended September 30, 1996 and 1995
and the Years Ended December 31, 1995 and 1994
<TABLE>
Nine Months Ended Years Ended
----------------------------- --------------------------
September 30, September 30, December 31, December 31,
1996 1995 1995 1994
----------- ----------- ----------- ------------
(Unaudited) (Unaudited) (Audited) (Audited)
<S> <C> <C> <C> <C>
ADMINISTRATIVE & GENERAL EXPENSES
General exploration $ - $ - $ 222,350 $ -
Wages and administration 338,193 155,917 141,494 3,402
Professional fees 124,144 15,680 91,257 31,711
General and office 49,643 13,984 29,379 20,781
Public relations 29,711 23,328 28,812 21,148
Financing fees - - 17,810 -
Insurance 13,900 9,807 11,457 6,520
Transfer agent's fees 14,618 8,364 9,378 7,991
Loss (gain) on foreign exchange 14,101 20,796 8,894 5,621
Accounting and corporate services 71,841 18,408 8,348 8,120
Shareholders' meeting 45,370 6,783 6,946 9,768
Stock exchange fees 4,500 3,300 5,091 3,100
Government fees and taxes 40,045 6,585 2,650 3,343
Travel 12,389 1,031 1,027 -
Royalties - - - 46,109
Rent 26,094 1,598 - -
Amortization 340,736 1,372 4,319 1,408
----------- ----------- ----------- ------------
1,125,285 286,953 589,212 169,022
Less: Interest income (22,730) - (1,370) (1,342)
----------- ----------- ----------- ------------
NET ADMINISTRATIVE EXPENSES 1,102,555 286,953 587,842 167,680
DEFICIT, BEGINNING OF PERIOD 4,566,930 3,967,833 3,967,833 3,183,755
Interest expense 4,399 942 - -
Write-off mineral properties and
related exploration expenditures - 258,892 11,255 616,398
Debt forgiveness (extraordinary item) 891,787 - - -
----------- ----------- ----------- ------------
DEFICIT, END OF PERIOD $ 4,782,097 $ 4,514,620 $ 4,566,930 $ 3,967,833
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
Net income (loss) per share from operations $ (0.10) $ (0.07) $ (0.09) $ (0.17)
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
Net income per share from extraordinary
item: debt forgiveness $ 0.08 $ - $ - $ -
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</TABLE>
F-16
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
AND THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
Nine Months Ended Years Ended
--------------------------- ----------------------------
September 30, September 30, December 31, December 31,
1996 1995 1995 1994
------------ ------------ ----------- ------------
(Unaudited) (Unaudited) (Audited) (Audited)
<S> <C> <C> <C> <C>
CASH PROVIDED (USED IN):
OPERATING ACTIVITIES:
Net (loss) income $ (215,167) $ (546,787) $ (587,842) $(167,680)
Charges not involving cash:
Write off of mineral property - 258,892 - -
Amortization 340,736 1,372 4,319 1,408
----------- ---------- ---------- ---------
125,569 (286,523) (583,523) (166,272)
----------- ---------- ---------- ---------
Changes in noncash working capital balances:
Decrease (increase) in advances and
accounts receivable 77,399 47,632 (70,162) 5,351
Increase (decrease) in accounts payable
and accrued liabilities 752,331 (122,950) (100,186) 62,943
----------- ---------- ---------- ---------
829,730 (75,318) (170,348) 68,294
----------- ---------- ---------- ---------
955,299 (361,841) (753,871) (97,978)
----------- ---------- ---------- ---------
FINANCING ACTIVITIES
Incorporation costs - (413) - -
Issuance of common shares for cash 2,034,019 1,200,000 1,200,000 180,000
Common shares issued for acquistion
of Trans Mar, Inc. 3,455,923 - - -
Issuance of common shares for shares of
subsidiary - - - 352,500
Issuance of common shares for royalties owed - - - 46,109
Exercise of stock options 102,500 24,800 73,400 -
Exercise of warrants 1,372,844 - 235,000 -
----------- ---------- ---------- ---------
6,965,286 1,224,387 1,508,400 578,609
----------- ---------- ---------- ---------
INVESTING ACTIVITIES
Acquisition of Trans Mar jig (5,161,936) - - -
Purchase of securities (382,961) - - -
Mineral properties and deferred exploration
expenditures (20,777) (16,737) (11,255) (144,625)
Purchase of capital assets (38,162) - (31,232) -
Centrifugal jig - - (5,965) (353,509)
Goodwill - - - (16,431)
Option agreement costs (473,126) (319,938) (291,708) (81,398)
----------- ---------- ---------- ---------
(6,076,962) (336,675) (340,160) (595,963)
----------- ---------- ---------- ---------
Increase (decrease) in cash 1,843,623 525,871 414,369 (115,332)
Cash, beginning of period 424,185 9,816 9,816 125,148
----------- ---------- ---------- ---------
Cash, end of period $ 2,267,808 $ 535,687 $ 424,185 $ 9,816
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
</TABLE>
F-17
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of Altair International Gold Inc. (the
Company) are expressed in Canadian dollars, and have been prepared in
accordance with accounting principles generally accepted in Canada, which
differ in certain material respects from those generally accepted in the
United States (see Note 11).
CONSOLIDATION:
The financial statements include the accounts of the Company and its wholly
owned subsidiaries, Carlin Gold Company, Fine Gold Recovery Systems, Inc.,
Mineral Recovery Systems, Inc. and 660250 Ontario Limited.
NATURE OF OPERATIONS:
The Company is engaged in the business of acquiring, developing and testing
mineral processing equipment for use in the recovery of fine, heavy mineral
particles, including gold and environmental contaminants. Prior to 1994, the
Company's primary business was the acquisition and development of mineral
properties.
CAPITAL ASSETS AND AMORTIZATION:
Office equipment is stated at acquisition cost. Amortization is provided on
the diminishing balance basis at 20% per annum.
Centrifugal jig patent and development costs are carried at acquisition cost
and are amortized over the remaining lives of the patents, which range from
five to seventeen years.
INVESTMENTS:
Investments in unconsolidated subsidiaries and other investees in which the
Company has a 20% to 50% interest or otherwise exercises significant
influence are carried at cost, adjusted for the Company's proportionate share
of their undistributed earnings or losses.
MINERAL PROPERTIES:
Mineral properties are carried at cost until they are brought into production
at which time they are depleted on a unit-of-production basis.
Exploration expenses relating to mineral properties are deferred until the
properties are brought into production at which time they are amortized on a
unit-of-production basis.
The cost of the mineral properties abandoned or sold and the deferred
exploration costs relating to properties abandoned or sold are charged to
operations in the current year.
ADMINISTRATIVE EXPENDITURES:
Administrative expenditures are charged to operations as incurred.
F-18
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTERIM FINANCIAL STATEMENTS
The interim financial statements as of and for the nine months ended
September 30, 1996 and 1995, respectively, included herein have been prepared
by the Company, without audit. They reflect all adjustments which are, in
the opinion of management, necessary to present fairly the results of
operations for these periods. All such adjustments are normal recurring
adjustments. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full fiscal
year.
GOODWILL:
Goodwill is the excess of the cost of investment in subsidiaries over the
estimated fair value of net assets acquired and is amortized on a
straight-line basis over 20 years.
TRANSACTIONS INVOLVING NON-CASH CONSIDERATION:
When exchanging its shares of common stock for non-cash consideration, the
Company values its exchanged shares at contemporaneous trade prices on the
Alberta Exchange, with larger transactions subject to arm's length
discounting in order to arrive at fair market value.
TRANSLATION OF FOREIGN CURRENCY:
The accounts of the U.S. subsidiaries are translated using the temporal
method, under which monetary assets and liabilities are translated at the
rate of exchange prevailing at the year end; capital assets are translated at
the rates prevailing at the acquisition dates; and, revenue and expenses at
average rates of exchange during the year, with the exception of
amortization, which is translated at historical exchange rates. Exchange
gains and losses are included in the consolidated statement of administrative
expenditures and deficit.
2. MINERAL PROPERTIES
Prior to 1994, the Company was primarily engaged in the acquisition and
exploration of mineral properties. In 1994, the Company shifted its primary
emphasis from minerals exploration to the acquisition and development of
technology and equipment for use in segregation and recovery of fine mineral
particles and contaminants.
NEAWANGANK LAKE:
The Company held a 100% interest in 17 unpatented claims in the Patricia
Portion, District of Kenora, Ontario, Canada subject to the reservation of a
10% net profit interest. The Company had the option to purchase the 10% net
profit interest for the issuance of 100,000 common shares. During 1995 the
claims were written off.
F-19
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
3. OPTION AGREEMENT COSTS
Pursuant to an option agreement dated November 15, 1994, the Company received
the option to acquire all of the shares of Trans Mar, Inc., a Washington
corporation (see Note 4). Trans Mar, Inc. was the owner of all patents and
other rights relating to the Campbell Centrifugal Jig (CJ).
At December 31, 1995, the Company had paid US $268,898 to Trans Mar, Inc., in
accordance with the agreement. In February 1996, the Company and Trans Mar,
Inc. agreed to replace the option agreement with a merger agreement (see Note
4).
4. ACQUISITIONS
FINE GOLD RECOVERY SYSTEMS, INC. (FINE GOLD)
Pursuant to an agreement dated April 21, 1994, the Company issued 750,000
common shares, with a deemed value of $0.47 per share ($352,500) for all of
the outstanding common shares of Fine Gold, a corporation incorporated in the
State of Nevada and involved in the development of a "Centrifugal Jig"; an
apparatus designed to recover fine gold from mineral properties. As at
September 30, 1996, Fine Gold was still in the development stage in that no
operating revenues have been earned and no operating expenses have been
incurred. Costs relating to the acquisition and development of the
centrifugal jig have been capitalized. (See Note 1).
TRANS MAR, INC. (TRANS MAR)
In March 1996, the Company acquired all of the outstanding common stock of
Trans Mar, Inc., a corporation incorporated in the State of Washington and
involved in the development of its patented Campbell Centrifugal Jig. In the
acquisition, Trans Mar was effectively merged into the Company's subsidiary,
Fine Gold, in a transaction accounted for as a purchase by the Company, which
agreed to issue to Trans Mar's shareholders 1,920,000 shares of Altair common
stock and 580,000 warrants entitling the holder to purchase one common share
of Altair for $2.00 until January 31, 1997 (see Note 5.) At September 30,
1996, 1,919,557 shares had been issued in connection with the transaction.
At the time of acquisition, Trans Mar was a development stage enterprise in
that no operating revenues had been earned and no operating expenses had been
incurred.
The purchase price of Trans Mar was $5,115,693. This consisted of $3,455,923
of stock issuance to Trans Mar shareholders (1,919,557 Altair shares with a
deemed value of $1.80 per share) and the absorption of Trans Mar's assets and
liabilities, with liabilities exceeding assets by $1,659,770 at February 29,
1996. The purchase price was allocated to centrifugal jig patents and
development costs. These incremental costs will be amortized over the
remaining life of the patents. It should be noted that the patented Campbell
Centrifugal Jig is subject to a royalty interest granted to Intercontinental
Development Corporation (hereinafter "Intercontinental"). Under the royalty
agreement, Intercontinental shall receive from Trans Mar ten percent (10%) of
the cost of manufacturing of any Campbell Centrifugal Jigs which are placed
in production, sold
F-20
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
4. ACQUISITIONS (Continued)
or exploited for profit worldwide. At September 30, 1996, there were no
royalties owed to Intercontinental under this agreement. (See Note 8.)
At the time of its acquisition, Trans Mar's balance sheet consisted of the
following:
Total Assets $ 210,449
-----------
-----------
Liabilities $ 1,870,219
Common stock 39,195
Paid-in capital 503,137
Accumulated deficit (2,202,102)
-----------
Total Liabilities &
Stockholders' Deficit $ 210,449
-----------
-----------
5. CAPITAL STOCK
The capital stock is as follows:
Authorized
Unlimited common shares Issued
13,331,588 common shares $ 12,744,379
------------
------------
Transactions for the year ended 1995 and for the nine-month period ended
September 30, 1996 are as follows:
Shares Amount
--------- ---------
Balance, December 31, 1994 5,200,849 4,270,616
Common shares issued for cash 2,700,000 1,200,000
Exercise of stock options 247,000 73,400
Exercise of warrants 350,000 235,000
---------- ----------
Balance, December 31, 1995 8,497,849 5,779,016
---------- ----------
Common shares issued for cash 593,997 2,034,096
Common shares issued for Trans Mar
acquisition 1,919,957 3,455,923
Exercise of stock options 70,000 102,500
Exercise of warrants 2,249,755 1,372,844
---------- ----------
Balance, September 1996 13,331,558 12,744,379
---------- ----------
---------- ----------
F-21
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
5. CAPITAL STOCK (Continued)
STOCK OPTIONS:
As at December 31, 1995, 677,000 common shares were reserved for issuance to
directors, officers and employees under the Company's stock option plan. The
exercise price and expiration dates of options outstanding as of December 31,
1995 were as follows:
Number
of Shares Price Expiration Date
--------- ------ ---------------
271,000 $ 0.20 August 1, 1999
110,000 0.60 August 8, 1998
166,000 0.65 November 13, 2000
30,000 0.50 March 30, 2000
100,000 0.50 March 28, 2000
The Company approved a new stock option plan in May 1996 whereby a total of
2,000,000 common shares may be reserved for issuance to the Company's
directors, officers, and employees. Options granted under the former stock
plan will remain outstanding under the new stock plan and will constitute
part of the aforementioned 2,000,000 shares. At September 30, 1996, the
Company has 627,000 options outstanding under the former stock plan and a
total of 535,000 no options have been granted under the new stock plan.
The exercise price and expiration dates of options outstanding as of
September 30, 1996 are as follows:
Number
of Shares Price Expiration Date
--------- ------ ---------------
160,000 $ 5.00 May 14, 1998
271,000 0.20 August 1, 1999
75,000 0.60 August 8, 1998
166,000 0.65 November 13, 2000
15,000 0.50 March 30, 2000
100,000 0.50 March 28, 2000
145,000 3.70 March 7, 2001
250,000 4.00 May 27, 2001
75,000 4.20 July 29, 2001
50,000 4.50 July 31, 2001
F-22
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
5. CAPITAL STOCK (Continued)
WARRANTS:
i) Series A
Issued 1,000,000
Pursuant to a subscription agreement, the Company issued 1,000,000 units at
$0.20 per unit for total proceeds of $200,000. Each unit consisted of one
common share and one Series A share purchase warrant. Each Series A share
purchase warrant entitled the holder to purchase one common share at $0.20
per share to March 14, 1996.
In 1996 (prior to March 14), 1,000,000 warrants were exercised for total
proceeds of $200,000.
ii) Series B
Issued 200,000
Pursuant to a subscription agreement, the Company issued 200,000 units at
$0.50 per unit for total proceeds of $100,000. Each unit consists of one
common share and one Series B share purchase warrant. Each Series B share
purchase warrant entitles the holder to purchase one common share at $0.60
per share to November 15, 1995 provided that only 50% of the warrants may be
exercised during the initial period, and at a price of $0.75 per share to May
15, 1996 provided that the number of warrants that may be exercised after
November 15, 1995 may not exceed the number of warrants exercised prior to
November 15, 1995.
In 1995 (prior to November 15), 100,000 warrants were exercised for total
proceeds of $60,000. In 1996 (prior to May 15), the remaining 100,000
warrants were exercised for total proceeds of $75,000.
iii) Series C
Issued 500,000
Pursuant to a subscription agreement, the Company issued 500,000 units at
$0.60 per unit for total proceeds of $300,000. Each unit consists of one
common share and one Series C share purchase warrant. Each Series C share
purchase warrant entitles the holder to purchase one common share at $0.70
per share to December 21, 1995 provided that only 50% of the warrants may be
exercised during the initial period, and at a price of $0.80 per share to
June 22, 1996 provided that the number of warrants that may be exercised
after December 22, 1995 may not exceed the number of warrants exercised prior
to December 22, 1995.
In 1995 (prior to December 22), 250,000 warrants were exercised for total
proceeds of $175,000. The remaining 250,000 warrants were exercised in 1996
(prior to June 22) for total proceeds of $200,000.
F-23
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
5. CAPITAL STOCK (Continued)
iv) Series D
Issued 1,000,000
Pursuant to a subscription agreement, the Company issued 1,000,000 units at
$0.60 per unit for total proceeds of $600,000. Each unit consists of one
common share and one Series D share purchase warrant. Each Series D share
purchase warrant entitles the holder to purchase one common share at $0.75
per share to April 10, 1996 provided that only 50% of the warrants may be
exercised during the initial period, and at a price of $0.90 per share to
October 10, 1996 provided that the number of warrants that may be exercised
after April 10, 1996 may not exceed the number of warrants exercised prior to
April 10, 1996.
In the first quarter of 1996, 500,000 warrants were exercised for total
proceeds of $375,000. In the second quarter of 1996, 333,333 warrants were
exercised for a total of $300,000.
v) Series E
Issued 580,000
In connection with the acquisition of Trans Mar, Inc. in March 1996, the
Company issued 580,000 Series E Warrants to Trans Mar shareholders entitling
the holder to purchase one common share of Altair for $2.00 until January 31,
1997.
While warrants were exercised in the first two quarters of 1996 (see Note 4),
6,422 warrants were exercised in the third quarter of 1996 for total proceeds
of $12,844.
vi) Series F
Issued 100,000
Pursuant to a subscription agreement, the Company issued 100,000 units at
$3.50 per unit for total proceeds of $350,000. Each unit consists of one
common share and one Series F share purchase warrant. Each Series F share
purchase warrant entitles the holder to purchase one common share at $7.00
per share to December 26, 1996 provided that only 50% of the warrants may be
exercised during the initial period, and at a price of $10.00 per share to
September 26, 1997 provided that the number of warrants that may be exercised
after December 25, 1996 may not exceed the number of warrants exercised
prior to December 26, 1996.
At September 30, 1996, none of the Series F warrants had been exercised.
F-24
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------
5. CAPITAL STOCK (Continued)
vii) Series G
Issued 494,027
Pursuant to a subscription agreement, the Company issued 494,027 units at
$4.50 per unit for total proceeds of $1,729,095. Each unit consists of one
common share and one Series G share purchase warrant. Each Series G share
purchase warrant entitles the holder to purchase one common share at $4.50
share to June 28, 1998 provided that if the Company's common shares trade at
or in excess of $6.50 on five days, the Series G purchase warrants will
expire on the thirtieth day after the fifth day on which the shares trade at
or above $6.50.
At September 30, 1996, none of the Series G warrants had been exercised.
viii) Series H
Issued 60,000
Pursuant to a subscription agreement, the Company issued 60,000 units at
$3.50 per unit for total proceeds of $210,000. Each unit consists of one
common share and one Series H share purchase warrant. Each Series H purchase
warrant entitles the holder to purchase one common share at $4.50 per share
until December 26, 1997.
At September 30, 1996, none of the Series H warrants had been exercised.
6. RELATED PARTY TRANSACTIONS
Pursuant to an employment agreement dated January 1, 1988 and as amended June
30, 1990 the Company hired the current president in accordance with the
following terms:
A minimum monthly salary of US$7,600 and an annual bonus to be determined by
the Board of Directors of not less than 10% of the annual compensation.
In the event of a takeover, merger or consolidation and if the voting control
of over 35% of the issued stock is acquired by an individual or a group of
individuals and this agreement is terminated by the Company within 180 days
before or one year thereafter, or by the president one year thereafter, then
the president shall be given 200,000 shares of the Company's common stock.
Included in accounts payable and accrued liabilities is US$75,016 owing to
the president. Included in advances and accounts receivable is US$45,000
owing from the president.
F-25
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
7. INCOME FROM FORGIVENESS OF DEBT
As a result of the Company's acquisition of Trans Mar, Inc., Fine Gold
assumed all of Trans Mar's liabilities, which were $1,870,219 at February 29,
1996. (see Note 4.) During June 1996, Fine Gold entered into agreements
extinguishing certain of the Trans Mar accounts payable and notes payable at
less than the book amounts of such debt. The net amount of such forgiveness
of debt was $891,787, which resulted in reduced remaining indebtedness of
$978,432. The $891,787 of debt forgiveness resulted in an extraordinary gain
of $0.08 per share for the nine months ending September 30, 1996.
8. INVESTMENTS
In the second quarter of 1996, the Company acquired 203,817 shares of common
stock of Intercontinental Development Corporation, a privately held American
company, at a cost of $382,961. This transaction, which is being accounted
for under the equity method, resulted in the purchase of 49.8% of
Intercontinental's outstanding common stock. Intercontinental is a dormant
company whose sole asset is a royalty interest in a patented centrifugal jig,
acquired by the Company in the Trans Mar acquisition (see Note 4).
Intercontinental, which had no activity in the nine months ending September
30, 1996, has no assets which are not fully depreciated and has no
liabilities.
At September 30, 1996, the Company's investment in Intercontinental exceeded
the Company's share of the underlying net assets by $382,961. This excess
related to the royalty interest which will be amortized against the Company's
share of Intercontinental's net income on the straight-line method over the
expected life of the royalty (15 years).
In October 1996, the Company acquired an additional 9,800 shares of common
stock in Intercontinental which brought the Company's ownership to 52.2% of
Intercontinental's outstanding shares.
9. LOSS PER SHARE
The existence of stock options and warrants affects the calculation of loss
per share on a fully diluted basis. As the effect of this dilution is to
reduce the reported loss per share, the fully diluted loss per share has not
been calculated.
F-26
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
10. INCOME TAXES
As at December 31, 1995, the Company has approximate non-capital losses
carried forward for income tax purposes which are available to reduce certain
future years' income for tax purposes as follows:
1996 $ 53,000
1997 76,000
1998 138,000
1999 93,000
2000 44,000
2001 54,000
2002 76,000
--------
$534,000
--------
--------
11. DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP") which
differ in the following respects from those principles and practices that the
Company would have followed had its consolidated financial statements been
prepared in accordance with generally accepted accounting principles in the
United States ("U.S. GAAP").
(a) Under Canadian GAAP, there is no requirement to disclose concentrations
of credit and market risk. For U.S. GAAP reporting, the Company is obligated
under Statement of Financial Accounting Standards No. 105 ("SFAS 105") to
provide information about significant concentrations of activity by region
and industry.
At September 30, 1996, the Company was still a development stage enterprise,
had no sales or customers or trade receivables, and had no significant
suppliers.
The Company maintains cash balances at several banks. Accounts at each
American institution are insured up to $100,000 by the Federal Deposit
Insurance Corporation. Large cash balances (those exceeding the FDIC limit)
at September 30, 1996 consisted of the following: US$686,313 at Western
Savings & Loan Association and $1,330,358 in Canadian dollars at Royal Bank
in Canada.
F-27
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
11. DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (Continued)
(b) Under Canadian GAAP, there is no requirement to disclose the Company's
policy for determining which items are treated as cash equivalents.
Generally, cash equivalents are short-term, highly liquid investments that
are readily converted to known amounts of cash and are so near their
maturities that they present an insignificant risk of change in value because
of changes in interest rates.
For purposes of the Statement of Financial Position, the Company considers
all highly liquid debt instruments purchased with a remaining maturity of
three months or less to be cash equivalents.
(c) Canadian GAAP requires the Statement of Financial Position. U.S. GAAP
requires the Statement of Cash Flows, which is included as Attachment A.
(d) Under Canadian GAAP, income taxes are accounted for under the deferred
method, which places emphasis on the matching of revenues and expenditures
and the recognition of income tax expense. Under U.S. GAAP, companies must
follow the requirements of Statement of Financial Accounting Standards No.
109 (SFAS 109), which requires the use of the asset/liability method for
measurement of tax liabilities, wherein deferred tax assets are recognized as
well as deferred tax liabilities.
The Company has significant net operating loss carryforwards (as discussed in
Note 8). SFAS 109 would require the recognition of a long-term tax asset for
the future benefit expected from the application of these carryforwards to
future profitable years. If it is expected that the entire amount of NOL
carryforwards will not be utilized, then a valuation adjustment is applied to
the asset to reasonably state the asset at its expected value. Under SFAS
109, disclosure of the amount of valuation adjustment is required. Changes
in the value of the deferred asset are recognized each year as income tax
expense.
(e) There are certain other differences in the determination of net income
and per share calculations between Canadian and U.S. GAAP, none of which had
a material effect on any of the periods presented.
F-28
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
(A Development Stage Enterprise)
PROFORMA COMBINED FINANCIAL INFORMATION
Pursuant to Regulation S-B, Item 310(d)(3)(i), Registrant furnishes the
following proforma combined statements of income to reflect the combined
operations of Altair International Gold Inc. (Altair) and Trans Mar, Inc.
(Trans Mar) for the latest fiscal year (December 31, 1995) and latest interim
period (nine months ended September 30, 1996). It should be noted that, in
calendar 1995, Trans Mar changed its fiscal year-end from April 30 to
December 31; accordingly, the inclusion of Trans Mar's year-end 1995 income
statement reflects eight months of operations ending December 31, 1995.
On March 1, 1996, Trans Mar was effectively merged into an Altair subsidiary
in a transaction whereby Altair issued to Trans Mar's shareholders 1,919,557
shares of Altair common stock (with a deemed value of $1.80 per share) and
580,000 warrants entitling the holder to purchase one common share of Altair
for $2.00 until January 1, 1997.
The proforma financial statements have been prepared utilizing the historical
financial statements of Altair and Trans Mar. They should be read in
conjunction with the separate historical financial statements and notes
thereto of these companies for the respective periods presented.
The proforma financial information is based on the purchase method of
accounting. The proforma combined statements of income assume the
acquisition occurred at the beginning of the periods presented in the
statements. For purposes of comparability, the weighted average number of
common shares outstanding for each company is based on the equivalent shares
of Altair International Gold Inc. for the respective periods.
Option fee income and expense reimbursement income which Trans Mar received
from Altair are shown in the adjustments column to reflect their exclusion
from combined income. The corresponding expenditures on Altair's books were
capitalized.
The 1996 proforma information does not reflect the effects of debt
forgiveness, which is considered an extraordinary item.
The proforma combined financial statements do not purport to be indicative of
the financial positions and results of operations and cash flows which
actually would have been obtained if the acquisition had occurred on the date
indicated or the results which may be obtained in the future.
ALL DOLLAR AMOUNTS HEREIN ARE EXPRESSED IN CANADIAN DOLLARS. ALTAIR
INTERNATIONAL GOLD INC. PREPARES ITS CONSOLIDATED FINANCIAL STATEMENTS IN
ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND
ROUTINELY REPORTS ITS FINANCIAL INFORMATION IN CANADIAN DOLLARS.
F-29
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
PROFORMA COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
<TABLE>
HISTORICAL PROFORMA
-------------------------- --------------------------
Altair
International Trans Mar,
Gold Inc. Inc. Adjustments Combined
------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ -
---------- ---------- -----------
ADMINISTRATIVE AND GENERAL EXPENSES
General exploration 222,350 - - 222,350
Wages and administration 141,494 248,594 - 390,088
Professional fees 91,257 36,360 - 127,617
General and office 29,379 - - 29,379
Public relations 28,812 - - 28,812
Financing fees 17,810 - - 17,810
Insurance 11,457 - - 11,457
Transfer agent's fees 9,378 - - 9,378
Loss on foreign exchange 8,894 - - 8,894
Accounting and corporate services 8,348 - - 8,348
Shareholders' meeting 6,946 - - 6,946
Stock exchange fees 5,091 - - 5,091
Government fees and taxes 2,650 - - 2,650
Travel 1,027 - - 1,027
Amortization 4,319 13,989 - 18,308
---------- ---------- -----------
(589,212) (298,943) (888,155)
---------- ---------- -----------
OTHER INCOME (EXPENSE)
Option fee income - 226,446 (226,446) -
Expense reimbursement income - 21,958 (21,958) -
Interest income 1,370 1,580 - 2,950
Interest expense - (224,232) - (224,232)
Research and development - (25,157) - (25,157)
Write-off of mineral properties (11,255) - - (11,255)
Miscellaneous other income - 6,711 - 6,711
---------- ---------- --------- -----------
(9,885) 7,306 (248,404) (250,983)
---------- ---------- --------- -----------
NET LOSS $ (599,097) $ (291,637) $(248,404) $(1,139,138)
---------- ---------- --------- -----------
---------- ---------- --------- -----------
LOSS PER COMMON SHARE $ (0.09) $ (0.15) $ (0.13)
---------- ---------- -----------
---------- ---------- -----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,860,681 1,920,000 8,780,681
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
F-30
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
PROFORMA COMBINED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
HISTORICAL PROFORMA
--------------------------------- --------------------------
Altair Trans Mar,
International Inc.
Gold Inc. Two Months
Nine Months Ended
Ended February 29,
September 30, 1996 1996 Adjustments Combined
------------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ -
---------- ---------- -----------
ADMINISTRATIVE AND GENERAL EXPENSES
General exploration - - - -
Wages and administration 338,193 79,902 - 418,095
Professional fees 124,144 65,091 - 189,235
General and office 49,643 - - 49,643
Public relations 29,711 - - 29,711
Insurance 13,900 - - 13,900
Transfer agent's fees 14,618 - - 14,618
Loss on foreign exchange 17,907 - - 17,907
Accounting and corporate services 71,841 - - 71,841
Shareholders' meeting 45,370 - - 45,370
Stock exchange fees 4,500 - - 4,500
Government fees and taxes 40,045 - - 40,045
Travel 12,389 - - 12,389
Rent 26,094 - 26,094
Amortization 175,017 3,490 - 178,507
---------- ---------- -----------
(963,372) (148,483) (1,111,855)
---------- ---------- -----------
OTHER INCOME (EXPENSE)
Option fee income - 46,549 (46,549) -
Expense reimbursement income - 786 (786) -
Interest income 22,730 103 - 22,833
Interest expense (4,399) (5,050) - (9,449)
Miscellaneous other income - 10,410 - 10,410
---------- ---------- --------- -----------
18,331 52,798 (47,335) 23,794
---------- ---------- --------- -----------
NET INCOME (LOSS) $ (945,041) $ (95,685) $ (47,335) $(1,088,061)
---------- ---------- --------- -----------
---------- ---------- --------- -----------
INCOME (LOSS) PER COMMON SHARE $ (0.08) $ (0.15) $ (0.09)
---------- ---------- -----------
---------- ---------- -----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,234,328 640,000 11,874,328
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
F-31
<PAGE>
ATTACHMENT A
ALTAIR INTERNATIONAL GOLD INC.
(FORMERLY CARLIN GOLD COMPANY INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
Nine Months Ended Years Ended
---------------------------- --------------------------
September 30, September 30, December 31, December 31,
1996 1995 1995 1994
------------- ------------- ------------ ------------
(Unaudited) (Unaudited) (Audited) (Audited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (215,167) $ (546,787) $ (587,842) $(167,680)
Adjustments to reconcile net income (loss)
to net cash provided (used):
Amortization 340,736 1,372 4,319 -
Royalties - - - 46,109
Write-off of mineral property - 258,892 - -
Changes in assets and liabilities:
Advances and accounts receivable 77,399 47,632 (70,162) 5,351
Accounts payable and accrued liabilities 752,331 (122,950) (100,186) 46,911
----------- ---------- ---------- ---------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 955,299 (361,841) (753,871) (69,309)
----------- ---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Incorporation costs paid - (413) - -
Purchase and development of mineral properties (20,777) (16,737) (11,255) (144,625)
Purchase of capital assets (38,162) - (31,232) -
Purchase of centrifugal jig - - (5,965) -
Purchase of securities (382,961) (319,938) - -
Option agreement costs (473,126) - (291,708) (81,398)
Acquisition of Trans Mar jig (5,161,936) - - -
----------- ---------- ---------- ---------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (6,076,962) (337,088) (340,160) (226,023)
----------- ---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 2,034,019 1,200,000 1,200,000 180,000
Issuance of common stock for acquisition of
Trans Mar, Inc. 3,455,923 - - -
Proceeds from exercise of stock options 102,500 24,800 73,400 -
Proceeds from exercise of warrants 1,372,844 - 235,000 -
----------- ---------- ---------- ---------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES 6,965,286 1,224,800 1,508,400 180,000
----------- ---------- ---------- ---------
NET INCREASE (DECREASE) IN CASH 1,843,623 525,871 414,369 (115,332)
CASH, BEGINNING OF PERIOD 424,185 9,816 9,816 125,148
----------- ---------- ---------- ---------
CASH, END OF PERIOD $ 2,267,808 $ 535,687 $ 424,185 $ 9,816
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
NET CASH PAID FOR:
Income taxes $ - $ - $ - $ -
Interest $ 4,399 $ 942 $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for shares of subsidiary $ $ $ - $ 352,500
Common stock issued for royalties owed $ $ $ - $ 46,109
</TABLE>
F-32
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- -----------
2.1 Articles of Incorporation of Altair International
Inc.
2.2 Bylaws of Altair International Inc.
3.1 Form of Common Stock Certificate
3.2 Form of Series D Warrant Certificate
3.3 Form of Series E Warrant Certificate
3.4 Form of Series F Warrant Certificate
3.5 Form of Series G Warrant Certificate
3.6 Form of Series H Warrant Certificate
6.1 Articles of Merger of Mineral Recovery Systems,
Inc. with and into Fine Gold Recovery Systems Inc. dated
June 21, 1996, including Exhibit A thereto, Plan of
Merger and Merger Agreement
6.2 Merger Agreement among Fine Gold Recovery Systems
Inc., Altair International Inc. and Trans Mar, Inc. dated
February 8, 1996, as amended February 22, 1996 (the "TMI
Merger Agreement")
6.2.1 Exhibit 1.1(c) to the TMI Merger Agreement --
Articles of Merger
6.2.2 Exhibit 1.1(e)(1) to the TMI Merger Agreement --
Principal Escrow Agreement dated February 29, 1996
6.2.3 Exhibit 1.1(e)(2) to the TMI Merger Agreement --
Performance Escrow Agreement dated February 27, 1996
6.2.4 Exhibit 1.1(h) to the TMI Merger Agreement --
Warrant Certificate
6.2.5 Schedule 1.1(e)(ii) to the TMI Merger Agreement
-- Principal Escrow Release Schedule
6.2.6 Schedule 1.1(e)(iii) to the TMI Merger Agreement
-- Performance Escrow Release Schedule
6.3 Employment Agreement between Altair International
Inc. and William P. Long dated January 1, 1988
6.4 Employment Agreement between Fine Gold Recovery
Systems Inc. and C. Patrick Costin dated August 15, 1994
6.5 Altair International Inc. Stock Option Plan
adopted by shareholders May 10, 1996
6.6 Share Purchase Agreement between Altair
International Inc. and Fine Gold Recovery Systems, Inc.
dated April 21, 1994
6.7 Escrow Agreement among Altair International Inc.,
Equity Transfer Services Inc., Thomas P. Campbell and C.
Patrick Costin dated June 1, 1994
13 Irrevocable Consent and Power of Attorney on
Form F-X
<PAGE>
CERTIFICATE
OF
INCORPORATION
THIS IS TO CERTIFY THAT
DIVERSIFIED MINES LIMITED
WAS INCORPORATED UNDER THE BUSINESS CORPORATIONS ACT ON April 9, 1973.
Assistant Controller of Records
COMPANIES DIVISION
MINISTRY OF CONSUMER
AND COMMERCIAL RELATIONS
FILE NUMBER
268986
<PAGE>
FORM 1
THE BUSINESS
CORPORATIONS
ACT
ARTICLES OF INCORPORATION
1. THE NAME OF THE CORPORATION IS DIVERSIFIED MINES LIMITED
2. THE HEAD OFFICE IS AT THE City
OF Toronto IN THE Municipality
OF Metropolitan Toronto
THE ADDRESS OF THE HEAD OFFICE IS
619 Avenue Road, Toronto, Ontario
4. THE NUMBER OF DIRECTORS are three
5. THE FIRST DIRECTOR(S) ARE
WILLIAM BROWN 16 Village Greenway,
Willowdale, Ontario
CHERITH CHURLY 29 Bywood Drive,
Islington, Ontario
HELEN TOSZEGI 46 Tulane Crescent,
Don Mills, Ontario
6. THE OBJECTS FOR WHICH THE CORPORATION IS INCORPORATED ARE
(a) To carry on in all its branches the business of mining, milling, reduction
and development;
(b) To acquire, own, lease, prospect for, open, explore, develop, work,
improve, maintain and manage mines and mineral lands and deposits, and to
dig for, raise, crush, wash, smelt, assay, analyze, reduce, amalgamate,
refine, pipe, convey and otherwise treat ores, metals and minerals, whether
belonging to the company or not, and to render the same merchantable and to
sell or otherwise dispose of the same or any part thereof or interest
therein; and
(c) To take, acquire and hold as consideration for ores, metals or minerals
sold or otherwise disposed of or for goods supplied or for work done by
contract or otherwise, shares, debentures or other securities of or in any
other company having objects similar, in whole or in part, to those of the
Company hereby incorporated and to sell and otherwise dispose of the same.
<PAGE>
7. THE AUTHORIZED CAPITAL IS divided into three million (3,000,000) common
shares without par value which may be issued for a maximum consideration of
three million ($3,000,000.00) dollars, provided that, the said common
shares may be issued for such greater amount as the directors, by
resolution, may deem expedient, and on payment of the requisite
governmental fees applicable to such greater amount.
8. THE DESIGNATIONS, PREFERENCES, RIGHTS, CONDITIONS, RESTRICTIONS,
LIMITATIONS OR PROHIBITIONS ATTACHING TO THE SPECIAL SHARES, IF ANY, ARE
nil
9. THE RESTRICTIONS, IF ANY, ON THE ALLOTMENT, ISSUE OR TRANSFER OF SHARES ARE
nil
9.A. THE SPECIAL PROVISIONS, IF ANY, ARE
1. That meetings of the board of directors and the executive committee (if
any) of the Corporation may be held at any place within or outside of Ontario
and meetings of the shareholders of the Corporation may be held at any place
within Ontario or at the head office of the Corporation in the Municipality of
Metropolitan Toronto.
2. That it shall not be necessary for a majority of the board of directors of
the Corporation to constitute a quorum, but the quorum shall be two-fifths of
the board of directors, or two directors, whichever is the greater.
3. That, except in the case of any class or series of shares of the
Corporation listed on a stock exchange the Corporation shall have a lien on the
shares registered in the name of a shareholder who is indebted to the
Corporation to the extent of such debt.
4. That the Corporation may pay commissions to persons in consideration of
their subscribing or agreeing to subscribe, whether absolutely or conditionally,
for shares in the Corporation, or procuring or agreeing to procure subscriptions
whether absolute or conditional for such shares.
<PAGE>
10. THE SHARES, IF ANY, TO BE TAKEN RY THE INCORPORATORS ARE
INCORPORATORS FULL NAMES, NUMBER CLASS AMOUNT TO
INCLUDING ALL GIVEN NAMES OF SHARES DESIGNATION BE PAID $
- ------------------------- --------- ----------- ---------
WILLIAM BROWN 5 common $5.00
CHERITH CHURLY 5 common $5.00
HELEN TOSZEGI 5 common $5.00
11. THE NAMES AND RESIDENCE ADDRESSES OF THE INCORPORATORS ARE
FULL NAMES, INCLUDING FULL RESIDENCE ADDRESS GIVING
ALL GIVEN NAMES STREET & NO. OR R.R. NO.,
MUNICIPALITY OR POST OFFICE
WILLIAM BROWN 16 Village Greenway,
Willowdale, Ontario
CHEFITH CHURLY 29 Bywood Drive,
Islington, Ontario
HELEN TOSZEGI 46 Tulane Crescent,
Don Mills, Ontario
THESE ARTICLES ARE EXECUTED IN DUPLICATE FOR DELIVERY TO THE MINISTER
SIGNATURES OF INCORPORATORS
(/s/ William Brown)
(/s/ Cherith Churly)
(/s/ Helen Toszegi)
<PAGE>
AFFIDAVIT OF VERIFICATION
PROVINCE OF ONTARIO IN THE MATTER OF THE BUSINESS
Metropolitan CORPORATIONS ACT AND THE
Municipality of Toronto ARTICLES OF INCORPORATION OF
TO WIT: DIVERSIFIED MINES LIMITED
(NAME OF CORPORATION)
I, CHERITH CHURLY, of the City of Toronto in the Municipality of
Metropolitan Toronto in the Province of Ontario, make oath and say that:
1. I am one of the incorporators of DIVERSIFIED MINES LIMITED and have
personal knowledge of the matters herein deposed to.
2. Each of the incorporators who is a natural person signing the
accompanying Articles of Incorporation in duplicate and each of the first
directors named therein is of eighteen or more years of age.
3. The signatures of the incorporators affixed to the articles are their
true signatures.
Sworn before me at the City of Toronto in the Municipality of Metropolitan
Toronto this 9th day of April, 1973.
/s/ Cherith Churly
(Signature of Deponent)
/s/
(Signature of Commissioner, Notary Public, Etc.)
<PAGE>
FOR MINISTRY USE ONLY ONTARIO CORPORATION NUMBER
268986
Ministry of Consumer and Commercial
Ontario Relations
CERTIFICATE
THIS IS TO CERTIFY THAT THESE ARTICLES ARE EFFECTIVE ON FEBRUARY 23, 1981
/s/ Controller of Records, Companies Services Branch
Tex-U.S. Oil & Gas Inc.
ARTICLES OF AMENDMENT
1. The Name of the Corporation is
DIVERSIFIED MINES LIMITED
2. Date of Incorporation: April 9th, 1973
3. The following is a certified copy of the resolution amending the Articles
of Incorporation:
RESOLVED AS SPECIAL RESOLUTIONS that:
1. The objects of the Company be extended,
a) To acquire, own, lease, prospect for, open, explore, develop, work,
improve, maintain and manage oil and gas lands and the deposits, and to
drill for, raise, analyse, refine, pipe, convey and otherwise treat oil and
gas whether belonging to the Company or not, and to render the same
merchantable and to sell or otherwise dispose of same or any part thereof
or interest therein;
b) To take, acquire and hold oil and gas sold or otherwise disposed of or
for good supplied or for work done by contract or otherwise, shares,
debentures or other securities of or in any other company having objects
similar, in whole or in part, to those of the Company and to sell and
otherwise dispose of same.
<PAGE>
2. The authorized capital of the Company be increased by:
a) deleting from the Articles of the Corporation all reference that the
aggregate consideration for the issue of the presently authorized 3,000,000
common shares without par value shall not exceed in amount or value the sum
of $3,000,000 or such greater amount as the Board of Directors of the
Corporation by effective resolution determines;
b) increasing the authorized capital of the Corporation by creating an
additional 7,000,000 common shares without par value ranking on a parity
with the existing 3,000,000 common shares of the Corporation;
c) increasing further the authorized capital of the Corporation by
creating 1,000,000 special shares with a par value of 1/10 of 1 cent each.
The designations, preferences, rights, conditions, restrictions, limitations or
prohibitions attaching to the special shares are:
i) the special shares shall not be entitled to receive any dividends;
ii) in the event of the liquidation, dissolution or winding up of the
Corporation, the holders of the special shares shall be entitled to repayment of
the amount paid up on such shares in priority to the common shares but they
shall not confer a right to any further participation in the profit or assets of
the Corporation;
iii) the special shares or any part thereof shall be redeemable at any time at
the option of the Corporation without the consent of the holders thereof at the
amount paid up thereon;
iv) The holders of the special shares shall be entitled to receive notice of
and to attend at any meeting of shareholders of the Corporation and shall be
entitled to one (1) vote thereat for each special share held; at all
shareholders' meetings the holders of common shares shall be entitled to one (1)
vote for each common share held by them;
3. The name of the Company be changed to TEX-U.S. OIL & GAS INC.
4. THE AMENDMENT HAS BEEN DULY AUTHORIZED AS REQUIRED BY SUBSECTIONS 2, 3
AND 4 (AS APPLICABLE) OF SECTION 189 OF THE BUSINESS CORPORATIONS ACT.
5. THE RESOLUTION AUTHORIZING THE AMENDMENT WAS CONFIRMED BY THE SHAREHOLDERS
OF THE CORPORATION ON February 23, 1981
<PAGE>
6. THESE ARTICLES ARE EXECUTED IN DUPLICATE FOR DELIVERY TO THE MINISTER.
CERTIFIED
DIVERSIFIED MINES LIMITED
(NAME OF CORPORATION)
BY /S/
--------------------------------
(CORPORATE SEAL) (SIGNATURE) (DESCRIPTION OF OFFICE)
GERALD ISCOVE - PRESIDENT
/s/
-----------------------------------
(SIGNATURE) (DESCRIPTION OF OFFICE)
SIMON TALSKY - SECRETARY-TREASURER
<PAGE>
Ontario Corporation Number
268986
Ministry of Consumer and
Commercial Relations
Ontario
CERTIFICATE
This is to certify that these
articles are effective on November 26, 1986
/s/
Controller of Records, Companies Branch
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation is: TEX U.S. OIL & GAS INC.
2. The name of the corporation is changed to (if applicable):
OREX RESOURCES LTD.
3. Date of incorporation/amalgamation:
9th April, 1973
(Day, Month, Year)
4. The articles of the corporation are amended as follows:
1. The name of the Corporation is hereby changed to:
OREX RESOURCES LTD.
2. The 2,254,222 issued and outstanding common shares of the Corporation
are converted into 450,845 issued and outstanding common shares, on
the basis of one common share for each five issued and outstanding
common shares prior to the date hereof.
3. After such amendments, the capital of the Corporation shall consist of
8,196,623 common shares and 1,000,000 special shares, of which 450,845
common shares and 500,000 special shares are issued and outstanding as
fully paid and non-assessable.
5. The amendment has been duly authorized as required by Sections 167 and 169
(as applicable) of the Business Corporations Act.
<PAGE>
6. The resolution authorizing the amendment was approved by the
shareholders/directors (as applicable) of the corporation on 21, November,
1986.
These articles are signed in duplicate.
TEX U.S. OIL & GAS INC.
(Name of Corporation)
By /s/
------------------------------------
(Signature)
Wayne G. Beach - Director
<PAGE>
Ontario Corporation Number
268986
For Ministry Use Only
Ministry of Consumer and
Commercial Relations
CORRECTED CERTIFICATE
This is a corrected certificate endorsed pursuant to
Section 273 of the Business Corporations Act, and effective
on July 20 1988
/s/
Director
Business Corporation Act
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation is:
OREX RESOURCES LTD.
2. The name of the corporation is changed to (if applicable):
CARLIN GOLD COMPANY INC.
3. Date of incoropration
9 April, 1973
(Day, Month, Year)
4. The articles of the corporation are amended as follows:
The name of the Corporation is hereby changed to:
Carlin Gold Company Inc.
5. The amendment has been duly authorized as required by Sections 167 and 169
(as applicable) of the Busienss Corporations Act.
6. The resolution authorizing the amendment was approved by the shareholders
(as applicable) of the corporation on
27 June, 1988
(Day, Month, Year)
<PAGE>
These articles are signed in duplicate.
OREX RESOURCES LTD.
(Name of Corporation)
By: /s/
-----------------------------------
(Signature)
WAYNE G. BEACH - SECRETARY
<PAGE>
Ontario Corporation No.: 268986
CERTIFIED COPY OF A RES0LUTION OF THE DIRECTOR8
OF
CARLIN GOLD COMPANY INC.
"CORRECTED ARTICLES OF AMENDMENT
WHEREAS Articles of Amendment changing Tex - U.S. Oil & Gas Inc. to Carlin
Gold Company Inc. were issued on July 20, 1988;
AND WHEREAS the name of the Corporation on the Articles of Amendment was
incorrectly set out as Tex - U.S. Oil & Gas Inc. The change of name should have
been from Orex Resources Ltd. to Carlin Gold Company Inc. because of a
Certificate of Amendment issued November 26, 1986 changing the name of Tex -
U.S. Oil & Gas Inc. to Orex Resources Ltd.;
AND WHEREAS the Ontario Corporation Number on the Articles of Amendment was
incorrectly set out as 128986. The Ontario Corporation Number should have been
set out as 268986;
AND WHEREAS the Ministry of Consumer and Commercial Relations has requested
that a corrected Certificate of Amendment be issued to correct the errors;
NOW THEREFORE BE IT RESOLVED THAT the Corporation file corrected Articles
of Amendment to correct the errors in the Certificate of Amendment dated July
20, 1988 changing the name Tex - U.S. Oil & Gas Inc. to Carlin Gold Company Inc.
with an Ontario Corporation Number of 128986 by having issued a Certificate of
Amendment changing the name Orex Resources Ltd. to Carlin Gold Company Inc. with
an Ontario Corporation Number of 268986."
CERTIFIED to be a true copy of a resolution of Carlin Gold Company Inc.
which was consented to during a meeting of the directors of the Corporation,
pursuant to the provisions of the Business Corporations Act, 1982, on the 12th
day of June, 1991.
DATED the 13th day of June, 1991.
/s/
---------------------------------------
Secretary - Wayne G. Beach
<PAGE>
Ontario Corporation Number
268986
Ministry of Consumer and
Commercial Relations
CERTIFICATE
This is to certify endorsed that these articles
are effective on June 19, 1991
/s/
Director
Business Corporation Act
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation is:
CARLIN GOLD COMPANY INC.
2. The name of the corporation is changed to (if applicable):
3. Date of incorpration
9 April, 1973
(Day, Month, Year)
4. The articles of the corporation are amended as follows:
A. AMEND MAXIMUM AUTHORIZED SHARES
The number of common shares shall be unlimited, and the consideration
for which any common shares of the Corporation are authorized to be
issued shall be unlimited.
B. DELETION OF SPECIAL SHARES
The special shares of the Corporation, none of which are issued and
outstanding, are hereby deleted.
C. NUMBER OF DIRECTORS
The Corporation shall have a minimum of three (3) directors and a
maximum of nine (9) directors.
<PAGE>
D. DELETION OF OBJECTS
The objects of the Corporation are hereby deleted, and there shall be
no restrictions on busienss the Corporation may carry on or powers the
Corporation may exercise.
5. The amendment has been duly authorized as required by Sections 167 and 169
(as applicable) of the Business Corporations Act.
6. The resolution authorizing the amendment was approved by the shareholders
(as applicable) of the corporation on
11 June, 1991
(Day, Month, Year)
These articles are signed in duplicate.
CARLIN GOLD COMPANY INC.
(Name of Corporation)
By: /s/
-----------------------------------
(Signature)
WAYNE G. BEACH - SECRETARY
<PAGE>
Ontario Corporation Number
268986
For Ministry Use Only
Ministry of Consumer and
Commercial Relations
CERTIFICATE
This is to certify that these articles are
effective on March 8, 1994
/s/
Director
Business Corporation Act
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
1. The present name of the corporation is:
CARLIN GOLD COMPANY INC.
2. The name of the corporation is changed to (if applicable):
ALTAIR INTERNATIONAL GOLD INC.
3. Date of incorporation
9 April, 1973
(Day, Month, Year)
4. The articles of the corporation are amended as follows:
A. CHANGE OF NAME
The name of the Corporation is changed to:
ALTAIR INTERNATIONAL GOLD INC.
B. CONSOLIDATION OF COMMON SHARES
The issued and outstanding common shares of the Corporation are
consolidated on the basis of one new share for each three previously
issued and outstanding common shares.
5. The amendment has been duly authorized as required by Sections 167 and 169
(as applicable) of the Business Corporations Act.
<PAGE>
6. The resolution authorizing the amendment was approved by the shareholders
(as applicable) of the corporation on
7, March, 1994
(Day, Month, Year)
These articles are signed in duplicate.
CARLIN GOLD COMPANY INC.
(Name of Corporation)
By: /s/
-----------------------------------
(Signature)
WILLIAM P. LONG - President
<PAGE>
BY-LAW NO. 1
A by-law relating generally to
the transaction of the business
and affairs of
BE IT ENACTED as by-law of DIVERSIFIED MINES LIMITED (hereinafter referred
to as the "Corporation") as follows:
HEAD OFFICE
1. The head office of the Corporation shall be at such location within
the municipality or geographic township designated as such by the articles of
incorporation or by special by-law as the directors may from time to time
determine.
MEETINGS OF SHAREHOLDERS
2. ANNUAL MEETING - The annual meeting of the shareholders shall be held
at such place within Ontario, at such time and on such day in each year as the
board, or the president, or a vice-president who is a director may from time to
time determine, for the purpose of hearing and receiving the reports and
statements required by THE BUSINESS CORPORATIONS ACT to be read at and laid
before the Corporation at an annual meeting, electing directors, appointing the
auditor and fixing or authorizing the board to fix his remuneration and for the
transaction of such other business as may properly be brought before the
meeting. At such meeting, any shareholder shall have an opportunity to raise
any matter relevant to the affairs and business of the Corporation.
3. GENERAL MEETING - The directors may at any time call a general
meeting of the shareholders for the transaction of any business, the general
nature of which is specified in the notice calling the meeting. The phrase
"general meeting of the shareholders" wherever it occurs in this by-law shall
include a meeting of any class or classes of shareholders, as well as a
general meeting of shareholders, and the phrase "meeting of shareholders"
wherever it occurs in this by-law shall mean and include an annual meeting of
shareholders and a general meeting of shareholders.
4. NOTICES - No public notice or advertisement of any meeting of
shareholders shall be required, but notice of the time and place of each such
meeting shall be given not less than *21 days and not more than 50 days before
the day on which the meeting is to be held to the auditor of the Corporation and
to each person who appears on the records of the Corporation as a shareholder
entitled to notice of meetings. Notice of a general meeting of shareholders
shall state the general nature of the business which is to be transacted at it.
A meeting of shareholders may be held at any time without notice if all the
shareholders entitled to vote thereat are present in person or represented by
proxy or those not so present or represented have waived notice and if the
auditor is present or has waived such notice.
* minimum notice in case of
Corporations offering shares to
the public, 21 days; for other
corporations, 10 days.
1
<PAGE>
5. PERSONS ENTITLED TO BE PRESENT - The only persons entitled to attend a
meeting of shareholders shall be those entitled to vote thereat and the auditor
of the Corporation and others who although not entitled to vote are entitled or
required under any provision of The BUSINESS CORPORATIONS ACT or by-laws of the
Corporation to be present at the meeting. Any other person may be admitted only
on the invitation of the chairman of the meeting or with the consent of the
meeting.
6. QUORUM - 2 persons present in person and each entitled to vote thereat
shall constitute a quorum for the transaction of business at any meeting of
shareholders.
7. RIGHT TO VOTE - The holder of each common share and, unless the
articles condition, restrict, limit or prohibit the right to vote, the holder of
each special share who, on the record date for voting, appears on the records of
the Corporation as a shareholder is entitled to one vote for each share held by
him at all meetings of the shareholders of the Corporation, or such greater
number of votes for each share respecting such matters as the articles provide.
8. PERSONAL REPRESENTATIVE - Where a person holds shares as a personal
representative, that person or his proxy is the person entitled to vote at all
meetings of shareholders in respect of the shares so held by him.
9. MORTGAGEE, ETC. - Where a person mortgages or hypothecates his shares,
that person or his proxy is the person entitled to vote at all meetings of
shareholders in respect of such shares unless, in the instrument creating the
mortgage or hypothec, he has expressly empowered the person holding the mortgage
or hypothec to vote in respect of such shares, in which case, subject to the
articles, such holder or his proxy is the person entitled to vote in respect of
the shares.
10. JOINT SHAREHOLDERS - Where two or more persons hold the same share
or shares jointly, any one of such persons present at a meeting of
shareholders has the right in the absence of the other or others to vote in
respect of such share or shares, but, if more than one of such persons are
present or represented by proxy and vote, they shall vote together as one on
the share or shares jointly held by them.
11. PROXIES - Every shareholder, including a corporate shareholder,
entitled to vote at meetings of shareholders may by means of a proxy appoint a
person who need not be a shareholder, as his nominee, to attend and act at the
meeting in the manner, to the extent and with the power conferred by the proxy.
A proxy shall be in writing, shall be executed by the shareholder or his
attorney authorizing in writing, or, if the shareholder is a body corporate,
under its corporate seal or by an officer or attorney thereof duly authorized,
and ceases to be valid one year from its date. Subject to the requirements of
The Business Corporations Act, a proxy may be in such form as the directors from
time to time prescribe or in such other form as the chairman of the meeting may
accept as sufficient, and shall be deposited with the secretary of the meeting
before any vote is passed under its authority, or at such earlier time and in
such manner as the board may prescribe.
12. SCRUTINEERS - At each meeting of shareholders one or more scrutineers
may be appointed by a resolution of the meeting or by the chairman with the
consent of the meeting to serve at the meeting. Such scrutineers need not be
shareholders of the Corporation.
13. VOTES TO GOVERN - Unless otherwise required by the articles of
incorporation or by-laws of the Corporation or by-law, all questions proposed
for the consideration of the shareholders
2
<PAGE>
at a meeting of shareholders shall be determined by the majority of the votes
cast, and in case of an equality of votes the chairman presiding at the
meeting has a second or casting vote.
14. SHOW OF HANDS - At all meetings of shareholders every question shall
be decided by a show of hands unless a poll thereon be required by the chairman
or be demanded by any shareholder present in person or represented by proxy and
entitled to vote. Upon a show of hands every shareholder present in person or
represented by proxy and entitled to vote shall have one vote. After a show of
hands has been taken upon any question the chairman may require or any
shareholder present in person or represented by proxy and entitled to vote may
demand a poll thereon. Whenever a vote by show of hands shall have been taken
upon a question, unless a poll thereon be so required or demanded a declaration
by the chairman of the meeting that the vote upon the question has been carried
or carried by a particular majority or not carried and an entry to that effect
in the minutes of the proceedings at the meeting shall be PRIMA FACIE evidence
of the fact without proof of the number or proportion of the votes recorded in
favour of or against any resolution or other proceeding in respect of the
question, and the result of the vote so taken shall be the decision of the
Corporation in annual or general meeting, as the case may be, upon the question.
A demand for a poll may be withdrawn at any time prior to the taking of the
poll.
15. POLLS - If a poll be required by the chairman of the the meeting or be
duly demanded by any shareholder and the demand be not withdrawn, a poll upon
the question shall be taken in such manner as the chairman of the meeting shall
direct.
16. ADJOURNMENT - The chairman at a meeting of the shareholders may, with
the consent of the meeting and subject to such conditions as the meeting may
decide, adjourn the meeting from time to time and from place to place.
DIRECTORS
17. POWERS OF DIRECTORS - The affairs and business of the Corporation
shall be managed or supervised by its board of directors. Until changed by
special by-law or amendment to the articles of incorporation, the number of the
directors shall be of whom a majority shall constitute a quorum
for the transaction of business at any meeting of the directors.
Notwithstanding vacancies the remaining directors may exercise all the powers of
the board so long as a quorum of the board remains in office.
18. QUALIFICATIONS - Each director shall be twenty-one or more years of
age, and shall not be an undischarged bankrupt or a mentally incompetent person.
19. ELECTION AND TERM - Directors shall be elected yearly to hold office
until the next annual meeting of shareholders and until their successors are
elected. The whole board shall be elected at each annual meeting, and all the
directors then in office shall retire, but if qualified, are eligible for
re-election, The election may be by a show of hands or by resolution of the
shareholders unless a ballot be demanded by any shareholder.
20. REMOVAL OF DIRECTORS - The shareholders may, by resolution passed by a
majority of the votes cast at a general meeting of shareholders duly called for
that purpose, remove any director before the expiration of his term of office
and may, by a majority of the votes cast at the meeting, elect any person in his
stead for the remainder of his term.
3
<PAGE>
21. VACANCIES - As long as there is a quorum of directors in office, and a
vacancy occurs on the board, the directors remaining in office may appoint a
qualified person to fill the vacancy for the remainder of the term. Where there
is not a quorum of directors in office, the director or directors then in office
shall forthwith call a general meeting of shareholders to fill the vacancies,
and, in default or if there are no directors then in office, the meeting may be
called by any shareholder.
22. CALLING OF MEETINGS - Meetings of the board shall be held from time to
time at such place, at such time and on such day as the president or a
vice-president who is a director or any two directors may determine, and the
secretary shall call meetings when directed or authorized by the president or by
a vice-president who is a director or by any two directors. Notice of every
meeting so called shall be given to each director not less than forty-eight (48)
hours (excluding any part of a Sunday and of a holiday as defined by the
Interpretation Act) before the time when the meeting is to be held, save that no
notice of a meeting shall be necessary if all the directors are present or if
those absent have waived notice of or otherwise signified their consent to the
holding of such meeting.
23. REGULAR MEETINGS - The board may appoint a day or days in any month or
months for regular meetings at a place and hour to be named. A copy of any
resolution of the board fixing the place and time of regular meetings of the
board shall be sent to each director forthwith after being passed, but no other
notice shall be required for any such regular meeting.
24. FIRST MEETING OF NEW BOARD - Each newly elected board may without
notice hold its first meeting for the purpose of organization and the election
and appointment of officers immediately following the meeting of shareholders at
which such board is elected, provided a quorum of directors is present.
25. PLACE OF MEETING - Meetings of the board may be held at the head
office of the Corporation or any other place within or outside of Ontario.
26. VOTES TO GOVERN - At all meetings of the board every question shall be
decided by a majority of the votes cast on the question; and in case of an
equality of votes the chairman of the meeting shall be entitled to a second or
casting vote.
27. REMUNERATION OF DIRECTORS - Until the end of the fiscal year,
the remuneration to be paid to the directors shall be the sum of .
Any remuneration so payable to a director who is also an officer or employee of
the Corporation or who is counsel or solicitor to the Corporation or otherwise
serves it in a professional capacity shall be in addition to his salary as such
officer or to his professional fees as the case may be. In addition, directors
shall be paid such sums in respect of their out-of-pocket expenses incurred in
attending board, committee or shareholders meetings or otherwise in respect of
the performance by them of their duties as the board may from time to time
determine.
28. DISCLOSURE OF INTERESTS IN CONTRACTS - Every director of the
Corporation who has, directly or indirectly any interest in any contract or
transaction to which the Corporation is or is to be a party, other than a
contract or transaction limited solely to his remuneration as a director,
officer or employee, shall declare his interest in such contract or transaction
at a meeting of the directors of the Corporation as required by section 134 of
The Business Corporations Act, and shall at that time disclose the nature and
extent of such interest including, as to any contract
4
<PAGE>
or transaction involving the purchase and sale of assets by or to the
Corporation or a subsidiary thereof, the cost of the assets to the purchaser
and the cost thereof to the seller if acquired by the seller within five
years before the date of the contract or transaction, to the extent to which
such information is within his knowledge or control.
29. INDEMNITY OF DIRECTORS AND OFFICERS - Subject to subsection 2 of
section 147 of The Business Corporations Act, every director and officer of the
Corporation and his heirs, executors, administrators and other legal personal
representatives, shall, from time to time be indemnified and saved harmless by
the Corporation from and against,
(a) any liability and all costs, charges and expenses that such director
or officer sustains or incurs in respect of any action, suit or
proceeding that is proposed or commenced against him for or in respect
of anything done or permitted by him in respect of the execution of
the duties of his office; and
(b) all other costs, charges and expenses that he sustains or incurs in
respect of the affairs of the Corporation, except such costs, charges
or expenses as are occasioned by his own wilful neglect or default.
30. LOANS TO SHAREHOLDERS - The directors of the Corporation may from time
to time,
(a) make loans to bona fide full-time employees of the Corporation whether
or not they are shareholders or directors, with a view to enabling
them to purchase or erect dwelling houses for their own occupation,
and may take from such employees mortgages or other security for the
repayment of such loans;
(b) provide, in accordance with a scheme for the time being in force,
money by way of loan for the purchase of or subscription for shares of
the Corporation by trustees to be held by or for the benefit of bona
fide employees of the Corporation, whether or not they are
shareholders or directors; or
(c) make loans to bona fide employees of the Corporation other than
directors, whether or not they are shareholders, with a view to
enabling them to purchase or subscribe for shares of the Corporation
to be held by them by way of beneficial ownership.
OFFICERS
31. ELECTED OFFICER - At the first meeting of the board after each
election of directors the board shall elect among its members a president. The
prior incumbent, if a member of the board, shall continue to hold office until
the election at such meeting and, in default of such election, shall continue to
hold office after such meeting. In case the office of president becomes vacant
at any time, such vacancy may be filled by the board from among its members.
32. APPOINTED OFFICERS - At the first meeting of the board after each
election of directors, the board shall appoint a secretary, and may appoint one
or more vice-presidents, a general manager, a treasurer, and such other officers
as the board may determine including one or more assistants to any of the
officers so appointed. The officers so appointed may but need not be
5
<PAGE>
members of the board. One person may hold more than one office, and if the
same person holds both the office of secretary and the office of treasurer,
he may but need not be known as the secretary-treasurer.
33. TERM OF OFFICE AND REMUNERATION - In the absence of written agreement
to the contrary the board may remove at its pleasure any officer of the
Corporation. Each prior officer shall continue to hold office until the
appointment of officers at such meeting and, in default of the appointment of
officers at such meeting. The terms of employment and remuneration of the
president and other officers elected or appointed by it shall be settled from
time to time by the board.
34. PRESIDENT - The president shall, when present, preside at all meetings
of the shareholders and of the board and shall be charged with the general
supervision of the business and affairs of the Corporation. Except when the
board has appointed a general manager or managing director, the president shall
also have the powers and be charged with the duties of that office.
35. VICE-PRESIDENT - During the absence or inability of the president his
duties may be performed and his powers may be exercised by the vice-president,
or if there are more than one, by the vice-presidents in order of seniority (as
determined by the board) save that no vice-president shall preside at a meeting
of the board or at a meeting of shareholders who is not qualified to attend the
meeting as a director or a shareholder, as the case may be. If a vice-president
exercises any such duty or power, the absence or inability of the president
shall be presumed with reference thereto. A vice-president shall also perform
such duties and exercise such powers as the president may from time to time
delegate to him or the board may prescribe.
36. GENERAL MANAGER - The general manager, if one is appointed, shall have
the general management and direction, subject to the authority of the board and
the supervision of the president, of the Corporation's business and affairs and
the power to appoint and remove any and all officers, employees and agents of
the Corporation not elected or appointed directly by the board and to settle the
terms of their employment and remuneration. If and so long as the general
manager is a director he may but need not be known as the managing director.
37. SECRETARY - The secretary shall give, or cause to be given, all
notices required to be given to shareholders, directors, auditors and members of
committees; he shall attend all meetings of the directors and of the
shareholders and shall enter or cause to be entered in books kept for that
purpose minutes of all proceedings at such meetings; he shall be the custodian
of the stamp or mechanical device generally used for affixing the corporate seal
of the Corporation and of all books, papers, records, documents and other
instruments belonging to the Corporation; and he shall perform such other duties
as may from time to time be prescribed by the board.
38. TREASURER - The treasurer shall keep full and accurate books of
account in which shall be recorded all receipts and disbursements of the
Corporation and, under the direction of the board, shall control the deposit of
money, the safekeeping of securities and the disbursement of the funds of the
Corporation; he shall render to the board at the meetings thereof, or whenever
required of him, an account of all his transactions as treasurer and of the
financial position of the Corporation; and he shall perform such other duties as
may from time to time be prescribed by the board.
39. OTHER OFFICERS - The duties of all other officers of the Corporation
shall be such as the terms of their engagement call for or the board requires of
them. Any of the powers and
6
<PAGE>
duties of an officer to whom an assistant has been appointed may be exercised
and performed by such assistant, unless the board otherwise directs.
40. VARIATION OF DUTIES - From time to time the board may vary, add to or
limit the powers and duties of any officer or officers.
41. AGENTS AND ATTORNEYS - The board shall have power from time to time to
appoint agents or attorneys for the Corporation in or out of Ontario with such
powers of management or otherwise (including the power to sub-delegate) as may
be thought fit.
42. FIDELITY BONDS - The board may require such officers, employees and
agents of the Corporation as the board deems advisable to furnish bonds for the
faithful discharge of their duties, in such form and with such surety as the
board may from time to time prescribe.
BANKING ARRANGEMENTS
43. BANKING ARRANGEMENTS - The banking business of the Corporation or any
part thereof, shall be transacted with such bank, trust company or other firm or
corporation carrying on a banking business as the board may designate, appoint
or authorize from time to time by resolution and all such banking business or
any part thereof, shall be transacted on the Corporation's behalf by such one or
more officers or other persons as the board may designate, direct or authorize
from time to time by resolution and to the extent therein provided, including,
but without restricting the generality of the foregoing, the operation of the
Corporation's accounts; the making, signing, drawing, accepting, endorsing,
negotiating, lodging, depositing, or transferring of any cheques, promissory
notes, drafts, acceptances, bills of exchange and orders for the payment of
money; the giving of receipts for and orders relating to any property of the
Corporation; the execution of any agreement relating to any banking business and
defining the rights and powers of the parties thereto; and the authorizing of
any officer of such banker to do any act or thing on the Corporation's behalf to
facilitate such banking business.
44. EXECUTION OF INSTRUMENTS - Deeds, transfers, assignments, contracts
and obligations on behalf of the Corporation may be signed by the president or a
vice-president or a director and by the secretary or the treasurer or an
assistant secretary or an assistant treasurer or another director, and the
corporate seal shall be affixed to such instruments as require the same.
Notwithstanding any provision to the contrary contained in the by-laws of
the Corporation, the board may at any time and from time to time direct the
manner in which and the person or persons by whom any particular deed, transfer,
contract or obligation or any class of deeds, transfers, contracts or
obligations of the Corporation may or shall be signed.
SHARES
45. ALLOTMENT - The board may from time to time allot or grant options to
purchase the whole or any part of the authorized and unissued shares of the
Corporation, including any shares created by supplementary articles increasing
or otherwise varying the capital of the Corporation, to such person or persons
or class of persons as the board shall by resolution determine.
7
<PAGE>
46. PAYMENT OF COMMISSIONS - The Corporation may pay commissions or allow
discounts to persons in consideration of their subscribing or agreeing to
subscribe, whether absolutely or conditionally, for shares in the Corporation,
or procuring or agreeing to procure subscriptions, whether absolute or
conditional for such shares, but no such commission or discount shall exceed
twenty-five per cent of the amount of the subscription price.
47. SHARE CERTIFICATES - Share Certificates (or Stock Certificates) shall
be in such form or forms as the Board may from time to time approve. Unless
otherwise ordered by the Board, they shall be signed by the President and
Secretary provided that certificates representing shares in respect of which a
transfer agent has been appointed shall not be valid unless counter-signed by or
on behalf of such transfer agent. If authorized by resolution of the Board, the
signature of one of the signing officers or in case of share certificates
representing shares in respect of which a transfer agent has been appointed, the
signature of both signing officers, may be printed, engraved, lithographed or
otherwise mechanically reproduced in facsimile upon share certificates and every
such facsimile signature shall for all purposes be deemed to be the signature of
the officer whose signature it reproduces and shall be binding upon the Company
provided the share certificate is otherwise validly issued. Share certificates
otherwise valid shall continue to be valid notwithstanding that one or both of
the officers whose signature (whether manual or facsimile) appears thereon no
longer holds office at the date of issue or delivery thereof.
48. REPLACEMENT OF SHARE CERTIFICATES - The Board may by resolution
prescribe, either generally or in any particular case, the terms and conditions
upon which a new share certificate may be issued in lieu of and upon
cancellation of a share certificate which has become mutilated or in
substitution for a share certificate which has been lost, stolen, or destroyed,
and in any such case the Board may require the applicant to provide such
indemnification of the Company and its transfer agents and registrars as the
Board may deem fit.
49. TRANSFER AGENT AND REGISTRAR - The directors may from time to time by
resolution appoint or remove a transfer agent and a registrar (who may, but need
not be the same individual or company) and one or more branch transfer agents
and registrars (who may, but need not be the same individual or company) for the
shares of the Corporation and may provide for the transfer of shares in one or
more places and may provide that shares will be interchangeably transferable or
otherwise.
50. CLOSING REGISTER - The board may by resolution fix in advance a date
as a record date,
(a) for the determination of the shareholders entitled to notice of
meetings of the shareholders which record date for notice shall not be
more than fifty days before the date of the meeting and not fewer than
the minimum number of days for notice of the meeting and where no such
record date for notice is fixed, the record date for notice shall be
at the close of business on the day next preceding the day on which
notice is given or sent; and
(b) for the determination of the shareholders entitled to vote at meetings
of the shareholders which record date for voting shall be not more
than forty-eight hours excluding Saturdays and holidays, before the
date of the meeting and where no such
8
<PAGE>
record date for voting is fixed, the record date for voting shall be
at the time of the taking of the vote.
51. JOINT SHAREHOLDERS - If two or more persons are registered as joint
holders of any share, any one of such persons may give effectual receipts for
the certificate issued in respect thereof and for any dividend, bonus, return of
capital or other money payable or warrant issuable in respect of such share.
FINANCIAL
52. FINANCIAL YEAR - The financial year of the Corporation shall end on
the 31 day of December in each year.
53. DIVIDENDS - The board may from time to time by resolution declare
dividends and pay the same out of the funds of the Corporation available for
that purpose. A dividend payable in cash shall be paid by cheque drawn on the
Corporation's bankers or one of them to the order of each registered holder of
shares of the class in respect of which it has been declared and mailed by
ordinary mail postage prepaid, to such registered holder at his last address
appearing on the records of the Corporation. In the case of joint holders the
cheque shall, unless such joint holders otherwise direct, be made payable to the
order of all of such joint holders and if more than one address appears on the
books of the Corporation in respect of such joint holding the cheque shall be
mailed to the first address so appearing. The mailing of such cheque as
aforesaid shall satisfy and discharge all liability for the dividend to the
extent of the sum represented thereby, unless such cheque be not paid on
presentation.
In the event of non-receipt of any cheque for dividend by the person to
whom it is so sent as aforesaid, the Corporation on proof of such non-receipt
and upon satisfactory indemnity being given to it, shall issue to such person a
replacement cheque for a like amount.
54. PURCHASE OF BUSINESS AS OF PAST DATE - Where any business is bought by
the Corporation as from a past date (whether such date be before or after the
incorporation of the Corporation) upon terms that the Corporation shall as from
that date take the profits and bear the losses of the business, such profits or
losses as the case may be shall, at the discretion of the directors be credited
or debited wholly or in part to revenue account, and in that case the amount so
credited or debited shall, for the purpose of ascertaining the fund available
for dividend, be treated as a profit or loss arising from the business of the
Corporation.
NOTICES
55. METHOD OF GIVING - Any notice, communication or other document to be
given by the Corporation to a shareholder, director, officer, or auditor of the
Corporation under any provision of the articles of incorporation or by-laws
shall be sufficiently given if delivered personally to the person to whom it is
to be given, or if delivered to his last address as shown on the records of the
Corporation, or if mailed by prepaid post in a sealed envelope addressed to him
at his last address shown on the records of the Corporation, or if telegraphed.
The secretary may change the address on the records of the Corporation of any
shareholder in accordance with any information believed by him to be reliable.
A notice, communication or document so delivered shall be deemed to have been
given when it is delivered personally or at the address aforesaid; and a notice,
communication or
9
<PAGE>
document so mailed shall be deemed to have been given when deposited in a
post office or public letter box; and a telegraphed notice shall be deemed to
have been given when delivered to the appropriate communication company or
agency or its representative for dispatch.
56. COMPUTATION OF TIME - In computing the date when notice must be given
under any provision of the articles of incorporation or by-laws requiring a
specified number of days' notice of any meeting or other event, the date of
giving the notice shall, unless otherwise provided, be included.
57. OMISSIONS AND ERRORS - The accidental omission to give any notice to
any shareholder, director, officer, or auditor, or the non-receipt of any notice
by any shareholder, director, officer, or auditor or any error in any notice not
affecting the substance thereof shall not invalidate any action taken at any
meeting held pursuant to such notice or otherwise founded thereon.
58. NOTICE TO JOINT SHAREHOLDERS - All notices with respect to any shares
registered in more than one name may if more than one address appears on the
records of the Corporation in respect of such joint holding, be given to such
joint shareholders at the first address so appearing, and notice so given shall
be sufficient notice to all the holders of such shares.
59. PERSONS ENTITLED BY DEATH OR OPERATION OF LAW - Every person who by
operation of law, transfer, death of a shareholder or by any other means
whatsoever, shall become entitled to any share or shares, shall be bound by
every notice in respect of such share or shares which shall have been duly given
to the persons from whom he derives his title to such share or shares,
previously to his name and address being entered on the records of the
Corporation (whether it be before or after the happening of the event upon which
he became so entitled).
60. WAIVER OF NOTICE - Any shareholder (or his duly appointed proxy)
director, officer or auditor may waive any notice required to be given under any
provision of the articles of incorporation or by-laws of the Corporation or The
BUSINESS CORPORATIONS ACT, and such waiver, whether given before or after the
meeting or other event of which notice is required to be given, shall cure any
default in giving such notice.
INTERPRETATION
61. In this by-law and all other by-laws of the Corporation words
importing the singular number only shall include the plural and vice-versa;
words importing the masculine gender shall include the feminine and neuter
genders; words importing persons shall include companies, corporations,
partnerships and any number or aggregate of persons; "board" shall mean the
board of directors of the Corporation; "articles of incorporation" shall include
supplementary articles of incorporation; "The Business Corporations Act" shall
mean The Business Corporations Act, as amended from time to time or any Act that
may hereafter be substituted therefor.
ENACTED this 9th day of April 1973.
WITNESS the corporate seal of the Corporation.
/s/
-------------------------------------------
President
10
<PAGE>
/s/
-------------------------------------------
Secretary
(Corporate Seal)
The foregoing by-law is hereby passed by the directors of the Corporation
pursuant to The Business Corporations Act, as evidenced by the respective
signatures hereto of all the directors.
Dated the 9th day of April 1973.
/s/ /s/
- ----------------------------------- ------------------------------------
William Brown Cherith Churly
/s/
------------------------------------
Helen Toszegi
The foregoing by-law is hereby confirmed by all the shareholders entitled
to vote at a meeting of shareholders of the Corporation pursuant to The Business
Corporations Act, as evidenced by their respective signatures hereto.
Dated the 9th day of April 1973.
/s/ /s/
- ---------------------------------- ------------------------------------
William Brown Cherith Churly
/s/
--------------------------------------
Helen Toszegi
11
<PAGE>
BY-LAW NO. 2
A by-law respecting the borrowing of money, the issuing
of securities and the securing of liabilities by
DIVERSIFIED MINES LIMITED (hereinafter referred to as
"the Company")
BE IT ENACTED as a by-law of the Company as follows:
The directors of the Company may from time to time:
a) borrow money on the credit of the Company;
b) issue, sell or pledge securities (including bonds, debentures, debenture
stock or other like liabilities) of the Company.
c) charge, mortgage, hypothecate, or pledge all or any of the real or personal
property of the Company, including book debts, and unpaid calls, rights, powers,
franchises and undertaking to secure any such securities or any money borrowed,
or other debt, or any other obligation or liability of the Company;
d) delegate to such one or more of the officers and directors of the Company
as may be designated by the directors, all or any of the powers conferred by the
foregoing clauses of this by-law to such extent and in such manner as the
directors shall determine at the time of each deligation;
e) give indemnities to any director or other person who has undertaken or is
about to undertake any liability on behalf of the Company or any company
controlled by it, and secure any such director or other person against loss by
giving him by way of security a mortgage or charge upon the whole or any part of
the real and personal property, undertaking and rights of the Company.
ENACTED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
President Secretary
The foregoing by-law is hereby enacted by the Board of Directors of the
Company pursuant to The Business Corporations Act, as evidenced by the
respective signatures hereto of all the Directors.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
The foregoing by-law is hereby confirmed by all the shareholders of the
Company pursuant to The Business Corporations Act, as evidenced by their
respective signatures hereto.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
BY-LAW NO. 3
A By-law authorizing the Directors of DIVERSIFIED
MINES LIMITED to purchase shares in any other company
BE IT ENACTED as a by-law of DIVERSIFIED MINES LIMITED (hereinafter
referred to as the "Company") as follows:
The directors of the Company may from time to time on behalf of the
Company:
1. Take, procure and otherwise acquire shares in and bonds, debentures,
debenture stock and other securities of any other company or corporation,
and hold the same and may use any of the funds, or the shares, bonds,
debentures or other securities of the Company for such purpose or purposes.
2. Sell and otherwise dispose of any such shares, debentures, debenture stock
and other securities for such consideration and upon such terms and
conditions as they may see fit.
ENACTED by the Directors and sealed with the Company's seal this 9th day of
April, 1973.
- ------------------------------ ---------------------------------
President Secretary
The foregoing by-law is hereby enacted by the Board of Directors of the
Company pursuant to The Business Corporations Act, as evidenced by the
respective signatures hereto of all the Directors.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
The foregoing by-law is hereby confirmed by all the shareholders of the
Company pursuant to The Business Corporations Act, AS EVIDENCED by their
respective signatures hereto.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
BY-LAW NO. 4
A by-law respecting the borrowing of money and issue
of securities by DlVERSIFIED MINES LIMITED
BE IT ENACTED by the Directors of DIVERSIFIED MINES LIMITED as a by-law of
the said Company as follows:
The Directors of the Company may from time to time:
(a) Borrow money upon the credit of the Company in such amounts and upon such
terms as may be deemed necessary;
(b) Issue bonds, debentures, debenture stock or other securities of the Company
for its lawful purposes, for such amounts and upon such terms as may be
deemed expedient and pledge or sell the same for such sums and at such
prices as the Directors shall determine;
(c) Hypothecate, mortgage, charge or pledge all or any of the real and
personal, moveable or immovable, property, undertaking and rights of the
Company, present or future, to secure any such bonds, debentures, debenture
stock or other securities or any money borrowed or any other liability of
the Company;
(d) Delegate to such one or more of the officers and directors of the Company
as may be designated by the Directors all or any of the powers conferred by
the foregoing clauses of this by-law to such extent and in such manner as
the Directors shall determine at the time of each such delegation;
(e) Give indemnities to any Director or other person who has undertaken or is
about to undertake any liability on behalf of the Company, and to secure
such Director or other person against loss by giving him a mortgage or
charge upon the whole or any part of the real or personal property of the
Company.
ENACTED by the Directors and sealed with the Company's seal this 9th day of
April, 1973.
- ------------------------------ ---------------------------------
President Secretary
The foregoing by-law is hereby enacted by the Board of Directors of the
Company pursuant to The Business Corporations Act, as evidenced by the
respective signatures hereto of all the Directors.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
The foregoing by-law is hereby confirmed by all the shareholders of the
Company pursuant to The Business Corporations Act, as evidenced by their
respective signatures hereto.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
BY-LAW NUMBER 5
A By-law respecting the borrowing of money and the issue of securities by
DIVERSIFIED MINES LIMITED
Be it enacted by the Directors of DIVERSIFIED MINES LIMITED as a Special
By-law of the said Corporation as follows:
The Directors of the Corporation may from time to time:
(a) borrow money upon the credit of the Corporation;
(b) issue, sell or pledge debt obligations of the Corporation, including
without limitation, bonds, debentures, notes or other similar obligations
of the Corporation whether secured or unsecured;
(c) charge, mortgage, hypothecate or pledge all or any currently owned or
subsequently acquired real or personal, movable or immovable property of
the Corporation, including book debts, rights, powers, franchises and
undertaking, to secure any such debt obligations or any money borrowed, or
other debt or liability of the Corporation;
(d) delegate to such one or more of the officers and Directors of the
Corporation as may be designated by the Directors all or any of the powers
conferred by the foregoing clauses of this by-law to such extent and in
such manner as the Directors shall determine at the time of each such
delegation.
PASSED by the Directors and sealed with the Corporation's seal this 9th day of
April, 1973.
DIVERSIFIED MINES LIMITED
[SEAL] --------------------------------------
PRESIDENT
--------------------------------------
SECRETARY
The foregoing by-law is hereby enacted by the Board of Directors of the
Company pursuant to The Business Corporations Act, as evidenced by the
respective signatures hereto of all the Directors.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
The foregoing by-law is hereby confirmed by all the shareholders of the
Company pursuant to The Business Corporations Act, as evidenced by their
respective signatures hereto.
DATED this 9th day of April, 1973.
- ------------------------------- ---------------------------------
William Brown Cherith Churly
- -------------------------------
Helen Toszegi
<PAGE>
BY-LAW NO. 6
A by-law respecting the borrowing of money, the
issuing of securities and the securing of liabilities
by: DIVERSIFIED MINES LIMITED
(hereinafter referred to as the "Company")
BE IT ENACTED as a by-law of the Company as follows:
The directors of the Company may from time to time:
(a) Borrow money upon the credit of the Company;
(b) Limit or increase the amount to be borrowed;
(c) Issue bonds, debentures, debenture stock or other securities of the Company
in such amounts and upon such terms and pledge or sell the same for such sums
and at such prices as the directors may deem expedient;
(d) Secure any such bonds, debentures, debenture stock or other securities or
any other present or future borrowing or liability of the Company, by mortgage,
hypothec, charge or pledge of all or any currently owned or subsequently
acquired real and personal, movable and immovable, property of the Company, and
the undertaking and rights of the Company;
(e) Delegate to such one or more of the officers and directors of the Company
as may be designated by the directors, all or any of the powers conferred by the
foregoing clauses of this by-law to such extent and in such manner as the
directors shall determine at the time of each such delegation;
(f) Give indemnities to any director or other person who has undertaken or is
about to undertake any liability on behalf of the Company and secure any such
director or other person against loss by giving him by way of security a
mortgage or charge upon all of the currently owned or subsequently acquired real
and personal, movable or immovable, property, undertaking and rights of the
Company.
(g) The powers hereby conferred shall be deemed to be in supplement of and not
in substitution for any powers to borrow money for the purposes of the Company
possessed by its directors or officers independently of a borrowing by-law.
ENACTED and PASSED by the directors this 23rd day of February, 1981.
- ----------------------------------- ------------------------------------
President Secretary
CERTIFICATE
The undersigned officer of the within named Company hereby certifies that
the By-law here above mentioned is a true and complete copy of By-Law No. 6 of
the Company which was
<PAGE>
(a) passed by the directors of the Company at a meeting duly called and
regularly held on the 23rd day of February 1981; and
(b) confirmed at a general, meeting of the shareholders of the said
Company duly called for that purpose and regularly held by at least two-thirds
of the votes cast at such meeting or such greater proportion of the votes cast
at such meeting.
DATED the 23rd day of February 1981.
(Corporate Seal) ------------------------------------
Secretary
<PAGE>
BY-LAW No. 7
RESPECTING THE BORROWING OF MONEY BY THE COMPANY
WHEREAS it is necessary for the purposes of the Company to borrow money on
the credit of the Company from time to time from VICTORIA AND GREY TRUST
COMPANY;
NOW THEREFORE BE IT ENACTED by the Directors of Tex-U.S. Oil & Gas Inc., as a
by-law thereof that:
1. The directors of the Company be and they are hereby authorized to
borrow money from time to time from VICTORIA AND GREY TRUST COMPANY (herein
called the "Lender") upon the credit of the Company in such amounts as they deem
proper and by way of overdraft or otherwise.
2. Any promissory notes or other negotiable paper (including renewals
thereof in whole or in part) signed on behalf of the Company by the officer or
officers of the Company authorized from time to time to sign negotiable
instruments on its behalf and delivered to the Lender for the money so borrowed
and interest thereon as may be agreed upon shall be binding upon the Company.
3. The directors may from time to time, if they see fit to do so, grant
security by way of mortgage, charge, hypothecation, pledge, security agreement,
assignment or otherwise covering the undertaking and/or all or any of the
property and assets of the Company as security for all or any money borrowed by
the Company from the Lender or any other liability of the Company to the Lender,
and any such mortgage, charge, hypothecation, pledge, security agreement,
assignment or other security shall be valid and binding upon the Company if
signed by any of the officers authorized to sign negotiable instruments on the
Company's behalf
4. All contracts, deeds, grants, assurances and documents reasonably
required by the Lender for all or any of the purposes aforesaid shall be
executed and carried into effect by the proper officers of the Company, and when
necessary the corporate seal of the Company shall be affixed thereto.
5. This by-law when sanctioned by the shareholders shall be irrevocable
until a by-law repealing the same shall have been confirmed or sanctioned by the
shareholders and a copy thereof duly certified under the corporate seal of the
Company shall have been delivered to the Lender, and until such time all the
powers and authorities hereby conferred shall continue in force.
ENACTED the 26th day of August, 1983.
- ----------------------------------- ------------------------------------
The foregoing by-law is hereby enacted by the Board of Directors of the
Company pursuant to The Business Corporations Act, as evidenced by the
respective signatures hereto of all the Directors.
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
<PAGE>
The foregoing by-law is hereby confirmed by all the shareholders of the
Company pursuant to The Business Corporations Act, as evidenced by their
respective signatures hereto.
DATED this 26th day of August, 1983.
- ----------------------------------- ------------------------------------
- ----------------------------------- ------------------------------------
<PAGE>
FORM 208 (3-34)
To be used in cases of corporations incorporated under the Canada Business
Corporations Act, the Corporations Acts of Manitoba and Ontario and the Business
Corporations Acts of Saskatchewan and New Brunswick and the Business
Corporations Act 1982 of Ontario.
BY-LAW TO AUTHORIZE THE DIRECTORS TO BORROW AND GIVE SECURITY
OREX RESOURCES LTD.
----------------------------------
(Name of Corporation)
Registered Office: Suite 1003, 34 King Street East, Toronto, Ontario, M5C 1E5
(Name of Act) INCORPORATED UNDER: the Business Corporations Act, 1982
BY-LAW No. 3
RESOLVED THAT THE FOLLOWING BE ENACTED AS A BY-LAW OF THE CORPORATION AS
FOLLOWS:
The Directors of the Corporation are hereby authorized from time to time
(a) to borrow money upon the credit of the Corporation in such amounts and
on such terms as may be deemed expedient by obtaining loans or advances or by
way of overdraft or otherwise;
(b) to issue or reissue debt obligations of the Corporation;
(c) to pledge or sell such debt obligations for such sums and at such
prices as may be deemed expedient;
(d) to mortgage, charge, hypothecate, pledge or otherwise create a
security interest in all or any property, real and personal, immoveable and
moveable, undertaking and rights of the Corporation, owned or subsequently
acquired, to secure any debt obligations of the Corporation present or future or
any money borrowed or to be borrowed or any other debt or liability of the
Corporation present or future;
(e) to give a guarantee on behalf of the Corporation to secure the
performance of an obligation, of any person present or future;
(f) to delegate to such officer(s), Director(s) or committee of Directors
of the Corporation as the Directors may designate all or any of the foregoing
powers to such extent and such manner as the Directors may determine.
This By-law shall remain in force and be binding upon the Corporation as
regards any party acting on the faith thereof until a Copy, certified by the
Secretary of the Corporation, of a By-law repealing or replacing this By-law
shall have been received by such party and duly acknowledged in writing.
ENACTED this 14th day of May, 1987.
AS WITNESS the corporate seal of the Corporation.
<PAGE>
------------------------------------
Harry J. Hodge, President
(Corporate seal)
------------------------------------
June Hodge, Secretary
CERTIFICATE
(This must be completed in all cases)
It is hereby certified by the undersigned that the foregoing By-law was
duly passed by the Directors of the above-mentioned Corporation and duly
sanctioned and confirmed by the shareholders of the Corporation, in accordance
with the Articles or Charter and By-laws or in any unanimous shareholders'
agreement made by the shareholders of the corporation and all other laws
governing the Corporation and that the said By-law is in full force and effect.
AS WITNESS the corporate seal of the Corporation this 14th day of May,
1987.
------------------------------------
(Corporate Seal) June Hodge (Secretary)
<PAGE>
ONTARIO CORPORATIONS
--------------------------------
SPECIAL BY-LAW TO AUTHORIZE THE DIRECTORS
TO BORROW AND GIVE SECURITY
OREX RESOURCES LTD.
--------------------------------
(Name of Corporation)
Head Office: 34 King Street East, Suite 1003, Toronto, Ontario, M5C 1E5
INCORPORATED UNDER the Business Corporations Act, 1982
SPECIAL BY-LAW NO. 3
BE IT ENACTED AS A SPECIAL BY-LAW OF THE CORPORATION AS FOLLOWS:
The Directors of the Corporation are hereby authorized from time to time
(a) to borrow money upon the credit of the Corporation in such amounts and
on such terms as may be deemed expedient by obtaining loans or advances or by
way of overdraft or otherwise;
(b) to issue debt obligations of the Corporation;
(c) to pledge or sell such debt obligations for such sums and at such
prices as may be deemed expedient;
(d) to mortgage, hypothecate, charge or pledge, or give security in any
manner whatever upon, all or any currently owned or subsequently acquired
property, real and personal, immovable and movable, undertaking book debts,
powers, franchises and rights of the Corporation, to secure any debt obligations
of the Corporation, present or future, or any money borrowed or to be borrowed
or any other debt or liability of the Corporation, present or future;
(e) to delegate to such officer(s) or Director(s) of the Corporation as
the Directors may designate all or any of the foregoing powers to such extent
and in such manner as the Directors may determine.
This Special By-law shall remain in force and be binding upon the
Corporation as regards any party acting on the faith thereof, until a copy,
certified by the Secretary of the Corporation under the Corporation's seal of a
Special By-law repealing or replacing this Special By-law shall have been
received by such party and duly acknowledged in writing.
ENACTED this day of 14th day of May, 1987.
AS WITNESS the corporate seal of the Corporation.
<PAGE>
------------------------------------
Harry J. Hodge, President
------------------------------------
June Hodge, Secretary
CERTIFICATE
(THIS MUST BE COMPLETED IN ALL CASES)
It is hereby certified by the undersigned that the foregoing Special By-law
was duly passed by the Directors of the above-named Corporation and was duly
sanctioned and/or confirmed by the Shareholders/members of the Corporation in
accordance with the Articles or Charter and By-laws or in any unanimous
shareholder's agreement made by the shareholders of the Corporation and all
other laws governing the Corporation and was executed in the manner above
indicated and that the said Special By-law is now in full force and effect.
AS WITNESS the corporate seal of the Corporation this 14th day of May,
1987.
------------------------------------
June Hodge, Secretary
(CORPORATE SEAL}
To be used only in cases of corporations incorporated under the Canada Business
Corporations Act, The Corporations Acts of Manitoba and Ontario and The Business
Corporations Act of Saskatchewan, The Business Corporations Act of Alberta or
The Business Corporations Act, 1982 of Ontario.
In cases of corporations incorporated by Special Act of Canada or any such
province, if Form 200 has required amendment, this form also may need to be
amended.
CORPORATIONS
RESOLUTION OF DIRECTORS REGARDING BANKING AND SECURITY
OREX RESOURCES LTD. thereinafter called the "Corporation")
(Name of Corporation)
Head Office: 34 King Street East, Suite 1003, Toronto, Ontario, M5C 1E5
INCORPORATED UNDER the Business Corporations Act, 1982
RESOLVED:
1. THAT THE ROYAL BANK OF CANADA (hereinafter called the "Bank") be and
is hereby appointed the Banker of the Corporation.
2. THAT any one of the directors together with Harry Schlesinger or
George Dugay or any one of them or any one of the persons mentioned in Clause 3
hereof or any one of any persons from time to time designated in writing by the
President, Vice-President, Secretary, Treasurer or
<PAGE>
Secretary-Treasurer, be and is hereby authorized on behalf of the Corporation
from time to time
(a) to deposit with or negotiate or transfer to the Bank (but only
for credit of the Corporation) all or any cheques, promissory notes, bills
of exchange, orders for the payment of money and other paper negotiable or
otherwise, interest or dividend coupons and warrants, securities maturing
or called for redemption, and the proceeds of any of them, and for such
purpose to make, draw, endorse, sign, execute and deliver all or any of the
foregoing or deliver all or any thereof to the Bank endorsed with the name
of the Corporation impressed thereon by rubber stamp or otherwise; and
(b) to receive all paid cheques and vouchers and sign and deliver to
the Bank the Bank's form of settlement of balances and release, and to
arrange, settle, balance and certify all books and accounts between the
Corporation and the Bank, and to receive all securities attached to drafts
drawn on the Corporation to be delivered upon payment of the drafts and all
commercial and other paper, and to sign and deliver to the Bank receipts
for all or any of the foregoing.
3. THAT any one of the directors together with Harry Schlesinger or
George Dugay be and are hereby authorized on behalf of the Corporation from time
to time
(a) to make, draw, accept, endorse, sign and execute, under the
corporate seal or otherwise, cheques, promissory notes, bills of exchange,
orders for the payment of money and other instruments whether negotiable or
not, contracts for letters of credit and forward exchange, and agreements
obligating the Corporation to the Bank in respect of obligations or
liabilities incurred or to be incurred by the Bank for the account or and
the benefit of the Corporation.
(b) to borrow money from the Bank upon the credit of the Corporation
in such amounts and on such terms as may be deemed expedient by obtaining
loans or advances or by way of overdraft or otherwise;
(c) to mortgage, hypothecate, charge or pledge, create a security
interest in or give security under The Bank Act or otherwise upon, all or
any of the property, real and personal, immoveable and moveable,
undertaking and rights of the Corporation, present and future to secure all
or any money borrowed or to be borrowed from the Bank, or obligations or
liabilities of the Corporation, present or future, to the Bank, the nature
and form of any such security and the rights, powers and authorities
exercisable by the Bank or any person or persons thereunder or in respect
thereof to be satisfactory to the Bank;
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
INCORPORATED UNDER THE LAWS OF THE PROVINCE OF ONTARIO
NUMBER SHARES
------ ------
"See Attached Schedule "A" for Legend"
CUSIP 02136W 1B 2
THIS
CERTIFIES
THAT
IS THE
REGISTERED
HOLDER OF
FULLY PAID AND NON-ASSESSABLE COMMON SHARES WITHOUT
PAR VALUE IN THE CAPITAL OF
ALTAIR INTERNATIONAL GOLD INC.
transferrable only on the books of the Corporation by the holder hereof in
person or by attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid until countersigned by the Transfer Agent and
Registrar of the Corporation.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed by
its duly authorized officers.
DATED
------------------------
COUNTERSIGNED AND REGISTERED
EQUITY TRANSFER SERVICES INC., Toronto, Ontario
THE MONTREAL TRUST COMPANY OF CANADA,
Vancouver, British Columbia and Calgary, Alberta
CO-TRANSFER AGENT AND REGISTRAR
PRESIDENT SECRETARY BY
------------------------------------------
AUTHORIZED OFFICER
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE TRANSFERABLE AT
THE PRINCIPAL OFFICE OF EQUITY TRANSFER SERVICES INC. IN TORONTO, ONTARIO AND
THE MONTREAL TRUST COMPANY OF CANADA IN VANCOUVER, BRITISH COLUMBIA AND CALGARY,
ALBERTA.
<PAGE>
THE CORPORATION IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS OR SERIES.
THE CLASS OR SERIES OF SHARES REPRESENTED BY THIS CERTIFICATE HAS RIGHTS,
PRIVILEGES, RESTRICTIONS OR CONDITIONS ATTACHED THERETO. THE CORPORATION WILL
FURNISH TO A SHAREHOLDER, ON DEMAND AND WITHOUT CHARGE, A FULL COPY OF THE TEXT
OF: (i) THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHED TO THE
SHARES REPRESENTED BY THIS CERTIFICATE AND TO EACH CLASS AUTHORIZED TO BE ISSUED
AND TO EACH SERIES INSOFAR AS THE SAME HAVE BEEN FIXED BY THE DIRECTORS, AND
(ii) THE AUTHORITY OF THE DIRECTORS TO FIX THE RIGHTS, PRIVILEGES, RESTRICTIONS
AND CONDITIONS OF SUBSEQUENT SERIES, IF APPLICABLE.
For Value Received ____________________________________ hereby sell, assign and
transfer unto
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME, ADDRESS AND S.I.N. OF ASSIGNEE)
- --------------------------------------------------------------------------------
SOCIAL INSURANCE NUMBER
- --------------------------------------------------------------------------------
__________________________________________________________________Shares of the
Capital Stock represented by the within certificate, and do hereby irrevocably
constitute and appoint
______________________________________________________________________Attorney,
to transfer the said Stock on the Books of the within-named Corporation, with
full power of substitution in the premises.
Dated
---------------------------------------
Signature of
Transferor:
----------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
Signature
guaranteed by:
--------------------------------------
NOTICE: THE SIGNATURE OF THE TRANSFEROR SHOULD BE GUARANTEED BY A BANK,
FINANCIAL INSTITUTION OR STOCK BROKER WHOSE SIGNATURE IS ACCEPTABLE TO THE
TRANSFER AGENT AND REGISTRAR.
<PAGE>
Equity
Transfer Richmond Adelaide Centre
Services Inc. Suite 800, 120 Adelaide Street West, Toronto, Ontario M5H 3V1
- --------------------------------------------------------------------------------
TRANSFER AGENT & REGISTRAR Tel: (416) 361-0152 Fax: (416) 361-0470
ALTAIR INTERNATIONAL GOLD INC
-----------------------------
SCHEDULE "A"
------------
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, OR (D) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO
THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY"
MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT THE
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED OR TRADED IN
CANADA OR TO A RESIDENT OF CANADA OR THROUGH THE FACILITIES OF THE ALBERTA STOCK
EXCHANGE FOR A PERIOD OF 90 DAYS FROM THE DATE HEREOF."
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (a) TO
THE CORPORATION, (b) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, OR (d) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO
THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY"
MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT THE
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED OR TRADED IN CANADA OR THE UNITED STATES OR TO A RESIDENT
OF CANADA OR THE UNITED STATES OR THROUGH THE FACILITIES OF THE ALBERTA STOCK
EXCHANGE FOR A PERIOD OF 90 DAYS FROM THE DATE HEREOF.
Void after 5:00 p.m. Toronto time on the 10th day of October, 1996.
__________________________ (_____________) Warrant Certificate No. D-________
Series D Warrants
ALTAIR INTERNATIONAL GOLD INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, _________________ (the "Holder")
shall have the right to purchase from Altair International Gold Inc.
(hereinafter called the "Corporation"), at any time up to 5:00 p.m. (Toronto
time) on October 10, 1996 (the "Expiry Time"), one fully paid and non-assessable
Common Share of the Corporation as constituted on the date hereof for each share
purchase warrant (individually, a "Warrant") represented hereby. The exercise
price for the purchase of each such Common Share (the "Exercise Price") shall be
$0.75 per share until 5:00 p.m. (Toronto time) on April 10, 1996 (the "Initial
Exercise Period") and $0.90 per share from the expiry of the Initial Exercise
Period until 5:00 p.m. (Toronto time) on October 10, 1996 (the "Final Exercise
Period").
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof or any
other adjustment under clause 8 hereof, or successive such changes,
subdivisions, redivisions, reductions, combinations, consolidations or other
adjustments, then
<PAGE>
subject to the adjustments, if any, having been made in accordance with the
provisions of this Warrant Certificate, "Common Shares" shall thereafter mean
the shares, other securities or other property resulting from such change,
subdivision, redivision, reduction, combination or consolidation or other
adjustment.
2. All Warrant Certificates shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement person
and notwithstanding any change in any of the persons holding said offices
between the time of actual signing and the delivery of the Warrant Certificate
and notwithstanding that such officer signing may not have held office at the
date of the delivery of the Warrant Certificate, the Warrant Certificate so
signed shall be valid and binding upon the Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have been
exercised shall wholly cease and determine and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time. In addition, the
Holder shall be entitled to exercise the right of subscription and purchase with
respect to not more than an aggregate of 250,000 Warrants during the Initial
Exercise Period and with respect to the Final Exercise Period, not more than an
equivalent number of Warrants that are exercised during the Initial Period.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder at or before the Expiry Time by:
(a) duly completing and executing a subscription substantially in the form
attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and executed
subscription form to the Corporation's counsel at 36 Toronto Street, Suite
1000, Toronto, Ontario, M5C 2C5, Attention: Jay Goldman, together with
payment of the purchase price for the Common Shares subscribed for in the
form of cash or a certified cheque payable to the Corporation in an amount
equal to the then applicable Exercise Price multiplied by the number of
Common Shares subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause to
be issued to the Holder the number of Common Shares of the Corporation to be
issued and the Holder shall become a shareholder of the Corporation in respect
of such Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing such
shares. The Corporation shall cause such certificate or certificates to be
mailed to the Holder at the address or addresses specified in such subscription
form within five (5) business days of such delivery and payment as herein
provided or, if so instructed by the Holder, held for pick-up by the Holder at
the principal office of the registrar and transfer agent of the Common Shares of
the Corporation, Equity Transfer Services Inc. (the "Transfer Agent").
6. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect thereof
except as herein expressly provided.
<PAGE>
-3-
7. The Corporation covenants and agrees that until the Expiry Time, while any
of the Warrants shall be outstanding, it shall reserve and there shall remain
unissued out of its authorized capital a sufficient number of Common Shares to
satisfy the right of purchase herein provided, as such right of purchase may be
adjusted pursuant to clauses 8 and 9 hereof. All Common Shares which shall be
issued upon the exercise of the right to purchase herein provided for, upon
payment therefor of the amount at which such Common Shares may at the time be
purchased pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
8.(a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its then
outstanding Common Shares by way of a stock dividend or other
distribution (any of such events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted effective
immediately after the effective date of any such event in (i) or (ii)
above or the record date at which the holders of Common Shares are
determined for the purpose of any such dividend or distribution in
(iii) above, as the case may be, by multiplying the Exercise Price in
effect on such effective date or record date, as the case may be, by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such effective date or record date, as the case may be,
before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Common Share Reorganization
including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common
Shares that would be outstanding if such securities were exchanged for
or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to above), evidences of indebtedness or property (excluding
cash dividends paid in the ordinary course) to holders of all or
substantially all of its then outstanding Common Shares, the number of
Common Shares to be issued by the Corporation under this Warrant
shall, at the time of exercise of the right of subscription and
purchase under this Warrant Certificate, be appropriately adjusted and
the Holder shall receive, in lieu of the number of the Common Shares
in respect of which the right to purchase is then being exercised, the
aggregate number of Common Shares or other securities or property that
the Holder would have been entitled to receive as a result of such
event, if, on the record date thereof, the Holder had been the
registered holder of the number of Common Shares to which the Holder
was theretofore entitled upon the exercise of the rights of the Holder
hereunder.
<PAGE>
-4-
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or a
reclassification or other change in the Common Shares (other than a
Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation or
other entity (other than a consolidation, merger or amalgamation which
does not result in any reclassification of the outstanding Common
Shares or a change of the Common Shares into other securities), or a
transfer of all or substantially all of the Corporation's undertaking
and assets to another corporation or other entity in which the holders
of Common Shares are entitled to receive shares, other securities or
other property (any of such events being called a "Capital
Reorganization"), the Holder, where he has not exercised the right of
subscription and purchase under this Warrant Certificate prior to the
effective date of such Capital Reorganization, shall be entitled to
receive and shall accept, upon the exercise of such right, on such
date or any time thereafter, for the same aggregate consideration in
lieu of the number of Common Shares to which he was theretofore
entitled to subscribe for and purchase, the aggregate number of shares
or other securities or property which the Holder would have been
entitled to receive as a result of such Capital Reorganization if, on
the effective date thereof, he had been the registered holder of the
number of Common Shares to which he was theretofore entitled to
subscribe for and purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 8(a), (b) or (c)
shall occur and the occurrence of such event results in an adjustment
of the Exercise Price pursuant to the provisions of this clause 8,
then the number of Common Shares purchaseable pursuant to this Warrant
shall be adjusted contemporaneously with the adjustment of the
Exercise Price by multiplying the number of Common Shares then
otherwise purchaseable on the exercise thereof by a fraction, the
numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment and the denominator of which shall be the
Exercise Price resulting from such adjustment.
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 8, in the opinion of the
board of directors of the Corporation, acting in good faith, are not
strictly applicable, or if strictly applicable would not fairly adjust
the rights of the Holder against dilution in accordance with the
intent and purposes hereof, or would otherwise materially affect the
rights of the Holder of the Warrants hereunder, then the Corporation
shall execute and deliver to the Holder an amendment hereto providing
for an adjustment in the application of such provisions so as to
adjust such rights as aforesaid in such manner as the board of
directors of the Corporation may determine to be equitable in the
circumstances, acting in good faith. The failure of the taking of
action by the board of directors of the Corporation to so provide for
any adjustment on or prior to the effective date of any action or
occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is
equitable to make no adjustment in the circumstances.
<PAGE>
-5-
9. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 8:
(a) any Common Shares owned or held by or for the account of the Corporation
shall be deemed not be to outstanding except that, for the purposes of
clause 8, any Common Shares owned by a pension plan or profit sharing plan
for employees of the Corporation or any of its subsidiaries shall not be
considered to be owned or held by or for the account of the Corporation;
(b) no adjustment in the Exercise Price shall be required unless a change of at
least 1% of the prevailing Exercise Price would result, provided, however,
that any adjustment which, except for the provisions of this clause 9(b),
would otherwise have been required to be made, shall be carried forward and
taken into account in any subsequent adjustment;
(c) the adjustments provided for in clause 8 are cumulative and shall apply to
successive subdivisions, consolidations, dividends, distributions and other
events resulting in any adjustment under the provisions of such clause;
(d) in the absence of a resolution of the board of directors of the Corporation
fixing a record date for any dividend or distribution referred to in clause
8(a)(iii) above, the Corporation shall be deemed to have fixed as the
record date therefor the date on which such dividend or distribution is
effected;
(e) if the Corporation sets a record date to take any action and thereafter and
before the taking of such action abandons its plan to take such action,
then no adjustment to the Exercise Price will be required by reason of the
setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number of
Common Shares purchaseable pursuant to the Warrants, the Corporation shall
provide to the Holder a certificate of an officer of the Corporation
certifying as to the amount of such adjustment and, in reasonable detail,
describing the event requiring and the manner of computing or determining
such adjustment; and
(g) any question that at any time or from time to time arises with respect to
the amount of any adjustment to the Exercise Price or other adjustment
pursuant to clause 8 shall be conclusively determined by a firm of
independent chartered accountants (who may be the Corporation's auditors)
and shall be binding upon the Corporation and the Holder.
10. At least 21 days prior to the effective date or record date, as the case
may be, of any event referred to in clause 8, the Corporation shall notify the
Holder of the particulars of such event and the estimated amount of any
adjustment required as a result thereof.
11. On the happening of each and every such event set out in clause 8, the
applicable provisions of this Warrant, including the Exercise Price, shall, ipso
facto, be deemed to be
<PAGE>
-6-
amended accordingly and the Corporation shall take all necessary action so as
to comply with such provisions as so amended.
12. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly closed,
having regard to the provisions of clauses 8 and 9 hereof, prior to any meeting
of shareholders or for the payment of dividends or for any other purpose and in
the event of the surrender of any Warrant in accordance with the provisions
hereof and the making of any subscription and payment for the Common Shares
called for thereby during any such period delivery of certificates for Common
Shares may be postponed for not more than five (5) days after the date of the
re-opening of said share transfer books. Provided, however, that any such
postponement of delivery of certificates shall be without prejudice to the right
of the Holder so surrendering the same and making payment during such period to
receive after the share transfer books shall have been re-opened such
certificates for the Common Shares called for, as the same may be adjusted
pursuant to clauses 8 and 9 hereof as a result of the completion of the event in
respect of which the transfer books were closed.
13. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any shareholder or officer of
the Corporation either directly or through the Corporation, it being expressly
agreed and declared that the obligations under the Warrants are solely corporate
obligations and that no personal liability whatever shall attach to or be
incurred by the shareholders or officers of the Corporation or any of them in
respect thereof, any and all rights and claims against every such shareholder,
officer or director being hereby expressly waived as a condition of and as a
consideration for the issue of the Warrants.
14. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in the Warrant Certificate. In the
case of any subscription for a lesser number of Common Shares than expressed in
any Warrant Certificate, the Holder hereof shall be entitled to receive at no
cost to the Holder a new Warrant Certificate in respect of the balance of
Warrant not then exercised. Such new Warrant Certificate shall be mailed to the
Holder by the Corporation or, at its direction, the Transfer Agent,
contemporaneously with the mailing of the certificate or certificates
representing the Common Shares issued pursuant to clause 5.
15. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
16. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or knowledge
to the contrary except where the Corporation or the Transfer Agent is
<PAGE>
-7-
required to take notice by statute or by order of a court of competent
jurisdiction. A Holder shall be entitled to the rights evidenced by such
Warrant free from all equities or rights of set-off or counterclaim between
the Corporation and the original or any intermediate holder thereof and all
persons may act accordingly and the receipt by any such Holder of the Common
Shares purchaseable pursuant to such Warrant shall be a good discharge to the
Corporation and the Transfer Agent for the same and neither the Corporation
nor the Transfer Agent shall be bound to inquire into the title of any such
Holder except where the Corporation or the Transfer Agent is required to take
notice by statute or by order of a court of competent jurisdiction.
17. The Corporation shall notify the Holder forthwith of any change of address
of the Transfer Agent or if Equity Transfer Services Inc., or any successor
thereto, is replaced as Transfer Agent, the name and address of the principal
office in the City of Toronto, Ontario of such successor Transfer Agent.
18. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise of the
rights of the Holders of Warrants against the Corporation which shall be
agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or supplemental
hereto which shall be agreed to by the Corporation; and/or
(c) to restrain any Holder of a Warrant from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders by the
terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be bound
to give effect thereto accordingly. Such extraordinary resolution shall, where
applicable, be binding on the Corporation which shall give effect thereto
accordingly.
The Corporation shall forthwith upon receipt of an extraordinary resolution
provide notice to all Holders of the date and text of such resolution. The
Holders of Warrants assenting to an extraordinary resolution agree to provide
the Corporation forthwith with a copy of any extraordinary resolution passed.
The expression "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the Holders
of Warrants calling in the aggregate for not less than seventy-five per cent
(75%) of the aggregate number of shares called for by all of the Warrants which
are, at the applicable time, outstanding.
<PAGE>
-8-
19. All notices to be sent hereunder shall be deemed to be validly given to the
Holders of the Warrants if delivered personally or if sent by registered letter
through the post addressed to such holders at their post office addresses
appearing in the register of Warrant holders caused to be maintained by the
Corporation pursuant to clause 16, and such notice shall be deemed to have been
given, if delivered personally when so delivered, and if sent by post on the
fifth business day next following the post thereof.
20. This Warrant shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the 10th day of October, 1995.
ALTAIR INTERNATIONAL GOLD INC.
Per:
----------------------------------
Director
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Gold Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that a legend may be placed on any certificates
representing common shares delivered to the undersigned.
Address for Delivery of Shares:
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
Attention:
----------------------------
Exercise Price Tendered (Cdn. $0.75 per share until 5:00 p.m. (Toronto
time) on April 10, 1996 and Cdn. $0.90 per share from the expiry of the
Initial Exercise Period until 5:00 p.m. (Toronto time) on October 10,
1996).
$
-------------------------------------
Dated at ________________, this _______ day of __________, 199_____.
Witness: ) -----------------------------------
) Holder's Name
)
)
) -----------------------------------
) Authorized Signature
)
)
) -----------------------------------
) Title (if applicable)
Signature guaranteed:
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL GOLD INC.
c/o Beach, Hepburn
36 Toronto Street
Suite 1000
Toronto, Ontario
M5C 2C5
This Warrant Certificate is hereby transferred to ______________________
residing
at ________________________________________ for good and valuable consideration.
You
are hereby instructed to take the necessary steps to effect this transfer.
Dated at ___________________, this ______ day of__________, 199_____.
Witness: ) -------------------------------------
) Holder's Name
)
)
) -------------------------------------
) Authorized Signature
)
)
) -------------------------------------
) Title (if applicable)
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE (THE "WARRANTS") AND THE COMMON
SHARES OF ALTAIR INTERNATIONAL GOLD INC. (THE "CORPORATION") ISSUABLE UPON THE
EXERCISE THEREOF (THE "COMMON SHARES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE LAW, AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY ARE
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE COMMON SHARES AND WARRANTS ARE ALSO SUBJECT TO
CERTAIN RESTRICTIONS ON SALE, TRANSFER AND DISPOSAL AS SET FORTH IN A MERGER
AGREEMENT BETWEEN THE CORPORATION, FINE GOLD RECOVERY SYSTEMS INC., TRANS MAR,
INC. AND CERTAIN HOLDERS OF THE CAPITAL STOCK OF TRANS MAR, INC. COPIES OF SUCH
AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE
FURNISHED UPON REQUEST TO SUCH REGISTERED HOLDER.
Void after 5:00 p.m. Toronto time on the 1st day of March, 1997.
___________________ (_______________) Warrant Certificate No. E-_________
Series E Warrants
ALTAIR INTERNATIONAL GOLD INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, _____________________ (the
"Holder") shall have the right to purchase from Altair International Gold Inc.
(hereinafter called the "Corporation"), at any time up to 5:00 p.m. (Toronto
time) on March 1, 1997 (the "Expiry Time"), one fully paid and non-assessable
Common Share of the Corporation for each Series E Warrant (individually, a
"Warrant") represented hereby. The exercise price for the purchase of each such
Common Share shall be CDN. $2.00 per share (the "Exercise Price").
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof or
any other adjustment under clause 8 hereof, or successive such changes,
subdivisions, redivisions, reductions, combinations, consolidations or
other adjustments, then subject to the adjustments, if any, having been
made in accordance with the provisions of this Warrant Certificate, "Common
Shares" shall thereafter mean the shares, other securities or other
property resulting from such change, subdivision, redivision, reduction,
combination or consolidation or other adjustment.
<PAGE>
2. All Warrant Certificates shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement
person and notwithstanding any change in any of the persons holding said
offices between the time of actual signing and the delivery of the Warrant
Certificate and notwithstanding that such officer signing may not have held
office at the date of the delivery of the Warrant Certificate, the Warrant
Certificate so signed shall be valid and binding upon the Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have
been exercised shall wholly cease and determine and such Warrants shall be
wholly void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder at or before the Expiry Time
by:
(a) duly completing and executing a subscription substantially in the form
attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and executed
subscription form to the Corporation's counsel at 36 Toronto Street, Suite
1000, Toronto, Ontario, M5C 2C5, Attention: Jay Goldman, together with
payment of the purchase price for the Common Shares subscribed for in the
form of cash or a certified cheque payable to the Corporation in an amount
equal to the then applicable Exercise Price multiplied by the number of
Common Shares subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause to
be issued to the Holder the number of Common Shares of the Corporation to
be issued and the Holder shall become a shareholder of the Corporation in
respect of such Common Shares with effect from the date of such delivery
and payment and shall be entitled to delivery of a certificate or
certificates evidencing such shares. The Corporation shall cause such
certificate or certificates to be mailed to the Holder at the address or
addresses specified in such subscription form within five (5) business days
of such delivery and payment as herein provided or, if so instructed by the
Holder, held for pick-up by the Holder at the principal office of the
registrar and transfer agent of the Common Shares of the Corporation,
Equity Transfer Services Inc. (the "Transfer Agent").
6. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect thereof
except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while any
of the Warrants shall be outstanding, it shall reserve and there shall
remain unissued out of its authorized capital a sufficient number of Common
Shares to satisfy the right of purchase herein provided, as such right of
purchase may be adjusted pursuant to clauses 8 and 9 hereof. All
-2-
<PAGE>
Common Shares which shall be issued upon the exercise of the right
to purchase herein provided for, upon payment therefor of the
amount at which such Common Shares may at the time be purchased
pursuant to the provisions hereof, shall be issued as fully paid
and non-assessable shares and the holders thereof shall not be
liable to the Corporation or its creditors in respect thereof.
8.(a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its then
outstanding Common Shares by way of a stock dividend or other
distribution (any of sch events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted effective
immediately after the effective date of any such event in (i) or (ii)
above or the record date at which the holders of Common Shares are
determined for the purpose of any such dividend or distribution in
(iii) above, as the case may be, by multiplying the Exercise Price in
effect on such effective date or record date, as the case may be, by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such effective date or record date, as the case may be,
before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Common Share Reorganization
including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common
Shares that would be outstanding if such securities were exchanged for
or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to above), evidences of indebtedness or property (excluding
cash dividends paid in the ordinary course) to holders of all or
substantially all of its then outstanding Common Shares, the number of
Common Shares to be issued by the Corporation under this Warrant
shall, at the time of exercise of the right of subscription and
purchase under this Warrant Certificate, be appropriately adjusted and
the Holder shall receive, in lieu of the number of the Common Shares
in respect of which the right to purchase is then being exercised, the
aggregate number of Common Shares or other securities or property that
the Holder would have been entitled to receive as a result of such
event, if, on the record date thereof, the Holder had been the
registered holder of the number of Common Shares to which the Holder
was theretofore entitled upon the exercise of the rights of the Holder
hereunder.
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or a
reclassification or other change in the Common Shares (other than a
Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation or
other entity (other
-3-
<PAGE>
than a consolidation, merger or amalgamation which does not result
in any reclassification of the outstanding Common Shares or a
change of the Common Shares into other securities), or a transfer
of all or substantially all of the Corporation's undertaking and
assets to another corporation or other entity in which the holders
of Common Shares are entitled to receive shares, other securities
or other property (any of such events being called a "Capital
Reorganization"), the Holder, where he has not exercised the right
of subscription and purchase under this Warrant Certificate prior
to the effective date of such Capital Reorganization, shall be
entitled to receive and shall accept, upon the exercise of such
right, on such date or any time thereafter, for the same aggregate
consideration in lieu of the number of Common shares to which he
was theretofore entitled to subscribe for and purchase, the
aggregate number of shares or other securities or property which
the Holder would have been entitled to receive as a result of such
Capital Reorganization if, on the effective date thereof, he had
been the registered holder of the number of Common Shares to which
he was theretofore entitled to subscribe for and purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 8(a), (b) or (c)
shall occur and the occurrence of such event results in an adjustment
of the Exercise Price pursuant to the provisions of this clause 8,
then the number of Common Shares purchaseable pursuant to this Warrant
shall be adjusted contemporaneously with the adjustment of the
Exercise Price by multiplying the number of Common Shares then
otherwise purchaseable on the exercise thereof by a fraction, the
numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment and the denominator of which shall be the
Exercise Price resulting from such adjustment.
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 8, in the opinion of the
board of directors of the Corporation, acting in good faith, are not
strictly applicable, or if strictly applicable would not fairly adjust
the rights of the Holder against dilution in accordance with the
intent and purposes hereof, or would otherwise materially affect the
rights of the Holder of the Warrants hereunder, then the Corporation
shall execute and deliver to the Holder an amendment hereto providing
for an adjustment in the application of such provisions so as to
adjust such rights as aforesaid in such manner as the board of
directors of the Corporation may determine to be equitable in the
circumstances, acting in good faith. The failure of the taking of
action by the board of directors of the Corporation to so provide for
any adjustment on or prior to the effective date of any action or
occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is
equitable to make no adjustment in the circumstances.
9. The following rules and procedures shall be applicable to the
adjustments made pursuant to clause 8:
(a) any Common Shares owned or held by or for the account of the
Corporation shall be deemed
-4-
<PAGE>
not be to outstanding except that, for the purposes of clause 8, any
Common Shares owned by a pension plan or profit sharing plan for
employees of the Corporation or any of its subsidiaries shall not be
considered to be owned or held by or for the account of the Corporation;
(b) no adjustment in the Exercise Price shall be required unless a change of at
least 1% of the prevailing Exercise Price would result, provided, however,
that any adjustment which, except for the provisions of this clause 9(b),
would otherwise have been required to be made, shall be carried forward and
taken into account in any subsequent adjustment;
(c) the adjustments provided for in clause 8 are cumulative and shall apply to
successive subdivisions, consolidations, dividends, distributions and other
events resulting in any adjustment under the provisions of such clause;
(d) in the absence of a resolution of the board of directors of the Corporation
fixing a record date for any dividend or distribution referred to in clause
8(a)(iii) above, the Corporation shall be deemed to have fixed as the
record date therefor the date on which such dividend or distribution is
effected;
(e) if the Corporation sets a record date to take any action and thereafter and
before the taking of such action abandons its plan to take such action,
then no adjustment to the Exercise Price will be required by reason of the
setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number of
Common Shares purchaseable pursuant to the Warrants, the Corporation shall
provide to the Holder a certificate of an officer of the Corporation
certifying as to the amount of such adjustment and, in reasonable detail,
describing the event requiring and the manner of computing or determining
such adjustment; and
(g) any question that at any time or from time to time arises with respect to
the amount of any adjustment to the Exercise Price or other adjustment
pursuant to clause 8 shall be conclusively determined by a firm of
independent chartered accountants (who may be the Corporation's auditors)
and shall be binding upon the Corporation and the Holder.
10. At least 21 days prior to the effective date or record date, as the case
may be, of any event referred to in clause 8, the Corporation shall notify
the Holder of the particulars of such event and the estimated amount of any
adjustment required as a result thereof.
11. On the happening of each and every such event set out in clause 8, the
applicable provisions of this Warrant, including the Exercise Price, shall,
ipso facto, be deemed to be amended accordingly and the Corporation shall
take all necessary action so as to comply with such provisions as so
amended.
-5-
<PAGE>
12. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly
closed, having regard to the provisions of clauses 8 and 9 hereof, prior to
any meeting of shareholders or for the payment of dividends or for any
other purpose and in the event of the surrender of any Warrant in
accordance with the provisions hereof and the making of any subscription
and payment for the Common Shares called for thereby during any such period
delivery of certificates for Common Shares may be postponed for not more
than five (5) days after the date of the re-opening of said share transfer
books. Provided, however, that any such postponement of delivery of
certificates shall be without prejudice to the right of the Holder so
surrendering the same and making payment during such period to receive
after the share transfer books shall have been re-opened such certificates
for the Common Shares called for, as the same may be adjusted pursuant to
clauses 8 and 9 hereof as a result of the completion of the event in
respect of which the transfer books were closed.
13. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any shareholder or officer
of the Corporation either directly or through the Corporation, it being
expressly agreed and declared that the obligations under the Warrants are
solely corporate obligations and that no personal liability whatever shall
attach to or be incurred by the shareholders or officers of the Corporation
or any of them in respect thereof, any and all rights and claims against
every such shareholder, officer or director being hereby expressly waived
as a condition of and as a consideration for the issue of the Warrants.
14. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in the Warrant Certificate. In
the case of any subscription for a lesser number of Common Shares than
expressed in any Warrant Certificate, the Holder hereof shall be entitled
to receive at no cost to the Holder a new Warrant Certificate in respect of
the balance of Warrant not then exercised. Such new Warrant Certificate
shall be mailed to the Holder by the Corporation or, at its direction, the
Transfer Agent, contemporaneously with the mailing of the certificate or
certificates representing the Common Shares issued pursuant to clause 5.
15. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
16. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or
knowledge to the contrary except where the Corporation or the Transfer
Agent is required to take notice by statute or by order of a court of
competent
-6-
<PAGE>
jurisdiction. A Holder shall be entitled to the rights evidenced by
such Warrant free from all equities or rights of set-off or counterclaim
between the Corporation and the original or any intermediate holder
thereof and all persons may act accordingly and the receipt by any such
Holder of the Common Shares purchaseable pursuant to such Warrant shall
be a good discharge to the Corporation and the Transfer Agent for the
same and neither the Corporation nor the Transfer Agent shall be bound
to inquire into the title of any such Holder except where the
Corporation or the Transfer Agent is required to take notice by statute
or by order of a court of competent jurisdiction.
17. The Corporation shall notify the Holder forthwith of any change of address
of the Transfer Agent or if Equity Transfer Services Inc., or any successor
thereto, is replaced as Transfer Agent, the name and address of the
principal office in the City of Toronto, Ontario of such successor Transfer
Agent.
18. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise of the
rights of the Holders of Warrants against the Corporation which shall be
agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or supplemental
hereto which shall be agreed to by the Corporation; and/or
(c) to restrain any Holder of a Warrant from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders by the
terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be
bound to give effect thereto accordingly. Such extraordinary resolution
shall, where applicable, be binding on the Corporation which shall give
effect thereto accordingly.
The Corporation shall forthwith upon receipt of an extraordinary resolution
provide notice to all Holders of the date and text of such resolution. The
Holders of Warrants assenting to an extraordinary resolution agree to
provide the Corporation forthwith with a copy of any extraordinary
resolution passed.
The expression "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the
Holders of Warrants calling in the aggregate for not less than ninety
percent (90%) of the aggregate number of shares called
-7-
<PAGE>
for by all of the Warrants which are, at the applicable time, outstanding.
19. All notices to be sent hereunder shall be deemed to be validly given to the
Holders of the Warrants if delivered personally or if sent by registered
letter through the post addressed to such holders at their post office
addresses appearing in the register of Warrant holders caused to be
maintained by the Corporation pursuant to clause 16, and such notice shall
be deemed to have been given, if delivered personally when so delivered,
and if sent by post on the fifth business day next following the post
thereof.
20. The parties acknowledge that the resale of the Common Shares issuable upon
exercise of this Warrant shall be governed by the resolutions set forth in
section 1.2(d) of the Merger Agreement dated as of February 8, 1996 between
the Corporation, Fine Gold Recovery Systems Inc., Trans Mar, Inc. ("TMI"),
and certain holders of the capital stock of TMI and the Holder hereby
covenants and agrees to be bound by the terms thereof.
21. The Holder acknowledges and agrees that this Warrant supersedes any and all
rights that the Holder may have in the "L" shares issued by TMI and any
option or similar agreement issued by TMI.
22. This Warrant shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the _____________ day of February, 1996.
ALTAIR INTERNATIONAL GOLD INC.
Per:
---------------------------------------
President
Acknowledged and agreed to as of the ____________ day of February, 1996.
)
- ------------------------------) ----------------------------------
Witness )
)
-8-
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Gold Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that a legend may be placed on any certificates
representing common shares delivered to the undersigned.
Address for Delivery of Shares:
------------------------------------
------------------------------------
------------------------------------
------------------------------------
Attention:
-------------------------
Exercise Price
Tendered (Cdn. $2.00 per share) $
------------------------------------
Dated at ________________, this _______ day of _______________, 199_____.
Witness: ) ------------------------------------
) Holder's Name
)
)
) ------------------------------------
) Authorized Signature
)
)
) ------------------------------------
) Title (if applicable)
Signature guaranteed:
-9-
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL GOLD INC.
c/o Beach, Hepburn
36 Toronto Street
Suite 1000
Toronto, Ontario
M5C 2C5
This Warrant Certificate is hereby transferred to _________________________
residing
at ________________________________________ for good and valuable consideration.
You
are hereby instructed to take the necessary steps to effect this transfer.
Dated at ___________________, this ______ day of _____________, 199_____.
Witness: ) ------------------------------------
) Holder's Name
)
)
) ------------------------------------
) Authorized Signature
)
)
) ------------------------------------
) Title (if applicable)
)
)
Signature guaranteed: )
-10-
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (a) TO
THE CORPORATION, (b) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, OR (d) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO
THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY"
MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT THE
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED OR TRADED IN CANADA OR THE UNITED STATES OR TO A RESIDENT
OF CANADA OR THE UNITED STATES OR THROUGH THE FACILITIES OF THE ALBERTA STOCK
EXCHANGE FOR A PERIOD OF 90 DAYS FROM THE DATE HEREOF.
__________________________ (_____________) Warrant Certificate No. F-________
Series F Warrants
ALTAIR INTERNATIONAL GOLD INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, _________________ (the "Holder")
shall have the right to purchase from Altair International Gold Inc.
(hereinafter called the "Corporation"), at any time up to the earlier to occur
of (such earlier date referred to herein as the "Expiry Time") (i) 5:00 p.m.
(Toronto time) on September 26, 1997 and (ii) the date on which the Final
Exercise Period (as hereinafter defined) terminates, one fully paid and non-
assessable Common Share of the Corporation as constituted on the date hereof for
each share purchase warrant (individually, a "Warrant") represented hereby,
subject to the terms and conditions set forth herein. Subject to the terms and
conditions set forth herein, the exercise price for the purchase of each such
Common Share (the "Exercise Price") shall be:
(a) Cdn.$7.00 per share from the date hereof until 5:00 p.m. (Toronto time) on
December 26, 1996, provided that (i) only 50,000 Warrants may be exercised
during such period; and (ii) if the Common Shares trade at or in excess of
Cdn.$8.00 per share, the Exercise Price shall, at 5:00 p.m. (Toronto time)
on the forty-fifth day following the date on which the Common Shares first
traded at or in excess of Cdn.$8.00, be adjusted to Cdn.$10.00 and such
period shall terminate at the end of such forty-five day period (such
period hereinafter referred to as the "Initial Exercise Period"); and
(b) Cdn.$10.00 per share during the period commencing on the date that the
Initial Exercise Period terminates and ending at 5:00 p.m. (Toronto time)
on September 26, 1997,
<PAGE>
-2-
provided that (i) the number of Warrants that may be exercised during such
period may not exceed the number of Warrants exercised during the Initial
Exercise Period; and (ii) if the Common Shares trade at or in excess of
Cdn.$11.00 during such period, the Warrants shall expire at 5:00 p.m.
(Toronto time) on the forty-fifth day following the date on which the
Common Shares first trade at or in excess of Cdn.$11.00 (such period
hereinafter referred to as the "Final Exercise Period").
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof or any
other adjustment under clause 8 hereof, or successive such changes,
subdivisions, redivisions, reductions, combinations, consolidations or other
adjustments, then subject to the adjustments, if any, having been made in
accordance with the provisions of this Warrant Certificate, "Common Shares"
shall thereafter mean the shares, other securities or other property resulting
from such change, subdivision, redivision, reduction, combination or
consolidation or other adjustment.
2. All Warrant Certificates shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement person
and notwithstanding any change in any of the persons holding said offices
between the time of actual signing and the delivery of the Warrant Certificate
and notwithstanding that such officer signing may not have held office at the
date of the delivery of the Warrant Certificate, the Warrant Certificate so
signed shall be valid and binding upon the Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have been
exercised shall wholly cease and determine and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time. In addition, the
Holder shall be entitled to exercise the right of subscription and purchase with
respect to not more than an aggregate of 50,000 Warrants during the Initial
Exercise Period and with respect to the Final Exercise Period, not more than an
equivalent number of Warrants that are exercised during the Initial Period.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder at or before the Expiry Time by:
(a) duly completing and executing a subscription substantially in the form
attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and executed
subscription form to the Corporation's counsel at 36 Toronto Street, Suite
1000, Toronto, Ontario, M5C 2C5, Attention: Jay Goldman, together with
payment of the purchase price for the Common Shares subscribed for in the
form of cash or a certified cheque payable to the Corporation in an amount
equal to the then applicable Exercise Price multiplied by the number of
Common Shares subscribed for.
<PAGE>
-3-
5. Upon such delivery and payment as aforesaid, the Corporation shall cause to
be issued to the Holder the number of Common Shares of the Corporation to be
issued and the Holder shall become a shareholder of the Corporation in respect
of such Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing such
shares. The Corporation shall cause such certificate or certificates to be
mailed to the Holder at the address or addresses specified in such subscription
form within five (5) business days of such delivery and payment as herein
provided or, if so instructed by the Holder, held for pick-up by the Holder at
the principal office of the registrar and transfer agent of the Common Shares of
the Corporation, Equity Transfer Services Inc. (the "Transfer Agent").
6. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect thereof
except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while any
of the Warrants shall be outstanding, it shall reserve and there shall remain
unissued out of its authorized capital a sufficient number of Common Shares to
satisfy the right of purchase herein provided, as such right of purchase may be
adjusted pursuant to clauses 8 and 9 hereof. All Common Shares which shall be
issued upon the exercise of the right to purchase herein provided for, upon
payment therefor of the amount at which such Common Shares may at the time be
purchased pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
8.(a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its then
outstanding Common Shares by way of a stock dividend or other
distribution (any of such events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted effective
immediately after the effective date of any such event in (i) or (ii)
above or the record date at which the holders of Common Shares are
determined for the purpose of any such dividend or distribution in
(iii) above, as the case may be, by multiplying the Exercise Price in
effect on such effective date or record date, as the case may be, by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such effective date or record date, as the case may be,
before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Common Share Reorganization
including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common
Shares that would be outstanding if such securities were exchanged for
or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to above), evidences of indebtedness or property
<PAGE>
-4-
(excluding cash dividends paid in the ordinary course) to holders of
all or substantially all of its then outstanding Common Shares, the
number of Common Shares to be issued by the Corporation under this
Warrant shall, at the time of exercise of the right of subscription
and purchase under this Warrant Certificate, be appropriately adjusted
and the Holder shall receive, in lieu of the number of the Common
Shares in respect of which the right to purchase is then being
exercised, the aggregate number of Common Shares or other securities
or property that the Holder would have been entitled to receive as a
result of such event, if, on the record date thereof, the Holder had
been the registered holder of the number of Common Shares to which the
Holder was theretofore entitled upon the exercise of the rights of the
Holder hereunder.
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or a
reclassification or other change in the Common Shares (other than a
Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation or
other entity (other than a consolidation, merger or amalgamation which
does not result in any reclassification of the outstanding Common
Shares or a change of the Common Shares into other securities), or a
transfer of all or substantially all of the Corporation's undertaking
and assets to another corporation or other entity in which the holders
of Common Shares are entitled to receive shares, other securities or
other property (any of such events being called a "Capital
Reorganization"), the Holder, where he has not exercised the right of
subscription and purchase under this Warrant Certificate prior to the
effective date of such Capital Reorganization, shall be entitled to
receive and shall accept, upon the exercise of such right, on such
date or any time thereafter, for the same aggregate consideration in
lieu of the number of Common Shares to which he was theretofore
entitled to subscribe for and purchase, the aggregate number of shares
or other securities or property which the Holder would have been
entitled to receive as a result of such Capital Reorganization if, on
the effective date thereof, he had been the registered holder of the
number of Common Shares to which he was theretofore entitled to
subscribe for and purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 8(a), (b) or (c)
shall occur and the occurrence of such event results in an adjustment
of the Exercise Price pursuant to the provisions of this clause 8,
then the number of Common Shares purchaseable pursuant to this Warrant
shall be adjusted contemporaneously with the adjustment of the
Exercise Price by multiplying the number of Common Shares then
otherwise purchaseable on the exercise thereof by a fraction, the
numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment and the denominator of which shall be the
Exercise Price resulting from such adjustment.
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 8, in the opinion of the
board of directors of the Corporation, acting in good faith, are not
strictly applicable, or if strictly applicable would not fairly
<PAGE>
-5-
adjust the rights of the Holder against dilution in accordance with the
intent and purposes hereof, or would otherwise materially affect the
rights of the Holder of the Warrants hereunder, then the Corporation shall
execute and deliver to the Holder an amendment hereto providing for an
adjustment in the application of such provisions so as to adjust such
rights as aforesaid in such manner as the board of directors of the
Corporation may determine to be equitable in the circumstances, acting in
good faith. The failure of the taking of action by the board of directors
of the Corporation to so provide for any adjustment on or prior to the
effective date of any action or occurrence giving rise to such state of
facts will be conclusive evidence that the board of directors has
determined that it is equitable to make no adjustment in the circumstances.
9. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 8:
(a) any Common Shares owned or held by or for the account of the Corporation
shall be deemed not be to outstanding except that, for the purposes of
clause 8, any Common Shares owned by a pension plan or profit sharing plan
for employees of the Corporation or any of its subsidiaries shall not be
considered to be owned or held by or for the account of the Corporation;
(b) no adjustment in the Exercise Price shall be required unless a change of at
least 1% of the prevailing Exercise Price would result, provided, however,
that any adjustment which, except for the provisions of this clause 9(b),
would otherwise have been required to be made, shall be carried forward and
taken into account in any subsequent adjustment;
(c) the adjustments provided for in clause 8 are cumulative and shall apply to
successive subdivisions, consolidations, dividends, distributions and other
events resulting in any adjustment under the provisions of such clause;
(d) in the absence of a resolution of the board of directors of the Corporation
fixing a record date for any dividend or distribution referred to in clause
8(a)(iii) above, the Corporation shall be deemed to have fixed as the
record date therefor the date on which such dividend or distribution is
effected;
(e) if the Corporation sets a record date to take any action and thereafter and
before the taking of such action abandons its plan to take such action,
then no adjustment to the Exercise Price will be required by reason of the
setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number of
Common Shares purchaseable pursuant to the Warrants, the Corporation shall
provide to the Holder a certificate of an officer of the Corporation
certifying as to the amount of such adjustment and, in reasonable detail,
describing the event requiring and the manner of computing or determining
such adjustment; and
<PAGE>
-6-
(g) any question that at any time or from time to time arises with respect to
the amount of any adjustment to the Exercise Price or other adjustment
pursuant to clause 8 shall be conclusively determined by a firm of
independent chartered accountants (who may be the Corporation's auditors)
and shall be binding upon the Corporation and the Holder.
10. At least 21 days prior to the effective date or record date, as the case
may be, of any event referred to in clause 8, the Corporation shall notify the
Holder of the particulars of such event and the estimated amount of any
adjustment required as a result thereof.
11. On the happening of each and every such event set out in clause 8, the
applicable provisions of this Warrant, including the Exercise Price, shall, ipso
facto, be deemed to be amended accordingly and the Corporation shall take all
necessary action so as to comply with such provisions as so amended.
12. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly closed,
having regard to the provisions of clauses 8 and 9 hereof, prior to any meeting
of shareholders or for the payment of dividends or for any other purpose and in
the event of the surrender of any Warrant in accordance with the provisions
hereof and the making of any subscription and payment for the Common Shares
called for thereby during any such period delivery of certificates for Common
Shares may be postponed for not more than five (5) days after the date of the
re-opening of said share transfer books. Provided, however, that any such
postponement of delivery of certificates shall be without prejudice to the right
of the Holder so surrendering the same and making payment during such period to
receive after the share transfer books shall have been re-opened such
certificates for the Common Shares called for, as the same may be adjusted
pursuant to clauses 8 and 9 hereof as a result of the completion of the event in
respect of which the transfer books were closed.
13. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any shareholder or officer of
the Corporation either directly or through the Corporation, it being expressly
agreed and declared that the obligations under the Warrants are solely corporate
obligations and that no personal liability whatever shall attach to or be
incurred by the shareholders or officers of the Corporation or any of them in
respect thereof, any and all rights and claims against every such shareholder,
officer or director being hereby expressly waived as a condition of and as a
consideration for the issue of the Warrants.
14. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in the Warrant Certificate. In the
case of any subscription for a lesser number of Common Shares than expressed in
any Warrant Certificate, the Holder hereof shall be entitled to receive at no
cost to the Holder a new Warrant Certificate in respect of the balance of
Warrant not then exercised. Such new Warrant Certificate shall be mailed to the
Holder by the Corporation or, at its direction, the Transfer Agent,
contemporaneously with the
<PAGE>
-7-
mailing of the certificate or certificates representing the Common Shares
issued pursuant to clause 5.
15. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
16. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or knowledge
to the contrary except where the Corporation or the Transfer Agent is required
to take notice by statute or by order of a court of competent jurisdiction. A
Holder shall be entitled to the rights evidenced by such Warrant free from all
equities or rights of set-off or counterclaim between the Corporation and the
original or any intermediate holder thereof and all persons may act accordingly
and the receipt by any such Holder of the Common Shares purchaseable pursuant to
such Warrant shall be a good discharge to the Corporation and the Transfer Agent
for the same and neither the Corporation nor the Transfer Agent shall be bound
to inquire into the title of any such Holder except where the Corporation or the
Transfer Agent is required to take notice by statute or by order of a court of
competent jurisdiction.
17. The Corporation shall notify the Holder forthwith of any change of address
of the Transfer Agent or if Equity Transfer Services Inc., or any successor
thereto, is replaced as Transfer Agent, the name and address of the principal
office in the City of Toronto, Ontario of such successor Transfer Agent.
18. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise of the
rights of the Holders of Warrants against the Corporation which shall be
agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or supplemental
hereto which shall be agreed to by the Corporation; and/or
(c) to restrain any Holder of a Warrant from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders by the
terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be bound
to give effect thereto accordingly. Such
<PAGE>
-8-
extraordinary resolution shall, where applicable, be binding on the Corporation
which shall give effect thereto accordingly.
The Corporation shall forthwith upon receipt of an extraordinary resolution
provide notice to all Holders of the date and text of such resolution. The
Holders of Warrants assenting to an extraordinary resolution agree to provide
the Corporation forthwith with a copy of any extraordinary resolution passed.
The expression "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the Holders
of Warrants calling in the aggregate for not less than seventy-five per cent
(75%) of the aggregate number of shares called for by all of the Warrants which
are, at the applicable time, outstanding.
19. All notices to be sent hereunder shall be deemed to be validly given to the
Holders of the Warrants if delivered personally or if sent by registered letter
through the post addressed to such holders at their post office addresses
appearing in the register of Warrant holders caused to be maintained by the
Corporation pursuant to clause 16, and such notice shall be deemed to have been
given, if delivered personally when so delivered, and if sent by post on the
fifth business day next following the post thereof.
20. This Warrant shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the 27th day of March, 1996.
ALTAIR INTERNATIONAL GOLD INC.
Per:
-------------------------------------------
Director
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Gold Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that a legend may be placed on any certificates
representing common shares delivered to the undersigned.
Address for Delivery of Shares:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Attention:
----------------------------
Exercise Price Tendered (Cdn.$7.00 per share until expiry of the Initial
Exercise Period and Cdn. $10.00 per share from the expiry of the Initial
Exercise Period until the expiry of the Final Exercise Period.
$
-------------------------------------
Dated at ________________, this _______ day of _______________, 199_____.
Witness: )
) ------------------------------------
) Holder's Name
)
)
)
) ------------------------------------
) Authorized Signature
)
)
)
) ------------------------------------
) Title (if applicable)
Signature guaranteed:
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL GOLD INC.
c/o Beach, Hepburn
36 Toronto Street
Suite 1000
Toronto, Ontario
M5C 2C5
This Warrant Certificate is hereby transferred to _______________________
residing
at ________________________________________ for good and valuable consideration.
You
are hereby instructed to take the necessary steps to effect this transfer.
Dated at ___________________, this ______ day of _____________, 199_____.
Witness: )
) ------------------------------------
) Holder's Name
)
)
)
) ------------------------------------
) Authorized Signature
)
)
)
) ------------------------------------
) Title (if applicable)
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (a) TO
THE CORPORATION, (b) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, OR (d) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO
THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY"
MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT THE
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED OR TRADED IN CANADA OR TO A RESIDENT OF CANADA OR THROUGH
THE FACILITIES OF THE ALBERTA STOCK EXCHANGE UNTIL JUNE 27, 1996.
__________________________ (_____________) Warrant Certificate No. G-________
Series G Warrants
ALTAIR INTERNATIONAL GOLD INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, _________________ (the "Holder")
shall have the right to purchase from Altair International Gold Inc.
(hereinafter called the "Corporation"), at any time up to 5:00 p.m. (Toronto
time) on June 26, 1998 (the "Expiry Time"), one fully paid and non-assessable
common share of the Corporation (a "Common Share") for each Warrant
(individually, a "Warrant") represented hereby provided that if the Common
Shares trade on the Alberta Stock Exchange at or in excess of Cdn.$6.50 per
share on five days, the Warrants shall expire on the thirtieth day following the
fifth day on which the Common Shares so trade at or in excess of Cdn.$6.50.
The exercise price for the purchase of each such Common Share shall be
Cdn.$4.50 per share (the "Exercise Price").
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof or any
other adjustment under clause 8 hereof, or successive such changes,
subdivisions, redivisions, reductions, combinations, consolidations or other
adjustments, then
<PAGE>
subject to the adjustments, if any, having been made in accordance with the
provisions of this Warrant Certificate, "Common Shares" shall thereafter mean
the shares, other securities or other property resulting from such change,
subdivision, redivision, reduction, combination or consolidation or other
adjustment.
2. All Warrant Certificates shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement person
and notwithstanding any change in any of the persons holding said offices
between the time of actual signing and the delivery of the Warrant Certificate
and notwithstanding that such officer signing may not have held office at the
date of the delivery of the Warrant Certificate, the Warrant Certificate so
signed shall be valid and binding upon the Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have been
exercised shall wholly cease and determine and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder at or before the Expiry Time by:
(a) duly completing and executing a subscription substantially in the form
attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and executed
subscription form to the Corporation's counsel at 36 Toronto Street, Suite
1000, Toronto, Ontario, M5C 2C5, Attention: Jay Goldman, together with
payment of the purchase price for the Common Shares subscribed for in the
form of cash or a certified cheque payable to the Corporation in an amount
equal to the then applicable Exercise Price multiplied by the number of
Common Shares subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause to
be issued to the Holder the number of Common Shares of the Corporation to be
issued and the Holder shall become a shareholder of the Corporation in respect
of such Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing such
shares. The Corporation shall cause such certificate or certificates to be
mailed to the Holder at the address or addresses specified in such subscription
form within five (5) business days of such delivery and payment as herein
provided or, if so instructed by the Holder, held for pick-up by the Holder at
the principal office of the registrar and transfer agent of the Common Shares of
the Corporation, Equity Transfer Services Inc. (the "Transfer Agent").
6. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect thereof
except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while any
of the Warrants shall be outstanding, it shall reserve and there shall remain
unissued out of its authorized capital a sufficient number of Common Shares to
satisfy the right of purchase herein
<PAGE>
-3-
provided, as such right of purchase may be adjusted pursuant to clauses 8 and
9 hereof. All Common Shares which shall be issued upon the exercise of the
right to purchase herein provided for, upon payment therefor of the amount at
which such Common Shares may at the time be purchased pursuant to the
provisions hereof, shall be issued as fully paid and non-assessable shares
and the holders thereof shall not be liable to the Corporation or its
creditors in respect thereof.
8.(a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its then
outstanding Common Shares by way of a stock dividend or other
distribution (any of such events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted effective
immediately after the effective date of any such event in (i) or (ii)
above or the record date at which the holders of Common Shares are
determined for the purpose of any such dividend or distribution in
(iii) above, as the case may be, by multiplying the Exercise Price in
effect on such effective date or record date, as the case may be, by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such effective date or record date, as the case may be,
before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Common Share Reorganization
including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common
Shares that would be outstanding if such securities were exchanged for
or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to above), evidences of indebtedness or property (excluding
cash dividends paid in the ordinary course) to holders of all or
substantially all of its then outstanding Common Shares, the number of
Common Shares to be issued by the Corporation under this Warrant
shall, at the time of exercise of the right of subscription and
purchase under this Warrant Certificate, be appropriately adjusted and
the Holder shall receive, in lieu of the number of the Common Shares
in respect of which the right to purchase is then being exercised, the
aggregate number of Common Shares or other securities or property that
the Holder would have been entitled to receive as a result of such
event, if, on the record date thereof, the Holder had been the
registered holder of the number of Common Shares to which the Holder
was theretofore entitled upon the exercise of the rights of the Holder
hereunder.
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or a
reclassification or other change in the Common Shares (other than a
Common Share Reorganization) or a consolidation or
<PAGE>
-4-
merger or amalgamation of the Corporation with or into any other
corporation or other entity (other than a consolidation, merger or
amalgamation which does not result in any reclassification of the
outstanding Common Shares or a change of the Common Shares into
other securities), or a transfer of all or substantially all of the
Corporation's undertaking and assets to another corporation or
other entity in which the holders of Common Shares are entitled to
receive shares, other securities or other property (any of such
events being called a "Capital Reorganization"), the Holder, where
he has not exercised the right of subscription and purchase under
this Warrant Certificate prior to the effective date of such
Capital Reorganization, shall be entitled to receive and shall
accept, upon the exercise of such right, on such date or any time
thereafter, for the same aggregate consideration in lieu of the
number of Common Shares to which he was theretofore entitled to
subscribe for and purchase, the aggregate number of shares or other
securities or property which the Holder would have been entitled to
receive as a result of such Capital Reorganization if, on the
effective date thereof, he had been the registered holder of the
number of Common Shares to which he was theretofore entitled to
subscribe for and purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 8(a), (b) or (c)
shall occur and the occurrence of such event results in an adjustment
of the Exercise Price pursuant to the provisions of this clause 8,
then the number of Common Shares purchaseable pursuant to this Warrant
shall be adjusted contemporaneously with the adjustment of the
Exercise Price by multiplying the number of Common Shares then
otherwise purchaseable on the exercise thereof by a fraction, the
numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment and the denominator of which shall be the
Exercise Price resulting from such adjustment.
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 8, in the opinion of the
board of directors of the Corporation, acting in good faith, are not
strictly applicable, or if strictly applicable would not fairly adjust
the rights of the Holder against dilution in accordance with the
intent and purposes hereof, or would otherwise materially affect the
rights of the Holder of the Warrants hereunder, then the Corporation
shall execute and deliver to the Holder an amendment hereto providing
for an adjustment in the application of such provisions so as to
adjust such rights as aforesaid in such manner as the board of
directors of the Corporation may determine to be equitable in the
circumstances, acting in good faith. The failure of the taking of
action by the board of directors of the Corporation to so provide for
any adjustment on or prior to the effective date of any action or
occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is
equitable to make no adjustment in the circumstances.
<PAGE>
-5-
9. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 8:
(a) any Common Shares owned or held by or for the account of the Corporation
shall be deemed not be to outstanding except that, for the purposes of
clause 8, any Common Shares owned by a pension plan or profit sharing plan
for employees of the Corporation or any of its subsidiaries shall not be
considered to be owned or held by or for the account of the Corporation;
(b) no adjustment in the Exercise Price shall be required unless a change of at
least 1% of the prevailing Exercise Price would result, provided, however,
that any adjustment which, except for the provisions of this clause 9(b),
would otherwise have been required to be made, shall be carried forward and
taken into account in any subsequent adjustment;
(c) the adjustments provided for in clause 8 are cumulative and shall apply to
successive subdivisions, consolidations, dividends, distributions and other
events resulting in any adjustment under the provisions of such clause;
(d) in the absence of a resolution of the board of directors of the Corporation
fixing a record date for any dividend or distribution referred to in clause
8(a)(iii) above, the Corporation shall be deemed to have fixed as the
record date therefor the date on which such dividend or distribution is
effected;
(e) if the Corporation sets a record date to take any action and thereafter and
before the taking of such action abandons its plan to take such action,
then no adjustment to the Exercise Price will be required by reason of the
setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number of
Common Shares purchaseable pursuant to the Warrants, the Corporation shall
provide to the Holder a certificate of an officer of the Corporation
certifying as to the amount of such adjustment and, in reasonable detail,
describing the event requiring and the manner of computing or determining
such adjustment; and
(g) any question that at any time or from time to time arises with respect to
the amount of any adjustment to the Exercise Price or other adjustment
pursuant to clause 8 shall be conclusively determined by a firm of
independent chartered accountants (who may be the Corporation's auditors)
and shall be binding upon the Corporation and the Holder.
10. At least 21 days prior to the effective date or record date, as the case
may be, of any event referred to in clause 8, the Corporation shall notify the
Holder of the particulars of such event and the estimated amount of any
adjustment required as a result thereof.
11. On the happening of each and every such event set out in clause 8, the
applicable provisions of this Warrant, including the Exercise Price, shall, ipso
facto, be deemed to be
<PAGE>
-6-
amended accordingly and the Corporation shall take all necessary action so as
to comply with such provisions as so amended.
12. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly closed,
having regard to the provisions of clauses 8 and 9 hereof, prior to any meeting
of shareholders or for the payment of dividends or for any other purpose and in
the event of the surrender of any Warrant in accordance with the provisions
hereof and the making of any subscription and payment for the Common Shares
called for thereby during any such period delivery of certificates for Common
Shares may be postponed for not more than five (5) days after the date of the
re-opening of said share transfer books. Provided, however, that any such
postponement of delivery of certificates shall be without prejudice to the right
of the Holder so surrendering the same and making payment during such period to
receive after the share transfer books shall have been re-opened such
certificates for the Common Shares called for, as the same may be adjusted
pursuant to clauses 8 and 9 hereof as a result of the completion of the event in
respect of which the transfer books were closed.
13. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any shareholder or officer of
the Corporation either directly or through the Corporation, it being expressly
agreed and declared that the obligations under the Warrants are solely corporate
obligations and that no personal liability whatever shall attach to or be
incurred by the shareholders or officers of the Corporation or any of them in
respect thereof, any and all rights and claims against every such shareholder,
officer or director being hereby expressly waived as a condition of and as a
consideration for the issue of the Warrants.
14. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in the Warrant Certificate. In the
case of any subscription for a lesser number of Common Shares than expressed in
any Warrant Certificate, the Holder hereof shall be entitled to receive at no
cost to the Holder a new Warrant Certificate in respect of the balance of
Warrant not then exercised. Such new Warrant Certificate shall be mailed to the
Holder by the Corporation or, at its direction, the Transfer Agent,
contemporaneously with the mailing of the certificate or certificates
representing the Common Shares issued pursuant to clause 5.
15. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
16. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or knowledge
to the contrary except where the Corporation or the Transfer Agent is
<PAGE>
-7-
required to take notice by statute or by order of a court of competent
jurisdiction. A Holder shall be entitled to the rights evidenced by such
Warrant free from all equities or rights of set-off or counterclaim between
the Corporation and the original or any intermediate holder thereof and all
persons may act accordingly and the receipt by any such Holder of the Common
Shares purchaseable pursuant to such Warrant shall be a good discharge to the
Corporation and the Transfer Agent for the same and neither the Corporation
nor the Transfer Agent shall be bound to inquire into the title of any such
Holder except where the Corporation or the Transfer Agent is required to take
notice by statute or by order of a court of competent jurisdiction.
17. The Corporation shall notify the Holder forthwith of any change of address
of the Transfer Agent or if Equity Transfer Services Inc., or any successor
thereto, is replaced as Transfer Agent, the name and address of the principal
office in the City of Toronto, Ontario of such successor Transfer Agent.
18. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise of the
rights of the Holders of Warrants against the Corporation which shall be
agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or supplemental
hereto which shall be agreed to by the Corporation; and/or
(c) to restrain any Holder of a Warrant from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders by the
terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be bound
to give effect thereto accordingly. Such extraordinary resolution shall, where
applicable, be binding on the Corporation which shall give effect thereto
accordingly.
The Corporation shall forthwith upon receipt of an extraordinary resolution
provide notice to all Holders of the date and text of such resolution. The
Holders of Warrants assenting to an extraordinary resolution agree to provide
the Corporation forthwith with a copy of any extraordinary resolution passed.
The expression "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the Holders
of Warrants calling in the aggregate for not less than seventy-five percent
(75%) of the aggregate number of shares called for by all of the Warrants which
are, at the applicable time, outstanding.
<PAGE>
-8-
19. All notices to be sent hereunder shall be deemed to be validly given to the
Holders of the Warrants if delivered personally or if sent by registered letter
through the post addressed to such holders at their post office addresses
appearing in the register of Warrant holders caused to be maintained by the
Corporation pursuant to clause 16, and such notice shall be deemed to have been
given, if delivered personally when so delivered, and if sent by post on the
fifth business day next following the post thereof.
20. This Warrant shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the 27th day of June, 1996.
ALTAIR INTERNATIONAL GOLD INC.
Per:
-------------------------------
Director
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Gold Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that a legend may be placed on any certificates
representing common shares delivered to the undersigned.
Address for Delivery of Shares:
------------------------------------
------------------------------------
------------------------------------
------------------------------------
Attention:
-------------------------
Exercise Price
Tendered (Cdn. $4.50 per share) $______________________
Dated at ________________, this _______ day of _______________, 199_____.
Witness: ) ------------------------------------
) Holder's Name
)
)
) -----------------------------------
) Authorized Signature
)
)
) -----------------------------------
) Title (if applicable)
Signature guaranteed:
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL GOLD INC.
c/o Beach, Hepburn
36 Toronto Street
Suite 1000
Toronto, Ontario
M5C 2C5
This Warrant Certificate is hereby transferred to ________________________
residing
at ________________________________________ for good and valuable consideration.
You
are hereby instructed to take the necessary steps to effect this transfer.
Dated at ___________________, this ______ day of _____________, 199_____.
Witness: ) ------------------------------------
) Holder's Name
)
)
) ------------------------------------
) Authorized Signature
)
)
) ------------------------------------
) Title (if applicable)
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (a) TO
THE CORPORATION, (b) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, OR (d) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO
THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY"
MAY BE OBTAINED UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT THE
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED OR TRADED IN CANADA OR TO A RESIDENT OF CANADA OR THROUGH
THE FACILITIES OF THE ALBERTA STOCK EXCHANGE FOR A PERIOD OF 90 DAYS.
__________________________ (_____________) Warrant Certificate No. H-________
Series H Warrants
ALTAIR INTERNATIONAL GOLD INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, _________________ (the "Holder")
shall have the right to purchase from Altair International Gold Inc.
(hereinafter called the "Corporation"), at any time up to 5:00 p.m. (Toronto
time) on December 26, 1997 (the "Expiry Time"), one fully paid and non-
assessable Common Share of the Corporation for each Warrant (individually, a
"Warrant") represented hereby. The exercise price for the purchase of each such
Common Share shall be Cdn. $4.50 per share (the "Exercise Price").
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof or any
other adjustment under clause 8 hereof, or successive such changes,
subdivisions, redivisions, reductions, combinations, consolidations or other
adjustments, then subject to the adjustments, if any, having been made in
accordance with the provisions of this Warrant Certificate, "Common Shares"
shall thereafter mean the shares, other securities or other property resulting
from such change, subdivision, redivision, reduction, combination or
consolidation or other adjustment.
2. All Warrant Certificates shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement person
and notwithstanding any change
<PAGE>
in any of the persons holding said offices between the time of actual signing
and the delivery of the Warrant Certificate and notwithstanding that such
officer signing may not have held office at the date of the delivery of the
Warrant Certificate, the Warrant Certificate so signed shall be valid and
binding upon the Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have been
exercised shall wholly cease and determine and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder at or before the Expiry Time by:
(a) duly completing and executing a subscription substantially in the form
attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and executed
subscription form to the Corporation's counsel at 36 Toronto Street, Suite
1000, Toronto, Ontario, M5C 2C5, Attention: Jay Goldman, together with
payment of the purchase price for the Common Shares subscribed for in the
form of cash or a certified cheque payable to the Corporation in an amount
equal to the then applicable Exercise Price multiplied by the number of
Common Shares subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause to
be issued to the Holder the number of Common Shares of the Corporation to be
issued and the Holder shall become a shareholder of the Corporation in respect
of such Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing such
shares. The Corporation shall cause such certificate or certificates to be
mailed to the Holder at the address or addresses specified in such subscription
form within five (5) business days of such delivery and payment as herein
provided or, if so instructed by the Holder, held for pick-up by the Holder at
the principal office of the registrar and transfer agent of the Common Shares of
the Corporation, Equity Transfer Services Inc. (the "Transfer Agent").
6. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect thereof
except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while any
of the Warrants shall be outstanding, it shall reserve and there shall remain
unissued out of its authorized capital a sufficient number of Common Shares to
satisfy the right of purchase herein provided, as such right of purchase may be
adjusted pursuant to clauses 8 and 9 hereof. All Common Shares which shall be
issued upon the exercise of the right to purchase herein provided for, upon
payment therefor of the amount at which such Common Shares may at the time be
purchased pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
<PAGE>
-3-
8.(a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its then
outstanding Common Shares by way of a stock dividend or other
distribution (any of such events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted effective
immediately after the effective date of any such event in (i) or (ii)
above or the record date at which the holders of Common Shares are
determined for the purpose of any such dividend or distribution in
(iii) above, as the case may be, by multiplying the Exercise Price in
effect on such effective date or record date, as the case may be, by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such effective date or record date, as the case may be,
before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Common Share Reorganization
including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common
Shares that would be outstanding if such securities were exchanged for
or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to above), evidences of indebtedness or property (excluding
cash dividends paid in the ordinary course) to holders of all or
substantially all of its then outstanding Common Shares, the number of
Common Shares to be issued by the Corporation under this Warrant
shall, at the time of exercise of the right of subscription and
purchase under this Warrant Certificate, be appropriately adjusted and
the Holder shall receive, in lieu of the number of the Common Shares
in respect of which the right to purchase is then being exercised, the
aggregate number of Common Shares or other securities or property that
the Holder would have been entitled to receive as a result of such
event, if, on the record date thereof, the Holder had been the
registered holder of the number of Common Shares to which the Holder
was theretofore entitled upon the exercise of the rights of the Holder
hereunder.
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or a
reclassification or other change in the Common Shares (other than a
Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation or
other entity (other than a consolidation, merger or amalgamation which
does not result in any reclassification of the outstanding Common
Shares or a change of the Common Shares into other securities), or a
transfer of all or substantially all of the Corporation's undertaking
and assets to another corporation or other entity in which the holders
of Common Shares are entitled to receive shares, other securities or
other property (any of such events being called a "Capital
Reorganization"), the Holder, where he has not
<PAGE>
-4-
exercised the right of subscription and purchase under this Warrant
Certificate prior to the effective date of such Capital
Reorganization, shall be entitled to receive and shall accept, upon
the exercise of such right, on such date or any time thereafter, for
the same aggregate consideration in lieu of the number of Common
Shares to which he was theretofore entitled to subscribe for and
purchase, the aggregate number of shares or other securities or
property which the Holder would have been entitled to receive as a
result of such Capital Reorganization if, on the effective date
thereof, he had been the registered holder of the number of Common
Shares to which he was theretofore entitled to subscribe for and
purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 8(a), (b) or (c)
shall occur and the occurrence of such event results in an adjustment
of the Exercise Price pursuant to the provisions of this clause 8,
then the number of Common Shares purchaseable pursuant to this Warrant
shall be adjusted contemporaneously with the adjustment of the
Exercise Price by multiplying the number of Common Shares then
otherwise purchaseable on the exercise thereof by a fraction, the
numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment and the denominator of which shall be the
Exercise Price resulting from such adjustment.
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 8, in the opinion of the
board of directors of the Corporation, acting in good faith, are not
strictly applicable, or if strictly applicable would not fairly adjust
the rights of the Holder against dilution in accordance with the
intent and purposes hereof, or would otherwise materially affect the
rights of the Holder of the Warrants hereunder, then the Corporation
shall execute and deliver to the Holder an amendment hereto providing
for an adjustment in the application of such provisions so as to
adjust such rights as aforesaid in such manner as the board of
directors of the Corporation may determine to be equitable in the
circumstances, acting in good faith. The failure of the taking of
action by the board of directors of the Corporation to so provide for
any adjustment on or prior to the effective date of any action or
occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is
equitable to make no adjustment in the circumstances.
9. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 8:
(a) any Common Shares owned or held by or for the account of the Corporation
shall be deemed not be to outstanding except that, for the purposes of
clause 8, any Common Shares owned by a pension plan or profit sharing plan
for employees of the Corporation or any of its subsidiaries shall not be
considered to be owned or held by or for the account of the Corporation;
<PAGE>
-5-
(b) no adjustment in the Exercise Price shall be required unless a change of at
least 1% of the prevailing Exercise Price would result, provided, however,
that any adjustment which, except for the provisions of this clause 9(b),
would otherwise have been required to be made, shall be carried forward and
taken into account in any subsequent adjustment;
(c) the adjustments provided for in clause 8 are cumulative and shall apply to
successive subdivisions, consolidations, dividends, distributions and other
events resulting in any adjustment under the provisions of such clause;
(d) in the absence of a resolution of the board of directors of the Corporation
fixing a record date for any dividend or distribution referred to in clause
8(a)(iii) above, the Corporation shall be deemed to have fixed as the
record date therefor the date on which such dividend or distribution is
effected;
(e) if the Corporation sets a record date to take any action and thereafter and
before the taking of such action abandons its plan to take such action,
then no adjustment to the Exercise Price will be required by reason of the
setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number of
Common Shares purchaseable pursuant to the Warrants, the Corporation shall
provide to the Holder a certificate of an officer of the Corporation
certifying as to the amount of such adjustment and, in reasonable detail,
describing the event requiring and the manner of computing or determining
such adjustment; and
(g) any question that at any time or from time to time arises with respect to
the amount of any adjustment to the Exercise Price or other adjustment
pursuant to clause 8 shall be conclusively determined by a firm of
independent chartered accountants (who may be the Corporation's auditors)
and shall be binding upon the Corporation and the Holder.
10. At least 21 days prior to the effective date or record date, as the case
may be, of any event referred to in clause 8, the Corporation shall notify the
Holder of the particulars of such event and the estimated amount of any
adjustment required as a result thereof.
11. On the happening of each and every such event set out in clause 8, the
applicable provisions of this Warrant, including the Exercise Price, shall, ipso
facto, be deemed to be amended accordingly and the Corporation shall take all
necessary action so as to comply with such provisions as so amended.
12. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly closed,
having regard to the provisions of clauses 8 and 9 hereof, prior to any meeting
of shareholders or for the payment of dividends or for any other purpose and in
the event of the surrender of any Warrant in accordance with the provisions
hereof and the making of any subscription and payment for the Common Shares
called for thereby during any such period delivery of certificates for Common
Shares may be postponed
<PAGE>
-6-
for not more than five (5) days after the date of the re-opening of said
share transfer books. Provided, however, that any such postponement of
delivery of certificates shall be without prejudice to the right of the
Holder so surrendering the same and making payment during such period to
receive after the share transfer books shall have been re-opened such
certificates for the Common Shares called for, as the same may be adjusted
pursuant to clauses 8 and 9 hereof as a result of the completion of the event
in respect of which the transfer books were closed.
13. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any shareholder or officer of
the Corporation either directly or through the Corporation, it being expressly
agreed and declared that the obligations under the Warrants are solely corporate
obligations and that no personal liability whatever shall attach to or be
incurred by the shareholders or officers of the Corporation or any of them in
respect thereof, any and all rights and claims against every such shareholder,
officer or director being hereby expressly waived as a condition of and as a
consideration for the issue of the Warrants.
14. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in the Warrant Certificate. In the
case of any subscription for a lesser number of Common Shares than expressed in
any Warrant Certificate, the Holder hereof shall be entitled to receive at no
cost to the Holder a new Warrant Certificate in respect of the balance of
Warrant not then exercised. Such new Warrant Certificate shall be mailed to the
Holder by the Corporation or, at its direction, the Transfer Agent,
contemporaneously with the mailing of the certificate or certificates
representing the Common Shares issued pursuant to clause 5.
15. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
16. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or knowledge
to the contrary except where the Corporation or the Transfer Agent is required
to take notice by statute or by order of a court of competent jurisdiction. A
Holder shall be entitled to the rights evidenced by such Warrant free from all
equities or rights of set-off or counterclaim between the Corporation and the
original or any intermediate holder thereof and all persons may act accordingly
and the receipt by any such Holder of the Common Shares purchaseable pursuant to
such Warrant shall be a good discharge to the Corporation and the Transfer Agent
for the same and neither the Corporation nor the Transfer Agent shall be bound
to inquire into the title of any such Holder except where the Corporation or the
Transfer Agent is required to take notice by statute or by order of a court of
competent jurisdiction.
<PAGE>
-7-
17. The Corporation shall notify the Holder forthwith of any change of address
of the Transfer Agent or if Equity Transfer Services Inc., or any successor
thereto, is replaced as Transfer Agent, the name and address of the principal
office in the City of Toronto, Ontario of such successor Transfer Agent.
18. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise of the
rights of the Holders of Warrants against the Corporation which shall be
agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or supplemental
hereto which shall be agreed to by the Corporation; and/or
(c) to restrain any Holder of a Warrant from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders by the
terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be bound
to give effect thereto accordingly. Such extraordinary resolution shall, where
applicable, be binding on the Corporation which shall give effect thereto
accordingly.
The Corporation shall forthwith upon receipt of an extraordinary resolution
provide notice to all Holders of the date and text of such resolution. The
Holders of Warrants assenting to an extraordinary resolution agree to provide
the Corporation forthwith with a copy of any extraordinary resolution passed.
The expression "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the Holders
of Warrants calling in the aggregate for not less than seventy-five percent
(75%) of the aggregate number of shares called for by all of the Warrants which
are, at the applicable time, outstanding.
19. All notices to be sent hereunder shall be deemed to be validly given to the
Holders of the Warrants if delivered personally or if sent by registered letter
through the post addressed to such holders at their post office addresses
appearing in the register of Warrant holders caused to be maintained by the
Corporation pursuant to clause 16, and such notice shall be deemed to have been
given, if delivered personally when so delivered, and if sent by post on the
fifth business day next following the post thereof.
<PAGE>
-8-
20. This Warrant shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the 27th day of June, 1996.
ALTAIR INTERNATIONAL GOLD INC.
Per:
-----------------------------------
Director
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Gold Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that a legend may be placed on any certificates
representing common shares delivered to the undersigned.
Address for Delivery of Shares:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Attention:
-----------------------------
Exercise Price
Tendered (Cdn. $4.50 per share) $______________________
Dated at ________________, this _______ day of _______________, 199_____.
Witness: ) -------------------------------------
) Holder's Name
)
)
) -------------------------------------
) Authorized Signature
)
)
) -------------------------------------
) Title (if applicable)
Signature guaranteed:
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL GOLD INC.
c/o Beach, Hepburn
36 Toronto Street
Suite 1000
Toronto, Ontario
M5C 2C5
This Warrant Certificate is hereby transferred to _______________________
residing
at ________________________________________ for good and valuable consideration.
You
are hereby instructed to take the necessary steps to effect this transfer.
Dated at ___________________, this ______ day of _____________, 199_____.
Witness: ) -------------------------------------
) Holder's Name
)
)
) -------------------------------------
) Authorized Signature
)
)
) -------------------------------------
) Title (if applicable)
<PAGE>
ARTICLES OF MERGER
OF
MINERAL RECOVERY SYSTEMS, INC.
WITH AND INTO
FINE GOLD RECOVERY SYSTEMS INC.
Pursuant to the provisions of the Revised Statutes of Nevada 1995, Chapter
92A, the undersigned corporations deliver to the Nevada Secretary of State these
Articles of Merger for filing.
I.
Mineral Recovery Systems, Inc. is a corporation organized under and
governed by the laws of the State of Nevada. Fine Gold Recovery Systems Inc. is
a corporation organized under and governed by the laws of the State of Nevada.
II.
Attached hereto as Exhibit A, and incorporated herein by this reference, is
a Plan of Merger and Reorganization (the "PLAN"), dated as of June 21, 1996,
which was adopted by Mineral Recovery Systems, Inc. and Fine Gold Recovery
Systems Inc. and sets forth the terms of the merger of Mineral Recovery Systems,
Inc. with and into Fine Gold Recovery Systems Inc.
III.
The Plan was submitted to the shareholders of Mineral Recovery Systems,
Inc. and Fine Gold Recovery Systems Inc.
IV.
The Plan was approved by the unanimous written consent of the sole
shareholder of Mineral Recovery Systems, Inc.
V.
The Plan was approved by the unanimous written consent of the sole
shareholder of Fine Gold Recovery Systems Inc.
<PAGE>
VI.
There shall be no amendments to the Articles of Incorporation of Fine Gold
Recovery Systems Inc.
VIII.
No approval of any owner of any parent of Fine Gold Recovery Systems Inc.
or Fine Gold Recovery Systems Inc. was required.
EXECUTED as of the 21st day of June, 1996.
Mineral Recovery Systems, Inc., Fine Gold Recovery Systems Inc.,
a Nevada corporation a Nevada corporation
By By
----------------------------- ------------------------------
C. Patrick Costin C. Patrick Costin
President President
and and
By By
----------------------------- ------------------------------
William P. Long William P. Long
Secretary Secretary
STATE OF NEVADA )
) ss.
COUNTY OF )
-----------
This instrument was acknowledged before me on June 21, 1996 by C. Patrick
Costin, as President of Mineral Recovery Systems, Inc., a Nevada corporation.
--------------------------------------
NOTARY PUBLIC
My Commission Expires
- ------------------------------
STATE OF WYOMING )
) ss.
COUNTY OF )
-------------
<PAGE>
This instrument was acknowledged before me on June ___, 1996 by William P.
Long, as Secretary of Mineral Recovery Systems, Inc., a Nevada corporation.
--------------------------------------
NOTARY PUBLIC
My Commission Expires
- ------------------------------
STATE OF NEVADA )
) ss.
COUNTY OF )
----------------
This instrument was acknowledged before me on June ___, 1996, by C. Patrick
Costin, as President of Fine Gold Recovery Systems Inc., a Nevada corporation.
--------------------------------------
NOTARY PUBLIC
My Commission Expires
- ------------------------------
STATE OF WYOMING )
) ss.
COUNTY OF )
-------------
This instrument was acknowledged before me on June ___, 1996, by William P.
Long, as Secretary of Fine Gold Recovery Systems Inc., a Nevada corporation.
--------------------------------------
NOTARY PUBLIC
My Commission Expires
- ------------------------------
<PAGE>
EXHIBIT A
PLAN OF MERGER AND MERGER AGREEMENT
THIS PLAN OF MERGER AND MERGER AGREEMENT (the "MERGER AGREEMENT") is made
this 21st day of June, 1996, between FINE GOLD RECOVERY SYSTEMS INC., a Nevada
corporation (the "SURVIVING CORPORATION"), and MINERAL RECOVERY SYSTEMS, INC., a
Nevada corporation (the "DISAPPEARING CORPORATION"); the Surviving Corporation
and the Disappearing Corporation being referred to hereinafter collectively as
the "CONSTITUENT CORPORATIONS").
RECITALS:
1. The Surviving Corporation is a corporation duly organized and existing
under the laws of the State of Nevada. The registered office of the Surviving
Corporation is located at 1850 Aquila Avenue, Reno, Nevada 89509. The Surviving
Corporation was incorporated on December 22, 1993.
2. The Disappearing Corporation is a corporation duly organized and
existing under the laws of the State of Nevada. The registered office of the
Disappearing Corporation is located at 1850 Aquila Avenue, Reno, Nevada 89509.
The Disappearing Corporation was incorporated on July 26, 1994.
3. The Board of Directors of the Surviving Corporation and the Board of
Directors of the Disappearing Corporation, respectively, deem it desirable and
in the best interests of the Constituent Corporations that the Disappearing
Corporation be merged with and into the Surviving Corporation (the "MERGER").
In consideration of the mutual covenants and promises of the parties to
this Merger Agreement, and pursuant to the laws governing mergers of
corporations as set forth in the Revised Statutes of the State of Nevada (the
"NEVADA STATUTES"), the Constituent Corporations agree that the Disappearing
Corporation shall be merged into the Surviving Corporation as a single
corporation upon the following terms and conditions.
ARTICLE I
TERMS OF MERGER
At the Effective Time (as defined in Article II below):
1. The Disappearing Corporation shall be merged into the Surviving
Corporation.
2. The separate existence of the Disappearing Corporation shall cease.
3. The Surviving Corporation shall continue its corporate existence,
continue to be governed by the laws of the State of Nevada, continue to be named
Fine Gold Recovery Systems Inc. and continue to maintain its registered office
at 1850 Aquila Avenue, Reno, Nevada 89509.
4. The Surviving Corporation shall succeed, without other transfer, to
all the rights, privileges, powers and franchises, of a public as well as of a
private nature, and be subject to all the restrictions, disabilities and duties
of each Constituent Corporation; to all the rights, privileges, powers
<PAGE>
and franchises of each Constituent Corporation; and to all property, real,
personal and mixed, of each Constituent Corporation.
5. All property, rights, privileges, powers and franchises, and every
other interest of a public as well as a private nature, shall be as effectively
the property of the Surviving Corporation as they were of each Constituent
Corporation. The title to any real or personal property, whether by deed or
otherwise, vested in either Constituent Corporation does not revert nor is it in
any way impaired by reason of the Merger.
6. All debts, liabilities and duties of the respective Constituent
Corporations shall attach to the Surviving Corporation and may be enforced
against it to the same extent as if the debts, liabilities and duties had been
incurred or contracted by it.
7. Any bequest, devise, gift, grant or promise contained in a will or
other instrument of donation, subscription, or conveyance, which is made to
either Constituent Corporation and which takes effect or remains payable after
the Merger, shall inure to the Surviving Corporation.
ARTICLE II
MODE OF CARRYING MERGER INTO EFFECT
1. Upon adoption of this Merger Agreement by the Surviving Corporation
and by the Disappearing Corporation, this Merger Agreement shall be submitted
for approval by the shareholders of the Disappearing Corporation and the
Surviving Corporation. Upon approval by the shareholders of the Disappearing
Corporation and the Surviving Corporation in accordance with the requirements of
the Nevada Statutes, all documents shall be executed, acknowledged, filed and
recorded and all required acts shall be done in order to accomplish the Merger
under the provisions of the Nevada Statutes.
2. The effective time of the Merger (the "EFFECTIVE TIME") shall occur
when:
(a) this Merger Agreement has been authorized, adopted, approved,
signed and acknowledged by each Constituent Corporation in accordance with the
laws of the State of Nevada; and
(b) Articles of Merger referencing this Merger Agreement have been
filed in the office of the Secretary of State of the State of Nevada in
accordance with the laws thereof.
ARTICLE III
CONDITIONS OF MERGER
The Boards of Directors of either or both of the Constituent Corporations
may, in their discretion, terminate this Merger Agreement and abandon the
Merger, subject to the right of third parties under any contracts relating to
the Merger, without further action or approval by the stockholders of the
Constituent Corporations, at any time prior to the Effective Time. In the event
of the termination of this Merger Agreement, this Merger Agreement shall
forthwith become void and there shall be no liability on the part of either of
the Constituent Corporations or their respective officers or directors.
<PAGE>
ARTICLE IV
MANNER OF CONVERTING SHARES
At the Effective Time, the treatment in the Merger of the shares of the
capital stock of the Constituent Corporations shall be as follows:
1. Each share of the capital common stock of the Surviving Corporation
that is issued and outstanding immediately prior to the Effective Time shall
continue to be one fully paid and nonassessable share of common stock, $.01 par
value, of the Surviving Corporation.
2. Each share of the capital common stock of the Disappearing Corporation
that is issued and outstanding immediately prior to the Effective Time shall be
converted into and shall be one share of common stock, $.01 par value, of the
Surviving Corporation.
3. Any shares of the capital stock of the Disappearing Corporation held
as treasury stock of the Disappearing Corporation shall be retired and shall
cease to exist.
ARTICLE V
ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS
AND OFFICERS OF THE SURVIVING CORPORATION
1. The Articles of Incorporation of the Surviving Corporation in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation unless and until amended as provided by law and
such Articles of Incorporation.
2. The Bylaws of the Surviving Corporation in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation unless and
until amended or repealed as provided by applicable law, the Articles of
Incorporation of the Surviving Corporation or such Bylaws.
3. The officers and directors of the Surviving Corporation immediately
prior to the Effective Time shall be the officers and directors of the Surviving
Corporation until their successors shall have been duly elected and qualified or
until otherwise provided by law.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Merger Agreement this
21st day of April, 1996.
"Surviving Corporation"
FINE GOLD RECOVERY SYSTEMS INC.,
a Nevada corporation
--------------------------------------
C. Patrick Costin, President
--------------------------------------
William P. Long, Secretary
"Disappearing Corporation"
MINERAL RECOVERY SYSTEMS, INC.,
a Nevada corporation
--------------------------------------
C. Patrick Costin, President
--------------------------------------
William P. Long, Secretary
<PAGE>
CERTIFICATE OF SECRETARY
OF
MINERAL RECOVERY SYSTEMS, INC.
I, William P. Long, do hereby certify as follows:
1. I am the duly elected and qualified Secretary of Mineral Recovery
Systems, Inc., a Nevada corporation (the "DISAPPEARING CORPORATION").
2. The Agreement and Plan of Merger, dated as of the 21st day of June,
1996, between Fine Gold Recovery Systems, Inc. a Nevada corporation, and the
Disappearing Corporation (the "MERGER AGREEMENT"), to which this Certificate is
attached, was submitted to the sole holder of the shares of the Disappearing
Corporation's capital stock.
3. The Merger Agreement was approved and adopted pursuant to the
unanimous written consent of the sole stockholder of the Disappearing
Corporation, representing all of the shares of each class entitled to vote
thereon as a class and representing the total shares entitled to be voted.
In witness whereof, I have executed this Certificate this 21st day of June,
1996.
--------------------------------------
William P. Long, Secretary
STATE OF WYOMING )
) ss.
COUNTY OF )
---------
On the ____ day of June, 1996, personally appeared before me, a notary
public, William P. Long, personally known (or proved) to me to be the person
whose name is subscribed to the above instrument who acknowledged that he
executed the instrument.
--------------------------------------
Notary Public
<PAGE>
CERTIFICATE OF SECRETARY
OF
FINE GOLD RECOVERY SYSTEMS INC.
I, William P. Long, do hereby certify as follows:
1. I am the duly elected and qualified Secretary of Fine Gold Recovery
Systems Inc., a Nevada corporation (the "SURVIVING CORPORATION").
2. The Agreement and Plan of Merger, dated as of the 21st day of June,
1996, between Mineral Recovery Systems, Inc. a Nevada corporation, and the
Surviving Corporation (the "MERGER AGREEMENT"), to which this Certificate is
attached, was submitted to the sole holder of the shares of the Surviving
Corporation's capital stock.
3. The Merger Agreement was approved and adopted pursuant to the
unanimous written consent of the sole stockholder of the Surviving Corporation,
representing all of the shares of each class entitled to vote thereon as a class
and representing the total shares entitled to be voted.
In witness whereof, I have executed this Certificate this 21st day of June,
1996.
--------------------------------------
William P. Long, Secretary
STATE OF WYOMING )
) ss.
COUNTY OF )
---------
On the ____ day of June, 1996, personally appeared before me, a notary
public, William P. Long, personally known (or proved) to me to be the person
whose name is subscribed to the above instrument who acknowledged that he
executed the instrument.
--------------------------------------
Notary Public
<PAGE>
MERGER AGREEMENT
Among
Fine Gold Recovery Systems Inc.,
a Nevada corporation,
Altair International Gold Inc.
an Ontario corporation,
and
Trans Mar, Inc.,
a Washington corporation,
dated as of
February 8, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 THE PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . 1
(a) THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . 1
(b) EFFECT OF THE MERGER. . . . . . . . . . . . . . . . . . . 2
(c) ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . 2
(e) ESCROW OF SHARES. . . . . . . . . . . . . . . . . . . . . 2
(f) DISSENTERS' RIGHTS. . . . . . . . . . . . . . . . . . . . 3
(g) FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . 3
(h) ISSUANCE OF WARRANTS. . . . . . . . . . . . . . . . . . . 3
1.2 EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . 3
(a) ALTAIR TO PROVIDE COMMON STOCK. . . . . . . . . . . . . . 3
(b) EXCHANGE PROCEDURES . . . . . . . . . . . . . . . . . . . 4
(c) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF TMI . . . 4
(d) RESTRICTIONS ON TRANSFER. . . . . . . . . . . . . . . . . 4
(e) RESTRICTIVE LEGENDS . . . . . . . . . . . . . . . . . . . 4
1.3 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 TAKING OF NECESSARY ACTION; FURTHER ACTION . . . . . . . . . . 6
ARTICLE 2 - CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER . 6
2.2 CONDITIONS TO OBLIGATIONS OF FINE GOLD AND ALTAIR. . . . . . . 7
2.3 CONDITIONS TO OBLIGATIONS OF TMI . . . . . . . . . . . . . . . 9
ARTICLE 3 - COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . 11
3.1 PRE-MERGER COVENANTS . . . . . . . . . . . . . . . . . . . . . 11
(a) NOTICES AND CONSENTS. . . . . . . . . . . . . . . . . . . 11
(b) OPERATION OF BUSINESS . . . . . . . . . . . . . . . . . . 11
(c) AFFILIATED TRANSACTIONS . . . . . . . . . . . . . . . . . 11
(d) PRESERVATION OF BUSINESS. . . . . . . . . . . . . . . . . 11
(e) FULL ACCESS . . . . . . . . . . . . . . . . . . . . . . . 11
(f) NOTICE OF DEVELOPMENTS. . . . . . . . . . . . . . . . . . 11
(g) EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . 12
(h) REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 12
(i) INFORMATION REGARDING HOLDERS OF TMI COMMON STOCK . . . . 12
(j) HART-SCOTT-RODINO ACT EXEMPTION . . . . . . . . . . . . . 12
(k) RECOVERY OF SERIES 24 JIG . . . . . . . . . . . . . . . . 12
(l) REDUCTION OF LONG-TERM DEBT . . . . . . . . . . . . . . . 12
ARTICLE 4 - ADDITIONAL AGREEMENTS, REPRESENTATIONS AND WARRANTIES. . . . . 12
4.1 POST-MERGER COVENANTS. . . . . . . . . . . . . . . . . . . . . 12
(a) CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . 12
(b) INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 13
(c) TAX TREATMENT . . . . . . . . . . . . . . . . . . . . . . 14
4.2 SECURITIES MATTERS . . . . . . . . . . . . . . . . . . . . . . 15
i
<PAGE>
(a) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) ASSISTANCE OF TMI . . . . . . . . . . . . . . . . . . . . 15
(c) NO ASSURANCES . . . . . . . . . . . . . . . . . . . . . . 15
4.3 FILES AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 15
5.1 REPRESENTATIONS AND WARRANTIES OF TMI. . . . . . . . . . . . . 15
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF TMI . . 16
(b) OUTSTANDING CAPITAL STOCK . . . . . . . . . . . . . . . . 16
(c) ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . 16
(d) AUTHORITY AND ENFORCEABILITY. . . . . . . . . . . . . . . 16
(e) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . 16
(f) CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . . . 17
(g) CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . 17
(i) FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . 17
(j) NO MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . 18
(k) COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . 18
(l) CONTRACTS AND COMMITMENTS . . . . . . . . . . . . . . . . 18
(m) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) TITLE TO PROPERTIES AND CONDITION OF ASSETS . . . . . . . 19
(o) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 20
(p) EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . 20
(q) CERTAIN INTERESTS . . . . . . . . . . . . . . . . . . . . 20
(r) ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . 20
(s) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . 21
(t) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 21
(u) TMI DISCLOSURE SCHEDULES. . . . . . . . . . . . . . . . . 21
5.2 REPRESENTATIONS AND WARRANTIES OF FINE GOLD. . . . . . . . . . 21
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF FINE
GOLD. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) AUTHORITY AND ENFORCEABILITY. . . . . . . . . . . . . . . 22
(c) CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . . . 22
(d) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 REPRESENTATIONS AND WARRANTIES OF ALTAIR . . . . . . . . . . . 22
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF ALTAIR. 22
(b) AUTHORITY AND ENFORCEABILITY. . . . . . . . . . . . . . . 22
(c) CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . . . 23
(d) OWNERSHIP AND CONTROL OF FINE GOLD BY ALTAIR. . . . . . . 23
(e) CAPITAL STRUCTURE OF ALTAIR . . . . . . . . . . . . . . . 23
(f) SEC DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . 23
(g) NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 24
(h) COMPLIANCE WITH APPLICABLE LAWS . . . . . . . . . . . . . 24
(i) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . 24
(j) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 PRESS RELEASES AND ANNOUNCEMENTS . . . . . . . . . . . . . . . 26
6.3 NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . 26
6.4 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 26
ii
<PAGE>
6.5 SUCCESSION AND ASSIGNMENT. . . . . . . . . . . . . . . . . . . 26
6.6 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 HEADINGS AND REFERENCES. . . . . . . . . . . . . . . . . . . . 26
6.8 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 28
6.10 AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . 28
6.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.13 INCORPORATION OF EXHIBITS AND SCHEDULES. . . . . . . . . . . . 28
6.14 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.15 ATTORNEY'S FEES. . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 7 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 29
ASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Altair Common Stock. . . . . . . . . . . . . . . . . . . . . . 29
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . 29
CCJ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Confidential Information . . . . . . . . . . . . . . . . . . . 29
Dissenting Shareholder . . . . . . . . . . . . . . . . . . . . 29
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . 29
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 29
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 30
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . 30
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . 30
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 30
Financial Statements . . . . . . . . . . . . . . . . . . . . . 30
Fine Gold Common Stock . . . . . . . . . . . . . . . . . . . . 30
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Governmental Authority . . . . . . . . . . . . . . . . . . . . 30
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . 30
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 30
Intellectual Property. . . . . . . . . . . . . . . . . . . . . 30
Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Ordinary Course of Business. . . . . . . . . . . . . . . . . . 31
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . 31
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 31
Security Interest. . . . . . . . . . . . . . . . . . . . . . . 31
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 31
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
iii
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Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . 31
TMI Common Stock . . . . . . . . . . . . . . . . . . . . . . . 31
TMI Disclosure Schedules . . . . . . . . . . . . . . . . . . . 31
TMI Options. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Warrant Certificate. . . . . . . . . . . . . . . . . . . . . . 31
Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . 31
Washington Act . . . . . . . . . . . . . . . . . . . . . . . . 32
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MERGER AGREEMENT
THIS MERGER AGREEMENT (the "AGREEMENT") is entered into as of February 8,
1996 by and among FINE GOLD RECOVERY SYSTEMS INC., a Nevada corporation ("FINE
GOLD"), ALTAIR INTERNATIONAL GOLD INC., an Ontario corporation ("ALTAIR"), and
TRANS MAR, INC., a Washington corporation ("TMI"). Fine Gold, Altair and TMI
are referred to collectively herein as the "PARTIES" and individually as a
"PARTY".
Capitalized terms used herein and not otherwise defined herein have the
meanings set forth in Article 7.
The respective boards of directors of Fine Gold, Altair and TMI have
approved the transactions contemplated hereby and Fine Gold, Altair and TMI have
determined that it is advisable to consummate the merger described in Article 1
(the "MERGER") as a reorganization under Section 368(a)(1)(A) of the Code, as a
result of which: (i) TMI will be merged into Fine Gold in accordance with the
laws of the States of Nevada and Washington, (ii) all of the capital stock of
TMI issued and outstanding before the Merger will be converted into shares of
Altair Common Stock, and (iii) Fine Gold will be the surviving corporation after
the Merger, all of whose issued and outstanding capital stock will be owned by
Altair; all on the terms and subject to the conditions set forth in this
Agreement.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties hereby agree as follows.
ARTICLE 1 - THE MERGER
1.1 THE PLAN OF MERGER. In connection with the Merger and the
reorganization under Code Section 368(a)(1)(A), the respective boards of
directors of Fine Gold and Altair have duly adopted and approved, Altair, in its
capacity as the sole shareholder of Fine Gold, has approved, and the board of
directors of TMI approved and has resolved to submit to the shareholders of TMI
for approval, a plan of merger (the "PLAN OF MERGER") required by Section 17 of
1995 Nev. SB 433, 768th Sess. Nev. Leg., 1995 Nev. Stat. 586 (the "NEVADA ACT")
and the Washington Business Corporation Act (the "WASHINGTON ACT"), which Plan
of Merger includes, among other things, provisions to the following effect:
(a) THE MERGER. At the Effective Time, in accordance with this
Agreement, Section 33 of the Nevada Act, and Section 23B.11.070 of the
Washington Act, TMI shall be merged with and into Fine Gold, the separate
existence of TMI shall cease, and Fine Gold shall continue as the surviving
corporation. Fine Gold, in its capacity as the corporation surviving the
merger, sometimes is referred to herein as the "SURVIVING CORPORATION".
(b) EFFECT OF THE MERGER. At the Effective Time, the Merger shall
have the effect provided for in Section 33 of the Nevada Act and Section
23B.11.060 of the Washington Act.
(c) ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
The Articles of Incorporation and Bylaws of Fine Gold, as in effect immediately
prior to the Effective Time, shall, except as amended by the Articles of Merger
to be filed in respect of the Merger (which include the Plan of Merger attached
thereto as an exhibit), in the form set forth as Exhibit 1.1(c) hereto, in
accordance with Section 28 of the Nevada Act and Section 23B.11.050 of the
Washington Act (the "ARTICLES OF MERGER"), be the Articles of Incorporation and
Bylaws of the Surviving Corporation at the Effective Time and shall thereafter
continue to be its Articles of Incorporation and Bylaws until amended as
provided therein and under applicable law. The directors of Fine Gold holding
office immediately prior to the Effective Time shall be the directors of the
Surviving Corporation at the Effective Time. The officers of Fine Gold
<PAGE>
holding office immediately prior to the Effective Time shall be the officers
of the Surviving Corporation at the Effective Time.
(d) CONVERSION OF SECURITIES.
(i) Subject to the provisions of Section 1.1(e), at the
Effective Time, by virtue of the Merger and without any further action on the
part of Fine Gold, Altair, TMI or the holder of any TMI Common Stock, all of the
shares of the capital stock of TMI issued and outstanding, other than the
Dissenting Shares, shall automatically be exchanged for an aggregate number of
shares of Altair Common Stock calculated by subtracting (A) the number of shares
of Altair Common Stock for which any Dissenting Shares could have been exchanged
at the Effective Time, from (B) One Million Nine Hundred Twenty Thousand
(1,920,000) shares and such shares of TMI Common Stock so exchanged shall remain
outstanding as additional shares of the Surviving Corporation. Each outstanding
share of the TMI Common Stock exchanged pursuant to this Section 1.1(d) will be
exchanged for 0.33311 of a share of Altair Common Stock (the "EXCHANGE RATIO")
and, subject to the provisions of Section 1.1 (e), the holder of each such share
shall be endowed with the right, as of the Effective Time, to be treated as a
registered holder of such shares of Altair Common Stock as of the Effective Time
with all rights to dividends and other distributions made to registered holders
of Altair Common Stock as of such date.
(ii) At the Effective Time, by virtue of the Merger and without
any further action on the part of Fine Gold, Altair, TMI or the holder of any
TMI Common Stock, all shares of capital stock of TMI that are owned directly or
indirectly by TMI or any Subsidiary of TMI shall be canceled and no stock of
Altair or other consideration shall be delivered in exchange therefor.
(iii) Each share of Fine Gold Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted, by
operation of law, into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(e) ESCROW OF SHARES.
(i) Pursuant to the terms of an Escrow Agreement substantially
in the form of EXHIBIT 1.1(E) attached to this Agreement (the "ESCROW
AGREEMENT") to be executed by and between Altair and the Escrow Agent, and
subject to the approval of the ASE, Altair shall, consistent with the provisions
of Section 1.2, transfer and deliver to the Escrow Agent for the benefit of the
holders of the TMI Common Stock all of the Shares. The Shares shall be held by
the Escrow Agent for distribution to the holders of the TMI Common Stock at the
times and in the manner set forth in the Escrow Agreement. During the period
that the Escrow Agent shall hold the Shares, all cash dividends received by the
Escrow Agent shall be paid to the holders of the Shares entitled thereto. Any
shares of Altair Common Stock received by the Escrow Agent in respect of the
Shares shall be held in escrow pending distribution of the Shares pursuant to
the terms of the Escrow Agreement and this Agreement. During such period, the
Escrow Agent shall take such other actions as are necessary or appropriate in
order to achieve the purposes contemplated under this Agreement.
(ii) The Escrow Agent shall have the exclusive authority to act on behalf
of the holders of the Shares for all purposes under the terms of this Agreement
including, without limitation, providing such consents, waivers, amendments, and
modifications as the Escrow Agent may consider appropriate.
(f) DISSENTERS' RIGHTS. If holders of the capital stock of TMI are
entitled to dissenters' rights in connection with the Merger under the
Washington Act, any Dissenting Shares shall not be converted into shares of
Altair Common Stock but shall be converted into the right to receive such
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<PAGE>
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to the Washington Act. Each Dissenting Shareholder who,
pursuant to the provisions of the Washington Act, becomes entitled to payment of
the value of shares of capital stock of TMI shall receive payment therefor (but
only after the value therefor shall have been agreed upon or finally determined
pursuant to such provisions). In the event of legal obligation, after the
Effective Time, to deliver shares of Altair Common Stock to any holder of shares
of capital stock of TMI who shall have failed to make an effective purchase
demand or shall have lost his status as a Dissenting Shareholder, Altair shall
issue and deliver, upon surrender by such Dissenting Shareholder of all
certificates representing shares of capital stock of TMI, the shares of Altair
Common Stock to which such Dissenting Shareholder is then entitled under this
Section 1.1.
(g) FRACTIONAL SHARES. No fractional shares of Altair Common Stock
shall be issued, but in lieu thereof each holder of shares of TMI Common Stock
who would otherwise be entitled to receive a fraction of a share of Altair
Common Stock shall receive from Altair an amount of cash equal to: (i) the
fraction of a share of Altair Common Stock to which such holder would otherwise
be entitled, multiplied by (ii) the closing bid price of a share of Altair
Common Stock as of the date of this Agreement, as reported by the ASE. The
fractional share interests of each TMI shareholder shall be aggregated, so that
no TMI shareholder shall receive cash in an amount greater than the value of one
full share of Altair Common Stock.
(h) ISSUANCE OF WARRANTS. At the Effective Time and on the terms set
forth in a warrant certificate substantially in the form of EXHIBIT 1.1(H)
attached to this Agreement, Altair shall issue to the individuals identified on
SCHEDULE 1.1(H) attached hereto warrants (the "WARRANTS") to purchase an
aggregate of Five Hundred Eighty Thousand (580,000) shares of Altair Common
Stock (the "WARRANT SHARES"). In furtherance of the foregoing obligation,
Altair shall reserve for issuance upon the exercise of the Warrants not less
than Five Hundred Eighty Thousand (580,000) shares of Altair Common Stock. The
Warrants will be exercisable for the number of Warrant Shares identified on
SCHEDULE 1.1(H) attached hereto, the per share exercise price for the Warrant
Shares shall be equal to Two Canadian Dollars (Cdn$2.00), and the Warrants shall
be exercisable for a period of one year from the date of the Closing, upon which
date any unexercised portion of the Warrants shall expire in its entirety. The
Warrants shall be issued in full satisfaction of all obligations of TMI with
respect to the TMI Options and any "L" shares of TMI and shall supersede any and
all rights of any holder of TMI Options, any "L" shares or any other option or
similar obligation of TMI.
1.2 EXCHANGE OF CERTIFICATES.
(a) ALTAIR TO PROVIDE COMMON STOCK. Promptly after the Effective
Time (but in no event later than twenty (20) business days thereafter), Altair
shall make available for exchange in accordance with Section 1.1(e) and this
Section 1.2, through such reasonable procedures as Altair may adopt, the shares
of Altair Common Stock issuable pursuant to Section 1.1 in exchange for all of
the outstanding shares of TMI Common Stock.
(b) EXCHANGE PROCEDURES. Within ten days after the Effective Time,
Altair shall deliver to Raymond F. Foster, as agent for the holders of the TMI
Common Stock, instructions for effecting the surrender of the certificates
representing the shares of TMI Common Stock to be exchanged pursuant to Section
1.1 (the "CERTIFICATES") in exchange for certificates representing the Shares.
Upon surrender of a Certificate for cancellation to Altair or to such other
agent or agents as may be appointed by Altair, the Escrow Agent, on behalf of
the holder thereof, shall be entitled to receive in exchange therefor the number
of Shares to which the holder thereof is entitled pursuant to Section 1.1
hereof. The Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of TMI
3
<PAGE>
Common Stock which is not registered on the transfer records of TMI, a
certificate representing the appropriate number of Shares may be delivered to
the Escrow Agent, on behalf of the holder thereof, if the Certificate
representing such TMI Common Stock is presented to Altair and accompanied by
all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid, as determined by
Altair in its discretion. Until surrendered as contemplated by this Section
1.2, each Certificate shall be deemed at any time after the Effective Time to
represent the right to receive upon such surrender the number of Shares as
provided by this Article I and the provisions of the Nevada and Washington
Acts.
(c) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF TMI. All Altair
Common Stock delivered upon the surrender for exchange of shares of TMI Common
Stock in accordance with the terms hereof shall be deemed to have been delivered
in full satisfaction of all rights pertaining to such shares of TMI Common
Stock. There shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of TMI Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be exchanged and canceled as provided in this Article I.
(d) RESTRICTIONS ON TRANSFER. The Shares and the Warrant Shares will
not be registered under the Securities Act or any state securities law and a
prospectus will not be filed with respect to the distribution of the Shares and
the Warrant Shares pursuant to the securities laws, regulations or policies of
any province of Canada. Each Person (and his, her or its successor in interest)
obtaining any Shares or Warrant Shares in connection with the Merger shall not
sell, pledge, assign, transfer, hypothecate, dispose of or convey in any manner
such shares other than (i) by will or by the laws of descent or distribution, or
(ii) in compliance with all applicable United States, Canadian, state and
provincial securities laws and the rules and regulations of the ASE.
Furthermore, and without in any manner limiting, the foregoing restrictions,
each such Person (and his, her or its successor in interest) shall not sell,
pledge, assign, transfer, hypothecate, dispose of or convey in any manner during
any calendar quarter commencing after the Effective Time any shares of Altair
Common Stock in excess of the greater of (y) fifteen thousand (15,000) shares,
or (z) the sum of (A) five percent (5%) of the aggregate number of Shares to be
received by such Person in the Merger, plus (B) ten percent (10%) of the
aggregate number of Warrant Shares then held by such Person; PROVIDED, HOWEVER,
that commencing one year from the Closing, the number of shares of Altair Common
Stock described in subsection (A) above shall be increased to ten percent (10%)
of the aggregate number of Shares to be received by such Person in the Merger.
(e) RESTRICTIVE LEGENDS.
(i) Each Certificate issued pursuant to the Merger and each
certificate of Altair issued in respect of the Shares (unless no longer required
in the opinion of counsel for Altair) shall be stamped or otherwise imprinted
with legends substantially in the following form, in addition to any legend that
may now or hereafter be required by United States, Canadian, state or provincial
securities law or regulation or by the ASE:
"THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE LAW, AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT IS SUBSEQUENTLY
4
<PAGE>
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE."
(ii) Each Warrant certificate of Altair and each certificate of
Altair issued in respect of the Warrant Shares (unless no longer required in the
opinion of counsel for Altair) shall be stamped or otherwise imprinted with
legends substantially in the following form, in addition to any legend that may
now or hereafter be required by United States, Canadian, state or provincial
securities law or regulation or by the ASE:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE (THE "WARRANTS") AND THE
COMMON SHARES OF ALTAIR INTERNATIONAL GOLD INC. (THE "CORPORATION")
ISSUABLE UPON THE EXERCISE THEREOF (THE "COMMON SHARES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE LAW, AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT IS SUBSEQUENTLY REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE COMMON SHARES AND WARRANTS ARE ALSO SUBJECT TO CERTAIN
RESTRICTIONS ON SALE, TRANSFER AND DISPOSAL AS SET FORTH IN A MERGER
AGREEMENT BETWEEN THE CORPORATION, FINE GOLD RECOVERY SYSTEMS INC.,
TRANS MAR, INC. AND CERTAIN HOLDERS OF THE CAPITAL STOCK OF TRANS MAR,
INC. COPIES OF SUCH AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION AND WILL BE FURNISHED UPON REQUEST TO SUCH REGISTERED
HOLDER.
1.3 CLOSING. Subject to the provisions of Section 6.1, the closing of the
Merger (the "CLOSING") shall take place at the offices of Kimball, Parr,
Waddoups, Brown & Gee, 185 South State Street, Suite 1300, Salt Lake City, Utah
on a date and at such time on or prior to March 1, 1996 as Fine Gold, Altair and
TMI shall agree following the fulfillment or waiver of each of the conditions
set forth in Article 2, or at such other time and place or on such other date as
Fine Gold, Altair and TMI may mutually agree.
5
<PAGE>
1.4 TAKING OF NECESSARY ACTION; FURTHER ACTION.
(a) Fine Gold and Altair on the one hand, and TMI on the other hand,
shall use reasonable efforts to take all such action (including, without
limitation, action to cause the satisfaction of the conditions of the other to
effect the Merger) as may be necessary or appropriate in order to effectuate the
Merger, and to cause the Effective Time to occur by March 1, 1996.
(b) As soon as practicable after the satisfaction or waiver of the
conditions set forth in Article 2, and in no event later than five (5) business
days after such satisfaction or waiver, the Parties will cause the Articles of
Merger to be properly executed and delivered to the Secretaries of State of the
States of Nevada and Washington for filing.
(c) The Merger shall be effective upon the filing of Articles of
Merger with the Secretaries of State of Nevada and Washington and the acceptance
of such Articles of Merger by such Secretaries of State or at such later time as
the Parties may agree as specified in such Articles of Merger (the "EFFECTIVE
TIME").
(d) At the Effective Time, the stock transfer books of TMI shall be
closed and no transfer of shares of TMI Common Stock issued and outstanding
immediately prior to the Effective Time shall thereafter be made.
(e) If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full possession of all the rights, privileges,
immunities and franchises of TMI and Fine Gold (the "CONSTITUENT CORPORATIONS"),
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, and the officers of the Surviving Corporation are fully
authorized in the name of the Constituent Corporations or otherwise to take, and
shall take, all such actions.
ARTICLE 2 - CONDITIONS
2.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each Party to effect the Merger and to consummate the
other transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions:
(a) There shall have been no law, statute, rule or regulation,
domestic or foreign, enacted or promulgated which would make consummation of the
Merger illegal;
(b) No action, suit or proceeding (a "PROCEEDING") shall be pending
or threatened before any Governmental Authority wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge would (i) prevent consummation
of the Merger, or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation of the Merger (and no such
judgment, order, decree, stipulation, injunction or charge shall be in effect);
and
(c) No Party shall have terminated this Agreement pursuant to Section
6.1.
Any Party may waive any condition, in whole or in part, specified in this
Section 2.1 if such Party executes a writing so stating at or prior to the
Effective Time.
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<PAGE>
2.2 CONDITIONS TO OBLIGATIONS OF FINE GOLD AND ALTAIR. The obligations of
Fine Gold and Altair to effect the Merger, to consummate the other transactions
contemplated hereby and to perform their respective obligations hereunder is
also subject to satisfaction at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of TMI identified in Section
5.1 shall be true and correct in all material respects at and as of the
Effective Time;
(b) TMI shall have performed and complied with all of its covenants
hereunder in all material respects through the Effective Time, including,
without limitation the obligations of TMI set forth in Section 3.2;
(c) TMI shall have procured all of the third party consents and
approvals necessary in order that the Merger and the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration or any encumbrance on any of TMI's assets pursuant
to the provisions of, any agreement, contract, arrangement or understanding or
any license, franchise or permit, in any such case which is material to TMI;
(d) At the Effective Time, the total long-term and short-term debt of
TMI, as determined pursuant to GAAP, together with all other financial
commitments of TMI shall not exceed One Million Three Hundred Thousand Dollars
($1,300,000), and the total short-term debt of TMI, also as determined pursuant
to GAAP, shall not exceed Ten Thousand Dollars ($10,000);
(e) At all times between the execution of this Agreement and the
Effective Time, the number of holders (record or beneficial) of the capital
stock of TMI who are not "accredited investors," as such term is defined in Rule
501 promulgated under the Securities Act, shall not exceed thirty-five (35)
Persons;
(f) At the Effective Time, (i) the number of holders (record or
beneficial) of the capital stock of TMI shall not exceed fifty (50) persons,
exclusive of holders who are employed by TMI or who were formerly employed by
TMI and who, while in that employment of TMI were, and have continued after that
employment to be, security holders of TMI, (ii) TMI shall not be a reporting
issuer under the securities laws of any province of Canada, and (iii) there
shall not be a published market for the TMI Common Stock;
(g) At the Effective Time, the holders of not more than three percent
(3%) of the outstanding shares of TMI Common Stock shall have taken steps
necessary to enforce their dissenters' rights pursuant to the Washington Act.
(h) TMI shall have delivered to Altair subscription documents, in
form and substance acceptable to Altair and its counsel, executed by each of the
holders of TMI Common Stock and each recipient of the Warrants, which contain
representations, warranties and covenants of the holders of TMI Common Stock and
the recipients of the Warrants acceptable to Altair, together with all other
agreements, certificates and documents as Altair shall reasonably request in
connection with the issuance of the Shares and the Warrants.
(i) TMI shall have filed with the Internal Revenue Service and all
applicable state and local Governmental Authorities all Tax Returns for all
periods prior to and including the year ended December 31, 1995, and shall have
provided to Altair copies of all such Tax Returns.
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<PAGE>
(j) TMI shall have used its best efforts to recover possession of the
Series 24 Campbell Centrifugal Jig (the "Series 24 Jig") from Energy
International, Inc., and shall have entered into arrangements for the recovery
of the Series 24 Jig in a manner acceptable to Altair in its discretion;
(k) TMI shall have delivered to Altair non-competition agreements, in
form and substance acceptable to Altair and its counsel, executed by each of the
following holders of the Altair Common Stock: Melvin L. Alter, Thomas P.
Campbell, Wallace D. Henderson, Edward B. Giller and Donald I. Prickett.
(l) TMI shall have delivered to Altair copies of the Escrow Agreement
executed by each holder of shares of TMI Common Stock who will receive shares of
Altair Common Stock in the Merger, in form and substance acceptable to Altair in
its discretion.
(m) TMI shall have delivered to Altair warrant certificates
evidencing the Warrants executed by each proposed recipient of the Warrants in
the Merger, in form and substance acceptable to Altair in its discretion.
(n) Prior to the Closing, TMI shall have delivered to Altair and Fine
Gold all of the Financial Statements, such Financial Statements shall not
deviate materially from the financial information delivered by TMI to Altair and
Fine Gold prior to the execution of this Agreement, and Altair shall have
approved the Financial Statements and shall have determined, in its discretion,
that the Financial Statements are acceptable in form and content.
(o) The chief executive officer and chief financial officer of TMI
shall have delivered to Fine Gold and Altair (i) a certificate signed by each
such officer to the effect that each of the conditions specified above in
Section 2.2(a) through (n), inclusive, is satisfied in all respects, and (ii)
except with respect to any Dissenting Shares, certificates in form and substance
satisfactory to Fine Gold and Altair representing all issued and outstanding
shares of the capital stock of TMI (which TMI, on behalf of the holders of the
TMI Common Stock, authorizes the Surviving Corporation to cancel, at the
Effective Time, upon issuance of the Shares to the holders of the TMI Common
Stock as provided by the Plan of Merger);
(p) TMI shall have delivered to Fine Gold and Altair (i) a certified
copy of the text of the resolutions by which the corporate action on the part of
TMI necessary to approve this Agreement, the Plan of Merger and the Merger were
taken, (ii) an incumbency certificate signed by an chief executive officer of
TMI certifying the signature and office of each officer executing this Agreement
or any other agreement, certificate or other instrument executed pursuant
hereto, (iii) Articles of Merger and the Plan of Merger duly executed by TMI,
(iv) resignations executed by all officers, directors and agents of TMI, and (v)
duly executed terminations of any and all powers of attorney or authorizations
to any Person to act for or on behalf of TMI;
(q) Altair and Fine Gold shall have received from counsel to TMI an
opinion in form and substance reasonably satisfactory to Altair and Fine Gold,
to the effect that:
(i) TMI is a corporation validly existing and in good standing under
the laws of the State of Washington, and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(ii) TMI has all requisite corporate power and authority to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby. The execution, delivery
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and performance by TMI of the Merger Agreement has been duly authorized
by all necessary corporate action, including shareholder approval, and
the Merger Agreement does not conflict with or result in a breach of any
of the provisions of the Articles of Incorporation or Bylaws of TMI.
(iii) The authorized, issued and outstanding capitalization of TMI is
as represented in the Merger Agreement; the outstanding shares of capital
stock of TMI are duly authorized and validly issued, are fully paid and
nonassessable.
(iv) To the knowledge of counsel to TMI, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to TMI in connection
with the execution and delivery of the Merger Agreement and the
consummation by TMI of the transactions contemplated thereby, other than
(i) such as have been obtained or accomplished , and (ii) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not have a material adverse effect on the business
and financial condition of TMI.
(v) To the knowledge of counsel to TMI, TMI has received no notice of
any pending or threatened action, suit or other proceeding involving TMI or
any of its businesses, properties or assets before or by any Governmental
Authority.
(r) All actions to be taken by TMI in connection with consummation of
the transactions contemplated hereby and all certificates, opinions, instruments
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to Fine Gold and Altair; and
(s) Fine Gold and Altair shall have received from the ASE all
necessary approvals, consents and authorizations with respect to the Merger, the
issuance of the Shares and the Warrants and the other transactions contemplated
hereby.
Each of Fine Gold and Altair may waive, in whole or in part, any condition
specified in this Section 2.2 by executing a writing so stating at or prior to
the Effective Time.
2.3 CONDITIONS TO OBLIGATIONS OF TMI. The obligation of TMI to effect the
Merger, to consummate the other transactions contemplated hereby and to perform
its obligations hereunder is also subject to satisfaction at or prior to the
Effective Time of the following conditions:
(a) The representations and warranties of Fine Gold and Altair set
forth in Sections 5.2 and 5.3, respectively, shall be true and correct in all
material respects at and as of the Effective Time;
(b) Each of Fine Gold and Altair shall have performed and complied
with all of its covenants hereunder in all material respects through the
Effective Time;
(c) Fine Gold and Altair shall have delivered to TMI a certificate
signed by the chief executive officers of Fine Gold and of Altair to the effect
that each of the conditions specified above in Sections 2.3(a) and (b) are
satisfied in all respects;
(d) Fine Gold and Altair shall have delivered to TMI (i) a certified
copy of the text of the resolutions by which the corporate action on the part of
Fine Gold and Altair necessary to adopt
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and approve (A) this Agreement, the Merger and the Plan of Merger, and (B)
the issuance, delivery and registration of the Shares as required by Section
1.1 hereof, (ii) an incumbency certificate signed by an officer of Fine Gold
and an incumbency certificate signed by an officer of Altair certifying the
signature and office of each officer executing this Agreement or any other
agreement, certificate or other instrument executed pursuant hereto on behalf
of Fine Gold or Altair, (iii) Articles of Merger duly executed by Fine Gold,
and (iv) the Plan of Merger duly executed by Fine Gold and Altair;
(e) TMI shall have received from counsel to Altair and Fine Gold an
opinion in form and substance reasonably satisfactory to TMI, to the effect
that:
(i) Altair is a corporation validly existing under the laws of the
Province of Ontario, and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted. Fine Gold is a corporation validly existing and in good
standing under the laws of the State of Nevada, and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(ii) Each of Altair and Fine Gold has all requisite corporate power
and authority to enter into the Merger Agreement and to consummate the
transactions contemplated thereby. The execution, delivery and performance
by Altair and Fine Gold of the Merger Agreement has been duly authorized by
all necessary corporate action, including shareholder approval, and the
Merger Agreement does not conflict with or result in a breach of any of the
provisions of the Articles of Incorporation or Bylaws of Altair or Fine
Gold, respectively.
(iii) The authorized, issued and outstanding capitalization of Altair
and Fine Gold are as represented in the Merger Agreement; the Shares to be
issued to the holders of TMI Common Stock will be, upon issuance, duly
authorized, validly issued, fully paid and nonassessable.
(iv) To the knowledge of counsel to Altair and Fine Gold, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required by or with respect to Altair
or Fine Gold in connection with the execution and delivery of the Merger
Agreement and the consummation by Altair and Fine Gold of the transactions
contemplated thereby, other than (A) filings as required by the Ontario
Securities Commission following consummation of the Merger, (B) such as
have been obtained or accomplished, and (C) such other consents,
authorizations, filings, approvals and registrations which if not obtained
or made would not have a material adverse effect on the business and
financial condition of Altair and Fine Gold taken as a whole.
(v) To the knowledge of counsel to Altair and Fine Gold, neither
Altair nor Fine Gold has received any notice of any pending or threatened
action, suit or other proceeding involving Altair or Fine Gold or any of
their respective businesses, properties or assets before or by any
Governmental Authority.
(f) All actions to be taken by Fine Gold and Altair in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
TMI.
TMI may waive, in whole or in part, any condition specified in this Section 2.3
by executing a writing so stating at or prior to the Effective Time.
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ARTICLE 3 - COVENANTS OF THE PARTIES
3.1 PRE-MERGER COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Effective Time:
(a) NOTICES AND CONSENTS. TMI will give any notices to third
parties, and use its reasonable efforts to obtain any third party consents or
assignments necessary to consummate the Merger and any other consents or
assignments that Fine Gold or Altair reasonably may request in connection with
the matters pertaining to TMI disclosed or required to be disclosed in the TMI
Disclosure Schedules. Each of the Parties will take all additional actions that
may be necessary, proper or advisable in connection with any other notices to,
filings with, and authorizations, consents, and approvals of, Governmental
Authorities and third parties that it may be required to give, make, or obtain.
(b) OPERATION OF BUSINESS. TMI will not engage in any practice, take
any action, embark on any course of inaction, or enter into any transaction
outside the Ordinary Course of Business.
(c) AFFILIATED TRANSACTIONS. TMI will not enter into any
transaction, arrangement or contract with, or distribute or transfer any
property or other assets to or for the benefit of, any officer, director,
shareholder or other insider or Affiliate of TMI, whether for payment of salary,
wages or otherwise.
(d) PRESERVATION OF BUSINESS. TMI will use reasonable efforts to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions and relationships with
lessors, licensors, suppliers and venture partners.
(e) FULL ACCESS. TMI will permit representatives of Fine Gold and
Altair to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of TMI, to all business operations
of TMI, to all premises, properties, books, records, contracts, Tax records and
documents of or pertaining to TMI.
(f) NOTICE OF DEVELOPMENTS. TMI will give prompt written notice to
Fine Gold and Altair of any material development affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of TMI. Each Party will give prompt written notice to the
other of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by
any Party pursuant to this Section 3.1(f), however, shall be deemed to amend or
supplement the TMI Disclosure Schedules or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. TMI will not at any time prior to the termination
of this Agreement pursuant to Section 6.1: (i) solicit, initiate or encourage
the submission of any proposal or offer from any Person relating to any (A)
liquidation, dissolution or recapitalization, (B) merger, consolidation or
reorganization, (C) acquisition or purchase of securities or assets, or (D)
similar transaction or purchase combination involving TMI, or (ii) participate
in discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other matter any effort or
attempt by any Person to do or seek any of the foregoing. TMI will notify Fine
Gold and Altair immediately if any Person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
(h) REPRESENTATIONS AND WARRANTIES. TMI will not take any action
which would cause or would reasonably likely cause a breach of any
representation or warranty set forth in this Agreement.
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Neither Fine Gold nor Altair will take any actions which would cause or would
reasonably likely cause a breach of any representation or warranty set forth
in this Agreement.
(i) INFORMATION REGARDING HOLDERS OF TMI COMMON STOCK. TMI shall
furnish to Altair such written information regarding the holders of the TMI
Common Stock, the proposed distribution of the Shares and the Warrants,
including the states in which the holders of the TMI Common Stock reside, and
the transactions described herein as Altair may reasonably request.
(j) HART-SCOTT-RODINO ACT EXEMPTION. The Parties have jointly made a
determination, after reasonable inquiry and investigation, that the transactions
contemplated by this Agreement and the Plan of Merger are exempt from compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
(k) RECOVERY OF SERIES 24 JIG. TMI shall use its best efforts to
recover possession of the Series 24 Jig identified in Section 2.2(j) and shall
provide, upon Altair's request, all information relating to the status of the
Series 24 Jig and TMI's efforts to recover the Series 24 Jig.
(l) REDUCTION OF LONG-TERM DEBT. TMI and its officers will in good
faith assist Altair in its efforts to negotiate the repayment and cancellation
of certain long-term debt owing to the Cripple Creek group at a discounted
price.
ARTICLE 4 - ADDITIONAL AGREEMENTS, REPRESENTATIONS AND WARRANTIES
4.1 POST-MERGER COVENANTS. The Parties agree as follows with respect to
the period following the Effective Time:
(a) CONFIDENTIALITY. TMI and each of the Shareholders will treat and
hold as such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with the Merger and the
transactions contemplated hereunder, and deliver promptly to the Surviving
Corporation or destroy, at the request and option of the Surviving Corporation,
all tangible embodiments (and all copies) of the Confidential Information which
are in his, her or its possession or control. In the event that TMI or any of
the Shareholders is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, TMI or such Shareholder will notify the Surviving Corporation
promptly of the request or requirement so that the Surviving Corporation may
seek an appropriate protective order or waive compliance with the provisions of
this Section 4.1(a). If, in the absence of a protective order or the receipt of
a waiver hereunder, TMI or any of the Shareholders is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, TMI or such Shareholder may disclose the Confidential
Information to the tribunal; PROVIDED, HOWEVER, that TMI or the disclosing
Shareholder shall use his, her or its best efforts to obtain, at the reasonable
request and sole expense of the Surviving Corporation or Altair, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Surviving
Corporation or Altair shall designate.
(b) INDEMNIFICATION.
(i) SURVIVAL. The representations and warranties of TMI set
forth in this Agreement shall survive for a period of one (1) year from the
Effective Time and then terminate and be of no further force or effect (even if
Fine Gold or Altair knew or had reason to know of a misrepresentation or breach
at the Effective Time); provided, however, that the representations and
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warranties of TMI set forth in Section 5.1(m) shall survive until the expiration
of any applicable statute of limitations plus ninety (90) days. The
representations and warranties of Fine Gold and Altair shall survive for a
period of one (1) year from the Effective Time and then terminate and be of no
further force or effect (even if TMI knew or had reason to know of a
misrepresentation or breach at the Effective Time). All of the covenants of
Fine Gold, Altair and TMI shall survive consummation of the Merger (even if Fine
Gold, Altair or TMI, as the case may be, knew or had reason to know of a breach
of a covenant at the Effective Time) and continue in full force and effect.
(ii) INDEMNIFICATION BY TMI
(A) Subject to the provisions of subsection (ii)A) below, TMI will
indemnify and hold harmless Altair, Fine Gold, and their respective
Affiliates, from and against any and all losses, claims, damages, expenses,
Liabilities or actions to which any of them may become subject under
applicable law (including the Securities Act) and will reimburse them for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any claim or action, whether or
not resulting in any Liability, insofar as such losses, claims, damages,
expenses, Liabilities or actions arise out of or are based upon (1) any
misrepresentation or omission of TMI set forth in this Agreement or
contained in any information provided by TMI to Altair or Fine Gold in
connection with the Merger, or (2) any untrue statement or alleged untrue
statement of a material fact contained in any report or other document
filed with a Governmental Authority or the ASE, provided that such claim or
action is not based on, and does not arise out of, information furnished by
Fine Gold or Altair for inclusion in such report or other document, or (3)
the omission or alleged omission to state in any such report or document a
material fact required to be stated therein, or necessary in order to make
the statements therein not misleading, provided that such claim or action
is not based on, and does not arise out of, information furnished by Fine
Gold or Altair for inclusion in such report or other document. The
indemnity agreement contained in this Section 4.1(b)(ii) shall survive the
consummation of the transactions contemplated hereby and shall remain
operative and in full force and effect for a period of one year from the
Closing, regardless of any investigation made by or on behalf of Altair or
Fine Gold, upon which time such indemnity agreement shall terminate.
(B) Altair, Fine Gold and TMI acknowledge and agree that the
indemnification obligation of TMI set forth in subsection 4.1(b)(ii)(A)
above shall be secured by the Shares held pursuant to the terms of the
Escrow Agreement. The Escrow Agreement shall provide that (1) in the event
of any claim of Altair or Fine Gold against TMI arising out of the
indemnity set forth in subsection 4.1(b)(i)(A) above, Altair or Fine Gold,
as the case may be, shall be entitled to satisfy the full amount of that
claim against the Shares then held under the Escrow Agreement; (2) the
amount of the claim of Altair and/or Fine Gold, as the case may be, shall
be assessed against the Shares then held in escrow on a pro rata basis,
based upon the fair market value of the Altair Common Stock on the date
such claim is paid by the Escrow Agent (but in no event shall a share of
TMI Common Stock be valued at less than One and 80/100 Canadian Dollars
(Cdn$1.80)); (3) the recourse of Fine Gold and TMI for any claim arising
pursuant to subsection 4.1(b)(i)(A) shall be limited to the aggregate value
of the Shares held in escrow at the time such claim is presented by Altair
or Fine Gold, as the case may be, to the Escrow Agent, and (4) Neither Fine
Gold nor Altair may exercise any claim against the Shares held under the
Escrow Agreement until the aggregate amount of all such claims of Altair
and Fine Gold exceeds Fifty Thousand Dollars ($50,000), and then Altair
and/or Fine Gold may recover with respect to all claims pursuant to
subsection 4.1(b)(i)(A) up to the full value of the Shares then held under
the Escrow Agreement.
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(iii) INDEMNIFICATION BY ALTAIR AND FINE GOLD. Fine Gold and Altair,
jointly and severally, will indemnify and hold harmless TMI and its Affiliates,
from and against any and all losses, claims, damages, expenses, Liabilities or
actions to which any of them may become subject under applicable law (including
the Securities Act) and will reimburse them for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any claim or action, whether or not resulting in Liability, insofar as
such losses, claims, damages, expenses, Liabilities or actions arise out of or
are based upon (1) any misrepresentation or omission of Altair or Fine Gold set
forth in this Agreement or contained in any information provided by Altair or
Fine Gold to TMI in connection with the Merger, or (2) any untrue statement or
alleged untrue statement of a material fact contained in any report or other
document filed with a Governmental Authority or the ASE, provided that such
claim or action is not based on, and does not arise out of, information
furnished by TMI for inclusion in such report or other document, or (3) the
omission or alleged omission to state in any such report or document a material
fact required to be stated therein, or necessary in order to make the statements
therein not misleading, provided that such claim or action is not based on, and
does not arise out of, information furnished by TMI for inclusion in such report
or other document. The indemnity agreement contained in this Section
4.1(b)(iii) shall survive the consummation of the transactions contemplated
hereby and shall remain operative and in full force and effect for a period of
one year from the Closing, regardless of any investigation made by or on behalf
of TMI, upon which time such indemnity agreement shall terminate.
(c) TAX TREATMENT.
(i) Each of the Parties agrees to treat the Merger as a
reorganization within the meaning of Code Section 368(a)(1)(A) and to prepare
and file all Tax returns and related reports and schedules consistent with such
treatment and to take no action intended to disqualify or to be inconsistent
with such treatment. Each of the Parties agrees to cooperate with, and make
available all necessary documents and records (with appropriate measures to
preserve confidentiality) to, any Party as requested (at the requesting Person's
sole cost and expense) to assist such requesting Person in the defense or
substantiation of such tax treatment. It is expressly understood and agreed,
however, that no representation or warranty is being made or legal opinion given
by any Party regarding the treatment of this transaction for federal, state or
foreign income taxation purposes. Although this transaction has been structured
in an effort to qualify for treatment under Code Section 368(a)(1)(A), there is
no assurance that any part of this transaction in fact meets the requirements
for such qualification. Each Party has relied exclusively on its own legal,
accounting and other tax advisors regarding the treatment of this transaction
for federal, state and foreign income tax purposes and on no representation,
warranty or assurance from any other Party or such other Party's legal,
accounting or other advisors that this transaction in fact meets the
requirements for such qualification. The Parties hereby acknowledge that a
transfer by Altair to a direct wholly owned subsidiary of Altair after the
Effective Time of the stock of the Surviving Corporation shall not constitute a
breach of any representation, warranty or covenant in this Agreement.
4.2 SECURITIES MATTERS. The consummation of the Merger and the other
transactions contemplated under this Agreement, including the issuance of the
Shares and the Warrants as contemplated by Section 1.1, constitutes the offer
and sale of securities under the Securities Act and applicable Canadian, state
and provincial statutes. Such transactions shall be consummated in reliance on
exemptions from the registration and prospectus delivery requirements of such
statutes which depend, among other items, on the circumstances under which the
holders of the TMI Common Stock and the Warrants acquire such securities.
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(a) NOTICES. In connection with the Merger and the transactions
contemplated hereby, TMI, Fine Gold and Altair shall file, with the assistance
of the others and their respective legal counsel, such notices, applications,
reports or other instruments as may be deemed by them to be necessary or
appropriate in an effort to document reliance on applicable exemptions from the
registration requirements of the Securities Act and all other applicable
securities laws and regulations with the appropriate Governmental Authorities,
all to the extent and in the manner as may be deemed by such Parties to be
appropriate.
(b) ASSISTANCE OF TMI. In order to more fully document reliance on
the exemptions described above, TMI shall cause the holders of the TMI Common
Stock and the Warrants to execute and deliver to Altair, at or prior to the
Closing, such subscription agreements, letters of representation,
acknowledgment, suitability or the like, as Altair and its counsel may
reasonably request in connection with reliance on exemptions from registration
under applicable securities laws or as required by the ASE.
(c) NO ASSURANCES. TMI and each of the Shareholders acknowledge that
the basis for relying on exemptions from registration or qualifications are
factual, depending on the conduct of the various parties, and that no legal
opinion or other assurance will be required or given to the effect that the
transactions contemplated hereby are in fact exempt from registration or
qualification.
4.3 FILES AND RECORDS. Promptly after the Effective Time, TMI will
deliver, arrange for the delivery of, or make available for Altair or Fine Gold
or their respective representatives to pick up, all files, records,
correspondence, maps, technical data, analyses, reports, financial and tax
information, tax returns (including tax returns of all partnerships of which TMI
is a partner), account ledgers, corporate records, computer or electronically
recorded data and other documents, data, and things owned by or related to TMI
or its assets, that are in the possession or control of the holders of TMI
Common Stock, including without limitation, any of such items that are held by
the attorneys, accountants, contractors or consultants of TMI.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF TMI. TMI hereby represents and
warrants to Fine Gold and Altair that all of the statements contained in this
Section 5.1 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Effective Time (as though made at the
Effective Time and as though the Effective Time were substituted for the date of
this Agreement throughout this Section 5.1), except as exceptions are permitted
to be set forth in the disclosure schedules prepared by TMI, delivered to Fine
Gold and Altair, and attached to this Agreement (the "TMI DISCLOSURE
SCHEDULES"). The TMI Disclosure Schedules will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
5.1.
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF TMI. TMI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington and has all requisite corporate power and lawful
authority to own, lease and operate its assets, properties and business and to
carry on its business as now being conducted. TMI is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership of its properties or both make such qualification necessary. TMI has
no Subsidiaries or other equity interest in any Person, nor is TMI subject to
any obligation or requirement to contribute funds to or make any investment in
any Person.
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(b) OUTSTANDING CAPITAL STOCK. The authorized capital stock of TMI
consists solely of Ten Million (10,000,000) shares of TMI Common Stock, of which
Five Million Seven Hundred Sixty-Three Thousand Nine Hundred Forty-Seven
(5,763,947) shares and no more are issued and outstanding. SCHEDULE 5.1(b)
identifies all holders of the TMI Common Stock, (b) the number of shares held by
each holder, (c) all holders of the TMI Options and any other option,
subscription, warrant, call, right or other agreement of any kind to acquire any
shares of TMI Common Stock, and (d) the number of shares of TMI Common Stock
subject to each such TMI Option and each other option, subscription, warrant,
call, right, or agreement. Not more than thirty-five (35) holders of the TMI
Common Stock are not "accredited investors," as such term is defined in Rule 501
promulgated under the Securities Act. No shares of TMI Common Stock are held in
TMI's treasury. Except as identified on SCHEDULE 5.1(b), there is no
outstanding right, subscription, warrant, call, unsatisfied preemptive right,
option or other agreement of any kind to purchase, subscribe for or otherwise to
receive from TMI any of the outstanding, authorized but unissued, unauthorized
or treasury shares of TMI Common Stock or any other security of TMI and there is
no outstanding security of any kind convertible into such capital stock or
security representing an equity interest. Except as identified on SCHEDULE
5.1(b), there are no outstanding contractual obligations of TMI to repurchase,
redeem, or otherwise acquire any outstanding shares of TMI Common Stock, nor are
there any voting trusts or other agreements to which TMI is a party with respect
to the voting of the TMI Common Stock.
(c) ARTICLES OF INCORPORATION AND BYLAWS. Included in the TMI
Disclosure Schedules are true and complete copies of TMI's Articles of
Incorporation and Bylaws (certified by TMI's corporate secretary) as in effect
on the date of this Agreement and as of the Effective Time.
(d) AUTHORITY AND ENFORCEABILITY. TMI has full power and authority
to execute and deliver this Agreement and, upon approval of the holders of the
TMI Common Stock, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of TMI and, except for approval by the shareholders of TMI,
no other proceedings on the part of TMI are necessary to authorize this
Agreement or to authorize the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed by TMI and
constitutes the legal, valid, and binding obligation of TMI, enforceable against
TMI in accordance with its terms.
(e) CAPITALIZATION. All of the issued and outstanding shares of TMI
Common Stock have been duly authorized and validly issued, are fully paid,
nonassessable and free of preemptive rights, and have been issued in compliance
with all applicable federal and state securities laws. To the Knowledge of TMI,
each of the holders of TMI Common Stock has good and marketable title to all of
the shares of TMI Common Stock identified with respect to that holder on
SCHEDULE 5.1(b) and, none of such shares of TMI Common Stock is subject to any
lien, pledge, hypothecation, assignment, encumbrance, security interest or
charge of any kind whatsoever, whether voluntary, involuntary or by operation of
law. To the Knowledge of TMI, no holder of TMI Common Stock owns or holds, is
obligated under or a party to, or has any Knowledge of any option, right of
first refusal or other contractual right to purchase, acquire, sell, assign or
dispose of any shares of TMI Common Stock except as set forth on SCHEDULE
5.1(b).
(f) CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on
SCHEDULE 5.1(f), neither the execution and delivery of this Agreement by TMI nor
the consummation by TMI of the transactions contemplated hereby, nor compliance
by TMI with any of the provisions hereof, will (i) require TMI to file or
register with, notify or obtain any permit, authorization, consent or approval
of any Governmental Authority; (ii) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of TMI; (iii) violate or
breach any provision of, or constitute a default (or
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an event which, with notice or lapse of time or both, would constitute a
default) under, any term, covenant, condition or provision of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
TMI is a party, or by which TMI or any of its properties or assets may be
bound; or (iv) violate any order, writ, injunction, decree, judgment,
statute, law or ruling of any Governmental Authority applicable to TMI or any
of its properties or assets.
(g) CLAIMS. Except as set forth on SCHEDULE 5.1(g), there is no
claim, dispute, action, suit, proceeding or investigation pending or threatened
by, against or affecting TMI, any its properties or any shares of TMI Common
Stock, at law or in equity, before any court or other Governmental Authority or
before any arbitrator of any kind.
(h) INTELLECTUAL PROPERTY. TMI owns or has a valid right to use any
Intellectual Property currently being used in its business as now operated,
expressly including, without limitation, all patents, licenses and rights
necessary to use, operate, manufacture, sell, develop and modify the CCJ. All
such Intellectual Property and related rights are fully and accurately
identified on SCHEDULE 5.1(h), are currently valid and no default exists with
respect thereto. TMI is not in default under any license agreement with respect
to any Intellectual Property right, and TMI has not received any notice that it
is in conflict with the rights of others relating to any such Intellectual
Property right.
(i) FINANCIAL STATEMENTS.
(i) Prior to Closing, TMI will deliver to Fine Gold and Altair
the following financial statements (collectively, the "FINANCIAL STATEMENTS"):
(A) a reviewed balance sheet as of December 31, 1995;
(B) an audited balance sheet as of December 31, 1995, together with
related audited statements of income, shareholders' equity and cash
flows for the year ended December 31, 1995;
(C) an audited balance sheet as of April 30, 1995, together with
related audited statements of income, shareholders' equity and cash
flows for the year ended April 30, 1995; and
(D) unaudited balance sheets as of April 30, 1992, 1993 and 1994,
together with unaudited statements of income, shareholders' equity and
cash flows for the fiscal years ended April 30, 1992, 1993 and 1994.
The Financial Statements fairly present the financial condition and the results
of operation, changes in shareholder equity and cash flows of TMI, and all
audited Financial Statements have been prepared in accordance with GAAP,
consistently applied. The balance sheets contained in the Financial Statements
present fairly the financial condition of TMI as of the dates thereof and
reflect all Liabilities relating to TMI's business as of the dates thereof, and
the statements of income related thereto present fairly the results of the
operations of TMI for the periods to which they pertain.
(ii) Except as set forth on SCHEDULE 5.1(i) attached hereto, all
accounts receivable of TMI are current and collectible and, to the Knowledge of
TMI, are not subject to any valid counterclaim or set-off, except to the extent
reserved against in the Financial Statements. TMI has not given or made any
warranty to third parties with respect to the products sold, licensed, or
distributed by
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it except as fully and accurately described on SCHEDULE 5.1(i) and such
warranties as may arise by operation of law. TMI does not have any material
obligation or Liability (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known to TMI or whether due or to become due),
arising out of any transaction entered into prior to the date of this
Agreement or any action or inaction at or prior to the date of this Agreement
or any condition existing at or prior to the date of this Agreement, except
(a) Liabilities accurately reflected and fully described in the Financial
Statements, and (b) Liabilities or obligations arising pursuant to this
Agreement.
(iii) The total long-term and short-term debt of TMI, as
determined pursuant to GAAP, together with all other financial commitments of
TMI, does not exceed One Million Three Hundred Thousand Dollars ($1,300,000),
and the total short-term debt of TMI, also as determined pursuant to GAAP, does
not exceed Ten Thousand Dollars ($10,000). SCHEDULE 5.1(i) identifies the
creditor, amount and all material terms of all Liabilities and other debts of
TMI (to the Knowledge of TMI and its officers and directors) as of the date of
this Agreement, regardless of whether any such Liability or debt is identified
in the Financial Statements. The Parties agree that TMI may update SCHEDULE
5.1(i) prior to the Effective Date; provided, however, that no such update shall
be permitted for information within the Knowledge of TMI or any of its officers
or directors as of the date of this Agreement or any information which
constitutes a material deviation from the representations and warranties of TMI
set forth in this Agreement.
(j) NO MATERIAL ADVERSE CHANGES. Since the date of the Financial
Statements, there has been no material adverse change in TMI's financial
condition, operations, operating results, business prospects, employee
relations, customer relations or otherwise.
(k) COMPLIANCE WITH LAWS. TMI has not received any notice of TMI's
asserted failure to comply with, and TMI has complied with, all laws, statutes,
ordinances, rules, regulations, policies and guidelines promulgated, and with
all judgments entered, by any Governmental Authority affecting it, any of its
properties, or any shares of TMI Common Stock. TMI has previously delivered to
Fine Gold and Altair copies of all pending or existing permits, approvals,
authorizations, consents, licenses and registrations issued or granted to TMI by
any Governmental Authority with respect to the conduct of TMI's business.
(l) CONTRACTS AND COMMITMENTS.
(i) TMI has performed all material obligations required to be
performed by it and is not in receipt of any claim or notice of default under
any material agreement to which TMI is a party or to which any of its assets or
properties are subject; TMI does not have any present intention of not
performing fully all of such obligations as they become due; TMI does not have
any Knowledge of any breach or any anticipated breach of the other parties to
any material contract or commitment; and TMI is not a party to any materially
adverse contract or commitment. No purchase commitment by TMI is in excess of
the normal, ordinary and usual requirements of TMI's business or at any
excessive price. TMI has no outstanding contract, agreement or arrangement with
any officer, director, employee, agent, consultant, advisor, sales
representative, distributor or dealer except as fully and accurately described
on SCHEDULE 5.1(l). TMI has not given any power of attorney to any Person for
any purpose whatsoever.
(ii) SCHEDULE 5.1(l) of the TMI Disclosure Schedules lists each
of the following contracts, agreements, and other written arrangements to which
TMI is a party or by which the assets or properties of TMI may be affected: (i)
any written arrangement concerning a partnership or joint venture; (ii) any
written arrangement (or group of related written arrangements) under which TMI
has (A) created, incurred, assumed, or guaranteed (or may create, incur, assume
or guarantee) Indebtedness
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in excess of $10,000 or (B) imposed (or may impose) a Security Interest on
any of TMI's assets, tangible or intangible; (iii) any arrangement not
disclosed in the TMI Disclosure Schedules pursuant to any other provision in
this Section 5.1 under which the consequences of a default or termination
could have a material adverse effect on the assets, Liabilities, business,
financial condition, operations, results of operations or future prospects of
TMI; (iv) any contract for the employment of any officer, individual employee
or other person on a full-time, part-time or consulting basis; (v) any
guaranty of any obligation for borrowed money or otherwise; (vi) any
agreement or commitment with respect to the lending or investing of funds by
TMI to or in any other Person; (vii) any license or royalty agreement;
(viii) any contract for the purchase or sale of products, services or real or
personal property; or (ix) any other written arrangement or group of related
written arrangements not entered into by TMI in the Ordinary Course of
Business.
(iii) Except as fully and accurately described on the TMI
Disclosure Schedules, TMI is not a party to any verbal contract, agreement, or
other arrangement which, if reduced to written form, would be required to be
listed on SCHEDULE 5.1(l) of the TMI Disclosure Schedules under the terms of
this Section 5.1(l). All of the verbal agreements listed on SCHEDULE 5.1(l) of
the TMI Disclosure Schedules will be terminated on or before the Effective Time
and TMI will have no further Liability therefor.
(m) TAXES. SCHEDULE 5.1(m) sets forth copies of TMI's Tax Returns
for the years ended April 30, 1993, 1994 and 1995 and December 31, 1995. TMI
has timely and duly filed with the appropriate Governmental Authority all Tax
Returns required by it, and, except as set forth on SCHEDULE 5.1(m), all Taxes
and other assessments which TMI is required by law to withhold or collect have
been timely and duly withheld and collected, including, without limitation, all
payroll taxes and employee withholding obligations. Except as set forth on
SCHEDULE 5.1(m), TMI has no unpaid Tax liability relating to salaries or other
compensation paid or payable to TMI officers, directors or employees. No TMI
Tax Returns have been examined and settled, and no waiver of statutes of
limitations has been given or requested. All such Tax Returns have been
prepared on the same basis as those for previous years and all Taxes (and all
penalties and interest related thereto) payable for the periods covered thereby
have been timely and duly paid or adequately reserved or provided for. TMI's
Tax Returns have never been audited by the Internal Revenue Service, the
assessment of any additional Taxes for periods for which Tax Returns have been
filed is not expected, and there are no material unresolved questions or claims
concerning TMI's Tax Liability.
(n) TITLE TO PROPERTIES AND CONDITION OF ASSETS. With respect to the
properties and assets of TMI:
(i) TMI has good and marketable title to, or a valid leasehold
interest in, the material properties and assets used by it or located on its
premises, including land, buildings, machinery, equipment, fixtures, inventories
and other assets reflected in the Financial Statements. Such properties and
assets are owned by TMI free and clear of all security interests, liens,
encumbrances, and adverse claims of any nature whatsoever, except as reflected
in the Financial Statements.
(ii) The properties and assets owned by TMI, or in which it has
an interest, or which it has in its possession are, in all material respects, in
good working order and are usable in the ordinary course of business, and no
notice of any violation of zoning, building or other laws, statutes, ordinances
or regulations relating to such properties and assets has been received by TMI
or is pending; and
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(iii) All leases of any real or personal property entered into
by TMI are fully and accurately described on SCHEDULE 5.1(n). All such leases
are valid and enforceable and, except as set forth on such schedule, there is
not under any such lease any existing default or event of default or event which
with notice or lapse of time or both would constitute a default.
(o) INSURANCE. TMI currently maintains no insurance coverage with
respect to its business, properties and employees.
(p) EMPLOYEES. Except as identified on SCHEDULE 5.1(p), there is no
pension, profit-sharing, bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any officer,
director, shareholder or employee of TMI. TMI is not a participant in any
multi-employer plan within the meaning of Section 4001(a)(3) of ERISA. No
notice to any employee of TMI is required in connection with the consummation of
the Merger and the other transactions contemplated hereby.
(q) CERTAIN INTERESTS.
(i) Except as identified on SCHEDULE 5.1(q), no officer,
director, shareholder, employee or Affiliate of TMI, and no relative of any such
officer, director, shareholder, employee or affiliate, has acquired any interest
in any property of TMI (except as a shareholder of TMI through ownership of
shares of TMI Common Stock), has loaned money to or borrowed money from TMI, or
has entered into any business relationship with TMI (except as an officer,
director, employee or shareholder thereof) or has entered into any employment or
consulting agreement with TMI.
(ii) Except as identified on SCHEDULE 5.1(q), since January 1,
1995, neither TMI (nor any other Person on behalf of or for the benefit of TMI)
has paid to or for the benefit of, or accrued for the benefit of, any officer or
director of TMI, or any relative of any such officer or director, any
compensation or remuneration, except for the reimbursement of legitimate
business expenses incurred by such officer or director in the Ordinary Course of
Business for the benefit of TMI.
(r) ENVIRONMENTAL MATTERS. TMI has not transported, stored, used,
manufactured, released or exposed its employees or any other Person to, any
Hazardous Material in violation of any applicable statute, rule, regulation,
order or law, except as would not have a material adverse effect on the assets,
Liabilities, business, financial condition, operations, results of operations or
future prospects of TMI. TMI has obtained all material permits, licenses and
other authorizations required to be obtained by it under any Environmental Law.
TMI is (a) in compliance with all terms and conditions of such permits, licenses
and authorizations, and (b) in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder except as would not have a material adverse effect on the assets,
Liabilities, business, financial condition, operations, results of operations or
future prospects of TMI. TMI has not received any notice, nor does TMI possess
any Knowledge, of any past or present condition or practice of the businesses
conducted by TMI or its Affiliates which forms or could form the basis of any
material claim, action, suit, proceeding, hearing or investigation against TMI,
arising out of the manufacture, processing, distribution, use, treatment,
storage, spill, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Hazardous Material.
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(s) LITIGATION. Except as disclosed on SCHEDULE 5.1(s), there is no
suit, action or proceeding pending or, to the Knowledge of TMI, threatened
against or affecting TMI, the effect of which might reasonably be expected to
have a material adverse effect on the business or operations of TMI (the "TMI
LITIGATION"), and TMI has no Knowledge of any facts which are likely to give
rise to any TMI Litigation which (in any case) might reasonably be expected to
have a material adverse effect on the business or operations of TMI, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Authority or arbitrator outstanding against TMI which might reasonably be
expected to have a material adverse effect on the business or operations of TMI
or TMI's ability to consummate the transactions contemplated by this Agreement.
(t) DISCLOSURE. No representation or warranty by TMI set forth
herein and no statement contained in any other document, financial statement,
certificate, exhibit, schedule or writing furnished or to be furnished by TMI to
Fine Gold or Altair or any of their respective representatives pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
(u) TMI DISCLOSURE SCHEDULES. TMI has delivered to Fine Gold and
Altair the TMI Disclosure Schedules, which consist of separate schedules dated
as of the date of this Agreement and instruments and data as of such date, all
certified by the chief executive officer and financial or accounting officer of
TMI as complete, true and accurate. TMI shall cause the TMI Disclosure
Schedules and the instruments and data delivered to Fine Gold and Altair
hereunder to be updated after the date hereof up to and including a specified
date not more than three business days prior to the Effective Time. Such
updated TMI Disclosure Schedules, certified in the same manner as the original
TMI Disclosure Schedules, shall be delivered prior to the Closing and as a
condition precedent to the obligations of Fine Gold and Altair to close.
5.2 REPRESENTATIONS AND WARRANTIES OF FINE GOLD. Fine Gold hereby
represents and warrants to TMI that the statements contained in this Section 5.2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Effective Time (as though made at the Effective Time and
as though the Effective Time were substituted for the date of this Agreement
throughout this Section 5.2).
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF FINE GOLD.
Fine Gold is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power and
lawful authority to own, lease and operate its assets, properties and business
and to carry on its business as now being conducted. Fine Gold is duly
qualified or otherwise authorized as a foreign corporation to transact business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership of its properties or both make such qualification necessary.
Fine Gold has no Subsidiaries or other equity interest in any Person, nor is
Fine Gold subject to any obligation or requirement to contribute funds to or
make any investment in any Person.
(b) AUTHORITY AND ENFORCEABILITY. Fine Gold has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Fine Gold and no other
proceedings on the part of Fine Gold are necessary to authorize this Agreement
or to authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Fine Gold
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and constitutes the legal, valid and binding obligation of Fine Gold
enforceable against Fine Gold in accordance with its terms.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by Fine Gold nor the consummation by Fine Gold of the
transactions contemplated hereby, nor compliance by Fine Gold with any of the
provisions hereof, will (i) require Fine Gold to file or register with, notify
or obtain any permit, authorization, consent or approval of any Governmental
Authority; (ii) conflict with or result in any breach of any provision of the
Articles of Incorporation or Bylaws of Fine Gold; (iii) violate or breach any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, any of the terms, covenants,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which Fine Gold is a party, or by which Fine Gold or
any of its properties or assets may be bound; or (iv) violate any order, writ,
injunction, decree, judgment, statute, law or ruling of any Governmental
Authority applicable to Fine Gold or any of its properties or assets.
(d) DISCLOSURE. No representation or warranty by Fine Gold set forth
in this Agreement and no statement contained in any other writing furnished or
to be furnished by Fine Gold to TMI or any Shareholder or any of their
representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
5.3 REPRESENTATIONS AND WARRANTIES OF ALTAIR. Altair hereby represents
and warrants to TMI that the statements contained in this Section 5.3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Effective Time (as though made at the Effective Time and as
though the Effective Time were substituted for the date of this Agreement
throughout this Section 5.3).
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF
ALTAIR. Altair is a corporation duly organized, validly existing and in good
standing under the laws of the Province of Ontario and has all requisite
corporate power and lawful authority to own, lease and operate its assets,
properties and business and to carry on its business as now being conducted.
Altair is duly qualified or otherwise authorized as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
nature of its business or the ownership of its properties or both make such
qualification necessary.
(b) AUTHORITY AND ENFORCEABILITY. Altair has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Altair and no other proceedings
on the part of Altair are necessary to authorize this Agreement or to authorize
the consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Altair and constitutes the
legal, valid and binding obligation of Altair enforceable against Altair in
accordance with its terms.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by Altair nor the consummation by Altair of the
transactions contemplated hereby, nor compliance by Altair with any of the
provisions hereof, will (i) require Altair to file or register with, notify or
obtain any permit, authorization, consent or approval of any Governmental
Authority other than the Ontario Securities Commission, the Alberta Securities
Commission, the British Columbia Securities
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Commission and the ASE; (ii) conflict with or result in any breach of any
provision of the charter documents of Altair; (iii) violate or breach any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, any of the terms,
covenants, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which Altair is a party, or by
which Altair or any of its properties or assets may be bound; or (iv) violate
any order, writ, injunction, decree, judgment, statute, law or ruling of any
Governmental Authority applicable to Altair or any of its properties or
assets.
(d) OWNERSHIP AND CONTROL OF FINE GOLD BY ALTAIR. The entire
authorized capital stock of Fine Gold consists of One Million (1,000,000) shares
of Fine Gold Common Stock, of which One Hundred Thousand (100,000) shares are
issued and outstanding and owned of record and beneficially by Altair. Fine
Gold is not a party to any agreement or commitment providing for the issuance,
disposition or acquisition of any of its capital stock. Except as set forth in
this Agreement, Altair has no present plans, intentions or commitments to (i)
liquidate Fine Gold, (ii) merge Fine Gold with and into another corporation,
(iii) sell or otherwise dispose of any of the capital stock of Fine Gold to any
person other than a direct or indirect wholly owned subsidiary of Altair, or
(iv) cause Fine Gold to sell or otherwise dispose of any of the assets of TMI
acquired in the Merger, except for dispositions made in the Ordinary Course of
Business or transfers described in Code Section 368(a)(2)(C).
(e) CAPITAL STRUCTURE OF ALTAIR. The authorized capital stock of
Altair consisted at December 31, 1995 of an unlimited number of shares of Altair
Common Stock, of which 8,497,849 shares were issued and outstanding. All
outstanding shares of Altair capital stock have been duly issued and are validly
outstanding, fully paid and nonassessable. None of the shares of Altair's
capital stock has been issued in violation of the preemptive rights of any
person. The Shares to be issued in connection with the Merger have been duly
authorized and, when issued in accordance with the terms of this Merger
Agreement and the Plan of Merger, will be validly issued, fully paid,
nonassessable and free and clear of any preemptive rights.
(f) SEC DOCUMENTS. Altair has made available to TMI a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Altair with the SEC (which includes the documents filed
with the Ontario Securities Commission) since January 1, 1994 and prior to the
date of this Agreement (the "ALTAIR SEC DOCUMENTS") which are all the documents
that Altair was required to file with the SEC since such date. As of their
respective dates, the Altair SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such
Altair SEC Documents, and none of the Altair SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Altair included in the Altair SEC Documents complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of Canadian
generally accepted accounting principles (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which are material) the
consolidated financial position of Altair and its consolidated Subsidiaries as
of their respective dates and the consolidated results of operations and the
consolidated cash flows of Altair and its consolidated Subsidiaries for the
periods presented therein.
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(g) NO DEFAULT. Neither Altair nor any of its significant
Subsidiaries is in material default or violation (and to the Knowledge of Altair
no event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any material term, condition or provision
of (i) in the case of Altair, its charter documents, (ii) any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which Altair or any of its significant Subsidiaries is now a party or by which
Altair or any of its significant Subsidiaries or any of their respective
properties or assets may be bound, or (iii) any order, writ, injunction, decree,
statute, rule or regulation applicable to Altair or any of its significant
Subsidiaries, except in the case of (ii) and (iii) for defaults or violations
which in the aggregate would not reasonably be expected to have a material
adverse effect on the business and operations of Altair and its Subsidiaries
taken as a whole.
(h) COMPLIANCE WITH APPLICABLE LAWS. Altair and its significant
Subsidiaries hold all material permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental entities necessary for the lawful
conduct of their respective businesses (the "ALTAIR PERMITS"), except where the
failure so to hold would reasonably be expected to not have a material adverse
effect on the business and operations of Altair and all of its Subsidiaries
taken as a whole. Altair and its Subsidiaries are in material compliance with
the terms of the Altair Permits, except where the failure so to comply would
reasonably be expected to not have a material adverse effect on the business and
operations of Altair and all of its Subsidiaries taken as a whole. Except as
disclosed in the Altair SEC Documents, the businesses of Altair and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Authority, except for possible violations which
would not reasonably be expected to have a material adverse effect on the
business or operations of Altair and its Subsidiaries taken as a whole.
(i) LITIGATION. Except as disclosed in the Altair SEC Documents,
there is no suit, action or proceeding pending or, to the Knowledge of Altair,
threatened against or affecting Altair or any Subsidiary of Altair the effect of
which might reasonably be expected to have a material adverse effect on the
business or operations of Altair and its Subsidiaries taken as a whole (the
"ALTAIR LITIGATION"), and Altair and its Subsidiaries have no Knowledge of any
facts which are likely to give rise to any Altair Litigation which (in any case)
might reasonably be expected to have a material adverse effect on the business
or operations of Altair and the Subsidiaries taken as a whole, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against Altair or any Subsidiary of Altair which might
reasonably be expected to have a material adverse effect on the business or
operations of Altair and its Subsidiaries taken as a whole or Altair's ability
to consummate the transactions contemplated by this Agreement.
(j) DISCLOSURE. No representation or warranty by Altair set forth in
this Agreement and no statement contained in any other writing furnished or to
be furnished by Altair to TMI or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
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ARTICLE 6 - MISCELLANEOUS
6.1 TERMINATION.
(a) This Agreement, the Merger and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time:
(i) By the mutual consent of Fine Gold, Altair and TMI through
action of their respective boards of directors; or
(ii) By any of Fine Gold, Altair or TMI if the Merger shall not
have become effective prior to March 15, 1996, or such later date as shall
have been approved by the boards of directors of each of Fine Gold, Altair
and TMI.
In the event of termination pursuant to this Section 6.1(a), no obligation,
right, remedy, or Liability shall arise hereunder, and Fine Gold, Altair and TMI
shall each bear its own costs incurred in connection with the preparation and
execution of this Agreement, the preparation and review of financial statements
required to be delivered pursuant hereto and the negotiation of the transactions
contemplated hereby.
(b) This Agreement, the Merger and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time by
action of the board of directors of Fine Gold or Altair if TMI or any
Shareholder shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of TMI contained herein shall be inaccurate in any
material respect. In the event of termination pursuant to this Section 6.1(b),
no obligation, right, remedy, or Liability shall arise hereunder, except that
TMI shall bear all of its own costs and TMI shall promptly reimburse Fine Gold
and Altair for all reasonable costs incurred by Fine Gold and Altair in
connection with the preparation and execution of this Agreement, the preparation
and review of financial statements required to be delivered pursuant hereto, and
the negotiation of the transactions contemplated hereby.
(c) This Agreement, the Merger and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time by
action of the board of directors of TMI if Fine Gold or Altair shall fail to
comply in any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of Fine Gold or
Altair contained herein shall be inaccurate in any material respect. In the
event of termination pursuant to this Section 6.1(c), no obligation, right,
remedy, or Liability shall arise hereunder, except that Fine Gold and Altair
shall bear all of their respective costs and shall promptly reimburse TMI for
all reasonable costs incurred by it in connection with the preparation and
execution of this Agreement, the preparation and review of financial statements
required to be delivered pursuant hereto, and the negotiation of the
transactions contemplated hereby.
6.2 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is required by
law or regulation (in which case the disclosing Party will advise the other
Parties prior to making the disclosure).
6.3 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
25
<PAGE>
6.4 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules referred to herein), the Escrow Agreement and the Warrant Certificates
constitute the entire agreement between the Parties and supersede any prior
understandings, agreements or representations by or between the Parties, written
or oral, that may have related in any way to the subject matter hereof
(expressly excluding, however, that certain Definitive Option Agreement executed
by and between TMI, Mineral Recovery Systems, Inc. and certain holders of the
TMI Common Stock.
6.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties hereto.
6.6 COUNTERPARTS. This Agreement and the Plan of Merger may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
6.7 HEADINGS AND REFERENCES. The Table of Contents and the article and
section headings contained in this Agreement and the Plan of Merger are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement. References in this Agreement to Articles and
Sections shall refer to the articles and sections of this Agreement, unless
expressly indicated otherwise.
6.8 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) when delivered
personally, (ii) when sent by telecopier (with receipt confirmed), (iii) when
received by the addressee, if sent by Express Mail, overnight express delivery
service (receipt requested), or (iv) three business days after being sent by
registered or certified mail, return receipt requested, in each case to the
other Party at the following addresses and telecopier numbers (or to such other
address or telecopier number for a Party as shall be specified by like notice;
provided that notices of a change of address or telecopier number shall be
effective only upon receipt thereof):
if to Fine Gold, to:
C. Patrick Costin
Fine Gold Recovery Systems Inc.
1850 Aquila Avenue
Reno, Nevada 89509
Fax No.: (702) 322-2231
with a copy to:
Brian G. Lloyd, Esq.
Kimball, Parr, Waddoups, Brown & Gee
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Fax No.: (801) 532-7750
26
<PAGE>
if to Altair, to:
William P. Long
Altair International Gold Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
Fax No.: (307) 587-8357
with copies to:
Jay Goldman, Esq.
Beach, Hepburn
36 Toronto Street, Suite 1000
Toronto, Ontario M5C 2C5
Fax No.: (416) 350-3510
and
Brian G. Lloyd, Esq.
Kimball, Parr, Waddoups, Brown & Gee
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Fax No. (801) 532-7750
if to TMI, to:
Melvin L. Alter
1936 East 23rd Avenue
Spokane, Washington 99203
Fax No. (509) 534-6306
with a copy to:
Keith D. Rieckers, Esq.
Lukins & Annis, P.S.
717 West Sprague Ave., Suite 1600
Spokane, Washington 99204
Fax No. (509) 747-2323
6.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Nevada, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Nevada or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Nevada.
6.10 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Fine
Gold, Altair, TMI and each of the Shareholders. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder or under
the Plan of Merger, whether intentional or not, shall be deemed to extend
27
<PAGE>
to any prior or subsequent default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
6.11 SEVERABILITY. Any term or provision of this Agreement, or the Plan of
Merger that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or thereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction declares that any term or
provision hereof or thereof is invalid or unenforceable, the Parties agree that
the court making the determination of invalidity or unenforceability shall have
the power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement and the Plan of Merger shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
6.12 CONSTRUCTION. The Parties have jointly participated in the
negotiation and drafting of this Agreement and the Plan of Merger. In the event
an ambiguity or question of intent or interpretation arises, this Agreement and
the Plan of Merger shall be construed as if drafted jointly by all Parties and
no presumptions or burdens of proof shall arise favoring any Party by virtue of
the authorship of any of the provisions of this Agreement or the Plan of Merger.
Any reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The Parties acknowledge that certain of the
representations and warranties herein and in the Plan of Merger, together with
the indemnification provisions herein, are intended to allocate risk and
economic cost as between Fine Gold, Altair, TMI and the holders of the TMI
Common Stock in the event such representations, warranties and covenants are
breached.
6.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
6.14 REMEDIES. Each of the Parties acknowledges and agrees that each other
Party would be damaged irreparably in the event any of the provisions of this
Agreement or the Plan of Merger are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that each other Party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and the Plan of Merger
and to enforce specifically this Agreement and the Plan of Merger and the terms
and provisions hereof and thereof in any action instituted in any court of the
United States or any state thereof, or in any courts of Canada or any province
thereof, having jurisdiction over the Parties and the matter, in addition to any
other remedy to which it may be entitled, at law or in equity.
6.15 ATTORNEY'S FEES. If any legal action or other proceeding is brought
for enforcement of this Agreement or the Plan of Merger because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement or the Plan of Merger, the successful or prevailing
party shall be entitled to recover reasonable attorney's fees and costs
incurred, both before and after judgment, in addition to any other relief to
which they may be entitled.
28
<PAGE>
ARTICLE 7 - DEFINITIONS
7.1 DEFINITIONS. For purposes of this Agreement, unless the context
otherwise clearly requires, the following terms shall have the meanings
specified or referred to below:
"ASE" means the Alberta Stock Exchange.
"AFFILIATE" means, with respect to any particular Person, any Person
controlling, controlled by or under common control with such Person.
"ALTAIR COMMON STOCK" means the voting common shares in the capital of
Altair, no par value.
"ARTICLES OF MERGER" has the meaning set forth in Section 1.1(c).
"CCJ" means the Campbell Centrifugal Jig, a mineral processing device
incorporating technology for the separation and recovery of fine heavy mineral
particles which are not presently recoverable utilizing conventional
technologies or processes, which device and technology are covered by U.S.
Patents Nos. 4279741 and 4998986 and the other patent rights described on
SCHEDULE 5.1(h).
"CLOSING" means the closing of the Merger as contemplated pursuant to
Section 1.3.
"CODE" means the Internal Revenue Service Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of Fine Gold, Altair or TMI other than any such information that (i)
is generally available to or known by the public immediately prior to the time
of disclosure (except through the actions or inactions of TMI or any holder of
TMI Common Stock), (ii) is available on a non-confidential basis (except through
the actions or inactions of TMI or any holder of TMI Common Stock) or (iii) has
been acquired or developed independent from TMI or any holder of TMI Common
Stock.
"DISSENTING SHAREHOLDER" means a holder of Dissenting Shares.
"DISSENTING SHARES" means those shares of TMI Common Stock, if any, held by
Persons exercising dissenter's rights in accordance with the Washington Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EFFECTIVE TIME" means the time the Merger becomes effective as described
in Section 1.4(c).
"ENVIRONMENTAL LAWS" means any and all laws, statutes, ordinances,
judgments, injunctions, decrees, regulations, rules and orders of any
Governmental Authority relating to pollution or the protection of human health
or the environment or to emissions, discharges, releases or threatened releases
of any substance that is regulated by any Governmental Authority or that has
been designated by any Governmental Authority to be toxic, hazardous,
radioactive or otherwise a danger to health or the environment.
"ESCROW AGENT" means the Person designated as such pursuant to the terms of
the Escrow Agreement.
"ESCROW AGREEMENT" has the meaning set forth in Section 1.1(e).
29
<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 5.1 (i).
"FINE GOLD COMMON STOCK" means the issued and outstanding common stock of
Fine Gold, $.01 par value, immediately preceding the Effective Time.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORITY" means any U.S., Canadian, state, provincial, local
or foreign court or governmental, administrative or regulatory authority or
agency.
"HAZARDOUS MATERIAL" means any substance that is regulated by any
Governmental Authority or that has been designated by any Governmental Authority
to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment.
"INDEBTEDNESS" of any Person means all obligations of such Person which in
accordance with GAAP should be classified upon a balance sheet of such Person as
Liabilities of such Person, and in any event, regardless of how classified in
accordance with GAAP, shall include (i) all obligations of such Person for
borrowed money or which has been incurred in connection with the acquisition of
property or assets, (ii) obligations secured by any lien or other charge upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, and (iii) obligations
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person, notwithstanding the fact that
the rights and remedies of such seller, lender or lessor under such agreement in
the event of default are limited to repossession or sale of the property.
"INTELLECTUAL PROPERTY" means all patents, trademarks, service marks,
copyrights, computer software, data and documentation, trade secrets and
confidential business information, and copies and tangible embodiments thereof
in whatever form or medium.
"KNOWLEDGE" means knowledge that a reasonable person under similar
circumstances would have after reasonable investigation and inquiry (including
with legal counsel).
"LIABILITY" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MERGER" means the merger described in Article 1 of this Agreement.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of a
Person consistent with past custom and practice of that Person (including with
respect to quantity, value, amount and frequency).
"PERSON" means any natural person, corporation, limited liability company,
partnership, association, venture, trust, estate, company or any other natural
or juridical entity of any nature.
"PLAN OF MERGER" has the meaning set forth in Section 1.1.
"SEC" means the United States Securities and Exchange Commission.
30
<PAGE>
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien.
"SHAREHOLDERS" means the individuals identified as such on the signature
pages hereof.
"SHARES" means the shares of Altair Common Stock being received by the
holders of Common Stock in exchange for TMI Common Stock pursuant to the Merger.
"SUBSIDIARY" means any corporation with respect to which another specified
corporation has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
"TAX" or "TAXES" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax, levy, fee, impost, charge or duty of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TMI COMMON STOCK" means the issued and outstanding common stock of TMI,
$.005 par value, immediately preceding the Effective Time.
"TMI DISCLOSURE SCHEDULES" has the meaning set forth in Section 5.1.
"TMI OPTIONS" means the non-qualified options to acquire 1,671,251 shares
of TMI Common Stock described on SCHEDULE 5.1(b).
"WARRANT" has the meaning set forth in Section 1.1(h).
"WARRANT CERTIFICATE" has the meaning set forth in Section 1.1(h).
"WARRANT SHARES" has the meaning set forth in Section 1.1(h).
"WASHINGTON ACT" means the Washington Business Corporation Act.
31
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
Fine Gold Recovery Systems, Inc.,
a Nevada corporation
By:
-----------------------------------
Title:
--------------------------------
Altair International Gold Inc.,
an Ontario corporation
By:
-----------------------------------
Title:
--------------------------------
Trans Mar, Inc.,
a Washington corporation
By:
-----------------------------------
Title:
--------------------------------
The following holders of the TMI Common Stock, by their execution below,
approve the execution of this Agreement by TMI and agree to vote their shares
of TMI Common Stock for approval of the Merger and the Merger Agreement as
set forth herein:
- -----------------------------------
Melvin L. Alter
- -----------------------------------
Dorothy E. Alter
- -----------------------------------
Raymond F. Foster
- -----------------------------------
Wallace D. Henderson
- -----------------------------------
Dr. John F. Hunt
32
<PAGE>
- -----------------------------------
Carolyn Milberg
- -----------------------------------
Irving Milberg
- -----------------------------------
Colina Negra, S.A.
a ______________________
By:
-----------------------------------
Title:
--------------------------------
Giller Family Revocable Living Trust
a ______________________
By:
-----------------------------------
Title:
--------------------------------
Dr. John F. Hunt Defined Benefit Plan
a ______________________
By:
-----------------------------------
Title:
--------------------------------
D.M.P. Trust
a ______________________
By:
-----------------------------------
Title:
--------------------------------
Wright Family Trust
a ______________________
By:
-----------------------------------
Title:
--------------------------------
33
<PAGE>
AMENDMENT TO MERGER AGREEMENT
THIS AMENDMENT TO MERGER AGREEMENT (the "AMENDMENT") is entered into this
22nd day of February, 1996, by and among ALTAIR INTERNATIONAL GOLD INC., an
Ontario corporation ("ALTAIR"), FINE GOLD RECOVERY SYSTEMS INC., a Nevada
corporation which is a wholly-owned subsidiary of Altair ("FINE GOLD"), TRANS
MAR, INC., a Washington corporation ("TMI"), and the individual shareholders of
TMI identified on the signature page hereto (collectively, the "PERFORMANCE
SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, as of February 8, 1996, Altair, Fine Gold and TMI entered into a
Merger Agreement (the "AGREEMENT") pursuant to which TMI proposed to merge with
and into Fine Gold and Altair proposed to issue to the shareholders of TMI
voting common shares of the capital stock of Altair (the "ALTAIR COMMON STOCK")
in exchange for all of the outstanding shares of the capital stock of TMI (the
"MERGER"); and
WHEREAS, the Agreement provides that the issuance of the shares of Altair
Common Stock to the shareholders of TMI is conditioned upon Altair's receipt of
all necessary approvals of the Alberta Stock Exchange (the "ASE"); and
WHEREAS, as a condition to its approval of the Merger, the ASE has required
that the terms of the Merger be modified to provide that certain shares of
Altair Common Stock to be issued to existing shareholders of TMI be held in
escrow until released on terms acceptable to the ASE; and
WHEREAS, upon the terms and subject to the conditions set forth in this
Amendment, Altair, Fine Gold, TMI and the Performance Shareholders desire to
amend the terms of the Merger Agreement and modify the terms of the Merger as
required by the ASE.
NOW, THEREFORE, in consideration of the premises and covenants and
agreements set forth in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. Except as expressly set forth in this Amendment,
capitalized terms not defined in this Amendment shall have the meanings set
forth in the Agreement.
2. MODIFICATION OF TERMS. Subject to the terms and conditions set forth
in this Amendment, Altair, Fine Gold, TMI and the Performance Shareholders
hereby agree to modify the terms and conditions of the Agreement as follows:
2.1 Upon the execution of this Amendment, Section 1.1(e) of the Agreement
shall be deleted and shall be replaced with a new Section 1.1(e) which shall
read in its entirety as follows:
(e) ESCROW OF SHARES.
(i) Pursuant to the terms of Escrow Agreements
substantially in the form of EXHIBITS 1.1(e)(1) AND (2) attached to
this Agreement (the "ESCROW AGREEMENTS") to
<PAGE>
be executed by and between Altair and the Escrow Agent prior to the
Closing, and subject to the approval of the ASE, including, without
limitation, the restrictions set forth in Sections 1.1(e)(ii) and
(iii) below, Altair shall, consistent with the provisions of Section 1.2,
transfer and deliver to the Escrow Agent for the benefit of the holders
of the TMI Common Stock all of the Shares. The Shares shall be held by the
Escrow Agent for distribution to the holders of the TMI Common Stock
at the times and in the manner set forth in the Escrow Agreements.
During the period that the Escrow Agent shall hold the Shares, all
cash dividends received by the Escrow Agent shall be paid to the
holders of the Shares entitled thereto. Any shares of Altair Common
Stock received by the Escrow Agent in respect of the Shares shall be
held in escrow pending distribution of the Shares pursuant to the
terms of the Escrow Agreements and this Agreement. During such
period, the Escrow Agent shall take such other actions as are
necessary or appropriate in order to achieve the purposes contemplated
under this Agreement.
(ii) The Escrow Agreement attached hereto as EXHIBIT
1.1(e)(1) (the "PRINCIPAL ESCROW AGREEMENT") shall provide that Seven
Hundred Fifty Thousand (750,000) Shares will be placed in escrow and
released, in the amounts and at the times set forth on SCHEDULE
1.1(e)(ii) attached to this Agreement (a copy of such schedule is also
attached to an Amendment to Merger Agreement dated February 22, 1996),
over a period of five calendar quarters.
(iii) The remaining One Million One Hundred Seventy
Thousand (1,170,000) Shares (the "PERFORMANCE SHARES") will be placed
in escrow subject to the requirements of the Escrow Agreement attached
hereto as EXHIBIT 1.1(e)(2) (the "PERFORMANCE ESCROW AGREEMENT"),
including, without limitation, the following requirements:
(A) One Performance Share shall be released from
escrow for each One and 80/100 Canadian Dollars (Cdn$1.80)
recognized by Altair as cash flow from, or associated with,
the operation, sale, license or lease of the CCJ by Altair
or Fine Gold after the Closing;
(B) The Performance Shares which are released
from escrow pursuant to subparagraph (A) above will be
released as soon as practicable following Altair's receipt
of approval of each such release from the ASE subsequent to
the respective anniversaries of the date of the Closing;
PROVIDED, HOWEVER, that not more than Three Hundred Ninety
Thousand (390,000) Performance Shares shall be released from
escrow during any twelve-month period commencing on any of
the first three anniversaries of the date of the Closing;
(C) Subject to the restrictions set forth in this
Section 1.1(e)(iii), Performance Shares which are released
from escrow shall be released to the following Shareholders
in the amounts and at the times set forth on SCHEDULE
1.1(e)(iii) attached to this Agreement (a copy of such
schedule is also attached to an Amendment to Merger
Agreement dated February 22, 1996) on a pro rata basis,
based upon the percentages set forth below, and shall be
subject to the restrictions on transfer set forth in Section
1.2(d) of this Agreement: Melvin L. Alter and Dorothy E.
Alter (24.74 percent), Colina Negra, S.A. (47.31 percent),
Wallace D.
2
<PAGE>
Henderson (14.28 percent), the D.M.P. Trust (8.47 percent) and
the Wright Family Trust (5.20 percent);
(D) Except as otherwise permitted by the ASE, any
Performance Shares which are not released from escrow prior
to the fifth anniversary of the date of the Closing will be
cancelled and the Performance Shareholders will have no
claim against Altair, Fine Gold, the ASE or any Shareholder
therefor; and
(E) No Performance Shares shall be released from
escrow except as permitted by the Performance Escrow
Agreement and the ASE.
(iii) The Escrow Agent shall have the exclusive authority
to act on behalf of the holders of the Shares for all purposes under
the terms of this Agreement including, without limitation, providing
such consents, waivers, amendments and modifications as the Escrow
Agent may consider appropriate.
2.2 Except as expressly set forth in this Section 2, all references in the
Agreement to the "Escrow Agreement" shall be revised to refer to the "Escrow
Agreements."
3. EXECUTION OF ESCROW AGREEMENT. By their execution of this Amendment,
the Performance Shareholders acknowledge and agree that they have read and
understand the escrow restrictions set forth in Section 2 above. Each of the
Performance Shareholders further authorizes Melvin L. Alter to execute the
Escrow Agreements on behalf of the Performance Shareholder on substantially the
terms set forth above and agrees to be bound by the terms thereof as if the
Escrow Agreements were executed by the Performance Shareholder.
4. INTEGRATED AGREEMENT AND AMENDMENT. The Agreement, as amended by this
Amendment, and the other agreements, documents, obligations and transactions
contemplated thereby, constitute the entire agreement between Altair, Fine Gold,
TMI and the Performance Shareholders regarding the subject matter hereof.
5. RATIFICATION. In all respects, other than as specifically set forth
in this Amendment, the Agreement shall remain unaffected by this Amendment, and
the Agreement shall continue in full force and effect, subject to the terms and
conditions thereof.
6. FURTHER ASSURANCES. Each of Altair, Fine Gold and TMI and each of the
Performance Shareholders shall execute any and all further documents, agreements
and instruments, and take all further actions which may be required or desirable
under applicable law, or which Altair or Fine Gold may, in their reasonable
discretion, require in order to effectuate the transactions contemplated by the
Agreement.
7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
"ALTAIR"
ALTAIR INTERNATIONAL GOLD INC.,
an Ontario corporation
By: /s/ William P. Long
----------------------------------
William P. Long
Its: Chief Executive Officer
----------------------------------
"FINE GOLD"
FINE GOLD RECOVERY SYSTEMS INC.,
a Nevada corporation
By: /s/ C. Patrick Costin
----------------------------------
C. Patrick Costin
Its: President
----------------------------------
"TMI"
TRANS MAR, INC.,
a Washington corporation
By: /s/ Melvin L. Alter
----------------------------------
Melvin L. Alter
Its: President
----------------------------------
"PERFORMANCE SHAREHOLDERS"
MELVIN L. ALTER, an individual
Melvin L. Alter
--------------------------------------
DOROTHY E. ALTER, an individual
/s/ Dorothy E. Alter
--------------------------------------
Dorothy E. Alter
4
<PAGE>
WALLACE D. HENDERSON, an individual
/s/ Wallace D. Henderson
---------------------------------------
COLINA NEGRA, S.A.
a Costa Rican Corporation
By: /s/ Sylvia Morales Gongora
------------------------------------
Its: President
------------------------------------
D.M.P. TRUST,
a
--------------------
By: [ILLEGIBLE]
-----------------------------------
Its: Trustees
-----------------------------------
WRIGHT FAMILY TRUST,
a
----------------
By: Susan M. Wright
-----------------------------------
By: Harold R. Wright
-----------------------------------
Its: Trustees
-----------------------------------
5
<PAGE>
EXHIBIT 6.2.1
<PAGE>
ARTICLES OF MERGER
OF
TRANS MAR, INC.
WITH AND INTO
FINE GOLD RECOVERY SYSTEMS INC.
Pursuant to the provisions of the Revised Statutes of Nevada 1995, Chapter
92A, and Chapter 23B of the Revised Code of Washington, the undersigned
corporations deliver to the Nevada Secretary of State and the Washington
Secretary of State these Articles of Merger for filing.
I.
Trans Mar, Inc. is a corporation organized under and governed by the laws
of the State of Washington. Fine Gold Recovery Systems Inc. is a corporation
organized under and governed by the laws of the State of Nevada.
II.
Attached hereto as Exhibit A, and incorporated herein by this reference, is
a Plan of Merger and Reorganization (the "PLAN"), dated as of February 29, 1996,
which was adopted by Trans Mar, Inc. and Fine Gold Recovery Systems Inc. and
sets forth the terms of the merger of Trans Mar, Inc. with and into Fine Gold
Recovery Systems Inc.
III.
The Plan was submitted to the shareholders of Trans Mar, Inc. and Fine Gold
Recovery Systems Inc.
IV.
By resolutions duly adopted at a special meeting of shareholders of Trans
Mar, Inc. held on February 29, 1996, the number of shares of the common stock of
Trans Mar, Inc., the only class of securities of Trans Mar, Inc. entitled to
vote on the Plan, voted for and against the Plan was:
FOR AGAINST
-------- -------
<PAGE>
V.
The Plan was approved by the unanimous written consent of the sole
shareholder of Fine Gold Recovery Systems Inc.
VI.
At and as of the Effective Time set forth in the Plan (the "EFFECTIVE
TIME"), Article IV of the Articles of Incorporation of Fine Gold Recovery
Systems Inc. is hereby amended to read as follows:
"IV.
The capital of the corporation shall consist of Seven Million
(7,000,000) shares of capital common stock, par value $.01 per share."
VIII.
No approval of any owner of any parent of Trans Mar, Inc. or Fine Gold
Recovery Systems Inc. was required.
IX.
Upon the consummation of the merger described in the Plan, Fine Gold
Recovery Systems Inc. agrees to appoint the Washington Secretary of State as its
agent for service of process in a proceeding to enforce any obligation or the
rights of dissenting shareholders of Trans Mar, Inc. Fine Gold Recovery Systems
Inc. agrees that it will promptly pay to the dissenting shareholders of Trans
Mar, Inc. the amount, if any, to which they are entitled under Chapter 23B.13 of
the Revised Code of Washington.
<PAGE>
EXECUTED as of the 29th day of February, 1996.
Trans Mar, Inc., Fine Gold Recovery Systems Inc.,
a Washington corporation a Nevada corporation
By By
------------------------------ ------------------------------
Melvin L. Alter C. Patrick Costin
President President
and and
By By
------------------------------ ------------------------------
Wallace D. Henderson William P. Long
Secretary Secretary
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
This instrument was acknowledged before me on February 29, 1996 by Melvin
L. Alter, as President of Trans Mar, Inc., a Washington corporation.
--------------------------------
NOTARY PUBLIC
My Commission Expires
- --------------------------
STATE OF NEW MEXICO )
) ss.
COUNTY OF ______________ )
This instrument was acknowledged before me on February 28, 1996 by Wallace
D. Henderson, as Secretary of Trans Mar, Inc., a Washington corporation.
--------------------------------
NOTARY PUBLIC
My Commission Expires
- --------------------------
STATE OF NEVADA )
) ss.
COUNTY OF _____________ )
This instrument was acknowledged before me on February ____, 1996, by C.
Patrick Costin, as President of Fine Gold Recovery Systems Inc., a Nevada
corporation.
--------------------------------
NOTARY PUBLIC
My Commission Expires
- --------------------------
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
This instrument was acknowledged before me on February 29, 1996, by William
P. Long, as Secretary of Fine Gold Recovery Systems Inc., a Nevada corporation.
--------------------------------
NOTARY PUBLIC
My Commission Expires
- --------------------------
<PAGE>
EXHIBIT A
PLAN OF MERGER AND REORGANIZATION
FOR THE MERGER OF
TRANS MAR, INC.
WITH AND INTO
FINE GOLD RECOVERY SYSTEMS INC.
THIS PLAN OF MERGER AND REORGANIZATION (the "PLAN") is dated as of the 29th
day of February, 1996, among Trans Mar, Inc., a corporation organized under the
laws of the State of Washington ("TMI") with offices at 1936 East 23rd Avenue,
Spokane, Washington 99210, Altair International Gold Inc., a corporation
organized under the laws of the Province of Ontario, Canada ("ALTAIR") with
offices at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414, and Fine Gold
Recovery Systems Inc., a corporation organized under the laws of the State of
Nevada ("FINE GOLD") with offices at 1850 Aquila Avenue, Reno, Nevada 89509.
WITNESSETH:
WHEREAS, TMI, Altair and Fine Gold entered into a Merger Agreement dated as
of February 8, 1996 pursuant to which this Plan is executed; and
WHEREAS, Fine Gold is a wholly-owned subsidiary of Altair; and
WHEREAS, the boards of directors of Fine Gold, Altair and TMI have approved
this Plan whereby TMI shall be merged with and into Fine Gold, and the Plan has
been approved by the shareholders of TMI and Fine Gold; and
WHEREAS, Fine Gold, Altair and TMI intend that the Plan constitute a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended, whereby TMI will be merged with and into Fine
Gold in accordance with the applicable laws relating thereto, and whereby Fine
Gold will remain a wholly-owned subsidiary of Altair.
AGREEMENT:
NOW, THEREFORE, in order to consummate such Plan, in consideration of the
mutual covenants herein set forth the parties agree as follows:
1. MERGER. At and on the Effective Time set forth in Section 2 below,
TMI shall be merged with and into Fine Gold in accordance with the terms hereof.
Fine Gold shall be the surviving corporation.
2. EFFECTIVE TIME. The effective time (the "EFFECTIVE TIME") of this
Merger shall be the time and date appropriate articles of merger are filed
pursuant to the laws of the States of Nevada and Washington, or at such later
time or date after such filing as specified in such articles.
<PAGE>
3. ARTICLES AND BYLAWS; AUTHORIZED CAPITAL; OFFICE; AGENT. At and after
the Effective Time, the Articles of Incorporation and Bylaws of Fine Gold as in
effect immediately prior to the Effective Time shall continue to be the Articles
of Incorporation and Bylaws of the surviving corporation until amended in
accordance with applicable law, except as follows:
(a) AUTHORIZED CAPITAL. The authorized capital of the
surviving corporation shall consist of seven million (7,000,000)
shares of capital common stock, par value $.01 per share;
4. TERMS AND CONDITIONS OF MERGER. At the Effective Time:
(a) TMI STOCK. All shares of capital common stock of TMI in the
aggregate (the "TMI STOCK") issued and outstanding immediately prior to the
Effective Time shall automatically be exchanged for One Million Nine Hundred
Twenty Thousand (1,920,000) shares of capital voting common stock of Altair (the
"ALTAIR STOCK"). All shares of Altair Stock into which shares of TMI Stock
shall have been exchanged pursuant to this Section shall be deemed to have been
issued in full satisfaction of all rights pertaining to such exchanged shares.
At the Effective Time, the holders of certificates formerly representing TMI
Stock outstanding on the Effective Time shall cease to have any rights with
respect to such stock, except their rights to the Altair Stock into which their
shares of TMI Stock have been converted by the Merger.
(b) FINE GOLD STOCK. Each share of capital common stock of Fine Gold
issued and outstanding immediately prior to the Effective Time (the "FINE GOLD
STOCK") shall be converted into and shall be one share of capital common stock
of the surviving corporation, par value $.01 per share, and, notwithstanding
Section 4(a) above, shall not be converted into shares of Altair Stock but shall
remain outstanding stock of the surviving corporation and shall be owned by
Altair. At the Effective Time, the holder of certificates formerly representing
Fine Gold Stock outstanding at the Effective Time shall cease to have any rights
with respect to such stock, except its rights to the stock of the surviving
corporation into which its shares of Fine Gold Stock have been converted by the
Merger.
5. RIGHTS AND DUTIES OF THE SURVIVING CORPORATION. At the Effective Time
(a) TMI shall be merged with and into Fine Gold, (b) the separate existence of
TMI shall cease, (c) the surviving corporation shall continue to be a Nevada
corporation and shall be subject to Nevada law, (d) the title to all real estate
and other property owned by TMI shall be vested in the surviving corporation
without reversion or impairment, (e) the surviving corporation shall have all of
the liabilities of TMI, and (f) a proceeding against TMI may be continued as if
the Merger had not occurred or the surviving corporation may be substituted in
the proceeding for TMI.
6. EXECUTION. This Plan may be executed in any number of counterparts
each of which shall be deemed an original and all of such counterparts shall
constitute one and the same instrument.
IN WITNESS WHEREOF, TMI, Altair and Fine Gold have each executed this Plan
as of the date set forth above.
TRANS MAR, INC.
By:
------------------------------
Melvin L. Alter,
President
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
By:
------------------------------
William P. Long,
President
FINE GOLD RECOVERY SYSTEMS INC.
By:
------------------------------
C. Patrick Costin,
President
<PAGE>
EXHIBIT 6.2.2
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT MADE AS OF THE 29TH DAY OF FEBRUARY, 1996.
A M O N G:
MELVIN L. ALTER, for and on behalf of the persons listed on Schedule A
hereto
(hereinafter collectively called the "Escrowed Shareholders")
- and -
ALTAIR INTERNATIONAL GOLD INC.
(hereinafter called the "Company")
- and -
HAGE CORPORATE SERVICES INC.
(hereinafter called the "Escrow Agent")
WHEREAS in furtherance of the acquisition by the Company of all of the
common shares of Trans Mar, Inc. ("TMI"), pursuant to a merger agreement (the
"Merger Agreement") dated February 8, 1996, as amended by an agreement dated
February 22, 1996 (the "Merger"), the Escrowed Shareholders have agreed to
deposit in escrow certain securities of the Company owned or to be received by
them upon the terms set forth herein;
AND WHEREAS the Escrow Agent has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements contained herein, the Escrowed Shareholders jointly and
severally covenant and agree with the Company and with the Escrow Agent and the
Company and the Escrow Agent covenant and agree with each other and with the
Escrowed Shareholder jointly and severally as follows:
1. The Escrowed Shareholders hereby place and deposit those of the
securities of the Company which are listed opposite their names in Appendix "1"
hereto, with the Escrow Agent, in transferable form, upon the terms and
conditions set out herein for deposit in escrow including any replacement
securities or certificates if and when such are issued or allotted and
represents
<PAGE>
2
and warrants to the Company and the Escrow Agent that it is the legal and
beneficial owner of such securities free and clear of any claims, liens or
other form of encumbrances.
2. The parties hereby agree that the shares deposited pursuant to section
1 (hereinafter called the "Escrowed Shares") and the beneficial ownership of or
any interest in them shall not be sold, assigned, hypothecated, alienated,
released from escrow, transferred within escrow, or otherwise in any manner
dealt with, without the prior written consent of the Alberta Stock Exchange (the
"Exchange") being obtained, except as expressly provided in sections 8, 9 and
14. Each of the Escrowed Shareholders hereby directs the Escrow Agent to retain
the Escrowed Shares representing the same upon the terms and conditions set out
herein and not to do or cause anything to be done to release the same from this
escrow or to allow any transfer, hypothecation or alienation thereof except as
herein expressly provided.
3. The Escrow Agent hereby accepts the responsibilities placed on it
under this agreement and agrees to perform such responsibilities in accordance
with the terms hereof and the written consents, orders or directions of the
Exchange. In particular, but without limitation, the Escrow Agent shall hold
shares represented by the certificates for the persons, firms, or corporations
respectively legally entitled thereto. Any consent, order or direction
releasing any portion of the Escrowed Shares from this escrow shall terminate
this agreement only in respect to the portion of the Escrowed Shares so
released. For greater certainty, the preceding sentence shall not apply to
Escrowed Shares transferred within escrow.
4. The Company hereby acknowledges the terms and conditions of this
agreement and agrees to take all reasonable steps to facilitate its performance.
5. During the period of this escrow, all dividends received by the Escrow
Agent on or in respect of the Escrowed Shares shall be forthwith paid or
transferred to the shareholders respectively entitled thereto.
6. Any shares received by the Escrow Agent by way of dividend in respect
of the Escrowed Shares shall be dealt with as if they were Escrowed Shares
hereunder.
7. All voting rights attached to the Escrowed Shares may at all times be
exercised by the respective owners thereof.
8. The Escrowed Shares shall be released from the terms of this escrow to
the respective owners thereof in accordance with Appendix "II" hereto.
9. Escrowed Shares may be transferred within escrow as may be required by
reason of the death or bankruptcy of any Escrowed Shareholder, in which case the
Escrow Agent shall hold the certificates representing such Escrowed
Shareholder's Escrowed Shares for the person, firm or corporation legally
entitled thereto.
<PAGE>
3
10. Any Escrowed Shareholder applying to the Exchange for a consent for a
transfer within escrow shall before applying, give reasonable notice in writing
of his intention to the company and the Escrow Agent. The Escrow Agent shall
send a written report to the parties to this Agreement of trades, transfers and
releases of Escrowed Shares in accordance with this Agreement at the end of any
month in which such activity has occurred to the Company.
11. The Escrowed Shareholders and the Company hereby jointly and severally
agree to and do hereby release and indemnify and save harmless the Escrow Agent
from and against all claims, suits, demands, costs, damages and expenses which
may be occasioned by reason of the Escrow Agent's compliance in good faith with
the terms of this Agreement and which are not attributable to the gross
negligence of the Escrow Agent, provided that, the parties agree that the
liability of the Escrow Agent in carrying out its duties hereunder for which it
is not indemnified hereunder shall not exceed the fees paid to the Escrow Agent
for acting in such capacity.
12. If the Escrow Agent should wish to resign, it shall give at least
three months' notice to the Company, which may by writing appoint another escrow
agent in its place and such appointment shall be binding on the Escrowed
Shareholder and the new escrow agent shall assume and be bound by the
obligations of the Escrow Agent hereunder.
13. The Company shall be responsible for paying to the Escrow Agent a
mutually agreed upon fee for its services provided pursuant to this agreement.
14. (a) The parties acknowledge that, among other purposes, this
agreement has been entered into by the parties hereto and the
Escrowed Shares have been deposited with the Escrow Agent as
security for the indemnification obligations of TMI set forth in
Article 4 of the Merger Agreement subject to the limitations set
forth in section 14(c) below, if the Company or Fine Gold
Recovery Systems Inc. ("Fine Gold") incurs any loss, claim,
damage, expense, liability or action for which TMI has agreed to
indemnify the Company or Fine Gold under section 4.1(b) of the
Merger Agreement (collectively, an "Indemnified Claim"), the
Company or Fine Gold, as the case may be, may instruct the Escrow
Agent to sell, in a public or private sale or open market
transaction, all or a portion of the Escrowed Shares necessary to
satisfy the full amount of the Indemnified Claim, together with
all legal or other expenses incurred by the Company or Fine Gold
in connection with such Indemnified Claim. Upon receipt of such
instructions, the Escrow Agent shall sell such Escrowed Shares as
necessary to satisfy the full amount of the Indemnified Claim and
shall immediately thereafter deliver to Fine Gold the amounts
payable to the Company or Fine Gold pursuant to section 6(b) of
the Merger Agreement. In such event, the Escrow Agent and the
Escrowed Shareholders shall take all actions and execute and
deliver to the Company or any third party all instruments or
certificates reasonably requested by the Company or Fine Gold to
effect the sale of the Escrowed Shares as contemplated by this
section 14(a).
<PAGE>
4
(b) For purposes of determining the number of Escrowed Shares to be
sold pursuant to section 14(a) above, the Escrow Agent shall
divide the aggregate amount of the Indemnified Claim to be
satisfied and the anticipated costs and expenses expected to be
incurred with respect to each Indemnified Claim by the greater
of: (i) closing bid price of the common shares of the Company, as
reported by the Exchange, as of the trading day immediately prior
to the date on which the Indemnified Claim is presented the
Escrow Agent; and (ii) CDN $1.80.
(c) The sale of any Escrowed Shares pursuant to this section 14 shall
be subject to the following conditions: (i) the amount of the
Indemnified Claim shall be assessed against the Escrowed Shares
on a pro rata basis based upon the number of Escrowed Shares held
in escrow pursuant to this agreement and common shares of the
Company ("Performance Shares") held in escrow pursuant to the
escrow agreement (the "Performance Escrow Agreement") dated as of
the date hereof made between Melvin L. Alter, for and on behalf
of the persons listed on Schedule A thereto, the Company and the
Escrow Agent (subject to the Escrow Agent obtaining the consent
of the Exchange to sell the Performance Shares held by the Escrow
Agent pursuant to the Performance Escrow Agreement for such
purposes) as at the date the Indemnified Claim is presented to
the Escrow Agent; (ii) the recourse of the Company and Fine Gold
for any Indemnified Claim pursuant to this agreement shall be
limited to the aggregate value of the Escrowed Shares held at the
time such Indemnified Claim is presented by the Company or Fine
Gold, as the case may be, to the Escrow Agent, and (iii) neither
Fine Gold nor the Company may exercise any remedy under this
agreement with respect to an Indemnified Claim until the
aggregate amount of all such Indemnified Claims exceeds Fifty
Thousand Dollars ($50,000), upon which time the Company and/or
Fine Gold may recover with respect to all Indemnified Claims, up
to the full value of all Escrowed Shares then held under this
Agreement.
15. Any notice required or permitted to be given hereunder shall be in
writing and shall be effectively given if (i) delivered personally, (ii) sent by
prepaid courier service or mail, or (iii) sent prepaid by telex, telecopier or
other similar means of electronic communication addressed, in case of notice to
the Escrow Agent and the Company, as follows:
<PAGE>
5
Escrow Agent: Hage Corporate Services Inc.
67 Richmond Street West
Toronto, Ontario
M5H 1Z5
Attention: J. Allan Ringler
Tel: (416) 361-0737
Fax: (416) 361-0923
the Company: Altair International Gold Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming
82414
U.S.A.
Tel: (307) 587-8245
Fax: (307) 587-8357
and in the case of notice to an Escrowed Shareholder, to the latest address of
such Escrowed Shareholder as shown in the records of the Company.
16. This agreement may be executed in several parts in the same form and
such parts as so executed shall together form one original agreement, and such
parts if more than one shall be read together and construed as if all the
signing parties hereto had executed one copy of this agreement. Pages delivered
by telecopy, including executed pages, shall be deemed to be original pages.
17. This agreement shall enure to the benefit of and be binding upon the
parties hereto, they and each of their heirs, executors, administrators,
successors and permitted assigns.
18. This agreement shall be governed by the laws of Ontario and the
federal laws of Canada applicable herein.
19. Whenever the singular or masculine is used, the same shall be
construed to include the plural or feminine or neutral where the context so
requires.
20. Melvin L. Alter hereby represents, warrants and agrees that he has
been duly authorized to enter into this agreement for and on behalf of the
Escrowed Shareholders and that the representations, warranties, covenants and
agreements contained herein are binding upon each Escrowed Shareholder as if
they were signatories hereto by virtue of their having signed a subscription
agreement between each such Escrowed Shareholder and the Company in respect of
their acquisition of the Escrowed Shares.
<PAGE>
6
<PAGE>
7
21. The parties agree that any disputes relating to the interpretation of
the provisions of this agreement shall be referred to a mediator mutually
acceptable to the Company and the Escrow Agent whose decision shall be binding
on the parties hereto.
IN WITNESS WHEREOF the parties hereto have executed this agreement on
the day and year first above written.
)
)
_______________________ ) -----------------------------------------
Witness ) MELVIN L. ALTER, for and on behalf of
) the Escrowed Shareholders listed on
Schedule A hereto
ALTAIR INTERNATIONAL GOLD, INC.
By:
--------------------------------------
HAGE CORPORATE SERVICES INC.
By:
--------------------------------------
<PAGE>
APPENDIX I
LIST OF ESCROWED SHAREHOLDERS
Shareholder Number of Shares Certificate Numbers
- ----------- ---------------- -------------------
Agnew Family Trust
Allan Lew, Jr.
Dorothy E. Alter and Melvin L. Alter
Thomas J. Barrowman
Robert Becker
Marjorie Callaghan-Brown
Douglas L. Carver
Colina Negra, S.A.
Dennis Derry
E.J. Derose Pension Fund
James L. Dick
Orville J. Duncklee
Larry Dunn
Elden Engle
Sally Ann Finch Trust
Raymond F. Foster
Giller Family Living Trust
Wallace D. Henderson
Mary C. Hook
Dr. John F. Hunt
Dr. John F. Hunt, Defined Benefit Plan
Ollie Hux
Leslie R. Linner
Frank McKimmins
Priscilla P. McKinley
Joseph W. McLean
Donald J. Mergman
Philip Michel
Dr. Irving Milberg and Carolyn Milberg
Neal G. Parker
Allan G. Patterson and Gloria M. Patterson
Greg Patterson
Allyson Call Phillips
William Phillips
D.M.P. Trust
<PAGE>
2
LIST OF ESCROWED SHAREHOLDERS CONT'D.
Shareholder Number of Shares Certificate Numbers
- ----------- ---------------- -------------------
Richard Schmittel
Robert W. Tobey
Virginia Warden
Frank D. Watson
Mahlon T. White
Wright Family Trust
<PAGE>
APPENDIX II
RELEASE SCHEDULE
<PAGE>
EXHIBIT 6.2.3
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT made as of the 27th day of February, 1996.
A M O N G:
MELVIN L. ALTER, for and on behalf of the persons listed on Schedule A
hereto
(hereinafter collectively called the "Escrowed Shareholders")
- and -
ALTAIR INTERNATIONAL GOLD INC.
(hereinafter called the "Company")
- and -
HAGE CORPORATE SERVICES INC.
(hereinafter called the "Escrow Agent")
WHEREAS in furtherance of the acquisition by the Company of all of the
common shares of Trans Mar, Inc. ("TMI"), pursuant to a merger agreement (the
"Merger Agreement") dated February 8, 1996, as amended by an agreement dated
February 22, 1996 (the "Merger"), the Escrowed Shareholders have agreed to
deposit in escrow certain securities of the Company owned or to be received by
them upon the terms set forth herein;
AND WHEREAS the Escrow Agent has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements contained herein, the Escrowed Shareholders jointly and
severally covenant and agree with the Company and with the Escrow Agent and the
Company and the Escrow Agent covenant and agree with each other and with the
Escrowed Shareholder jointly and severally as follows:
1. Where used in this agreement, or in any amendment or supplement
hereto, unless the context otherwise requires, the phrase "Cash Flow" shall mean
net income derived from the assets of TMI, as shown on the audited consolidated
financial statements or verified by the Company's auditors, adjusted for the
following add-backs:
<PAGE>
2
(a) depreciation;
(b) depletion;
(c) deferred taxes;
(d) amortization of goodwill;
(e) amortization of research and development costs.
2. The Escrowed Shareholders hereby place and deposit those of the
securities of the Company which are listed opposite their names in Appendix "1"
hereto, with the Escrow Agent, in transferable form, upon the terms and
conditions set out herein for deposit in escrow including any replacement
securities or certificates if and when such are issued or allotted and
represents and warrants to the Company and the Escrow Agent that it is the legal
and beneficial owner of such securities free and clear of any claims, liens or
other form of encumbrances.
3. The parties hereby agree that the shares deposited pursuant to section
1 (hereinafter called the "Escrowed Shares") and the beneficial ownership of or
any interest in them shall not be sold, assigned, hypothecated, alienated,
released from escrow, transferred within escrow, or otherwise in any manner
dealt with, without the prior written consent of the Alberta Stock Exchange (the
"Exchange") being obtained. Each of the Escrowed Shareholders hereby directs
the Escrow Agent to retain the Escrowed Shares upon the terms and conditions set
out herein and not to do or cause anything to be done to release the same from
this escrow or to allow any transfer, hypothecation or alienation thereof except
as herein expressly provided.
4. The Escrow Agent hereby accepts the responsibilities placed on it
under this agreement and agrees to perform such responsibilities in accordance
with the terms hereof and the written consents, orders or directions of the
Exchange. In particular, but without limitation, the Escrow Agent shall hold
shares represented by the certificates for the persons, firms, or corporations
respectively legally entitled thereto. Any consent, order or direction
releasing any portion of the Escrowed Shares from this escrow shall terminate
this agreement only in respect to the portion of the Escrowed Shares so
released. For greater certainty, the preceding sentence shall not apply to
Escrowed Shares transferred within escrow.
5. The Company hereby acknowledges the terms and conditions of this
agreement and agrees to take all reasonable steps to facilitate its performance.
6. The Escrowed Shareholders shall, if a dividend is declared while the
Escrowed Shares or any of them continue to be held in escrow under this
agreement, renounce and release any right to receive payment of the dividend on
the Escrowed Shares then held in escrow.
7. Any shares received by the Escrow Agent by way of dividend in respect
of the Escrowed Shares shall be dealt with as if they were Escrowed Shares
hereunder.
8. All voting rights attached to the Escrowed Shares may at all times be
exercised by the respective owners thereof.
<PAGE>
3
9. The Escrowed Shares shall be released from the terms of this escrow to
the respective owners thereof in accordance with the following provisions:
(a) The Exchange will consent to the release from escrow of one
Escrowed Share for each $1.80 of Cash Flow generated by or from
the assets of TMI.
(b) Any release from escrow under this paragraph 9 shall be made
pursuant to a written application on behalf of the Company or the
Escrowed Shareholders, which application shall be accompanied by
evidence of the Cash Flow received in a form satisfactory to the
Exchange. Application for release may only be made once per year
and may only relate to Cash Flow received in the preceding fiscal
year or the fiscal years of the Company since the last release
from escrow pursuant to this agreement, whichever is greater.
All Escrowed Shares released from escrow shall, unless otherwise
directed by the Exchange, be distributed pro-rata to all Escrowed
Shareholders.
(c) Notwithstanding subparagraph (b) above, the maximum number of
Escrowed Shares to be released from escrow in any of the first
three years of this agreement to an Escrowed Shareholder shall be
one third of the original number of Escrowed Shares held in
escrow on behalf of such Escrowed Shareholder.
10. Escrowed Shares may be transferred within escrow as may be required by
reason of the death or bankruptcy of any Escrowed Shareholder, in which case the
Escrow Agent shall hold the certificates representing such Escrowed
Shareholder's Escrowed Shares for the person, firm or corporation legally
entitled thereto.
11. Any Escrowed Shareholder applying to the Exchange for a consent for a
transfer within escrow shall before applying, give reasonable notice in writing
of his intention to the Company and the Escrow Agent. The Escrow Agent shall
send a written report to the parties to this Agreement of trades, transfers and
releases of Escrowed Shares in accordance with this Agreement at the end of any
month in which such activity has occurred to the Company.
12. A release from escrow of all or part of the Escrowed Shares shall
terminate this agreement only in respect to those securities so released. For
greater certainty this paragraph does not apply to securities transferred within
escrow.
13. If the Company is wound up and any securities remain in escrow under
this agreement at the time when a distribution of assets to holders of
securities is made by the liquidator, the Escrowed Shareholders shall assign
their right to receive that part of the distribution which is attributable to
the Escrowed Securities to the Escrow Agent, for the benefit of, and in trust
for the persons and companies who are then holders of free securities in the
Company rateably in proportion to their holdings.
<PAGE>
4
14. The Escrowed Shareholders and the Company hereby jointly and severally
agree to and do hereby release and indemnify and save harmless the Escrow Agent
from and against all claims, suits, demands, costs, damages and expenses which
may be occasioned by reason of the Escrow Agent's compliance in good faith with
the terms of this agreement and which are not attributable to the gross
negligence of the Escrow Agent, provided that, the parties agree that the
liability of the Escrow Agent in carrying out its duties hereunder for which it
is not indemnified hereunder shall not exceed the fees paid to the Escrow Agent
for acting in such capacity.
15. If the Escrow Agent should wish to resign, it shall give at least
three months' notice to the Company, which may by writing appoint another escrow
agent in its place and such appointment shall be binding on the Escrowed
Shareholder and the new escrow agent shall assume and be bound by the
obligations of the Escrow Agent hereunder.
16. The Company shall be responsible for paying to the Escrow Agent a
mutually agreed upon fee for its services provided pursuant to this agreement.
17. (a) The parties acknowledge that, among other purposes, this
agreement has been entered into by the parties hereto and the
Escrowed Shares have been deposited with the Escrow Agent as
security for the indemnification obligations of TMI set forth in
Article 4 of the Merger Agreement subject to the limitations set
forth in section 17(c) below, and the prior approval of the
Exchange, if the Company or Fine Gold Recovery Systems Inc.
("Fine Gold") incurs any loss, claim, damage, expense, liability
or action for which TMI has agreed to indemnify the Company or
Fine Gold under section 4.1(b) of the Merger Agreement
(collectively, an "Indemnified Claim"), the Company or Fine Gold,
as the case may be, may instruct the Escrow Agent to sell, in a
public or private sale or open market transaction, all or a
portion of the Escrowed Shares necessary to satisfy the full
amount of the Indemnified Claim, together with all legal or other
expenses incurred by the Company or Fine Gold in connection with
such Indemnified Claim. Upon receipt of such instructions and
the prior approval of the Exchange, the Escrow Agent shall sell
such Escrowed Shares as necessary to satisfy the full amount of
the Indemnified Claim and shall immediately thereafter deliver to
Fine Gold the amounts payable to the Company or Fine Gold
pursuant to section 6(b) of the Merger Agreement. In such event,
the Escrow Agent and the Escrowed Shareholders shall take all
actions and execute and deliver to the Company or any third party
all instruments or certificates reasonably requested by the
Company or Fine Gold to effect the sale of the Escrowed Shares as
contemplated by this section 17(a).
(b) For purposes of determining the number of Escrowed Shares to be
sold pursuant to section 17(a) above, the Escrow Agent shall
divide the aggregate amount of the Indemnified Claim to be
satisfied and the anticipated costs and expenses expected to be
incurred with respect to each Indemnified Claim by the greater
of: (i)
<PAGE>
5
closing bid price of the common shares of the Company, as
reported by the Exchange, as of the trading day immediately prior
to the date on which the Indemnified Claim is presented to the
Escrow Agent; and (ii) CDN $1.80.
(c) The sale of any Escrowed Shares pursuant to this section 17 shall
be subject to the following conditions: (i) the amount of the
Indemnified Claim shall be assessed against the Escrowed Shares
on a pro rata basis based upon the number of Escrowed Shares held
in escrow pursuant to this agreement (subject to receipt of the
prior approval of the Exchange to sell the Escrowed Shares for
such purposes) and common shares of the Company held in escrow
pursuant to the escrow agreement dated as of the date hereof made
between Melvin L. Alter, for and on behalf of the persons listed
on Schedule A thereto, the Company and the Escrow Agent, as at
the date the Indemnified Claim is presented to the Escrow Agent;
(ii) the recourse of the Company and Fine Gold for any
Indemnified Claim pursuant to this agreement shall be limited to
the aggregate value of the Escrowed Shares held at the time such
Indemnified Claim is presented by the Company or Fine Gold, as
the case may be, to the Escrow Agent, and (iii) neither Fine Gold
nor the Company may exercise any remedy under this agreement with
respect to an Indemnified Claim until the aggregate amount of all
such Indemnified Claims exceeds Fifty Thousand Dollars ($50,000),
upon which time the Company and/or Fine Gold may recover with
respect to all Indemnified Claims, up to the full value of all
Escrowed Shares then held under this Agreement.
18. Any notice required or permitted to be given hereunder shall be in
writing and shall be effectively given if (i) delivered personally, (ii) sent by
prepaid courier service or mail, or (iii) sent prepaid by telex, telecopier or
other similar means of electronic communication addressed, in case of notice to
the Escrow Agent and the Company, as follows:
Escrow Agent: Hage Corporate Services Inc.
67 Richmond Street West
Toronto, Ontario
M5H 1Z5
Attention: J. Allan Ringler
Tel: (416) 361-0737
Fax: (416) 361-0923
<PAGE>
6
the Company: Altair International Gold Inc.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming
82414
U.S.A.
Tel: (307) 587-8245
Fax: (307) 587-8357
and in the case of notice to an Escrowed Shareholder, to the latest address of
such Escrowed Shareholder as shown in the records of the Company.
19. Notwithstanding paragraph 9, any shares remaining in escrow on the
fifth anniversary of the date of this agreement, unless otherwise exempted in
writing by the Exchange, shall be cancelled by the Escrow Agent within 6 months
of the said fifth anniversary.
20. This agreement may be executed in several parts in the same form and
such parts as so executed shall together form one original agreement, and such
parts if more than one shall be read together and construed as if all the
signing parties hereto had executed one copy of this agreement. Pages delivered
by telecopy, including executed pages, shall be deemed to be original pages.
21. This agreement shall enure to the benefit of and be binding upon the
parties hereto, they and each of their heirs, executors, administrators,
successors and permitted assigns.
22. This agreement shall be governed by the laws of Ontario and the
federal laws of Canada applicable herein.
23. Whenever the singular or masculine is used, the same shall be
construed to include the plural or feminine or neutral where the context so
requires.
24. Melvin L. Alter hereby represents, warrants and agrees that he has
been duly authorized to enter into this agreement for and on behalf of the
Escrowed Shareholders and that the representations, warranties, covenants and
agreements contained herein are binding upon each Escrowed Shareholder as if
they were signatories hereto by virtue of their having signed a subscription
agreement between each such Escrowed Shareholder and the Company in respect of
their acquisition of the Escrowed Shares.
<PAGE>
7
25. The parties agree that any disputes relating to the interpretation of
the provisions of this agreement shall be referred to a mediator mutually
acceptable to the Company and the Escrow Agent whose decision shall be binding
on the parties hereto.
IN WITNESS WHEREOF the parties hereto have executed this agreement on
the day and year first above written.
)
)
________________________ ) ------------------------------------------
Witness ) MELVIN L. ALTER, for and on behalf of the
) Escrowed Shareholders listed on Schedule A
hereto
ALTAIR INTERNATIONAL GOLD, INC.
By:
---------------------------------------
HAGE CORPORATE SERVICES INC.
By:
---------------------------------------
<PAGE>
APPENDIX I
LIST OF ESCROWED SHAREHOLDERS
Shareholder Number of Shares Certificate Numbers
- ----------- ---------------- -------------------
Melvin L. Alter
Dorothy E. Alter
Colin Negra, S.A.
Wallace D. Henderson
The D.M.P. Trust
The Wright Family Trust
<PAGE>
EXHIBIT 6.2.4
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE (THE "WARRANTS") AND THE COMMON
SHARES OF ALTAIR INTERNATIONAL GOLD INC. (THE "CORPORATION") ISSUABLE UPON
THE EXERCISE THEREOF (THE "COMMON SHARES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE LAW,
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY ARE
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE COMMON SHARES AND WARRANTS ARE ALSO SUBJECT
TO CERTAIN RESTRICTIONS ON SALE, TRANSFER AND DISPOSAL AS SET FORTH IN A
MERGER AGREEMENT BETWEEN THE CORPORATION, FINE GOLD RECOVERY SYSTEMS INC.,
TRANS MAR, INC. AND CERTAIN HOLDERS OF THE CAPITAL STOCK OF TRANS MAR, INC.
COPIES OF SUCH AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION AND WILL BE FURNISHED UPON REQUEST TO SUCH REGISTERED HOLDER.
Void after 5:00 p.m. Toronto time on the 1st day of March, 1997.
___________________ (_______________) Warrant Certificate No. E-______
Series E Warrants
ALTAIR INTERNATIONAL GOLD INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, _____________________ (the
"Holder") shall have the right to purchase from Altair International Gold
Inc. (hereinafter called the "Corporation"), at any time up to 5:00 p.m.
(Toronto time) on March 1, 1997 (the "Expiry Time"), one fully paid and
non-assessable Common Share of the Corporation for each Series E Warrant
(individually, a "Warrant") represented hereby. The exercise price for the
purchase of each such Common Share shall be CDN.$2.00 per share (the
"Exercise Price").
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof
or any other adjustment under clause 8 hereof, or successive such
changes, subdivisions, redivisions, reductions, combinations,
consolidations or other adjustments, then subject to the adjustments, if
any, having been made in accordance with the provisions of this Warrant
Certificate, "Common Shares" shall thereafter mean the shares, other
securities or other property resulting
-1-
<PAGE>
from such change, subdivision, redivision, reduction, combination or
consolidation or other adjustment.
2. All Warrant Certificates shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement
person and notwithstanding any change in any of the persons holding said
offices between the time of actual signing and the delivery of the
Warrant Certificate and notwithstanding that such officer signing may not
have held office at the date of the delivery of the Warrant Certificate,
the Warrant Certificate so signed shall be valid and binding upon the
Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have
been exercised shall wholly cease and determine and such Warrants shall
be wholly void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder at or before the Expiry Time
by:
(a) duly completing and executing a subscription substantially in the
form attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and
executed subscription form to the Corporation's counsel at 36
Toronto Street, Suite 1000, Toronto, Ontario, M5C 2C5, Attention:
Jay Goldman, together with payment of the purchase price for the
Common Shares subscribed for in the form of cash or a certified
cheque payable to the Corporation in an amount equal to the then
applicable Exercise Price multiplied by the number of Common Shares
subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause
to be issued to the Holder the number of Common Shares of the Corporation
to be issued and the Holder shall become a shareholder of the Corporation
in respect of such Common Shares with effect from the date of such
delivery and payment and shall be entitled to delivery of a certificate
or certificates evidencing such shares. The Corporation shall cause such
certificate or certificates to be mailed to the Holder at the address or
addresses specified in such subscription form within five (5) business
days of such delivery and payment as herein provided or, if so instructed
by the Holder, held for pick-up by the Holder at the principal office of
the registrar and transfer agent of the Common Shares of the Corporation,
Equity Transfer Services Inc. (the "Transfer Agent").
-2-
<PAGE>
6. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect
thereof except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while
any of the Warrants shall be outstanding, it shall reserve and there
shall remain unissued out of its authorized capital a sufficient number
of Common Shares to satisfy the right of purchase herein provided, as
such right of purchase may be adjusted pursuant to clauses 8 and 9
hereof. All Common Shares which shall be issued upon the exercise of the
right to purchase herein provided for, upon payment therefor of the
amount at which such Common Shares may at the time be purchased pursuant
to the provisions hereof, shall be issued as fully paid and non-
assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
8. (a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its
then outstanding Common Shares by way of a stock dividend or other
distribution (any of sch events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted
effective immediately after the effective date of any such event in
(i) or (ii) above or the record date at which the holders of Common
Shares are determined for the purpose of any such dividend or
distribution in (iii) above, as the case may be, by multiplying the
Exercise Price in effect on such effective date or record date, as
the case may be, by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such effective date or record
date, as the case may be, before giving effect to such Common Share
Reorganization and the denominator of which shall be the number of
Common Shares outstanding immediately after giving effect to such
Common Share Reorganization including, in the case where securities
exchangeable for or convertible into Common Shares are distributed,
the number of Common Shares that would be outstanding if such
securities were exchanged for or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to above), evidences of indebtedness or property (excluding
cash dividends paid in the ordinary course) to holders of all or
substantially all of its then outstanding Common Shares, the number
of Common Shares to be issued by the Corporation under this
-3-
<PAGE>
Warrant shall, at the time of exercise of the right of subscription
and purchase under this Warrant Certificate, be appropriately
adjusted and the Holder shall receive, in lieu of the number of the
Common Shares in respect of which the right to purchase is then
being exercised, the aggregate number of Common Shares or other
securities or property that the Holder would have been entitled to
receive as a result of such event, if, on the record date thereof,
the Holder had been the registered holder of the number of Common
Shares to which the Holder was theretofore entitled upon the
exercise of the rights of the Holder hereunder.
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or
a reclassification or other change in the Common Shares (other than
a Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation
or other entity (other than a consolidation, merger or amalgamation
which does not result in any reclassification of the outstanding
Common Shares or a change of the Common Shares into other
securities), or a transfer of all or substantially all of the
Corporation's undertaking and assets to another corporation or other
entity in which the holders of Common Shares are entitled to receive
shares, other securities or other property (any of such events being
called a "Capital Reorganization"), the Holder, where he has not
exercised the right of subscription and purchase under this Warrant
Certificate prior to the effective date of such Capital
Reorganization, shall be entitled to receive and shall accept, upon
the exercise of such right, on such date or any time thereafter, for
the same aggregate consideration in lieu of the number of Common
shares to which he was theretofore entitled to subscribe for and
purchase, the aggregate number of shares or other securities or
property which the Holder would have been entitled to receive as a
result of such Capital Reorganization if, on the effective date
thereof, he had been the registered holder of the number of Common
Shares to which he was theretofore entitled to subscribe for and
purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 8(a), (b) or (c)
shall occur and the occurrence of such event results in an
adjustment of the Exercise Price pursuant to the provisions of this
clause 8, then the number of Common Shares purchaseable pursuant to
this Warrant shall be adjusted contemporaneously with the adjustment
of the Exercise Price by multiplying the number of Common Shares
then otherwise purchaseable on the exercise thereof by a fraction,
the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment and the denominator of which
shall be the Exercise Price resulting from such adjustment.
-4-
<PAGE>
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 8, in the opinion of
the board of directors of the Corporation, acting in good faith,
are not strictly applicable, or if strictly applicable would not
fairly adjust the rights of the Holder against dilution in
accordance with the intent and purposes hereof, or would otherwise
materially affect the rights of the Holder of the Warrants
hereunder, then the Corporation shall execute and deliver to the
Holder an amendment hereto providing for an adjustment in the
application of such provisions so as to adjust such rights as
aforesaid in such manner as the board of directors of the
Corporation may determine to be equitable in the circumstances,
acting in good faith. The failure of the taking of action by the
board of directors of the Corporation to so provide for any
adjustment on or prior to the effective date of any action or
occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is
equitable to make no adjustment in the circumstances.
9. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 8:
(a) any Common Shares owned or held by or for the account of the
Corporation shall be deemed not be to outstanding except that, for
the purposes of clause 8, any Common Shares owned by a pension plan
or profit sharing plan for employees of the Corporation or any of
its subsidiaries shall not be considered to be owned or held by or
for the account of the Corporation;
(b) no adjustment in the Exercise Price shall be required unless a
change of at least (1%) of the prevailing Exercise Price would
result, provided, however, that any adjustment which, except for the
provisions of this clause 9(b), would otherwise have been required
to be made, shall be carried forward and taken into account in any
subsequent adjustment;
(c) the adjustments provided for in clause 8 are cumulative and shall
apply to successive subdivisions, consolidations, dividends,
distributions and other events resulting in any adjustment under
the provisions of such clause;
(d) in the absence of a resolution of the board of directors of the
Corporation fixing a record date for any dividend or distribution
referred to in clause 8(a)(iii) above, the Corporation shall be
deemed to have fixed as the record date therefor the date on which
such dividend or distribution is effected;
(e) if the Corporation sets a record date to take any action and
thereafter and before the taking of such action abandons its plan
to take such action, then no
-5-
<PAGE>
adjustment to the Exercise Price will be required by reason of the
setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number
of Common Shares purchaseable pursuant to the Warrants, the
Corporation shall provide to the Holder a certificate of an officer
of the Corporation certifying as to the amount of such adjustment
and, in reasonable detail, describing the event requiring and the
manner of computing or determining such adjustment; and
(g) any question that at any time or from time to time arises with
respect to the amount of any adjustment to the Exercise Price or
other adjustment pursuant to clause 8 shall be conclusively
determined by a firm of independent chartered accountants (who may
be the Corporation's auditors) and shall be binding upon the
Corporation and the Holder.
10. At least (21) days prior to the effective date or record date, as the
case may be, of any event referred to in clause 8, the Corporation shall
notify the Holder of the particulars of such event and the estimated
amount of any adjustment required as a result thereof.
11. On the happening of each and every such event set out in clause 8, the
applicable provisions of this Warrant, including the Exercise Price,
shall, IPSO FACTO, be deemed to be amended accordingly and the
Corporation shall take all necessary action so as to comply with such
provisions as so amended.
12. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly
closed, having regard to the provisions of clauses 8 and 9 hereof, prior
to any meeting of shareholders or for the payment of dividends or for any
other purpose and in the event of the surrender of any Warrant in
accordance with the provisions hereof and the making of any subscription
and payment for the Common Shares called for thereby during any such
period delivery of certificates for Common Shares may be postponed for
not more than five (5) days after the date of the re-opening of said
share transfer books. Provided, however, that any such postponement of
delivery of certificates shall be without prejudice to the right of the
Holder so surrendering the same and making payment during such period to
receive after the share transfer books shall have been re-opened such
certificates for the Common Shares called for, as the same may be
adjusted pursuant to clauses 8 and 9 hereof as a result of the completion
of the event in respect of which the transfer books were closed.
13. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by
appropriate legal proceedings. No recourse under or upon any obligation,
covenant or agreement contained herein
-6-
<PAGE>
shall be had against any shareholder or officer of the Corporation either
directly or through the Corporation, it being expressly agreed and
declared that the obligations under the Warrants are solely corporate
obligations and that no personal liability whatever shall attach to or be
incurred by the shareholders or officers of the Corporation or any of
them in respect thereof, any and all rights and claims against every such
shareholder, officer or director being hereby expressly waived as a
condition of and as a consideration for the issue of the Warrants.
14. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in the Warrant Certificate.
In the case of any subscription for a lesser number of Common Shares than
expressed in any Warrant Certificate, the Holder hereof shall be entitled
to receive at no cost to the Holder a new Warrant Certificate in respect
of the balance of Warrant not then exercised. Such new Warrant
Certificate shall be mailed to the Holder by the Corporation or, at its
direction, the Transfer Agent, contemporaneously with the mailing of the
certificate or certificates representing the Common Shares issued
pursuant to clause 5.
15. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
16. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or
knowledge to the contrary except where the Corporation or the Transfer
Agent is required to take notice by statute or by order of a court of
competent jurisdiction. A Holder shall be entitled to the rights
evidenced by such Warrant free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate
holder thereof and all persons may act accordingly and the receipt by any
such Holder of the Common Shares purchaseable pursuant to such Warrant
shall be a good discharge to the Corporation and the Transfer Agent for
the same and neither the Corporation nor the Transfer Agent shall be
bound to inquire into the title of any such Holder except where the
Corporation or the Transfer Agent is required to take notice by statute
or by order of a court of competent jurisdiction.
17. The Corporation shall notify the Holder forthwith of any change of
address of the Transfer Agent or if Equity Transfer Services Inc., or any
successor thereto, is replaced as Transfer Agent, the name and address of
the principal office in the City of Toronto, Ontario of such successor
Transfer Agent.
-7-
<PAGE>
18. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise
of the rights of the Holders of Warrants against the Corporation
which shall be agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or
supplemental hereto which shall be agreed to by the Corporation;
and/or
(c) to restrain any Holder of a Warrant from taking or instituting any
suit or proceedings against the Corporation for the enforcement of
any of the covenants on the part of the Corporation conferred upon
the Holders by the terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be
bound to give effect thereto accordingly. Such extraordinary resolution
shall, where applicable, be binding on the Corporation which shall give
effect thereto accordingly.
The Corporation shall forthwith upon receipt of an extraordinary
resolution provide notice to all Holders of the date and text of such
resolution. The Holders of Warrants assenting to an extraordinary
resolution agree to provide the Corporation forthwith with a copy of any
extraordinary resolution passed.
The expression "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the
Holders of Warrants calling in the aggregate for not less than ninety per
cent (90%) of the aggregate number of shares called for by all of the
Warrants which are, at the applicable time, outstanding.
19. All notices to be sent hereunder shall be deemed to be validly given to
the Holders of the Warrants if delivered personally or if sent by
registered letter through the post addressed to such holders at their
post office addresses appearing in the register of Warrant holders caused
to be maintained by the Corporation pursuant to clause 16, and such
notice shall be deemed to have been given, if delivered personally when
so delivered, and if sent by post on the fifth business day next
following the post thereof.
20. The parties acknowledge that the resale of the Common Shares issuable
upon exercise of this Warrant shall be governed by the resolutions set
forth in section 1.2(d) of the Merger Agreement dated as of February 8,
1996 between the Corporation, Fine Gold
-8-
<PAGE>
Recovery Systems Inc., Trans Mar, Inc. ("TMI"), and certain holders of
the capital stock of TMI and the Holder hereby covenants and agrees to
be bound by the terms thereof.
21. The Holder acknowledges and agrees that this Warrant supersedes any and
all rights that the Holder may have in the "L" shares issued by TMI and
any option or similar agreement issued by TMI.
22. This Warrant shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the ____ day of _________________, 1996.
ALTAIR INTERNATIONAL GOLD INC.
By: _______________________________________
Its President
Acknowledged and agreed to as of the ____ day of February, 1996.
___________________________________________
____________________
-9-
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Gold Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that a legend may be placed on any certificates
representing common shares delivered to the undersigned.
Address for Delivery of Shares: ____________________________________
____________________________________
____________________________________________________________________________
____________________________________________________________________________
Attention: ______________________________
Exercise Price
Tendered (Cdn.$2.00 per share) $___________________________________
Dated at ________________, this _____ day of _____________, 199_____.
Witness: ) ____________________________________
) Holder's Name
)
)
) ____________________________________
) Authorized Signature
)
)
) ____________________________________
) Title (if applicable)
Signature guaranteed:
[NOTE: THIS FORM IS FOR USE ONLY WHEN EXERCISING WARRANTS. DO NOT SIGN AS
PART OF MERGER DOCUMENTS.]
-10-
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL GOLD INC.
c/o Beach, Hepburn
36 Toronto Street
Suite 1000
Toronto, Ontario
M5C 2C5
This Warrant Certificate is hereby transferred to ______________________
residing at _____________________________________________________ for good and
valuable consideration. You are hereby instructed to take the necessary steps
to effect this transfer.
Dated at __________________, this ______ day of _____________, 199_____.
Witness: ) ____________________________________
) Holder's Name
)
)
) ____________________________________
) Authorized Signature
)
)
) ____________________________________
) Title (if applicable)
)
)
Signature guaranteed: )
[NOTE: THIS FORM IS FOR USE ONLY WHEN EXERCISING WARRANTS. DO NOT SIGN AS
PART OF MERGER DOCUMENTS.]
-11-
<PAGE>
EXHIBIT 6.2.5
<PAGE>
ALTAIR INTERNATIONAL GOLD
PRINCIPAL ESCROW
SCHEDULE 1.1(e)(ii)
<TABLE>
SHAREHOLDER TMI SHARES AIG SHARES Q1 RELEASE Q1 REMAIN Q2 RELEASE Q2 REMAIN Q3 RELEASE
<S> <C> <C> <C> <C> <C> <C> <C>
Agnew Trust 20000 6662 6662 0 0 0 0
Lew Allen 36000 11991 11991 0 0 0 0
Melvin Alter 1241888 413672 20683 392989 20683 372306 20683
Thomas Barrowman 3000 999 999 0 0 0 0
Robert Becker 4000 1332 1332 0 0 0 0
Marjorie Callaghan 2000 666 666 0 0 0 0
Douglas Carver 4000 1332 1332 0 0 0 0
Colina Negra 2375000 791112 39555 751557 39555 712002 39555
Dennis Derry 4000 1332 1332 0 0 0 0
Derose Fund 5000 1666 1666 0 0 0 0
James Dick 31471 10482 10482 0 0 0 0
Orville Duncklee 4000 1332 1332 0 0 0 0
Larry Dunn 4000 1332 1332 0 0 0 0
Eldon Engle 2000 666 666 0 0 0 0
Sally Finch Trust 5000 1666 1666 0 0 0 0
Raymond Foster 35000 11658 11658 0 0 0 0
Giller Trust 97973 32634 15000 17634 15000 2634 2634
Wallace Henderson 716643 238713 15000 223713 15000 208713 15000
Mary Hook 6000 1998 1998 0 0 0 0
John Hunt 106612 35512 15000 20512 15000 5512 5512
John Hunt Plan 100000 33310 15000 18310 15000 3310 3310
Ollie Hux 4000 1332 1332 0 0 0 0
Leslie Linner 2000 666 666 0 0 0 0
Frank McKimmons 18000 5995 5995 0 0 0 0
Priscilla McKinley 4000 1332 1332 0 0 0 0
Joseph McLean 4000 1332 1332 0 0 0 0
Donald Mersman 4000 1332 1332 0 0 0 0
Philip Michel 20000 6662 6662 0 0 0 0
Irving Milberg 61000 20319 15000 5319 5319 0 0
Neal Parker 4000 1332 1332 0 0 0 0
Allen Patterson 16000 5329 5329 0 0 0 0
Greg Patterson 20000 6662 6662 0 0 0 0
Allyson Call Phillips 47000 15655 15000 655 655 0 0
William Phillips 10000 3331 3331 0 0 0 0
D.M.P. Trust 425360 141687 15000 126687 15000 111687 12547
Richard Schmittel 20000 6662 6662 0 0 0 0
Robert Tobey 4000 1332 1332 0 0 0 0
Virginia Warden 10000 3331 3331 0 0 0 0
Frank Watson 6000 1998 1998 0 0 0 0
Mahlon White 20000 6662 6662 0 0 0 0
Wright Trust 261000 86939 15000 71939 11107 60832 0
TOTALS 5763947 1919957 290642 1629315 152319 1476996 99241
SHAREHOLDER Q3 REMAIN Q4 RELEASE Q4 REMAIN Q5 RELEASE
<S> <C> <C> <C> <C>
Agnew Trust 0 0 0 0
Lew Allen 0 0 0 0
Melvin Alter 351623 20683 330940 20683
Thomas Barrowman 0 0 0 0
Robert Becker 0 0 0 0
Marjorie Callaghan 0 0 0 0
Douglas Carver 0 0 0 0
Colina Negra 672447 39555 632892 39555
Dennis Derry 0 0 0 0
Derose Fund 0 0 0 0
James Dick 0 0 0 0
Orville Duncklee 0 0 0 0
Larry Dunn 0 0 0 0
Eldon Engle 0 0 0 0
Sally Finch Trust 0 0 0 0
Raymond Foster 0 0 0 0
Giller Trust 0 0 0 0
Wallace Henderson 193713 15000 178713 11683
Mary Hook 0 0 0 0
John Hunt 0 0 0 0
John Hunt Plan 0 0 0 0
Ollie Hux 0 0 0 0
Leslie Linner 0 0 0 0
Frank McKimmons 0 0 0 0
Priscilla McKinley 0 0 0 0
Joseph McLean 0 0 0 0
Donald Mersman 0 0 0 0
Philip Michel 0 0 0 0
Irving Milberg 0 0 0 0
Neal Parker 0 0 0 0
Allen Patterson 0 0 0 0
Greg Patterson 0 0 0 0
Allyson Call Phillips 0 0 0 0
William Phillips 0 0 0 0
D.M.P. Trust 99140 0 99140 0
Richard Schmittel 0 0 0 0
Robert Tobey 0 0 0 0
Virginia Warden 0 0 0 0
Frank Watson 0 0 0 0
Mahlon White 0 0 0 0
Wright Trust 60832 0 60832 0
TOTALS 1377755 75238 1302517 71921
</TABLE>
<PAGE>
ALTAIR INTERNATIONAL GOLD
PRINCIPAL ESCROW - PAGE 2
SCHEDULE 1.1(e)(ii)
<TABLE>
SHAREHOLDER Q5 RELEASE Q5 REMAIN Q6 RELEASE Q6 REMAIN Q7 RELEASE Q7 REMAIN
<S> <C> <C> <C> <C> <C> <C>
Agnew Trust 0 0 0 0 0 0
Lew Allen 0 0 0 0 0 0
Melvin Alter 20683 310257 20683 289574 124 289450
Thomas Barrowman 0 0 0 0 0 0
Robert Becker 0 0 0 0 0 0
Marjorie Callaghan 0 0 0 0 0 0
Douglas Carver 0 0 0 0 0 0
Colina Negra 39555 593337 39555 553782 234 553548
Dennis Derry 0 0 0 0 0 0
Derose Fund 0 0 0 0 0 0
James Dick 0 0 0 0 0 0
Orville Duncklee 0 0 0 0 0 0
Larry Dunn 0 0 0 0 0 0
Eldon Engle 0 0 0 0 0 0
Sally Finch Trust 0 0 0 0 0 0
Raymond Foster 0 0 0 0 0 0
Giller Trust 0 0 0 0 0 0
Wallace Henderson 11683 167030 0 167030 0 167030
Mary Hook 0 0 0 0 0 0
John Hunt 0 0 0 0 0 0
John Hunt Plan 0 0 0 0 0 0
Ollie Hux 0 0 0 0 0 0
Leslie Linner 0 0 0 0 0 0
Frank McKimmons 0 0 0 0 0 0
Priscilla McKinley 0 0 0 0 0 0
Joseph McLean 0 0 0 0 0 0
Donald Mersman 0 0 0 0 0 0
Philip Michel 0 0 0 0 0 0
Irving Milberg 0 0 0 0 0 0
Neal Parker 0 0 0 0 0 0
Allen Patterson 0 0 0 0 0 0
Greg Patterson 0 0 0 0 0 0
Allyson Call Phillips 0 0 0 0 0 0
William Phillips 0 0 0 0 0 0
D.M.P. Trust 0 99140 0 99140 0 99140
Richard Schmittel 0 0 0 0 0 0
Robert Tobey 0 0 0 0 0 0
Virginia Warden 0 0 0 0 0 0
Frank Watson 0 0 0 0 0 0
Mahlon White 0 0 0 0 0 0
Wright Trust 0 60832 0 60832 0 60832
TOTALS 71921 1230596 60238 1170358 358 1170000
SHAREHOLDER Q8 RELEASE Q8 REMAIN
Agnew Trust 0 0
Lew Allen 0 0
Melvin Alter 0 289450
Thomas Barrowman 0 0
Robert Becker 0 0
Marjorie Callaghan 0 0
Douglas Carver 0 0
Colina Negra 0 553548
Dennis Derry 0 0
Derose Fund 0 0
James Dick 0 0
Orville Duncklee 0 0
Larry Dunn 0 0
Eldon Engle 0 0
Sally Finch Trust 0 0
Raymond Foster 0 0
Giller Trust 0 0
Wallace Henderson 0 167030
Mary Hook 0 0
John Hunt 0 0
John Hunt Plan 0 0
Ollie Hux 0 0
Leslie Linner 0 0
Frank McKimmons 0 0
Priscilla McKinley 0 0
Joseph McLean 0 0
Donald Mersman 0 0
Philip Michel 0 0
Irving Milberg 0 0
Neal Parker 0 0
Allen Patterson 0 0
Greg Patterson 0 0
Allyson Call Phillips 0 0
William Phillips 0 0
D.M.P. Trust 0 99140
Richard Schmittel 0 0
Robert Tobey 0 0
Virginia Warden 0 0
Frank Watson 0 0
Mahlon White 0 0
Wright Trust 0 60832
TOTALS 0 1170000
</TABLE>
<PAGE>
EXHIBIT 6.2.6
<PAGE>
ALTAIR INTERNATIONAL GOLD
PERFORMANCE ESCROW
SCHEDULE 1.1(e)(iii)
<TABLE>
SHAREHOLDER ESCROW SHARES Y1 MAX RELEASE Y1 MIN REMAIN Y2 MAX RELEASE Y2 MIN REMAIN Y3 MAX RELEASE Y3 MIN REMAIN
<S> <C> <C> <C> <C> <C> <C> <C>
Agnew Trust 0 0 0 0 0 0 0
Lew Allen 0 0 0 0 0 0 0
Melvin Alter 289450 96483 192967 96483 96484 96484 0
Thomas Barrowman 0 0 0 0 0 0 0
Robert Becker 0 0 0 0 0 0 0
Marjorie Callaghan 0 0 0 0 0 0 0
Douglas Carver 0 0 0 0 0 0 0
Colina Negra 553548 184516 369032 184516 184516 184516 0
Dennis Derry 0 0 0 0 0 0 0
Derose Fund 0 0 0 0 0 0 0
James Dick 0 0 0 0 0 0 0
Orville Duncklee 0 0 0 0 0 0 0
Larry Dunn 0 0 0 0 0 0 0
Eldon Engle 0 0 0 0 0 0 0
Sally Finch Trust 0 0 0 0 0 0 0
Raymond Foster 0 0 0 0 0 0 0
Giller Trust 0 0 0 0 0 0 0
Wallace Henderson 167030 55677 111353 55677 55676 55676 0
Mary Hook 0 0 0 0 0 0 0
John Hunt 0 0 0 0 0 0 0
John Hunt Plan 0 0 0 0 0 0 0
Ollie Hux 0 0 0 0 0 0 0
Leslie Linner 0 0 0 0 0 0 0
Frank McKimmons 0 0 0 0 0 0 0
Priscilla McKinley 0 0 0 0 0 0 0
Joseph McLean 0 0 0 0 0 0 0
Donald Mersman 0 0 0 0 0 0 0
Philip Michel 0 0 0 0 0 0 0
Irving Milberg 0 0 0 0 0 0 0
Neal Parker 0 0 0 0 0 0 0
Allen Patterson 0 0 0 0 0 0 0
Greg Patterson 0 0 0 0 0 0 0
Allyson Call Phillips 0 0 0 0 0 0 0
William Phillips 0 0 0 0 0 0 0
D.M.P. Trust 99140 33047 66093 33046 33047 33047 0
Richard Schmittel 0 0 0 0 0 0 0
Robert Tobey 0 0 0 0 0 0 0
Virginia Warden 0 0 0 0 0 0 0
Frank Watson 0 0 0 0 0 0 0
Mahlon White 0 0 0 0 0 0 0
Wright Trust 60832 20277 40555 20278 20277 20277 0
TOTALS 1170000 390000 780000 390000 390000 390000 0
</TABLE>
<PAGE>
Employment Agreement
Between
William P. Long
and
Orex Resources Ltd.
<PAGE>
TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Part-Time Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Positions and Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
6. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
7. Corporate Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. Payment of Business Expenses. . . . . . . . . . . . . . . . . . . . . . . 4
9. Subject Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10. Confidential Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11. Other Capacities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
12. Express Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
13. Interest on Unpaid Amounts. . . . . . . . . . . . . . . . . . . . . . . . 5
14. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
17. Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
18. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
19. Governing Law and Severability. . . . . . . . . . . . . . . . . . . . . . 7
20. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
21. Sole Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
22. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
23. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
24. Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 7
25. Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . 7
26. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
EXHIBIT A Business Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .11
EXHIBIT B Long's Existing Prospects. . . . . . . . . . . . . . . . . . . . . .12
EXHIBIT C Finder's Fee Agreement . . . . . . . . . . . . . . . . . . . . . . .13
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("this Agreement") is made and entered into
effective as of the first day of January, 1988, by and between Orex Resources
Ltd., a corporation organized pursuant to the laws of Canada ("Orex"), and
William P. Long ("Long").
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the definitions specified in this Section 1:
(a) "Area of Interest" shall mean all lands within the borders of the
State of Nevada except for Long's Existing Prospects.
(b) "Cause" shall mean (i) action or inaction by Long which causes
Orex to incur substantial and material losses; and (ii) situations in which
Long, in connection with the business of Orex, engages in willful misconduct,
fraudulent conduct, or felonious behavior or acts in a grossly negligent manner.
(c) "Common Stock" shall mean the common stock of Orex (no par
value).
(d) "Exor" shall mean Exor Inc., a Nevada corporation wholly owned by
Orex.
(e) "Business Expenses" shall mean those costs and expenses
enumerated in Exhibit A attached hereto and incorporated herein, and any other
cost or expense which this Agreement characterizes as a Business Expense or
requires Long to pay or incur on behalf of Orex or Exor, and any other expenses
paid or incurred in the course of employment for which executive level employees
or corporate officers or directors in the State of Nevada are customarily
reimbursed by their employer and/or corporation.
(f) "Graphic Information" shall mean drawings, maps, plans, reports,
or any other documents which contain data or information concerning a Precious
Metals Property, but shall not include any data or information concerning a
Precious Metals Property which has not been reduced to writing.
(g) "Long's Existing Prospects" shall mean those Precious Metals
Properties which are identified in Exhibit B attached hereto and incorporated
herein.a basis that would be profitable without reference to revenues generated
by the recovery of materials which are depositionally associated with the
Precious Metals; a property where Precious Metals are being or may be recovered
but only incidentally or secondarily to the mining and sale of some substance
other than Precious Metals shall not constitute a Precious Metals Property.
(h) "Orex Bank Account" shall mean a bank account to be funded by
Orex with amounts sufficient to pay Business Expenses.
(i) "Precious Metals" shall mean gold, silver and platinum.
(j) "Precious Metal Property" shall mean a property within the Area
of Interest which may contain Precious Metals in sufficient quantity to mine and
sell on a basis that would be profitable
-1-
<PAGE>
without reference to revenues generated by the recovery of materials which
are depositionally associated with the Precious Metals; a property where
Precious Metals are being or may be recovered but only incidentally or
secondarily to the mining and sale of some substance other than Precious
Metals shall not constitute a Precious Metals Property.
(k) "Subject Opportunity" shall mean any opportunity to acquire
(directly or indirectly) the right to mine a Precious Metals Property.
(l) "Third Party Owner" shall mean the individual or entity that
owns and/or controls a Precious Metals Property.
2. RECITALS. Acting as an independent contractor, Long has provided
consulting services to Orex on a non-exclusive basis and in a highly
satisfactory manner. Such consulting services involved assistance in
connection with identification, evaluation and acquisition of Precious Metals
Properties. Orex wants Long to continue providing the same services, but in
the capacity of a part-time employee and corporate officer and director
rather than an independent contractor. Long is willing to do so, subject to
the terms and provisions of this Agreement.
Long is currently involved in various other projects which do not
involve Orex or Exor but do involve Precious Metals Properties, and Orex is
aware of the details. Since Long will be only a part-time employee, he must
remain able to take advantage of any Subject Opportunity which Orex rejects
or is deemed to have rejected as provided below, free and clear of the terms
and provisions of this Agreement. Both parties recognize and want to avoid
any potential conflict of interest or similar problem which might be
generated under these circumstances.
Accordingly, for and in consideration of the following mutual
promises, conditions and covenants, Orex and Long agree as specified in this
Agreement.
3. PART-TIME EMPLOYMENT. Orex agrees to employ Long on a part-time
basis, and Long agrees to be so employed by Orex upon the terms and
conditions hereinafter set forth.
4. TERM. Unless sooner terminated as hereinafter provided, this
Agreement shall remain in full force from the effective date hereof until
midnight (Pacific Standard Time) on December 31, 1997.
5. POSITIONS AND DUTIES. Long shall devote sixty-five percent (65%)
of a forty (40) hour business week in the performance of his employment
duties. His capacities will be President and Chief Operating Officer of Orex
and Vice-President and Chief Operating Officer of Exor. Subject to the terms
and provisions of this Agreement, while serving in these capacities, Long
shall have such responsibilities, duties, obligations, rights, benefits and
authority as may be specified in Orex's and Exor's corporate Bylaws. In
addition, Long shall have the rights, duties and authority specifically
provided for in this Agreement.
6. COMPENSATION. Long shall receive the following compensation:
(a) SALARY. A monthly salary of at least US$4,000 (before
withholding for income tax), which shall be paid to him in one installment on
or before the first business day of each calendar
-2-
<PAGE>
month. Orex's Board of Directors shall review Long's monthly salary
periodically, and may increase the same in its discretion.
(b) ANNUAL BONUS. An annual bonus in an amount to be determined
by Orex's Board of Directors, but in no event less than ten percent (10%) of
the product obtained by multiplying his monthly salary on the date when the
bonus is due by twelve (12). The annual bonus for services rendered during
1987 shall be paid to Long on or before April 1, 1988. The annual bonus for
each calendar year after 1987 shall be paid to Long no later than December 15
of each year.
(c) PERSONAL INSURANCE.
(i) Long shall arrange for medical and health insurance for
Long and his family which is satisfactory to him, and all premiums,
deductible, coinsurance amounts and other associated costs shall constitute
Business Expenses and shall be paid from the Orex Bank Account.
(ii) At his cost, Long shall maintain personal automobile
liability insurance protecting Long from claims for damages for bodily injury
(including wrongful death) and property damage which may arise from the use
of his own or rental automobiles for Orex or Exor business purposes, with
policy limits and conditions which are acceptable to Long. When he rents
automobiles for Orex or Exor business purposes, Long may decline any
additional coverage offered by rental agencies. All insurance deductible
costs or other expenses of any nature which Long may incur as the result of
an accident involving an automobile rented for Orex or Exor business
purposes, to the extent that such expenses are not covered by Long's personal
automobile liability policy, shall constitute Business Expenses and shall be
paid from the Orex Bank Account.
(d) SHIRLEY CLAIMS FINDER'S FEE. Orex agrees to purchase from
Long that certain finder's fee payable to Long under the Agreement between
Long and Orex attached hereto as Exhibit C and by this reference incorporated
herein. The purchase price shall be US$15,000 and 50,0, 1988. Long
acknowledges receipt of the 50,000 shares of Common Stock contemporaneously
with his execution of this Agreement.
(e) STOCK OPTION PLAN. Orex hereby grants to Long the option
until December 31, 1990, to acquire 200,000 common shares of its capital
stock at the price of $0.50 (Canadian) per share.
(f) TAKEOVER, MERGER OR CONSOLIDATION. If voting control of over
thirty-five percent (35%) of the then issued and outstanding shares of Common
Stock is hereafter acquired by an individual, group of individuals, entity or
group of entities through any method (including, without limitation, merger,
takeover or consolidation, regardless of whether Orex or Exor survives the
transaction) and this Agreement is terminated by Orex within 180 days before
or one (1) year thereafter or by Long within one (1) year thereafter, then
Long shall be paid US$250,000 and 200,000 shares of Common Stock.
If and each time that any event occurs after the effective date
hereof which changes the number of currently outstanding shares of Common
Stock, then on the effective date of that event, the number of shares Long is
entitled to receive under this Section 6(f) shall be deemed to have been
automatically adjusted (without the need for any act by the parties), so that
the ownership share in Orex which Long is entitled to receive under this
Section 6(f) shall never be reduced or diluted. If, and only if, shares of
Common Stock cannot legally be delivered to Long pursuant to this Section
6(f), then Long
-3-
<PAGE>
shall be paid the fair market value thereof, in cash and within ten (10) days
after termination of this Agreement.
(g) Under appropriate circumstances and within the discretion of
the Board of Directors of Orex, Long shall be rewarded for exceptional
performance with royalties based on mineral production from one or more
Precious Metals Properties which are brought to Orex's attention by Long.
7. CORPORATE INSURANCE. As part of Long's duties described in Section
5 hereof, Long shall arrange for issuance of corporate insurance policies for
Orex and Exor of the following types:
(a) Comprehensive general liability insurance with bodily injury,
general property damage, operations and contractual liability coverage, with
a minimum policy limit of US$1,000,000,000;
(b) Workmen's compensation and employer's liability insurance as
may be required by applicable federal and state law; and
(c) Excess umbrella liability insurance with excess of limits
afforded in primary or underlying policies of US$500,000.
It is expressly understood by the parties that acquisition of the
insurance coverage described in this Section 7 shall not relieve Orex and/or
Exor from their indemnification of Long as provided in Section 15 of this
Agreement. All costs and expenses of any nature whatsoever which are
associated with the acquisition and maintenance of the insurance coverage
required by this Section 7 shall constitute Business Expenses and shall be
paid from the Orex Bank Account.
8. PAYMENT OF BUSINESS EXPENSES. Long shall pay Business Expenses
using funds deposited by Orex in the Orex Bank Account. No less frequently
than quarterly, Long shall submit a report to Orex describing Business
Expenses so paid out of the Orex Bank Account. At Orex's request, the
quarterly report shall be accompanied by satisfactory evidence of Business
Expenses paid from the Orex Bank Account, such as applicable bills, invoices,
receipts, and canceled checks. On a continuing basis, but in may be
required to pay the same.
9. SUBJECT OPPORTUNITIES. Long shall immediately notify Orex of any
Subject Opportunity which comes to his attention and which, in Long's
professional opinion, is worthy of consideration by Orex. Such notice shall
describe the Subject Opportunity and all pertinent business terms and
conditions. For a period of thirty (30) days after Orex's receipt of such
notice from Long, Orex shall have the right and option to accept or reject
the Subject Opportunity described in the notice. If Orex fails to give
notice to Long that it accepts the Subject Opportunity described in Long's
notice within thirty (30) days after Orex's receipt thereof, then Orex shall
be deemed to have rejected the same.
If Orex gives Long notice during the required thirty (30) day period
that it accepts the Subject Opportunity described in Long's notice, then Orex
shall have a period of forty-five (45) days after Long's receipt of such
notice from Orex during which to execute a contract with the Third Party
Owner whereby Orex acquires the right (or the option to acquire the right) to
mine the Precious Metals Property which is owned or controlled by the Third
Party Owner. If Orex has not executed such a contract within the required
forty-five (45) day period, then Orex shall be deemed to have rejected the
Subject Opportunity in question.
-4-
<PAGE>
If and when Orex rejects a Subject Opportunity or is deemed to have
rejected it as provided in this Section 9, then neither Orex or Exor shall
have, acquired or assert any right, title, interest, claim or demand therein
or thereto. Long may thereafter independently pursue and take advantage of
such rejected Subject Opportunity on his own personal behalf and entirely
free and clear of the terms and provisions of this Agreement and of any duty
or responsibility to Orex and/or Exor.
10. CONFIDENTIAL DATA. All Graphic Information which is prepared,
compiled or analyzed by Long on behalf of Orex or Exor hereunder shall be and
remain the sole property of Orex and Exor, except for Graphic Information
which is in or later enters (through no fault of Long) the public domain.
For a period of one (1) calendar year after any termination or expiration
hereof, Long shall not disclose such Graphic Information to any third party
except as required by law or with the prior consent of Orex.
It is acknowledged by the parties that, as a result of the performance
of Long's duties under this Agreement, Long shall necessarily gain knowledge
of or relating to Precious Metals Properties within the Area of Interest.
Subject only to the provisions of this Section 10, nothing in this Agreement
shall ever be interpreted, applied, or construed so as to prevent Long from
enjoying the full use and benefit of his knowledge, comprehension, intuition,
consciousness, awareness, perception, insight, expertise, and experience.
11. OTHER CAPACITIES. Subject to the provisions of Section 5 of this
Agreement, upon full disclosure to Orex's Board of Directors, Long shall be
entitled to accept and hold positions as an officer and/or director of any
other corporations, domestic or foreign.
12. EXPRESS LIMITATIONS. Anything to the contrary herein
notwithstanding, it is expressly understood and agreed by the parties that
this Agreement shall never s other than Precious Metals, or to any mineral
prospects other than Precious Metals Properties, or to any business
opportunity other than a Subject Opportunity. So long as he complies with
the terms of this Agreement, Long shall never be deemed to have any conflict
of interest with Orex or Exor or to have breached any express or implied duty
or obligation (fiduciary or otherwise) to either Orex or Exor. The
provisions hereof that are related to non-competition, conflicts or interest,
and to the handling and treatment of any written or oral confidential or
proprietary information or trade secrets are expressly agreed to in lieu of
and as a substitute for any other obligation or obligations (fiduciary or
otherwise) with regard to non-competition, conflicts of interest or the
handling or treatment of confidential or proprietary information or trade
secrets which might be implied by law or imposed by applicable statutory or
common law as the result of the past, present, or future relationship or
relationships between Orex, Exor, and/or Long. No implied covenants of any
sort are either contained herein or intended by the parties.
13. INTEREST ON UNPAID AMOUNTS. Any unpaid amounts due under this
Agreement shall accrue interest at the rate of ten percent (10%) per annum
adjusted upward semi-annually in accordance with increases in the Producer
Price Index (or an appropriate substitute index if the Producer Price Index
should cease to be published) or at the rate provided by statute, whichever
is higher.
14. TERMINATION. This Agreement may be terminated:
(a) By the mutual consent of Orex and Long;
(b) By Orex for Cause; or
-5-
<PAGE>
(c) Subject to the provisions of Section 6 hereof, at any time by
Long or Orex with ninety (90) days prior notice to the other party.
No notice of termination by Orex shall relieve Orex of its obligation to
pay Long the compensation which is due to him pursuant to Sections 6(a) and 6(b)
of this Agreement for services rendered prior to the effective date of
termination. All indemnifications herein shall survive any termination or
expiration hereof, and the other terms and provisions hereof shall so survive to
the extent necessary in order to give full effect thereto.
15. INDEMNIFICATION. Orex agrees to and hereby assumes all liability for
and indemnifies, protects, saves, and holds Long harmless from and against any
and all losses, costs, expenses, attorneys' fees, claims, demands, liabilities,
suits, and actions of every kind and character which may be imposed upon or
incurred by Long on account of, arising directly or indirectly from, or in any
way connected with or related to Long's activities as an officer and member of
the Boards of Directors of Orex and Exor.
16. NOTICES. All notices, requests, statements, deliveries, reports,
payments, consents, or other communications from or to a party to this Agreement
which are required, permitted or made necessary by the terms hereof shall be
written. All such communications shall be either delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Long:
111 Edward Drive
Grass Valley, California 95949
If to Orex:
Attn: Mr. Wayne Beach
595 Bay Street, Suite 1200
Toronto, Ontario
Canada M5G 2C2
Either of the parties may change its respective address for notice
from time to time by giving notice of such change to the other party in the
manner specified in this Section 16. Communications sent by registered or
certified mail shall be deemed to have been given and received on the date of
receipt indicated on the return receipt therefor.
17. MODIFICATION. Subject to the provisions of Section 6(f) hereof, this
Agreement may not be extended, supplemented, modified, or otherwise altered
except by written instrument executed by Long and appropriate and authorized
representatives of Orex.
18. ASSIGNMENT. Long may employ or subcontract with persons or entities
with such skills and training as he may deem necessary or desirable, provided
that the work performed by such persons or entities on behalf of Orex or Exor
shall be supervised and reviewed by Long. Subject to the foregoing, the parties
hereto shall not assign all or any of their respective rights or duties
hereunder without the prior consent of the other parties, and any assignment
made without such consent shall be void.
-6-
<PAGE>
19. GOVERNING LAW AND SEVERABILITY. This Agreement, its validity,
interpretation and enforcement, shall be governed by the laws of the State of
Nevada, except those concerning conflicts of law. The individual provisions of
this Agreement are severable. If any such individual provision is contrary to
or in conflict with any requirement or principle of applicable statutory or
common law, then that provision and the remainder of this Agreement shall be
construed so as to give effect to the intent of the parties.
20. NO WAIVER. No waiver of any breach of or default in any of the terms
and provisions of this Agreement shall be considered valid unless in writing,
and no such waiver shall be deemed to constitute or be construed as a waiver of
any subsequent breach or default of the same, similar, or dissimilar nature.
21. SOLE AGREEMENT. This Agreement and the exhibits incorporated herein
contain and set forth the entire agreement between the parties with respect to
the subject matter hereof, all previous agreements between the parties with
respect to the subject matter hereof being expressly rescinded and replaced
hereby including, without limitation, Exhibit C hereto. No prior written or
prior or contemporaneous oral promises, representations, or agreements of any
nature whatsoever regarding the subject matter hereof shall be binding upon the
parties.
22. INTERPRETATION. If necessary to give effect to the terms and
provisions herein, references to the singular shall include the plural and
references to the neuter gender shall include the masculine and/or the feminine
genders. In the event of any conflict between the terms and provisions of this
Agreement and the terms and provisions of the corporate Bylaws of Orex and/or
Exor (as the same may be amended from time to time), the terms and provisions of
this Agreement shall control in all respects.
23. CUMULATIVE REMEDIES. The re and conditions hereof are intended to be
cumulative and non-exclusive. Use of any one or more remedies provided herein
shall not preclude the use of any other remedies provided herein or any other
remedies that may be available by statute or through applicable common law.
24. MULTIPLE COUNTERPARTS. This Agreement may be signed in any number of
counterparts, all of which taken together shall constitute a fully-executed
agreement.
25. JOINT AND SEVERAL OBLIGATIONS. Orex and Exor shall have joint and
several liability for the obligations of Orex hereunder.
26. ATTORNEYS' FEES. In the event of any litigation between the parties
regarding the interpretation or enforcement hereof, the court shall award
reasonable attorneys' fees to the prevailing party.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
Orex Resources Ltd.
(a Canadian corporation)
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
ATTEST:
- -------------------------------
- --------------------, Secretary
-8-
<PAGE>
Exor Inc.
(a Nevada corporation)
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
------------------------------------------------
[Board member]
ATTEST:
- -------------------------------
- --------------------, Secretary
------------------------------------------------
William P. Long
-9-
<PAGE>
STATE OF NEVADA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of
___________, 1988, by William P. Long.
WITNESS my hand and official seal.
My commission expires _________________
------------------------------------------------
Notary Public
[Seal]
_____________ of ________ )
) ss.
_____________ of ________ )
The foregoing instrument was acknowledged before me this _____ day of
_______, 1988, by ____________________ as a director of Orex Resources Ltd., a
Canadian corporation.
------------------------------------------------
Notary Public
[Seal]
-10-
<PAGE>
EXHIBIT A
BUSINESS EXPENSES
Charges for:
Secretarial services;
Long-distance telephone expenses;
Telecopying expenses;
Photocopying and other reproduction expenses;
Drafting costs;
Postage costs, including Federal Express and other mailing expenses;
Costs of office supplies and equipment;
Office space rental;
Business-related travel expenses, including transportation, meals and
hotel accommodations; and
Reasonable charges for the use of Long's personal vehicles.
-11-
<PAGE>
EXHIBIT B
LONG'S EXISTING PROSPECTS
Petan Ranch
I L Ranch
Ellison Ranch
M&M Claims
Klondike Prospect (with Bill Armstrong)
Tough Nut Prospect (with Bill Armstrong)
-12-
<PAGE>
EXHIBIT C
FINDER'S FEE AGREEMENT
FINDERS AGREEMENT
between
OREX RESOURCES LTD. AND WILLIAM P. LONG
In consideration of arranging the agreement between OREX Resources Ltd., an
Ontario, Canada, Corporation hereinafter referred to as "OREX", and Robert A.
Perkins, Mary Ann Perkins and Clay R. Sullivan, hereinafter referred to as
"Perkins-Sullivan", OREX will pay a consulting company designated by Mr. William
P. Long the following advanced royalties and production royalties during the
term of the agreement between OREX and Perkins-Sullivan.
ADVANCED ROYALTIES
DATE OF PAYMENT U.S. DOLLARS
--------------- ------------
July 15, 1987 $10,000.00
One Year Anniversary of Execution Date $15,000.00
Two Year Anniversary of Execution Date $20,000.00
Three Year Anniversary of Execution Date $25,000.00
and Each Anniversary Thereafter
The above payments shall be subject to the same cost of living adjustment
specified for Advanced Royalties in the Agreement between OREX and Perkins-
Sullivan.
PRODUCTION ROYALTY
In the event the Premises or mining claims located by OREX or an affiliated
party on public lands within the Area of Interest as specified in the
OREX/Perkins-Sullivan Agreement are placed into commercial production, OREX
agrees to pay to the consulting company a production royalty of two percent (2%)
of the Net Smelter Returns (NSR) from Production as defined in the
OREX/Perkins-Sullivan Agreement. In the event the property is economically
marginal and the 2% NSR royalty creates an unreasonably burden for OREX, OREX
may purchase the 2% NSR royalty for $250,000. The $250,000 shall be subject to
the same escalation specified in the OREX/Perkins-Sullivan Agreement for
Advanced Royalties. Prior payments made to the consulting company by OREX shall
not reduce the amount required to purchase the 2% NSR royalty.
-13-
<PAGE>
EXPENSE REIMBURSEMENT
OREX further agrees to reimburse the consulting company for all travel and
other expenses incurred by MR. Long while negotiation the Agreement with
Perkins-Sullivan or evaluating the associated mining property.
In witness whereof the parties hereto have caused this agreement to be
executed as of the ____ day of February, 1987.
----------------------------------
William P. Long
----------------------------------
Wayne G. Beach
OREX Resources Limited
-14-
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("this Agreement") is made and entered into effective
as of the fifteenth day of August, 1994, by and between Altair International
Gold Inc., ("Altair") a corporation organized pursuant to the laws of Canada and
it's subsidiary, Mineral Recovery Systems, Inc. ("MRS"), and C. Patrick Costin
("Costin").
1. DEFINITIONS. For purpose of this Agreement, the following terms shall have
the definitions specified in this Section 1:
(a) "Cause" shall mean (i) action or inaction by Costin which causes MRS
to incur substantial and material losses; and (ii) situations in which Costin,
in connection with the business of MRS, engages in willful misconduct,
fraudulent conduct, or felonious behavior or acts in a grossly negligent manner.
(b) "Common Stock" shall mean the common stock of Altair (no par value).
(c) "MRS" shall mean Mineral Recovery Systems Inc., a Nevada corporation
wholly owned by Altair International Gold Inc.
(d) "Business Expenses" shall mean those costs and expenses enumerated in
Exhibit A attached hereto and incorporated herein, and any other cost or expense
which this Agreement characterizes as a Business Expense or requires Costin to
pay or incur on behalf of MRS or Altair, and any other expenses paid or incurred
in the course of employment for which executive level employees or corporate
officers or directors in the State of Nevada are customarily reimbursed by their
employer and/or corporation.
(e) "Graphic Information" shall mean drawings, maps, plans, reports, or
any other documents which contain data or information concerning the CCJ.
2. RECITALS. Acting as an independent contractor, Costin has provided
consulting services to MRS on a non-exclusive basis and in a highly satisfactory
manner. Such consulting services involved assistance in connection with
evaluation and acquisition of the Campbell Centrifugal Jig and Trans Mar Inc.
MRS wants Costin to continue providing the services, but in the capacity of an
employee rather than an independent contractor. Costin is willing to do so,
subject to the terms and provisions of this Agreement.
3. EMPLOYMENT. MRS agrees to employ Costin and Costin agrees to be so
employed by MRS upon these terms and conditions hereinafter set forth.
4. TERM. Unless sooner terminated as hereinafter provided, this Agreement
shall remain in full force from the effective date hereof until midnight
(Pacific Standard Time) on December 31, 1997.
5. POSITIONS AND DUTIES. Costin will be employed by MRS in the capacity of
Manager, Business Development and Operations. Subject to the terms and
provisions of this Agreement, while serving in this capacity, Costin shall have
such responsibilities, duties, obligations, rights, benefits and authority as
may be specified in MRS's and Altair's corporate Bylaws. In addition, Costin
shall have the rights, duties and authority specifically provided for in this
agreement and specified by the President, chief executive officer and Board of
Directors of MRS.
<PAGE>
Costin Shall devote a forty (40) hour business week in the performance of his
employment duties.
Notwithstanding anything to the contrary in this agreement, Costin may have
other business interests/activities in addition to those relating to MRS. MRS,
by virtue of the employment agreement, does not share or participate in these
other interests/activities or the proceeds derived there from. Such
interests/activities may not be competitive with, or diminish in any direct
sense, MRS activities.
6. COMPENSATION. Costin shall receive the following compensation:
(a) Salary. A monthly salary paid by MRS of at least US $5,000 (before
withholding for income tax), which shall be paid to him in one installment on or
before the first business day of each calendar month. MRS's Board of Directors
shall review Costin's monthly salary periodically, and may increase the same in
its discretion.
(b) Stock Option. An option to purchase 25,000 shares of Altair Stock.
The option price will be established as of the date of issue.
(c) Bonuses. Costin may be entitled to participate (in such manner and to
such extent as may be determined by the board) in any bonuses that may be
authorized and declared from time to time by the board.
7. CONFIDENTIAL DATA. During the term of this agreement and for one year
following the expiration or termination hereof, Costin shall not disclose to any
third party or use for his personal benefit any unpublished information
specifically concerning Altair or MRS or their associated companies, their
mining properties, their process technologies, or the companies or mining
properties which are the subject of the services performed herein, which has
been or will be disclosed to Costin or developed by Costin in the course of his
employment with MRS or its associated companies, without the prior written
consent of MRS. Nothing herein shall be interpreted or applied, however, to
prevent Costin's use and benefit from the general expertise, knowledge and
experience gained in the course of employment with MRS and its associated
companies.
8. OTHER CAPACITIES. Subject to the provisions of Section 5 of this
Agreement, upon full disclosure to MRS's Board of Directors, Costin shall be
entitled to accept and hold positions as an officer and/or director of any other
corporations, domestic or foreign.
9. TERMINATION. This agreement may be terminated:
(a) by the mutual consent of MRS and Costin;
(b) by MRS for Cause; or
(c) at any time by Costin or MRS with ninety (90) days prior notice to the
other party.
10. INDEMNIFICATION. MRS agrees to and hereby assumes all liability for and
indemnifies, protects, saves, and holds Costin harmless from and against any and
all losses, costs, expenses, attorneys' fees, claims, demands, liabilities,
suits and actions of every kind and character which may be imposed on or
incurred by Costin on account of, arising directly or indirectly from, or in any
way connected with or related to Costin's activities as a manager or officer or
member of the Boards of Directors of MRS and Altair.
<PAGE>
11. NOTICES. All notices, requests, statements, deliveries, reports, payments,
consents, or other communications from or to a party to this Agreement which are
required, permitted, or made necessary by the terms hereof shall be written.
All such communications shall be either delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Costin:
1850 Aquila Ave
Reno, Nevada 89509
If to MRS:
Attn: Mr. William P. Long
1725 Sheridan Ave, STE 140
Cody, WY 82414
Either of the parties may change its respective address for notice from
time to time by giving notice of such change to the other party in the manner
specified in this Section 16. Communications sent by registered or certified
mail shall be deemed to have been given and received on the date of receipt
indicated on the return receipt therefor.
12. MODIFICATION. This agreement may not be extended, supplemented, modified,
or otherwise altered except by written instrument executed by Costin and
appropriate and authorized representatives of MRS.
13. ASSIGNMENT. Costin may not assign this agreement. MRS may assign this
agreement to a parent or subsidiary company.
14. GOVERNING LAW AND SEVERABILITY. This agreement, its validity,
interpretation and enforcement, shall be governed by the laws of the State of
Wyoming, except those concerning conflicts of law. The individual provisions of
this Agreement are severable. If any such individual provision is contrary to
or in conflict with any requirement or principle of applicable statuary or
common law, then that provision and the remainder of this Agreement shall be
construed so as to give effect to the intent of the parties.
15. NO WAIVER. No waiver of any breach of or default in any of the terms and
provisions of this Agreement shall be considered valid unless in writing, and no
such waiver shall be deemed to constitute or be construed as a waiver of any
subsequent breach or default of the same, similar, or dissimilar nature.
16. SOLE AGREEMENT. This Agreement and the exhibits incorporated herein
contain and set forth the entire agreement between the parties with respect to
the subject matter hereof, all previous agreements between the parties with
respect to the subject matter hereof being expressly rescinded and replaced
hereby.
17. INTERPRETATION. If necessary to give effect to the terms and provisions
herein, references to the singular shall include the plural and references to
the neuter gender shall include the masculine and/or the feminine genders. In
the event of any conflict between the terms and provisions of this Agreement and
the terms and provisions of the corporate Bylaws of MRS and/or Altair (as the
same may be amended from time to time), the terms and provisions of this
Agreement shall control in all respects.
18. CUMULATIVE REMEDIES. The remedies provided in this Agreement in the event
that either party hereto fails to perform under the terms, provisions and
conditions hereof are intended to be cumulative and non-exclusive. Use of any
one or more remedies provided herein shall not preclude the use of any
<PAGE>
other remedies provided herein or any other remedies that may be available by
statute or through applicable common law.
19. MULTIPLE COUNTERPARTS. This Agreement may be signed in any number of
counterparts, all of which taken together shall constitute a fully-executed
agreement.
20. JOINT AND SEVERAL OBLIGATIONS. MRS and Altair shall have joint and several
liability for the obligations of MRS hereunder.
21. ATTORNEYS' FEES. In the event of any litigation between the parties
regarding the interpretation or enforcement hereof, the court shall award
reasonable attorneys' fees to the prevailing party.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first above written.
Altair International Gold Company
(a Canadian corporation)
------------------------------------
(Vice President)
ATTEST:
- -----------------------------------
, Secretary
- ------------------------
Mineral Recovery Systems, Inc.
(a Nevada corporation)
------------------------------------
(President)
ATTEST:
- -----------------------------------
, Secretary
- ------------------------
------------------------------------
C. Patrick Costin
<PAGE>
OF )
) SS.
OF )
The foregoing instrument was acknowledged before me this _______ day of
_______________, 1994, by Wayne G. Beach as Vice President of Altair
International Gold Company, a Canadian Corporation.
Expires
----------------------------
------------------------------------
Notary Public
(SEAL)
STATE of WYOMING )
) SS.
COUNTY OF PARK )
The foregoing instrument was acknowledged before me this ______ day of
_______________, 1994, by William P. Long as President of Mineral Recovery
Systems, Inc., a Nevada corporation.
Expires
----------------------------
------------------------------------
Notary Public
(SEAL)
STATE OF NEVADA )
) SS.
COUNTY OF WASHOE )
The foregoing instrument was acknowledged before me this ____ day of
_________________, 1994, by C. Patrick Costin.
WITNESS my hand and official seal.
Expires ----------------------------
------------------------------------
Notary Public
(SEAL)
<PAGE>
EXHIBIT A
BUSINESS EXPENSES
Charges for:
Secretarial services;
Long-distance telephone expenses;
Telecopying expenses;
Photocopying and other reproduction expenses;
Drafting costs;
Postage costs, including Federal Express and other
mailing expenses;
Costs of office supplies and equipment;
Business-related travel expenses, including
transportation, meals and hotel accommodations; and
Reasonable charges for the use of Costin's personal
vehicles.
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
STOCK OPTION PLAN
1. PURPOSE
The purpose of this stock option plan (the "Plan") is to authorize the
grant to service providers for Altair International Gold Inc. (the
"Corporation") of options to purchase common shares ("shares") of the
Corporation's capital and thus benefit the Corporation by enabling it to
attract, retain and motivate service providers by providing them with the
opportunity, through share options, to acquire an increased proprietary interest
in the Corporation.
2. ADMINISTRATION
The Plan shall be administered by the board of directors of the
Corporation. Subject to approval of the granting of options by the board of
directors, the Corporation shall grant options under the Plan.
3. SHARES SUBJECT TO PLAN
Subject to adjustment under the provisions of paragraph 12 hereof, the
aggregate number of shares of the Corporation which may be issued and sold under
the Plan will not exceed 2,000,000 shares. The total number of shares which may
be reserved for issuance to any one individual under the Plan shall not exceed
5% of the outstanding issue. The Corporation shall not, upon the exercise of
any option, be required to issue or deliver any shares prior to (a) the
admission of such shares to listing on any stock exchange on which the
Corporation's shares may then be listed, and (b) the completion of such
registration or other qualification of such shares under any law, rules or
regulation as the Corporation shall determine to be necessary or advisable. If
any shares cannot be issued to any optionee for whatever reason, the obligation
of the Corporation to issue such shares shall terminate and any option exercise
price paid to the Corporation shall be returned to the optionee.
4. LIMITS WITH RESPECT TO INSIDERS
(a) The maximum number of shares which may be reserved for issuance to
insiders under the Plan, any other employer stock option plans or
options for services, shall be 10% of the shares issued and
outstanding at the time of the grant (on a non-diluted basis).
(b) The maximum number of shares which may be issued to insiders under the
Plan, together with any other previously established or proposed share
compensation arrangements, within any one year period shall be 10% of
the outstanding issue. The maximum number of shares which may be
issued to any one insider and his or her associates under the Plan,
together with any other previously established or proposed share
compensation arrangements, within a one year period shall be 5% of the
shares outstanding at the time of the grant (on a non-diluted basis).
(c) Any entitlement to acquire shares granted pursuant to the Plan, any
other employer stock option plans, options for services or any other
share compensation agreement, prior to the optionee becoming an
insider, shall be excluded for the purposes of the limits set out in
paragraphs (a) and (b) above.
<PAGE>
-2-
5. ELIGIBILITY
Options shall be granted only to service providers for the Corporation.
The term "service providers for the Corporation" means (a) any employee or
insider of the Corporation or any of its subsidiaries, and (b) any other person
or company engaged to provide ongoing management or consulting services for the
Corporation or any entity controlled by the Corporation. The terms "insider",
"controlled" and "subsidiary" shall have the meanings ascribed thereto in the
Securities Act (Ontario) from time to time. Subject to the foregoing, the board
of directors shall have full and final authority to determine the persons who
are to be granted options under the Plan and the number of shares subject to
each option.
6. PRICE
The purchase price (the "Price") for the shares of the Corporation under
each option shall be determined by the board of directors on the basis of the
market price, where "market price" shall mean the prior trading day closing
price of the shares of the Corporation on any stock exchange on which the shares
are listed, and where there is no such closing price, "market price" shall mean
the average of the most recent bid and ask of the shares of the Corporation on
any stock exchange on which the shares are listed. In no event shall the Price
be less than the market price on The Toronto Stock Exchange, if the shares of
the Corporation are then listed on such exchange.
7. PERIOD OF OPTION AND RIGHTS TO EXERCISE
Subject to the provisions of this paragraph 7 and paragraphs 8, 9 and 10
below, options will be exercisable in whole or in part, and from time to time,
during the currency thereof. Options shall not be granted for a term exceeding
five years. Options may, at the discretion of the board of directors, provide
that the number of shares which may be acquired pursuant to the option shall not
exceed a specified number each year during the term of the option. The shares
to be purchased upon each exercise of any option (the "optioned shares") shall
be paid for in full at the time of such exercise. Except as provided in
paragraphs 8 and 9 below, no option which is held by a service provider may be
exercised unless the optionee is then a service provider for the Corporation.
8. CESSATION OF PROVISION OF SERVICES
If any optionee who is a service provider shall cease to be a service
provider for the Corporation for any reason (except as otherwise provided in
paragraph 9) the optionee may, but only within the period of ninety days next
succeeding such cessation and in no event after the expiry date of the
optionee's option, exercise the optionee's option.
9. DEATH OF OPTIONEE
In the event of the death of an optionee during the currency of the
optionee's option, the option theretofore granted to the optionee shall be
exercisable within, but only within, the period of one year next succeeding the
optionee's death, and in no event after the expiry date of the option. Before
expiry of an option under this paragraph 9, the board of directors shall notify
the optionee's representative in writing of such expiry.
<PAGE>
-3-
10. EXTENSION OF OPTION
In addition to the provisions of paragraphs 8 and 9, the board of directors
may extend the period of time within which an option held by a deceased optionee
may be exercised or within which an option may be exercised by an optionee who
has ceased to be a service provider for the Corporation, but such an extension
shall not be granted beyond the original expiry date of the option. Any
extensions of options granted under this Plan are subject to applicable
regulatory approval.
11. NON-TRANSFERABILITY OF OPTION
No option granted under the Plan shall be transferrable by an optionee
otherwise than by will or by the laws of descent and distribution, and such
option shall be exercisable, during an optionee's lifetime, only by the
optionee.
12. ADJUSTMENTS IN SHARES SUBJECT TO PLAN
The aggregate number and kind of shares available under the Plan shall be
appropriately adjusted in the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, rights
offering or any other change in the corporate structure or shares of the
Corporation. The options granted under the Plan may contain such provisions as
the board of directors may determine with respect to adjustments to be made in
the number and kind of shares covered by such options and in the option price in
the event of any such change.
13. AMENDMENT AND TERMINATION OF THE PLAN
The board of directors may at any time amend or terminate the Plan, but
where amended, such amendment is subject to regulatory approval.
14. EFFECTIVE DATE OF THE PLAN
The Plan becomes effective on the date of its approval by the shareholders
of the Corporation.
15. EVIDENCE OF OPTIONS
Each option granted under the Plan shall be embodied in a written option
agreement between the Corporation and the optionee which shall give effect to
the provisions of the Plan.
16. EXERCISE OF OPTION
Subject to the provisions of the Plan and the particular option, an option
may be exercised from time to time by delivering to the Corporation at its
registered office a written notice of exercise specifying the number of shares
with respect to which the option is being exercised and accompanied by payment
in cash or certified cheque for the full amount of the purchase price of the
shares then being purchased.
Upon receipt of a certificate of an authorized officer directing the issue
of shares purchased under the Plan, the transfer agent is authorized and
directed to issue and countersign share certificates for the optioned shares in
the name of such optionee or the optionee's legal personal representative or as
may be directed in writing by the optionee's legal personal representative.
<PAGE>
-4-
17. NOTICE OF SALE OF ALL OR SUBSTANTIALLY ALL SHARES OR ASSETS
If at any time when an option granted under this Plan remains unexercised
with respect to any optioned shares, (a) a general offer to purchase all of the
issued shares of the Corporation is made by a third party or (b) the Corporation
proposes to sell all or substantially all of its assets and undertaking or to
merge, amalgamate or be absorbed by or into any other corporation (save and
except for a subsidiary or subsidiaries of the Corporation) under any
circumstances which involve or may involve or require the liquidation of the
Corporation, a distribution of its assets among its shareholders, or the
termination of the corporate existence of the Corporation, the Corporation shall
use its best efforts to bring such offer or proposal to the attention of the
optionee as soon as practicable and (i) the option granted under this Plan may
be exercised, as to all or any of the optioned shares in respect of which such
option has not previously been exercised, by the optionee at any time up to and
including, (but not after) a date thirty (30) days following the date of the
completion of such sale or prior to the close of business on the expiry date of
the option, whichever is the earlier; and (ii) the Corporation may require the
acceleration of the time for the exercise of the said option and of the time for
the fulfillment of any conditions or restrictions on such exercise.
18. RIGHTS PRIOR TO EXERCISE
An optionee shall have no rights whatsoever as a shareholder in respect of
any of the optioned shares (including any right to receive dividends or other
distributions therefrom or thereon) other than in respect of optioned shares in
respect of which the optionee shall have exercised the option to purchase
hereunder and which the optionee shall have actually taken up and paid for.
19. GOVERNING LAW
This Plan shall be construed in accordance with and be governed by the laws
of the Province of Ontario and shall be deemed to have been made in said
Province, and shall be in accordance with all applicable securities laws.
20. EXPIRY OF OPTION
On the expiry date of any option granted under the Plan, and subject to any
extension of such expiry date permitted in accordance with the Plan, such option
hereby granted shall forthwith expire and terminate and be of no further force
or effect whatsoever as to such of the optioned shares in respect of which the
option has not been exercised.
21. APPROVAL
The Plan has been approved by the shareholders of the Corporation on May
10, 1996 and supersedes and replaces all prior stock option plans.
DATED at Toronto, Ontario, this 10th day of May, 1996.
/s/
------------------------------------
William Long, President
<PAGE>
EXHIBIT 6.6
<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into to be effective as of the 21st day
of April, 1994 by and between
ALTAIR INTERNATIONAL GOLD, a company incorporated pursuant to the laws
of the Province of Ontario and having an office located at 36 Toronto
Street, Suite 100, Toronto, Ontario, Canada
(hereinafter called "Altair")
AND
THOSE SHAREHOLDERS OF FINE GOLD RECOVERY SYSTEMS, INC. ("FGR") which
have executed this agreement in the space set forth below
(hereinafter called "Shareholders").
WHEREAS:
A. Shareholders are desirous of selling to Altair and Altair is desirous
of purchasing all issued and outstanding shares (the "Shares") of the capital
stock of FGR;
B. The consideration for the purchase of the Shares has been determined
on the basis of the value of FGR's rights under that certain Agreement dated
January 1, 1994 between Thomas P. Campbell and FGR;
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, Altair and the Shareholders agree as follows:
1. SALE AND PURCHASE.
1.1 Shareholders hereby agree to sell and Altair hereby agrees to
purchase the Shares on the terms and conditions herein contained for the
purchase price as set forth in Article 2 hereof.
1.2 The Shares consist of 100,000 shares held by the persons and in
the amounts set opposite their respective names in Schedule "A" attached hereto
representing all and not less than all of the issued and outstanding shares of
FGR.
-1-
<PAGE>
2. PURCHASE PRICE.
2.1 The purchase price for the Shares shall be 750,000 fully paid and
non-assessable common shares in the capital stock of Altair. The shares issued
pursuant to the acquisition will be issued as to 100,000 shares with a hold
period of twelve (12) months and 650,000 shares subject to a Form C Performance
Escrow Agreement with one share released for each forty-five cents ($0.45) of
cash flow generated by Fine Gold Recovery Systems, Inc.
3. SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES.
3.1 The Shareholders severally represent and warrant to Altair, upon
which representations and warranties Altair is relying, that:
(a) FGR is a corporation duly incorporated under the laws of
Nevada and is a valid and subsisting corporation;
(b) The authorized capital of FGR consists of $10,000 divided
into 1,000,000 shares at the par value of $.01 per share, of
which 100,000 shares have been issued and are outstanding as
fully paid and non-assessable;
(c) Each Shareholder owns the Shares owned by him as the legal
and beneficial owner thereof, free of all liens, claims,
charges and encumbrances whatsoever. Each Shareholder has
the due and sufficient right and authority to enter into
this Agreement on the terms and conditions herein set forth
and to transfer the legal and beneficial title and ownership
of the Shares owned by him to Altair;
(d) FGR has the corporate power to own the properties owned by
it and to carry on the business carried on by it and is duly
qualified to carry on business in the State of Nevada;
(e) There are no actions, suits or proceedings pending against
the Shareholder or FGR at law or in equity of before or by
any federal, provincial, state, municipal or other
governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, and which involve
the possibility of any materially adverse judgment or ruling
against or liability of the Shareholder or FGR;
(f) All material transactions of FGR have been promptly and
properly recorded or filed in or with its respective books
and records. The minute book of FGR contains all records of
the meetings and proceedings of shareholders and directors
of FGR;
(g) The performance of this Agreement will not be in violation
of the Articles of Incorporation or Bylaws of FGR or of any
agreement to which the Shareholder or any company are a
party and will not give any
-2-
<PAGE>
person or company any right to terminate or cancel any
agreement or any right enjoyed by FGR and will not result
in the creation or imposition of any lien, encumbrances or
restriction of any nature whatsoever in favor of a third
party upon or against the assets of FGR;
(h) FGR is not party to any collective agreement with any labor
union or other association of employees, and FGR has no
contract with employees, officers, lawyers, accountants or
other individuals;
(i) No Shareholder is aware of any event or circumstance which
has had, or might reasonably be expected to have, a
materially adverse effect on the business of FGR or the
results of any of its operations.
4. ALTAIR REPRESENTATIONS AND WARRANTIES.
4.1 Altair represents and warrants to Shareholders, upon which
representations and warranties Shareholders are relying, that:
(a) Altair is a corporation duly incorporated under the laws of
the Province of Ontario, Canada and is a valid and
subsisting corporation;
(b) The shares of Altair are listed and posted for trading on
the Alberta Stock Exchange ("ASE") and Altair is not in
default under the Securities Act of Alberta, the
regulations, by-laws, policies or rules of the Alberta
Securities Commission or the ASE, as the case may be, or the
general laws of Alberta or any other jurisdiction in which
Altair carries on business;
(c) The authorized capital of Altair consists of unlimited
shares without par value of which 3,850,850 shares have been
issued and are outstanding as fully paid and non-assessable;
(d) Altair has the full right and power to enter into and to
perform under this Agreement and to issue to Shareholders
the shares as provided in Article 2 hereof;
(e) There are no actions, suits or proceedings pending against
Altair at law or in equity or before or by any federal,
provincial, state, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and which involve the
possibility of any materially adverse judgment or ruling
against or liability of Altair.
5. COVENANTS OF ALTAIR.
5.1 Altair covenants and agrees with Shareholders as follows:
-3-
<PAGE>
(a) To cause FGR to observe and perform all of the covenants and
conditions on FGR's part to be paid, observed and performed
under the said Agreement to acquire certain rights to the
Campbell Centrifugal Jig.
6. CONDITIONS PRECEDENT.
6.1 Altair's obligations hereunder are subject to each of the
following conditions:
(a) The ASE and any other securities or regulatory authorities
as may have jurisdiction of the subject matter of this
Agreement shall have accepted this Agreement filing on or
before July 1, 1994;
(b) The Shareholder's attorney shall have delivered to Altair at
the time of execution of this Agreement an opinion that the
Shares have been duly authorized and validly issued and an
opinion as to such other matters as may be reasonably
required by Altair's solicitors, which opinion shall be to
the satisfaction of Altair's solicitors;
(c) Altair's solicitors shall approve a form of escrow or other
agreement which may be prescribed by the ASE or any other
regulatory authority;
(d) The Shareholders shall have made available to Altair, or its
nominees, at all reasonable times prior to the execution of
this Agreement, the minute book of FGR and all other books,
accounts, records and other information with respect to the
affairs of FGR;
The conditions contained in this Article 6.1 are for the sole benefit of Altair
and may be waived by Altair in whole or in part at any time prior to the
closing.
6.2 Each Shareholder's obligations hereunder are subject to each of
the following conditions:
(a) The ASE shall have accepted this Agreement for filing on or
before July 1, 1994;
(b) The issuance of the Shares of Altair to the Shareholders.
The conditions contained in this Article 6.2 are for the sole benefit of the
Shareholders and may be waived by the Shareholders in whole or in part at any
time.
7. DELIVERY OF DOCUMENTS.
7.1 Altair shall tender evidence to the reasonable satisfaction of
Shareholders as to the allotment and issuance of 100,000 restricted shares of
its capital stock to Shareholders on or before the latter to occur of the 10th
business day after acceptance of this Agreement for filing by the ASE or the
execution of this Agreement by all of the Shareholders, or at such other time as
may be mutually agreed upon by the parties hereto.
-4-
<PAGE>
7.2 If this Agreement is terminated due to a failure of the
conditions precedent set out in Article 6 hereof, or the same are not waived by
Altair or by the Shareholders, as the case may be, this Agreement shall be of no
further force or effect.
8. GENERAL PROVISIONS.
8.1 This Agreement shall be construed and enforced according to the
laws of the Province of Ontario.
8.2 Each of the parties hereto agrees to execute such further and
other deeds, documents, and assurances and do such further and other acts as may
be necessary to carry out the true intent and meaning of this Agreement.
8.3 Time shall be of the essence of this Agreement.
8.4 This Agreement shall inure to the benefit of and be binding upon
Shareholders and Altair and their respective personal representatives,
successors and assigns.
8.5 This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, Shareholders and Altair have duly executed this
Agreement as of the day and year first mentioned above.
ALTAIR INTERNATIONAL GOLD
By
-----------------------------------
WAYNE G. BEACH
Vice President
"SHAREHOLDERS"
/s/ Thomas P. Campbell
--------------------------------------
THOMAS P. CAMPBELL
/s/ C. Patrick Costin
--------------------------------------
C. PATRICK COSTIN
-5-
<PAGE>
SCHEDULE A
Thomas P. Campbell 5,000
C. Patrick Costin 95,000
-6-
<PAGE>
EXHIBIT 6.7
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT made in triplicate as of the 1st day of June, 1994.
AMONG:
ALTAIR INTERNATIONAL GOLD INC.
(herein called the "Issuer")
OF THE FIRST PART
- and -
EQUITY TRANSFER SERVICES INC.
(herein called the "Escrow Agent")
OF THE SECOND PART
- and -
THOMAS P. CAMPBELL
C. PATRICK COSTIN
(herein called the "Security Holders")
OF THE THIRD PART
WHEREAS the Security Holders and the Issuer entered into an agreement
dated as of the 21st day of April, 1994 whereby the Security Holders agreed
to sell certain shares of Fine Gold Recovery Systems, Inc. (the "Property")
to the Issuer, the consideration for such Property being at least in part the
allotment of securities in the Issuer to the Security Holders, the Property
and the number of securities and the names of the Security Holders presently
owning or about to receive such securities being respectively and more
particularly described in Schedule "A" attached to and forming part of this
agreement.
AND WHEREAS in order to comply with the requirements of The Alberta
Stock
<PAGE>
-2-
Exchange, the Security Holders are desirous of depositing in escrow certain
securities in the Issuer owned or to be received by them;
AND WHEREAS the Escrow Agent has agreed to undertake and perform its
duties according to the terms and conditions thereof:
NOW THEREFORE this agreement witnesses that, in consideration of the sum
of one dollar ($1) paid by the parties to each other, receipt of this sum
being acknowledged by each of the partes, the Security Holders jointly and
severally covenant and agree with the Issuer and with the Escrow Agent, and
the Issuer and the Escrow Agent covenant and agree each with the other and
with the Security Holders jointly and severally as follows:
1. Where used in this agreement, or in any amendment or supplement
hereto, unless the context otherwise requires, the following words
and phrases shall have the following meaning ascribed to them below:
(a) "CASH FLOW" means net income derived from the Property (being the
net income of Fine Gold Recovery Systems, Inc. ("FGR")), as shown
on the audited financial statements or verified by the Issuer's
auditors, adjusted for the following add-backs:
(i) depreciation,
(ii) depletion,
(iii) deferred taxes,
(iv) amortization of goodwill,
(v) amortization of research and development costs.
(b) "DEFERRED EXPENDITURES" means expenditures which have been
verified by the Issuer's auditors or the auditors of FGR and
incurred in exploring, developing or maintaining in good standing
the assets of FGR.
(c) "RELATED PARTY" means promoters, officers, directors, other
insiders of the issuer and any associates or affiliates of the
foregoing.
2. Each of the Security Holders hereby places and deposits in escrow with
the Escrow Agent those of his securities in the Issuer which are
represented by the certificates described in Schedule "A" (the
"Escrowed Shares") and the Escrow Agent hereby acknowledges
receipt of those certificates. The Security Holders agree to
deposit in escrow any further certificates representing securities
in the Issuer which they may
<PAGE>
-3-
receive as a stock dividend on securities hereby escrowed, and to
deliver to the Escrow Agent immediately on receipt thereof the
certificates for any such further securities and any replacement
certificates which may at any time be issued for any escrowed
securities.
3. The Parties hereby agree that, subject to the provisions of paragraph
6 herein, the Escrowed Shares and the beneficial ownership of or
any interest in them and the certificates representing them
(including any replacement securities or certificates) shall not
be sold, assigned, hypothecated, alienated, released from escrow,
transferred within escrow, or otherwise in any manner dealt with
without the written consent of The Alberta Stock Exchange
(hereinafter referred to as the "Exchange") given to the Escrow
Agent or except as may be required by reason of the death or
bankruptcy of any Security Holder, in which case the Escrow Agent
shall hold the said certificates subject to this agreement, for
whatever person, or company shall be legally entitled to become
the registered owner thereof.
4. The Security Holders direct the Escrow Agent to retain the Escrowed
Shares and the certificates (including any replacement securities
or certificates) representing them and not to do or cause anything
to be done to release them from escrow or to allow any transfer,
hypothecation or alienation thereof, without the written consent
of the Exchange. The Escrow Agent accepts the responsibilities
placed on it by the agreement and agrees to perform them in
accordance with the terms of this agreement and the written
consents, orders or directions of the Exchange.
5. Any Security Holder applying to the Exchange for a consent for a
transfer within escrow shall, before applying, give reasonable
notice in writing of his intention to the Issuer and the Warranty
Agent.
6. (a) The Exchange will consent to the release from escrow of one share
for each $0.45 of (i) Cash Flow generated by or from the
Property; or (ii) Deferred Expenditures incurred on the assets of
FGR.
(b) Any release from escrow under this paragraph 6 shall be made
pursuant to a written application on behalf of the Issuer or the
Security Holder, which application shall be accompanied by
evidence of the Cash Flow received by or from the Property or
Deferred Expenditures incurred on the assets of FGR in a form
satisfactory to the Exchange. Application for release may only
be made once per year and may only relate to Cash Flow received
or Deferred Expenditures incurred in the preceding fiscal year or
fiscal years of the Issuer since the last release from escrow
pursuant to this agreement, whichever is greater. All shares
released from escrow shall, unless otherwise directed by the
Exchange, be distributed pro rata to all Security Holders.
<PAGE>
-4-
(c) Notwithstanding subparagraph (b) above, the maximum number of
shares to be released from escrow in any year to a Security
Holder who is a Related Party shall be one third of the original
number of shares held in escrow on behalf of such Security
Holder.
7. A release from escrow of all or part of the Escrowed Shares shall
terminate this agreement only in respect to those securities so
released. For greater certainty this paragraph does not apply to
securities transferred within escrow.
8. The Security Holders shall, if a dividend is declared while the
Escrowed Shares or any of them continue to be held in escrow under
this Agreement, renounce and release any right to receive payment
of the dividend on the shares then held in escrow.
9. If the Issuer is wound up and any securities remain in escrow under
this agreement at the time when a distribution of assets to
holders of securities is made by the liquidator, the Security
Holders shall assign their right to receive that part of the
distribution which is attributable to the escrowed securities to
the liquidator, receiver, in bankruptcy, or like person as the
case may be, for the benefit of, and in trust for the persons and
companies who are then holders of free securities in the Issuer
rateably in proportion to their holdings.
10. (a) In the event that the Issuer has lost, alienated or has not
obtained a good or marketable title to, or has abandoned or
discontinued development of, any or all of the business which was
or formed part of the consideration for which the aforesaid
securities were issued, or that any or all of the said Property
has become of little or no value, the Issuer shall declare the
occurrence of that event, with full particulars thereof, to the
Exchange by a resolution of its directors, and those Security
Holders who are directors from time to time hereby agree to cause
such resolution to be passed and certified to the satisfaction of
the Exchange.
(b) The Security Holders jointly and severally agree with the Issuer
and the Escrow Agent that in the event of any such abandonment or
discontinuance of development or diminution of value, the
securities held in escrow shall not be cancelled or released from
escrow, in whole or in part, except with the consent of the
Exchange.
(c) The Exchange may, in its sole discretion, having regard to the
number and value of the securities issued and such other
circumstances as it may consider relevant, determine the number
of securities to be cancelled or released and shall communicate
its decision in writing to the Escrow Agent. If the Exchange
determines that less than all the securities then held in escrow
shall
<PAGE>
-5-
be cancelled or released, the securities to be cancelled or
released shall be taken rateably from the Escrowed Shares held
by each of the Security Holders, unless the Exchange otherwise
directs or the Security Holders, with the consent of the
Exchange, otherwise agree in writing.
(d) On receipt by the Escrow Agent of a determination to cancel, each
of the Security Holders shall tender the required number of
escrowed securities to the Issuer by way of gift for cancellation
and, the Issuer shall thereupon take the necessary action, by way
of reduction of capital or otherwise, to cancel them, and the
certificates for these securities shall be delivered up for
cancellation by the Issuer's transfer agent.
(e) Each of the Security Holders undertakes and agrees to vote and
cause to be voted their respective securities in a manner
consistent with the terms, conditions and intent of this
agreement in relation to the aforesaid gifting back of securities
for cancellation.
(f) The Exchange may, in its sole discretion, permit the substitution
of natural resource properties for the assets of FGR in
calculating the amount of Deferred Expenditures in paragraph 6.
11. Notwithstanding paragraphs 6 and 10, any shares remaining in escrow on
the fifth anniversary of the date of this agreement, unless
otherwise exempted in writing by the Exchange, shall be delivered
by the Escrow Agent to the Issuer for cancellation, within 6
months of the said fifth anniversary.
12. All voting rights attached to the Escrowed Shares shall at all times
be exercised by the respective registered owners thereof.
13. The Security Holders and the Issuer hereby jointly and severally agree
to and do hereby release and indemnify and save harmless the
Escrow Agent from and against all claims, suits, demands, costs,
damages and expenses which may be occasioned by reason of the
Escrow Agent's compliance in good faith with the terms hereof; and
upon termination or resignation of the Escrow Agent, or
termination of this agreement, this provision will survive and
continue for the benefit of the Escrow Agent.
14. The Issuer hereby acknowledges the terms and conditions of this
Agreement and agrees to take all reasonable steps to facilitate
its performance and to pay the Escrow Agent's proper charges for
its services as trustee of this escrow.
<PAGE>
-6-
15. If the Escrow Agent should wish to resign, it shall give at least two
(2) months' notice to the Issuer which may, with the written
consent of the Exchange, by writing appoint another Escrow Agent
in its place and such appointment shall be binding on the Security
Holders, and the new Escrow Agent shall assume and be bound by the
obligations of the Escrow Agent hereunder.
16. The covenants of the Security Holders with the Issuer in this
agreement are made with the Issuer both in their own right and as
for the holders from time to time of free securities in the
Issuer, and may be enforced not only by the Issuer but also by any
holder of free securities.
17. In the exercise of its rights, duties and obligations herein, the
Escrow Agent may rely and act upon any resolution, direction,
statutory declaration, opinion, report, notice, certificate or
other paper or document believed by it to have been signed, sent
or presented by or on behalf of the proper parties. However, the
Escrow Agent may in its discretion require reasonable evidence of
the due execution before acting or relying thereon.
18. Notwithstanding any provision contained herein, the Issuer and the
Security Holder agree that if any of the Escrow Agent's fees,
expenses and disbursements are in arrears then the Escrow Agent
reserves the right to withhold the release of any Escrowed Shares
until such fees, expenses and disbursements are paid in full.
19. The Escrow Agent shall not by reason of signing this agreement assume
any responsibility or liability for any transaction between the
Issuer and the Security Holders other than the performance of its
obligations with respect to the Securities held in trust by the
Escrow Agent in accordance with this agreement.
20. Any certificate, opinion, direction, request, instruction or other
communication required or permitted to be given pursuant to this
agreement shall be in writing and shall be deemed to have been
sufficiently given if delivered personally or sent by pre-paid
registered mail addressed to the party at the address shown below:
(a) if to the Issuer:
Altair International Gold Inc.
1725 Sheridan Avenue
Cody, Wyoming
82414
U.S.A.
<PAGE>
-7-
(b) if to the Escrow Agent:
Equity Transfer Services Inc.
Suite 307
67 Richmond Street West
Toronto, Ontario
M5H 1Z5
(c) if to the Security Holders:
(i) Thomas P. Campbell
1025 1/2 S. Empire Blvd.
Coos Bay, Oregon
U.S.A. 97459
(ii) C. Patrick Costin
1850 Aquila Ave.
Reno, Nevada
U.S.A. 89509
If there is a disruption in the mail service, then delivery shall be
made personally.
21. This agreement may be executed in several parts of the same form and
the parts as so executed shall together constitute one original
agreement, and the parts, if more than one, shall be read together
and construed as if all the signing parties hereto had executed
one copy of this agreement.
22. Wherever the singular or masculine is used, the same shall be
construed to include the plural or feminine or neuter where the
context so requires.
23. This agreement shall enure to the benefit of and be binding on the
parties to this agreement and each of their heirs, executors,
administrators, successors and assigns.
<PAGE>
-8-
IN WITNESS WHEREOF the Issuer and the Escrow Agent have caused their
respective corporate seals to be hereto affixed and the Security
Holders have hereto set their respective hands and seals.
ALTAIR INTERNATIONAL GOLD INC.
Per: /s/ WAYNE BEACH (C/S)
----------------------
EQUITY TRANSFER SERVICES INC.
Per: /s/ [NAME ILLEGIBLE]
----------------------
Per: /s/ [NAME ILLEGIBLE] (C/S)
----------------------
SIGNED, SEALED AND DELIVERED by the Security Holders.
)
WITNESS: ) /s/ THOMAS P. CAMPBELL
---------------------------
) Thomas P. Campbell
)
)
)
WITNESS: ) /s/ C. PATRICK COSTIN
---------------------------
) C. Patrick Costin
)
)
<PAGE>
-9-
SCHEDULE "A"
To the agreement dated as of the 1st day of June, 1994 and made among Altair
International Gold Inc. therein called the "Issuer", Equity Transfer Services
Inc. therein called the "Escrow Agent", and certain security holders of the
Issuer as noted below, therein called the "Security Holders".
CERTIFICATE
NUMBER OF NUMBER OF NUMBERS OF
NAME OF TYPE OF SECURITIES SECURITIES SECURITIES
HOLDER SECURITIES HELD ESCROWED ESCROWED
- ------ ---------- ---- -------- --------
Thomas P. Common Shares 5,000 32,500 00502
Campbell (1 x 32,500)
C. Patrick Costin Common Shares 128,333 617,500 00503
(1 x 617,500)
DESCRIPTION OF PROPERTY
- -----------------------
100,000 common shares of Fine Gold Recovery Systems, Inc.
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
INCORPORATED UNDER THE LAWS OF THE PROVINCE OF ONTARIO
[COPY ILLEGIBLE]
-----------------
00502 CUSIP 02136W 10 2
-----------------
- -------------------------------------------------------------------------------
THIS
CERTIFIES "THOMAS P CAMPBELL"
THAT
- -------------------------------------------------------------------------------
IS THE 32,500
REGISTERED
HOLDER OF
FULLY PAID AND NON-ASSESSABLE COMMON SHARES WITHOUT PAR VALUE IN THE CAPITAL OF
ALTAIR INTERNATIONAL GOLD INC.
[COPY ILLEGIBLE]
DATED JUNE 1, 1994
[COPY ILLEGIBLE]
[NAME ILLEGIBLE] WAYNE BEACH BY [NAME ILLEGIBLE]
PRESIDENT SECRETARY AUTHORIZED OFFICER
[COPY ILLEGIBLE]
<PAGE>
ALTAIR INTERNATIONAL GOLD INC.
INCORPORATED UNDER THE LAWS OF THE PROVINCE OF ONTARIO
[COPY ILLEGIBLE]
-----------------
00503 CUSIP 02136W 10 2
-----------------
- -------------------------------------------------------------------------------
THIS
CERTIFIES "C PATRICK COSTIN"
THAT
- -------------------------------------------------------------------------------
IS THE 617,500
REGISTERED
HOLDER OF
FULLY PAID AND NON-ASSESSABLE COMMON SHARES WITHOUT PAR VALUE IN THE CAPITAL OF
ALTAIR INTERNATIONAL GOLD INC.
[COPY ILLEGIBLE]
DATED JUNE 1, 1994
[COPY ILLEGIBLE]
[NAME ILLEGIBLE] WAYNE BEACH BY [NAME ILLEGIBLE]
PRESIDENT SECRETARY AUTHORIZED OFFICER
[COPY ILLEGIBLE]
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM F-X
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
AND UNDERTAKING
A. Name of issuer or person filing ("Filer"):
ALTAIR INTERNATIONAL GOLD INC.
-----------------------------------------
B. This is:
X An original filing for the Filer.
---
An amended filing for the Filer.
---
C. Identify the filing in conjunction with which this Form is being
filed:
Name of registrant Altair International Gold Inc.
---------------------------------------------------
Form type Form 10-SB
------------------------------------
File Number (if known) Not known
----------------------------------------
Filed by Altair International Gold Inc.
------------------------------------------------------
Date Filed (if filed concurrently, so indicate)
Filed concurrently herewith
- ---------------------------------------------------------------
D. The Filer is incorporated or organized under the laws of the Province
of Ontario and has its principal place of business at:
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
(307) 587-8245
<PAGE>
E. The Filer designates and appoints William P. Long (the "Agent")
located at:
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
(307) 587-8245
as the agent of the Filer upon whom may be served any process, pleadings,
subpoenas, or other papers in:
(a) Any investigation or administrative proceeding conducted by the
Commission; and
(b) Any civil suit or action brought against the Filer or to which the
Filer has been joined as defendant or respondent, in any appropriate court
in any place subject to the jurisdiction of any state or of the United
States, or any of its territories or possessions, or of the District of
Columbia, where the investigation, proceeding or cause of action arises out
of or relates to or concerns: (i) any offering made or purported to be
made in connection with the securities registered or qualified by the Filer
on Form 10-SB filed concurrently herewith or any purchases or sales of any
security in connection therewith; (ii) the securities in relation to which
the obligation to file an annual report on Form 40-F arises, or any
purchases or sales of such securities; (iii) any tender offer for the
securities of a Canadian issuer with respect to which filings are made by
the Filer with the Commission on Schedule 13E-4F, 14D-1F or 14D-9F; or (iv)
the securities in relation to which the Filer acts as trustee pursuant to
an exemption under Rule 10a-5 under the Trust Indenture Act of 1939. The
Filer stipulates and agrees that any such civil suit or action or
administrative proceeding may be commenced by the service of process upon,
and that service of an administrative subpoena shall be effected by service
upon such agent for service of process, and that the service as aforesaid
shall be taken and held in all courts and administrative tribunals to be
valid and binding as if personal service thereof had been made.
F. The Filer stipulates and agrees to appoint a successor agent for
service of process and to file an amended Form F-X if the Filer discharges the
Agent or the Agent is unwilling or unable to accept service on behalf of the
Filer at any time until six years have elapsed from the date that the Filer has
ceased to be a reporting entity under the Exchange Act.
The Filer further undertakes to advise the Commission promptly of any
change to the Agent's name and address during the applicable period by amendment
of this Form, referencing the file number of the relevant form in conjunction
with which the amendment is being filed.
G. The Filer undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the Forms, Schedules and offering statements described in General
Instructions I.(a), I.(b), I.(c), I.(d) and I.(f) of this Form, as applicable;
the securities to which such Forms, Schedules and offering statements relate;
and the transactions in such securities.
2
<PAGE>
The Filer certifies that it has duly caused this power of attorney,
consent, stipulation and agreement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cody, State of Wyoming,
Country of the United States, this 16th day of September, 1996.
ALTAIR INTERNATIONAL GOLD, INC.
/s/ William P. Long
------------------------------------
William P. Long
President
This statement has been signed by the following persons in the capacities
indicated on September 16th, 1996.
WILLIAM P. LONG,
AS REGISTERED AGENT FOR
SERVICE OF PROCESS IN
THE UNITED STATES
/s/ William P. Long
------------------------------------
William P. Long
3
