THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND NO PROSPECTUS
HAS BEEN FILED UNDER ANY CANADIAN SECURITIES LAWS IN RESPECT THERETO. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF SUCH A PROSPECTUS OR AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED
TO ANY PERSON RESIDENT IN THE PROVINCE OF ONTARIO WITHIN ONE YEAR OF THE DATE OF
ISSUANCE HEREOF. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF THIS NOTE, INCLUDING SECTION 2(e)(vi) HEREOF. THE PRINCIPAL AMOUNT AND THE
INTEREST THEREON REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH
ON THE FACE HEREOF PURSUANT TO SECTION 2(e)(vi) OF THIS NOTE.
ASSET-BACKED EXCHANGEABLE TERM NOTE
-----------------------------------
Chicago, Illinois
December 15, 2000 $7,000,000
FOR VALUE RECEIVED, Altair International, Inc., an Ontario corporation (the
"Company"), Altair Technologies, Inc., a Nevada corporation, Mineral Recovery
Systems, Inc., a Nevada corporation and Fine Gold Recovery Systems, Inc., a
Nevada corporation (collectively, the "Consolidated Companies"), hereby jointly
and severally promises to pay to the order of Doral 18, LLC, a Cayman Islands
limited liability company, or registered assigns in accordance with Section 20
hereof ("Holder") the principal amount of Seven Million Dollars ($7,000,000), on
December 15, 2003 (the "Maturity Date"), and to pay interest on the unpaid
principal balance hereof until payment in full thereof as described in Section 2
hereof, at the rate of 10% per annum from the date hereof (the "Issuance Date")
until the same becomes due and payable, whether at maturity or upon acceleration
or by exchange or redemption in accordance with the terms hereof or otherwise.
Interest on this Note shall commence accruing on the Issuance Date and shall be
computed on the basis of a 365-day year and actual days elapsed and shall be
payable in cash, at the Company's option, on each Due Date or at the time of
optional or mandatory redemption or exchange of principal in accordance with
Section 1 hereof; as applicable; provided, that until the Registration Statement
contemplated by the Securities Purchase Agreement dated as of the date hereof
between the Company and Holder (the "Securities Purchase Agreement") and
Registration Rights Agreement (as defined in the Securities Purchase Agreement)
is declared effective by the Securities and Exchange Commission, such interest
shall be payable in accordance with the last sentence of Section 1 hereof. Any
amount of this Note which is not paid when due shall bear interest at the rate
of 1.5% per month (prorated for partial months) (rather than at the rate set
forth above) until the same is paid in full (the amount of such interest payment
may be referred to in this Note as "Default Interest"). Any amount with respect
to which Holder has a conversion right pursuant to Section 2(b)(i) hereof shall
be deemed to have been paid when due for purposes of the preceding sentence.
<PAGE>
1. PAYMENTS OF PRINCIPAL AND INTEREST.
All payments of principal and interest on this Note (to the extent such
principal and/or interest is not converted into Common Stock in accordance with
the terms hereof) shall be made in lawful money of the United States of America
by wire transfer of immediately available funds as follows: American National
Bank and Trust, 120 South LaSalle Street, Chicago, IL 60603, ABA 071000770, FBO
Doral 18, LLC, A/C 5330299586 or to such other account as Holder may from time
to time designate by not less than 10 days prior written notice in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a Business Day (as defined
below), the same shall instead be due on the next succeeding day which is a
Business Day and, in the case of any interest payment date which is not the date
on which this Note is paid in full, the extension of the due date thereof shall
not be taken into account for purposes of determining the amount of interest due
on such date. For purposes of this Note, "Business Day" shall mean any day other
than a Saturday, Sunday or a day on which commercial banks in the City of
Chicago, Illinois are authorized or required by law or executive order to remain
closed. Each capitalized term used herein, and not otherwise defined, shall have
the meaning ascribed thereto in the Securities Purchase Agreement.
Notwithstanding anything to the contrary set forth herein, interest shall be
payable on a monthly basis in cash by wire transfer of immediately available
funds to the account designated above in this Section 1 until such time as the
Registration Statement contemplated by the Securities Purchase Agreement and
Registration Rights Agreement is declared effective by the Securities and
Exchange Commission.
2. EXCHANGE OF NOTE.
This Note shall be exchangeable into the Company's shares, without par
value (the "Common Stock"), on the terms and conditions set forth in this
Section 2.
(a) Certain Defined Terms. For purposes of this Note, the following terms
shall have the following meanings:
(i) "Exchange Amount" means the sum of (A) the principal amount of this Note
to be converted, redeemed or otherwise with respect to which this
determination is being made including any Monthly Payment Amount (as
defined in Section 2(b)(i) below, and (B) all accrued and unpaid interest
(other than Default Interest), calculated as the outstanding principal
amount of the Note times .10 times (N/365) and (C) Default Interest, if
any.
(ii) "Exchange Price" means, as of any Exchange Date (as defined below) or
other date of determination and subject to adjustment as provided herein,
a price equal to the lesser of (A) the Fixed Exchange Price (as defined
below) and (B) the Variable Exchange Price (as defined below).
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<PAGE>
(iii) "Due Date" means the Issuance Date and each monthly anniversary thereof
after the Issuance Date.
(iv) "Fixed Exchange Price" means a price equal to $ 3.00, subject to
adjustment as provided herein.
(v) "Initial Exchange Price" means a price equal to $8.00, subject to
adjustment as provided herein.
(vi) "Interest Date" means the day on which the outstanding interest on the
Note is effected either through cash payment, redemption or exchange
(Exchange Date) as appropriate.
(vii) "N" means the number of days from, but excluding, the most recent
Interest Date through and including the Exchange Date for any portion of
this Note for which exchange is being elected.
(viii) "Person" means a natural person, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental or any
department, agency or political subdivision thereof.
(ix) "Principal Market" means Nasdaq National Market.
(x) "Variable Exchange Price" means a price equal to 100% of the average of
the three lowest daily trading prices of the Common Stock (as reported by
Bloomberg) for the fifteen (15) consecutive trading days ending on the
trading day immediately preceding the date of submission of a Exchange
Notice by Holder.
(b) Monthly Payment Amount; Exchange Upon Special Event. The Consolidated
Companies shall be obligated to pay to the Holder the Monthly Payment Amount (as
defined below) on the following terms and conditions:
(i) Monthly Payment Amount. Subject to the provisions of Section 2(d) and
Section 4 below, commencing on January 15, 2001, and continuing on each Due
Date thereafter, the Consolidated Companies shall be obligated to pay to the
Holder the principal amount of $291,667 plus accrued interest (the "Monthly
Payment Amount"). Notwithstanding the foregoing, commencing on the first Due
Date subsequent to the Effective Date, and continuing on each Due Date
thereafter, subject to the existence of any Mandatory Redemption Event
described in Section 4(a) below and/or any Event of Default described in
Section 11(a) below, the Company shall notify Holder as to whether the
Consolidated Companies will satisfy all or a portion of the Monthly Payment
Amount through redemption, as described in the following sentences (an
"Optional Monthly Redemption"). If the Consolidated Companies elect to
satisfy a Monthly Payment Amount through an Optional Monthly Redemption, the
Consolidated Companies shall pay to the Holder that portion of the Monthly
Payment Amount that the Consolidated Companies have elected to redeem in
cash as described in Section 4(c) below. If the Consolidated Companies elect
not to redeem an entire Monthly Payment Amount through an Optional Monthly
Redemption, the Exchange Amount (or portion thereof that is not redeemed by
the Company) applicable to such Due Date shall become immediately
convertible at the Exchange Price then in effect. Thereafter, so long as the
Registration Statement remains effective and the exchange is permitted under
all applicable laws and regulations, the Holder shall be entitled to convert
the Exchange Amount (or portion thereof that is not redeemed by the
Consolidated Companies) into fully paid and nonassessable shares of Common
Stock at the Exchange Rate. Delivery of such shares in accordance with
Section 2(e)(ii) shall be considered payment in full of that portion of the
Note. The exchange rights of the Holder, as described in this Section
2(b)(i), (A) shall relate to all or any portion of any unpaid Monthly
Payment Amount and (B) shall be cumulative. Further, such exchange rights
shall be exercisable in whole or in part, at any time prior to repayment in
full of the Note, at the Holder's discretion.
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<PAGE>
(ii Exchanges Upon Special Event. Notwithstanding Holder's option to convert
the Monthly Payment Amount described in item (i) above and in addition to
all other rights of Holder contained herein, upon the occurrence of any
Special Event (as described below), 100% of the remaining principal
balance hereunder, plus accrued and unpaid interest thereon, shall become
subject to exchange at the applicable Exchange Price, at the option of
Holder, upon delivery of a Exchange Notice (as defined below) without any
restriction or limitation. A "Special Event" shall be deemed to have
occurred at such time as any of the following events:
(A) the Closing Price of the Common Stock closing at or above $8.00 for
a period of 10 consecutive trading days. In this instance only, the applicable
Exchange Price shall be the Initial Exchange Price;
(B) the consolidation, merger or other business combination of the
Company with or into another Person (other than solely pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company and except for a merger in which the Company is the
surviving entity);
(C) the sale or transfer of 50% or more of the Company's assets;
(D) a purchase, tender or exchange offer made to holders of more than
30% of the outstanding shares of Common Stock; or
(E) any event constituting an Event of Default pursuant to Section 9(a)
hereof.
(iii) Fractional Shares. The Company shall not issue any fraction of a share of
Common Stock upon any exchange. All shares of Common Stock (including
fractions thereof) issuable upon exchange of this Note by a holder
thereof shall be aggregated for purposes of determining whether the
exchange would result in the issuance of a fraction of a share of Common
Stock. If, after the aforementioned aggregation, the issuance would
result in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up or down
to the nearest whole share.
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<PAGE>
(iv) Accrual. Notwithstanding the foregoing provisions of this Section 2(b),
from the period beginning on the date the Holder no longer owns any
shares of Common Stock subject to the call right set forth in Section
7.13 of the Securities Purchase Agreement and ending on the first to
occur of (A) the Effective Date and (B) the date that is 180 days
subsequent to the Issuance Date (the "Announcement Date"), the
Consolidated Companies shall have the right to accrue the Exchange
Amounts due to Holder. If such an election is made by the Consolidated
Companies, no later than the Announcement Date, the Consolidated
Companies shall notify Holder as to an election by the Consolidated
Companies to satisfy the accrued Exchange Amounts in the same manner as
an Optional Monthly Redemption. If the Company elects not to redeem the
accrued Exchange Amounts, such Exchange Amounts shall become immediately
convertible at the Exchange Price then in effect.
(c) Exchange Rate. The number of shares of Common Stock issuable upon exchange
of a Exchange Amount of this Note pursuant to Section 2(b) shall be
determined according to the following formula (the "Exchange Rate"):
Exchange Rate = Exchange Amount
Exchange Price
(d) Limitation on Beneficial Ownership.
(i) The Company shall not effect any exchange of this Note and Holder
shall not have the right to convert any portion of this Note pursuant to
Section 2(b)(i) to the extent that after giving effect to such exchange
such Person (together with such Person's affiliates) would beneficially
own in excess of 4.99% of the outstanding shares of the Common Stock
following such exchange. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by a Person and its
affiliates or acquired by a Person and its affiliates, as the case may
be, shall include the number of shares of Common Stock issuable upon
exchange of this Note with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exchange of the remaining,
nonconverted portion of this Note beneficially owned by such Person and
its affiliates and (ii) exercise or exchange of the unexercised or
unconverted portion of any other securities of the Company (including,
without limitation, any warrants) subject to a limitation on exchange or
exercise analogous to the limitation contained herein beneficially owned
by such Person and its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(d), beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended. Notwithstanding anything to the contrary
contained herein, each Exchange Notice (as defined below) shall
constitute a representation by Holder that, after giving effect to such
Exchange Notice, Holder will not beneficially own (as determined in
accordance with this Section 2(d)) a number of shares of Common Stock in
excess of 4.99% of the outstanding shares of Common Stock (1) as
reflected in the Company's most recent shareholder list, which list shall
be provided to Holder by the Company on a quarterly basis and certified
by the Company as true, complete and accurate as of the date thereof, or
(2) at such time as the Company is a Reporting Company under the
Securities Exchange Act of 1934, as reflected in the Company's most
recent Form 10-Q or Form 10-K, as the case may be, or more recent public
press release by the Company or other notice by the Company to Holder
setting forth the number of shares of Common Stock outstanding, but after
giving effect to exchanges of this Note (including the exchange with
respect this determination is being made) by Holder since the date as of
which such number of outstanding shares of Common Stock was disclosed.
5
<PAGE>
(ii)Notwithstanding the foregoing, upon the occurrence of an Event of
Default, the Holder shall have the right to exchange all or any portion
of the Note and Warrant pursuant to the terms of the Agreement, in its
sole discretion and at such time or times as it deems appropriate.
(e) Mechanics of Exchange. The exchange of this Note shall be conducted in
the following manner:
(i) Holder's Delivery Requirements. To convert this Note into shares of
Common Stock on any date (an "Exchange Date"), Holder hereof shall (A)
transmit by facsimile (or otherwise deliver), for receipt on or prior to
11:59 p.m., Eastern Time on such date, a copy of a fully executed notice
of exchange in the form attached hereto as Exhibit A (an "Exchange
Notice") to the Company and (B), subject to Section 2(e)(vi), surrender
to a common carrier for delivery to the Transfer Agent as soon as
practicable following such date the original Note being converted (or an
indemnification undertaking with respect to such Note in the case of its
loss, theft or destruction).
(ii)Company's Response. Upon receipt by the Company of a copy of a
Exchange Notice, the Company shall as soon as practicable, but in no
event later than one (1) Business Day after receipt of such Exchange
Notice, send, via facsimile, a confirmation of receipt of such Exchange
Notice to Holder and the Transfer Agent, which confirmation shall
constitute an instruction to the Transfer Agent to process such Exchange
Notice in accordance with the terms hereof. Upon receipt by the Transfer
Agent of a copy of the executed Exchange Notice, the Transfer Agent
shall, no later than the 2nd trading day following the date of the
Company's receipt by it of the Exchange Notice, (A) issue and surrender
to a common carrier for overnight delivery to Holder's brokerage account
#70357 (the "Doral Brokerage Account") with Credit Suisse First Boston
(the "Broker"), a certificate, registered in the name of Holder or its
designee, for the number of shares of Common Stock to which Holder shall
be entitled, or (B) in the event the Transfer Agent is participating in
The Depository Trust Company ("DTC") Fast Automated Securities Transfer
Program, upon the request of Holder, credit such aggregate number of
shares of Common Stock to which Holder shall be entitled to the Broker's
balance account with DTC through its Deposit Withdrawal Agent Commission
system to be further credited to the Doral Brokerage Account by the
Broker. Subject to Section 2(e)(vi), if less than the principal amount of
this Note is submitted for exchange, then the Company shall, as soon as
practicable and in no event later than three Business Days after receipt
of this Note and at its own expense, issue and deliver to Holder or its
designee a new Note for the outstanding principal amount not converted.
6
<PAGE>
(iii) Dispute Resolution. In the case of a dispute as to the
determination of the Exchange Price or the arithmetic calculation of the
Exchange Rate, the Company shall instruct the Transfer Agent to issue to
Holder the number of shares of Common Stock that is not disputed and
shall submit the disputed determinations or arithmetic calculations to
Holder via facsimile within one (1) Business Day of receipt of Holder's
Exchange Notice. If Holder and the Company are unable to agree upon the
determination of the Exchange Price or arithmetic calculation of the
Exchange Rate within one (1) Business Day of such disputed determination
or arithmetic calculation being submitted to Holder, then the Company
shall within one (1) Business Day submit via facsimile (A) the disputed
determination of the Exchange Price to an independent, reputable
investment bank selected by the Company and approved by Holder or (B) the
disputed arithmetic calculation of the Exchange Rate to the Company's
independent, outside accountant. The Company shall cause the investment
bank or the accountant, as the case may be, to perform the determinations
or calculations and notify the Company and Holder of the results no later
than the third (3rd) day after the date it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon
all parties absent manifest error.
(iv)Record Holder. The person or persons entitled to receive the shares
of Common Stock issuable upon an exchange of this Note shall be treated
for all purposes as the record holder or holders of such shares of Common
Stock on the Exchange Date.
(v) Company's Failure to Timely Convert.
(A) Cash Damages. If within five (5) Business Days after
Holder's delivery of the Exchange Notice (subject to extension in
accordance with Section 2(e)(iii) for a good faith dispute made in
accordance with the terms of Section 2(e)(iii)) (the "Share Delivery
Period") the Transfer Agent shall fail to issue a certificate to Holder
or credit Holder's balance account with The Depository Trust Company
for the number of shares of Common Stock to which Holder is entitled
upon Holder's exchange of this Note (a "Exchange Failure"), in addition
to all other available remedies which Holder may pursue hereunder and
under the Securities Purchase Agreement (including indemnification
pursuant to Article 8 thereof), the Company shall pay additional
damages to Holder on each day after such fifth (5th) Business Day such
exchange is not timely effected and/or such Note is not delivered in an
amount equal to 2.0% of such principal amount of this Note submitted
for exchange by Holder.
(B) Void Exchange Notice; Adjustment to Exchange Price. If for
any reason Holder has not received all of the shares of Common Stock
prior to the tenth (10th) Business Day after the expiration of the
Share Delivery Period with respect to a an Exchange Notice, then
Holder, upon written notice to the Company, with a copy to the Transfer
Agent, may void the Exchange Notice with respect to, and retain or have
returned, as the case may be, any principal amount of this Note that
has not been converted pursuant to Holder's Exchange Notice; provided,
that the voiding of the Exchange Notice shall not affect the
obligations of the Consolidated Companies to make any payments which
have accrued prior to the date of such notice pursuant to Section
2(e)(v)(A) or otherwise. Thereafter, the Fixed Exchange Price of the
principal amount of this Note returned or retained by Holder for
failure to timely convert shall be adjusted to the lesser of (I) the
Exchange Price as in effect on the date on which Holder submitted the
Exchange Notice and (II) the lowest trade price for the Common Stock
during the period beginning on the Exchange Date and ending on the date
Holder voided the Exchange Notice.
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<PAGE>
(vi) Book-Entry. Notwithstanding anything to the contrary set forth
herein, upon exchange of any portion of this Note in accordance with the
terms hereof, Holder shall not be required to physically surrender this
Note to the Company unless the full Exchange Amount represented by this
Note is being converted. Holder and the Company shall maintain records
showing the Exchange Amount so converted and the dates of such exchanges
or shall use such other method, reasonably satisfactory to Holder and the
Company, so as not to require physical surrender of this Note upon each
such exchange. In the event of any dispute or discrepancy, such records
of the Company shall be controlling and determinative in the absence of
manifest error. Notwithstanding the foregoing, if this Note is converted
as aforesaid, Holder may not transfer this Note unless Holder first
physically surrenders this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of Holder a new Note of
like tenor, registered as Holder may request, representing in the
aggregate the remaining Exchange Amount represented by this Note. Holder
and any assignee, by acceptance of this Note or such new Note,
acknowledge and agree that, by reason of the provisions of this
paragraph, following exchange of any portion of this Note, the Exchange
Amount (including the principal of this Note) represented by this Note
may be less than the principal amount and the accrued interest set forth
on the face hereof.
(vii) Notwithstanding the foregoing provisions of this Section 2(e), upon
Holder's exercise of its exchange right in accordance with Section 2(b)
hereof (the "Exchange Right"), the number of shares of Common Stock
subject to the call right set forth in Section 7.13 of the Securities
Purchase Agreement (the "Call Right") shall be reduced by an amount equal
to the number of shares of Common Stock calculated pursuant to the
Exchange Rate formula set forth in Section 2(c) hereof for so long as
there are shares of Common Stock subject to the Call Right. In the event
that at any time there is an insufficient number of shares of Common
Stock subject to the Call Right to satisfy the Holder's exercise of its
Exchange Right, the Company shall deliver to the Holder that number of
shares of Common Stock necessary to satisfy the Exchange Right in the
manner set forth in this Section 2(e).
(f) Taxes. The Company shall pay any and all transfer taxes
(but not income taxes) that may be payable with respect to the issuance
and delivery of Common Stock upon the exchange of this Note.
8
<PAGE>
3. ANTI-DILUTION.
(a) Certain Defined Terms. For purposes of this Section, the following
terms shall have the following meanings:
(i) "Common Stock" shall mean the Common Stock, no par value,
of the Company as constituted on the date of this Note and any stock
into which such Common Stock shall have been changed or any stock
resulting from any reclassification of such Common Stock.
(ii) "Exchangeable Securities" shall mean evidences of
indebtedness, shares (including, without limitation, Preferred Shares)
of stock or other securities which are exchangeable into or
exchangeable for, with or without payment of additional consideration,
shares of Common Stock, either immediately or upon the arrival of a
specified date or the happening of a specified event.
(iii) "Preferred Shares," as applied to any Person, shall mean
shares of such Person, which shall be entitled to preference or
priority over any other shares of such Person in respect of either the
payment of dividends or the distribution of assets upon liquidation.
(iv) "Stock Purchase Rights" shall mean any warrants, options
or other rights to subscribe for, purchase or otherwise acquire any
shares of Common Stock or any Exchangeable Securities, either
immediately or upon the arrival of a specified date or the happening of
a specified event.
(b) Except as otherwise provided in Section 3(b)(vii)) below, the Fixed
Exchange Price shall be subject to adjustment from time to time as set forth in
this Section 3.
(i) Issuance of Additional Common Stock. If and whenever the
Company shall issue or sell any shares of its Common Stock for a
consideration per share less than the Fixed Exchange Price in effect
immediately prior to the time of such issuance or sale, then, upon such
issuance or sale, the Fixed Exchange Price shall be adjusted to that
price equal to the fraction (i) the numerator of which shall be equal
to (A) (x) the Fixed Exchange Price in effect immediately prior to such
event multiplied by (y) the total number of outstanding shares of
Common Stock immediately prior to such event plus (B) the consideration
received by the Company upon such issuance, and (ii) the denominator of
which shall be the total number of outstanding shares of Common Stock
immediately after such event, treating as outstanding all shares of
Common Stock issuable upon exchanges or exchanges of Exchangeable
Securities (including any Notes held by Holder) and exercises of Stock
Purchase Rights (including any Warrants held by Holder) provided that,
no adjustment shall be made with respect to the issuance of shares of
Common Stock issued (1) upon exchange or conversion of Notes or
preferred shares or the exercise of warrants or options outstanding on
the date hereof and disclosed to Holder in a Schedule attached to the
Securities Purchase Agreement, (2) in connection with the exercise of
options granted under the 1998 Altair International Inc. Stock Option
Plan and the Altair International Inc. Stock Option Plan (collectively,
the "Company Plans"), subject to the maximum reservation of shares
defined in Section 3.3(i) of the Securities Purchase Agreement, (3) as
consideration in connection with arms-length transactions involving the
acquisition of other companies or lines of business in the mining,
minerals or technology (including technology relating to nanoparticles
or other related activities) industries, including non-competition or
(4) the acquisition of assets to be used in the operation of the
Company's business.
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<PAGE>
(ii) Stock Dividends, Subdivisions and Combinations. If and
whenever the Company subsequent to the date hereof:
(A) declares a dividend upon, or makes any distribution in
respect of, any of its capital stock, payable in shares of Common
Stock, Exchangeable Securities or Stock Purchase Rights,
(B) subdivides its outstanding shares of Common Stock into
a larger number of shares of Common Stock, or
(C) combines its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the Fixed Exchange Price shall be adjusted to that price determined by
multiplying the Fixed Exchange Price in effect immediately prior to such event
by a fraction (A) the numerator of which shall be the total number of
outstanding shares of Common Stock immediately prior to such event, and (B) the
denominator of which shall be the total number of outstanding shares of Common
Stock immediately after such event, treating as outstanding all shares of Common
Stock issuable upon exchanges or exchanges of Exchangeable Securities (including
any Notes held by Holder) and exercises of Stock Purchase Rights (including any
Warrants held by Holder).
(iii) Issuance of Exchangeable Securities or Stock Purchase
Rights. If and whenever the Company shall issue or sell any
Exchangeable Securities or Stock Purchase Rights (other than the
granting of Stock Purchase Rights to officers, employees, directors and
consultants of the Company pursuant to any qualified or non-qualified
stock option plan (including the Company Plans) or employee stock
ownership plan (ESOP)) under which a consideration per share for which
shares of Common Stock may at any time thereafter be issuable upon
exercise thereof (or, in the case of Stock Purchase Rights exercisable
for the purchase of Exchangeable Securities, upon the subsequent
exchange or exchange of such Exchangeable Securities) shall be less
than the Exchange Price in effect immediately prior to the time of such
issuance or sale, then upon such issuance or sale the Exchange Price
shall be adjusted as provided in Section 4(a) on the basis that the
maximum number of shares of Common Stock ever issuable upon exercise of
such Exchangeable Securities or Stock Purchase Rights (or upon exchange
or exchange of such Exchangeable Securities following such exercise)
shall be deemed to have been issued as of the date of the determination
of the Fixed Exchange Price, provided that, no adjustment shall be made
with respect to the issuance of shares of Common Stock (1) upon
exchange or conversion of Notes or preferred shares or the exercise of
warrants or options outstanding on the date hereof and disclosed to
Holder in a Schedule attached to the Securities Purchase Agreement, (2)
in connection with the exercise of options granted under the 1998
Altair International Inc. Stock Option Plan and the Altair
International Inc. Stock Option Plan (collectively, the "Company
Plans"), subject to the maximum reservation of shares defined in
Section 3.3(i) of the Securities Purchase Agreement, (3) as
consideration in connection with arms-length transactions involving the
acquisition of other companies or lines of business in the mining,
minerals or technology (including technology relating to nanoparticles
or other related activities) industries, including non-competition
covenants or (4) the acquisition of assets to be used in the operation
of the Company's business.
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(iv) Readjustment of Exchange Price. Upon (i) each change in
the purchase price payable for any Stock Purchase Rights or
Exchangeable Securities referred to in Section 3(b)(iii) each change in
the consideration, if any, payable upon exercise of such Stock Purchase
Rights or upon the exchange or exchange of such Exchangeable
Securities, (iii) each change in the number of shares of Common Stock
issuable upon the exercise of such Stock Purchase Rights or the rate at
which such Exchangeable Securities are exchangeable into or
exchangeable for shares of Common Stock or (iv) the expiration of any
Stock Purchase Rights not exercised or of any right to convert or
exchange under any Exchangeable Securities not exercised, the Fixed
Exchange Price in effect at the time of such event shall forthwith be
readjusted to the Fixed Exchange Price which would have been in effect
at such time had such Stock Purchase Rights or Exchangeable Securities
provided for such change or expiration, as applicable.
(v) Reorganization, Reclassification or Recapitalization of
the Company. In the event that the Company effects (i) any
reorganization or reclassification or recapitalization of the capital
stock of the Company (other than in the cases referred to in Section
3(b)), (ii) any consolidation or merger of the Company with or into
another Person, (iii) the sale, transfer or other disposition of the
property, assets or business of the Company as an entirety or
substantially as an entirety or (iv) any other transaction or event as
a result of which holders of Common Stock become entitled to receive
any shares of stock or other securities and/or property (including,
without limitation, cash, but excluding any cash dividend that is paid
out of the earnings or surplus of the Company legally available
therefor) with respect to or in exchange for the Common Stock of the
Company, there shall thereafter be deliverable upon the exchange of
this Note or any portion thereof (in lieu of or in addition to the
Common Stock theretofore deliverable, as appropriate) the highest
number of shares of stock or other securities and/or the greatest
amount of property (including, without limitation, cash) to which the
holder of the number of shares of Common Stock which would otherwise
have been deliverable upon the exchange of this Note or any portion
thereof at the time would have been entitled upon such transaction or
event.
(vi) Other Dilutive Events. If the Company takes any other
action, or if any other event occurs to which the other provisions of
this Section 3 are not strictly applicable, but which could result in
an adjustment the Exchange Price or to any of the other terms of this
Note that would not fairly protect the exchange rights and other rights
represented by this Note in accordance with the essential intent and
principles hereof, an appropriate adjustment in such purchase rights
comparable to the adjustments described in (a) and (b) above shall be
made by the Company.
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(vii) Maximum Exchange Price. At no time shall the Fixed
Exchange Price exceed the initial Exchange Price set forth in Section
2(a) hereof except as a result of an adjustment thereto pursuant to
Section 3(b).
(viii) Application. All subdivisions of this Section 3 are
intended to operate independently of one another. If a transaction or
an event occurs that requires the application of more than one
subsection, all applicable subdivisions shall be given independent
effect.
(ix) Waiver. In the event that Holder consents in writing to
limit, or waive in its entirety, any anti-dilution adjustment to which
it would otherwise be entitled hereunder, the Company shall not be
required to make any adjustment whatsoever with respect to this Note in
excess of such limit or at all, as the terms of such consent may
dictate.
(x) Notice of Adjustments to Fixed Exchange Price. As promptly
as practicable after the occurrence of any event requiring any
adjustment under this Section 3 to the Exchange Price (or to the number
or kind of securities or other property deliverable upon the exchange
of this Note), the Company shall, at its expense, mail to Holder a
certificate of an officer of the Company setting forth in reasonable
detail the events requiring the adjustment and the method by which such
adjustment was calculated and specifying the adjusted Fixed Exchange
Price and the number of shares of Common Stock issuable upon exchange
of this Note after giving effect to such adjustment.
(xi) Anti-Dilution Provisions in Other Securities. If the
Company issues any Stock Purchase Rights or Exchangeable Securities or
other securities containing provisions protecting the holder or holders
thereof against dilution in any manner more favorable to such holder or
holders thereof than those set forth in this Note, such provisions (or
any more favorable portion thereof) shall be deemed to be incorporated
herein as if fully set forth in this Note and, to the extent
inconsistent with any provision of this Note, shall be deemed to be
substituted therefor.
4. REDEMPTION.
This Note shall be subject to mandatory redemption upon the occurrence
of certain events and optional redemption at the option of the Company, each as
discussed below.
(a) Mandatory Monthly Redemption. Upon the occurrence of a
Mandatory Redemption Event, and on each month anniversary thereafter
until such Mandatory Redemption Event shall have been cured, if any,
the Company will be required to redeem the Monthly Payment Amount for
such month, on the Due Date, at a price equal to 120% of such Monthly
Payment Amount, including all accrued and unpaid interest on the Note
(the "Mandatory Redemption Price"). For purposes of this Note,
"Mandatory Redemption Event" means any of the following events:
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(i) the failure of the Company to satisfy any listing criteria
of its Principal Market necessary to maintain the continued listing of
the Common Stock, without regard to any grace period or other timing
issues,
(ii) the suspension of the Common Stock from trading for four
(4) consecutive trading days or for a total of ten (10) trading days
out of the preceding 365 days;
(iii) if for any reason pursuant to the registration statement
(the "Registration Statement") covering the resale of shares of Common
Stock issuable upon exchange of this Note and the exercise of the
Warrants required to be filed by the Company pursuant to the
Registration Rights Agreement between the Company and Holder (the
"Registration Rights Agreement") sales cannot be made following the
date such Registration Statement has been declared effective by the SEC
(whether because of a failure to keep the Registration Statement
effective, to disclose such information as is necessary for sales to be
made pursuant to the Registration Statement, to register sufficient
shares of Common Stock, or otherwise) for four (4) consecutive trading
days or for a total of ten (10) trading days out of the preceding 365
days unless due to the failure for a Registration Statement to become
effective, or the suspension of an effective Registration Statement
(provided such suspension is required by applicable law) if the Company
is required under the Securities Exchange of 1934 to file financial
statements of the acquired business and proforma financial statements
and such financial statements are not readily available at the time the
Company would have otherwise been obligated to file the Registration
Statement, but only for up to thirty days with respect to any one
acquisition and an aggregate of forty-five days in a twelve month
period. The Company shall use all commercially reasonable efforts to
file such financial statements at the earliest practicable date.
(iv) If, without prior shareholder approval, the issuance of
the Exchange Shares that would result form the exchange of the Monthly
Payment Amount, would result in the issuance of more than 19.9% of the
aggregate number of outstanding shares upon the Closing Date shares.
(b) Optional Monthly Redemption. At any time during the five (5)
trading days prior to each Due Date (other than the Issuance Date), if the
Closing Bid Price of the Common Stock on each such trading day is less than the
Fixed Exchange Price on such day then the Company shall have the option to
redeem (the "Optional Monthly Redemption Right") the Monthly Payment Amount for
such month at a price equal to 100% of the Monthly Payment Amount, including all
accrued and unpaid interest.
(c) Mechanics of Company Redemption. Within one (1) day after the
occurrence of a Mandatory Redemption Event, or upon a determination by the
Company to exercise its Optional Monthly Redemption Right, the Company shall
deliver a written notice thereof via facsimile and overnight courier ("Notice of
Redemption") to Holder, which notice shall specify the type of redemption (and
the nature of the Mandatory Redemption Event, if any). The Company shall pay the
Redemption Price to Holder in cash on or before the relevant Due Date by wire
transfer delivered to Holder as follows: American National Bank and Trust, 120
South LaSalle Street, Chicago, IL 60603, ABA 071000770, FBO Doral 18, LLC, A/C
5330299586, or to such other account or accounts as Holder may designate in
writing to the Company from time to time.
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(d) Void Redemption. In the event that the Company does not pay the
Mandatory Full Redemption Price to Holder on a timely basis as described in this
Section 4, in addition to any remedy otherwise available to Holder hereunder or
under the Securities Purchase Agreement, such unpaid amount shall bear interest
at the Default Rate until paid in full. In the event that the Company does not
pay the Applicable Optional Redemption Price within the time period set forth in
Section 4(c), at any time thereafter and until the Company pays such unpaid
Applicable Optional Redemption Price in full, Holder shall have the option (the
"Void Optional Redemption Option") to, in lieu of redemption, require the
Company to rescind the Notice of Redemption for that portion of the Note for
which the Applicable Optional Redemption Price (together with any interest
thereon) has not been paid, by sending written notice thereof to the Company via
facsimile (the "Void Optional Redemption Notice"). Upon the Company's receipt of
such Void Optional Redemption Notice, (i) the Notice of Redemption pursuant to
the Company's optional redemption rights as described in Section 4(c), shall be
null and void with respect to that portion of the Note subject to the Void
Optional Redemption Notice, (ii) the Company shall immediately rescind such
Redemption Notice, and (iii) the Exchange Price of that portion of the Note
returned shall be adjusted to the lesser of (A) the Exchange Price as in effect
on the date on which the Void Optional Redemption Notice is delivered to the
Company and (B) the lowest trade price for the Common Stock (as reported by
Bloomberg) during the period beginning on the date on which the Notice of
Redemption is delivered to Holder and ending on the date on which the Void
Optional Redemption Notice is delivered to the Company.
(e) Disputes; Miscellaneous. In the event of a dispute as to the
determination of the lowest trade price or the arithmetic calculation of the
Redemption Price, such dispute shall be resolved pursuant to Section 2(e)(iii)
above with the term "lowest trade price" being substituted for the term
"Exchange Price" and the term "Redemption Price" being substituted for the term
"Exchange Rate." Holder's delivery of a Void Optional Redemption Notice and
exercise of its rights following such notice shall not affect the Company's
obligations to make any payments which have accrued prior to the date of such
notice. In the event of a redemption pursuant to this Section 3 of less than all
of the principal amount and interest of this Note and subject to Section
2(e)(vi), the Company shall promptly cause to be issued and delivered to Holder
a new Note representing the remaining unpaid principal amount which has not been
redeemed.
5. APPLICATION OF PAYMENTS/PREPAYMENT.
Upon the exercise by the Holder of its Exchange Right or upon the redemption of
all or a portion of this Note, the amounts received by the Holder upon the
exercise of the Exchange Right or upon the redemption of the Note shall be
applied first to pay accrued interest on the Note through and including the date
of the exercise of the Exchange Right or the redemption of the Note, as
applicable, second to pay any penalties due the Holder from the Company and
third to reduce the principal balance of the Note. At any time during the term
of this Note, the Company may prepay the Note, in $250,000 increments at a price
equal to (A) (x) the outstanding principal balance on the Note plus (y) accrued
interest and (B) 115%.
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6. OTHER RIGHTS OF HOLDER.
(a) Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any (i) sale of all
or substantially all of the Company's assets to an acquiring Person or (ii)
other Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the successor
resulting from such Organic Change (in each case, the "Acquiring Entity") a
written agreement (in form and substance satisfactory to Holder) to deliver to
Holder in exchange for this Note, a security of the Acquiring Entity evidenced
by a written instrument substantially similar in form and substance to this
Note, and satisfactory to Holder. Prior to the consummation of any other Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to Holder) to insure that Holder will thereafter have the right to
acquire and receive in lieu of or in addition to (as the case may be) the shares
of Common Stock immediately theretofore acquirable and receivable upon the
exchange of Holder's Note such shares of stock, securities or assets that would
have been issued or payable in such Organic Change with respect to or in
exchange for the number of shares of Common Stock which would have been
acquirable and receivable upon the exchange of Holder's Note as of the date of
such Organic Change (without taking into account any limitations or restrictions
on the convertibility of the Note).
(b) Purchase Rights. If at any time the Company grants, issues or sells
any options, exchangeable securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which Holder could have acquired if Holder had held the number of shares of
Common Stock acquirable upon complete exchange of the Note (without taking into
account any limitations or restrictions on the convertibility of the Note)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
7. RESERVATION OF SHARES.
The Company shall, so long as any principal amount of the Note is
outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the exchange of the Note, such
number of shares of Common Stock as shall from time to time be sufficient to
effect the exchange of all of the principal amount of the Note then outstanding;
provided that the number of shares of Common Stock so reserved shall at no time
be less than 140% of the number of shares of Common Stock for which the
principal amount of the Note are at any time exchangeable.
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8. VOTING RIGHTS.
Holder shall have no voting rights, except as required by law,
including but not limited to the Business Corporations Act (Ontario), and as
expressly provided in this Note.
9. RESTRICTION ON REDEMPTION AND CASH DIVIDENDS.
Until all of the outstanding principal amount of this Note has been
converted, redeemed or otherwise satisfied as provided herein, the Company shall
not, directly or indirectly, redeem, or declare or pay any cash dividend or
distribution on, the Common Stock without the prior express written consent of
Holder.
10. REISSUANCE OF NOTE.
Subject to Section 2(e)(vi) in the event of a exchange or redemption
pursuant to this Note of less than all of the Exchange Amount represented by
this Note, the Company shall promptly cause to be issued and delivered to
Holder, upon tender by Holder of the Note converted or redeemed, a new Note of
like tenor representing the remaining principal amount of this Note which has
not been so converted or redeemed.
11. DEFAULTS AND REMEDIES.
(a) Events of Default. An "Event of Default" is: (i) failure of the
Company's Registration Statement to be declared effective within 180 days
following the Issuance Date, (ii) failure of the Company to file with the SEC,
on Form S-3, the Registration Statement covering the Exchange Shares and the
Warrant Shares on or before the Filing Deadline (as such term is defined in the
Registration Rights Agreement), (iii) default in payment of principal, interest
or Default Interest on this Note when and as due; (iv) failure by the Company
(A) for thirty (30) days after notice to it to comply with any other material
provision of this Note except for delivery of a replacement Note within four (4)
Business Days as described in Section 2(e)(ii); or (B) for six (6) Business Days
after notice to it to comply with the replacement Note delivery requirement set
forth in Section 2(e)(ii); (v) any default under or acceleration prior to
maturity of any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or for money borrowed the repayment of which is
guaranteed by the Company, whether such indebtedness or guarantee now exists or
shall be created hereafter in principal amount greater than $10,000; (vi) any
representations or warranty made by the Company in the Securities Purchase
Agreement proves untrue in any material respect as of the date of the issuance
or making thereof; (vii) any failure to observe or perform any of the covenants
set forth in the Securities Purchase Agreement which is not remedied by the
Company within 30 days after notice thereof to the Company by the Holder; (viii)
any event occurs or condition exists which is specified as an event of default
under that certain Security Agreement by and among the Company, Altair
Technologies, Inc. and the Holder dated as of an even date herewith or the
Intellectual Property Security Agreement by and between Altair Technologies,
Inc. and the Holder dated as of an even date herewith; (ix) if the Company
pursuant to or within the meaning of any Bankruptcy Law: (A) commences a
voluntary case; (B) consents to the entry of an order for relief against it in
an involuntary case; (C) consents to the appointment of a Custodian of it or for
all or substantially all of its property; (D) makes a general assignment for the
benefit of its creditors; or (E) admits in writing that it is generally unable
to pay its debts as the same become due; or (x) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (1) is for
relief against the Company in an involuntary case; (2) appoints a Custodian of
the Company or for all or substantially all of its property; or (3) orders the
liquidation of the Company or any subsidiary, and the order or decree remains
unstayed and in effect for ninety (90) days. The term "Bankruptcy Law" means the
Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act
(Canada) and Title 11, U.S. Code, and any similar Federal, Provincial. or State
Law for the relief of debtors. The term "Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
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(b) Remedies. If an Event of Default occurs and is continuing, Holder
may notify the Company that it is declaring all of this Note, including any
interest and Default Interest and other amounts due or to become due, to be due
and payable immediately, except that in the case of an Event of Default arising
from events described in clauses (iv), (ix) and (x) of Section 11(a), this Note
shall become due and payable without further action or notice by Holder. The
Holder may not enforce the agreements contained in this Note except as provided
herein. In addition to any remedy Holder may have under this Note and the
Securities Purchase Agreement, such unpaid amount shall bear interest at the
Default Rate until paid in full.
12. VOTE TO CHANGE THE TERMS OF THIS NOTE.
This Note and any provision hereof may only be amended by an instrument
in writing signed by the Company and Holder. The term "Note" and all reference
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.
13. LOST OR STOLEN NOTE.
Upon receipt by the Company of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of any Note, and, in the case of
loss, theft or destruction, of an indemnification undertaking by the holder to
the Company in a form reasonably acceptable to the Company and, in the case of
mutilation, upon surrender and cancellation of the Note, the Company shall
execute and deliver a new Note of like tenor and date; provided, however, the
Company shall not be obligated to re-issue the Note if Holder contemporaneously
requests the Company to convert such remaining principal amount into Common
Stock.
14. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
If: (i) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding; or (ii)
an attorney is retained to represent Holder of this Note in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; or (iii) an attorney is retained to
represent Holder of this Note in any other proceedings whatsoever in connection
with this Note, then the Company shall pay to Holder all reasonable attorneys'
fees, costs and expenses incurred in connection therewith, in addition to all
other amounts due hereunder.
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15. CANCELLATION.
After all principal and accrued interest at any time owed on this Note
has been paid in full, this Note shall automatically be deemed canceled, shall
be surrendered to the Company for cancellation and shall not be reissued.
16. NOTE EXCHANGEABLE FOR DIFFERENT DENOMINATIONS.
This Note is exchangeable, upon the surrender hereof by Holder at the
principal office of the Company, for a new Note or Note (in principal amounts of
at least $1,000) containing the same terms and conditions and representing in
the aggregate the principal amount of this Note, and each such new Note will
represent such portion of such principal amount as is designated by Holder at
the time of such surrender. The date the Company initially issues this Note will
be deemed to be the "Issuance Date" hereof regardless of the number of times a
new Note shall be issued.
17. WAIVER OF NOTICE.
To the extent permitted by law, the Company hereby waives demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Note and the
Securities Purchase Agreement.
18. GOVERNING LAW.
This Note shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Note shall be governed by the laws of the State of Illinois, without
giving effect to provisions thereof regarding conflict of laws.
19. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.
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The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note, at law or in equity (including
a decree of specific performance and/or other injunctive relief), no remedy
contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing herein shall limit Holder's right to
pursue actual damages for any failure by the Company to comply with the terms of
this Note. The Company covenants to Holder that there shall be no
characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments,
exchange and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to Holder and that the remedy at law for
any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, Holder shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
20. SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION.
No specific provision contained in this Note shall limit or modify any
more general provision contained herein. This Note shall be deemed to be jointly
drafted by the Company and Holder and shall not be construed against any person
as the drafter hereof.
21. FAILURE OR INDULGENCE NOT WAIVER.
No failure or delay on the part of this Note in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
22. JUDGMENT CURRENCY.
(a) If, for the purpose of obtaining or enforcing judgment against the
Company in any court in any jurisdiction, it becomes necessary to convert into
any other currency (such other currency being hereinafter in this Section 22
referred to as the "Judgment Currency") an amount due under any this Note in any
currency (the "Obligation Currency") other than the Judgment Currency, the
conversion shall be made at the rate of exchange prevailing on the business day
immediately preceding (i) the date of actual payment of the amount due, in the
case of any proceeding in the courts of the Province of Ontario or in the courts
of any other jurisdiction that will give effect to such conversion being made on
such date, or (ii) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this Section 19 being hereinafter in
this Section 22 referred to as the "Judgment Conversion Date").
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(b) If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 22(a), there is a change in the rate of exchange
prevailing between the Judgment Conversion Date and the date of actual receipt
of the amount due in immediately available funds, the Company shall pay such
additional amount (if any, but in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of the Judgment Currency stipulated in the judgment or judicial
order at the rate of exchange prevailing on the Judgment Conversion Date.
Any amount due from the Company under Section 22(b) shall be due as a separate
debt and shall not be affected by judgment being obtained for any other amounts
due under or in respect of this Note.
(c) The term "rate of exchange" in this Section 22 means the rate of
exchange at which the Holder would, on the relevant date at or about 12:00 noon
(Toronto time), be prepared to sell Canadian Dollars or US Dollars, as the case
may be, against the Judgment Currency.
23. INTEREST ACT
For purposes of disclosure pursuant to the Interest Act (Canada), the
annual rates of interest or fees to which the rates of interest or fees provided
in this Note (and stated herein as applicable to be computed on the basis of a
365 day year or any other period of time less than a calendar year) are
equivalent are the rates so determined multiplied by the actual number of days
in the applicable calendar year and divided by 365 or such other period of time.
24. CRIMINAL RATES OF INTEREST
If any provision of this Note would obligate the Company to make any
payment of interest or other amount payable to any Holder in an amount or
calculated at a rate which would be prohibited by law or would result in a
receipt by that Holder of interest at a criminal rate (as such terms are
construed under the Criminal Code (Canada) or in such other similar applicable
legislation) then, notwithstanding such provision, such amount or rate shall be
deemed to have been adjusted with retroactive effect to the maximum amount or
rate of interest, as the case may be, as would not be so prohibited by law or so
result in a receipt by that Holder of interest at a criminal rate, such
adjustment to be effected, to the extent necessary, as follows: (i) firstly, by
reducing the amount or rate of interest required to be paid to the Holder under
this Section 24; and (ii) thereafter, by reducing any fees, commissions,
premiums and other amounts required to be paid to the Holder which would
constitute interest for purposes of Section 347 of the Criminal Code (Canada) or
in such other similar applicable legislation. Notwithstanding the foregoing, and
after giving effect to all adjustments contemplated thereby, if any Holder shall
have received an amount in excess of the maximum permitted by that section of
the Criminal Code (Canada) or in such other similar applicable legislation, then
the Company shall be entitled, by notice in writing to the Holder, to obtain
reimbursement from the Holder in an amount equal to such excess, and pending
such reimbursement, such amount shall be deemed to be an amount payable by the
Holder to the Company. Any amount or rate of interest referred to in this
Section 24 shall be determined in accordance with generally accepted actuarial
practices and principles as an effective annual rate of interest over the term
that the Note.
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25. Taxes
(a) Any and all payments by the Company hereunder, including the
issuance of Common Stock of the Company in lieu of any such payment, shall be
made, in accordance with this Section 25, free and clear of and without
deduction for any and all present or future Taxes, excluding Taxes imposed on or
measured by the net income or capital of the Holder by the jurisdictions the
laws of which are applicable to the Holder. If the Company shall be required by
law to deduct any Taxes (excluding Taxes imposed on or measured by the net
income or capital of the Holder by the jurisdictions the laws of which are
applicable to the Holder) from or in respect of any sum payable hereunder,
including the issuance of Common Stock of the Company in lieu of any such sum,
(i) the sum payable shall be increased as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 25) the Holder receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Company shall make such deductions, and (iii) the Company shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any payment of Taxes,
the Company shall furnish to the Holder the original or a certified copy of a
receipt evidencing payment thereof.
(b) In addition, the Company agrees to pay any present or future Taxes
that arise from any payment made under this Note, including the issuance of
Common Stock of the Company in lieu of any such payment, or from the execution,
sale, transfer, delivery or registration of, or otherwise with respect to, this
Note and any other agreements and instruments contemplated hereby or thereby
(except for Taxes imposed on or measured by the net income or capital of the
Holder by the jurisdictions the laws of which are applicable to the Holder).
(c) The Company shall indemnify the Holder for the full amount of the
Taxes referred to in this Section 25 (except for Taxes imposed on or measured by
the net income or capital of the Holder by the jurisdictions the laws of which
are applicable to the Holder), but including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable by the Company under this Section
25) that are not deducted and paid by the Company in accordance with Section
25(a) and that are paid by the Holder and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted. This indemnification shall be
made within ten (10) days after the date the Holder makes written demand
therefor.
(d) Without prejudice to the survival of any other agreement of the
Company under this Note, the agreements and obligations of the Company contained
in this Section 25 shall survive the termination of this Note
(e) Tax and Taxes includes all present and future taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, withholdings and other
charges of any nature net worth, sales, consumption, use, transfer, goods and
services, value-added, stamp, registration, franchise, withholding, payroll,
employment, health, education, employment insurance, pension, exercise,
business, school, property, occupation, customs, anti-dumping and countervail
taxes, surtaxes, duties, levies, imports, rates, fees, assessments, withholdings
and other charges) imposed by any governmental authority, together with any
fines, interest, penalties or other additions on, to, in lieu of, for
non-collection of or in respect of those taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings and other charges.
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26. TRANSFER.
This Note and the rights granted to Holder are transferable without the
consent of the Company in whole or in part, upon notice and surrender of this
Note to the Company. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to Holder), a register for this Note, in which the Company shall record
the name and address of the person in whose name this Note has been issued, as
well as the name and address of each transferee. The Company may treat the
person in whose name the Note is registered on the register as the owner and
Holder for all purposes, notwithstanding any notice to the contrary, but in all
events recognizing any transfers made in accordance with the terms of this Note.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered as of the 15th day of December, 2000.
ALTAIR INTERNATIONAL, INC.
By: _________________________________________________________
[Name]
[Title]
ALTAIR TECHNOLOGIES, INC.
By: _________________________________________________________
[Name]
[Title]
MINERAL RECOVERY SYSTEMS, INC.
By: _________________________________________________________
[Name]
[Title]
FINE GOLD RECOVERY SYSTEMS, INC.
By: _________________________________________________________
[Name]
[Title]
23
<PAGE>
EXHIBIT A
ISSUER
EXCHANGE NOTICE
Reference is made to the Note issued by Altair International, Inc. (the "Note").
In accordance with and pursuant to the Note, the undersigned hereby elects to
convert the principal amount of the Note, indicated below into shares of common
stock, no par value per share (the "Common Stock"), of the Company, by tendering
the Note amount specified below as of the date specified below.
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DATE
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CURRENTLY OUTSTANDING PRINCIPAL
--------------------------------------------------------------------------------
CURRENT VALUE OF LETTER OF CREDIT
--------------------------------------------------------------------------------
ACCRUED BUT UNPAID INTEREST
--------------------------------------------------------------------------------
EXCHANGE AMOUNT
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(divided by)
EXCHANGE PRICE
--------------------------------------------------------------------------------
(equals)
EXCHANGE SHARES
Less: Call Shares
Equals: Newly Issued Exchange Shares
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ACCRUED INTEREST CONVERTED
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PRINCIPAL CONVERTED
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(times) LETTER OF CREDIT RATIO
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(equals) LETTER OF CREDIT REDUCTION
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NEW OUTSTANDING PRINCIPAL
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NEW LETTER OF CREDIT AMOUNT
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AGREED TO:
ALTAIR INTERNATIONAL, INC. DORAL 18, LLC
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