THE SECURITIES REPRESENTED BY THIS WARRANT 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 FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE ISSUER 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 SUCH OFFER, SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH THE APPLICABLE STATE SECURITIES
LAWS. NOTWITHSTANDING THE FOREGOING, THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.
ALTAIR INTERNATIONAL, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.: Number of Shares: 350,000
Date of Issuance: December 15, 2000
ALTAIR INTERNATIONAL, INC., an Ontario corporation (the "Company"), hereby
certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, DORAL 18, LLC, a Cayman Islands limited liability company (the
"Holder"), the registered holder hereof or its permitted assigns, is entitled,
subject to the terms set forth below, to purchase from the Company upon
surrender of this Warrant, at any time or times on or after the date hereof, but
not after 11:59 P.M. Eastern Time on the appropriate Expiration Date (as defined
herein), 350,000 fully paid nonassessable shares of Common Stock (as defined
herein) of the Company (the "Warrant Shares") at the purchase prices per share
provided in SECTION 1(b) below. Notwithstanding the foregoing, in no event shall
the holder be entitled to exercise this Warrant to the extent that after giving
effect to such exercise such holder (together with such person's affiliates)
would beneficially own in excess of 4.99% of the outstanding shares of the
Common Stock following such exercise. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by a holder and its
affiliates or acquired by such holder and its affiliates, as the case may be,
shall include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which such determination of beneficial ownership is
being made, but shall exclude the number of shares of Common Stock which would
be issuable upon (i) exercise of the remaining, nonexercised portion of this
Warrant beneficially owned by such holder and its affiliates and (ii) exercise
<PAGE>
or exchange of the unexercised or unconverted portion of any other securities of
the Company (including, without limitation, any exchangeable notes) subject to a
limitation on exchange or exercise analogous to the limitation contained herein
beneficially owned by such holder and its affiliates. Except as set forth in the
preceding sentence, for purposes of this paragraph, 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 Exercise Notice (as defined below) shall constitute a representation by the
holder submitting such Exercise Notice that, after giving effect to such
Exercise Notice, (A) the holder will not beneficially own (as determined in
accordance with this paragraph) in excess of 4.99% of the outstanding shares of
Common Stock and (B) the holder will not have acquired, through exercise of this
Warrant or otherwise, a number of shares of Common Stock which, when added to
the number of shares of Common Stock beneficially owned at the beginning of the
60-day period ending on and including the applicable date of exercise of this
Warrant, is in excess of 4.99% of the outstanding shares of the Common Stock
following such exercise during the 60-day period ending on and including such
date of exercise and the Company shall have no liability for any exercise in
reliance on any such Exercise Notice. For purposes of this paragraph, in
determining the number of the outstanding shares of Common Stock the holder of
this Warrant may rely on the number of outstanding shares of Common Stock (1) as
reflected in the Company's most recent shareholder list, which list shall be
provided to the holder by the Company upon the holders' written request (which
request the holder shall not submit to the Company on more than one occasion per
calendar quarter) 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 a more recent public
announcement by the Company or other notice by the Company or its transfer agent
setting forth the number of shares of Common Stock outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to exercises of this Warrant (including the exercise with respect this
determination is being made) by the holder since the date as of which such
number of outstanding shares of Common Stock was disclosed or reported.
Notwithstanding the foregoing, in an Event of Default under the Note, as such
term is defined therein, the holder of this Warrant shall have the right to
exercise this Warrant and to convert all or any portion of this Warrant into
Common Stock, in its sole discretion and at such time or times as it deems
appropriate.
SECTION 1. DEFINITIONS.
(a) Securities Purchase Agreement. This Warrant has been issued
pursuant to the terms of that certain Securities Purchase Agreement dated as of
December 15, 2000, between the Company and the Buyer referred to therein (the
"Securities Purchase Agreement").
(b) Definitions. The following words and terms as used in this Warrant
shall have the following meanings:
(i) "Approved Stock Plan" shall mean any employee benefit plan which
has been approved by the Board of Directors of the Company, pursuant to
which the Company's securities may be issued to any employee, officer,
director or consultant for services provided to the Company.
2
<PAGE>
(ii) "Closing Bid Price" means, for any security as of any date, the
last closing bid price for such security on the Principal Market (as defined
below) as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the
Principal Market is not the principal securities exchange or trading market
for such security, the last closing bid price of such security on the
principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg,
or, if no last closing bid price is reported for such security by Bloomberg,
the last closing trade price for such security as reported by Bloomberg, or,
if no last closing trade price is reported for such security by Bloomberg,
the average of the bid prices of any market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on such date on any
of the foregoing bases, the Closing Bid Price of such security on such date
shall be the fair market value as mutually determined by the Company and
holder. If the Company and holder are unable to agree upon the fair market
value of the Common Stock, then such dispute shall be resolved pursuant to
SECTION 2(a) below with the term "Closing Bid Price" being substituted for
the term "Market Price." All such determinations to be appropriately
adjusted for any stock dividend, stock split or other similar transaction
during such period.
(iii) "Common Stock" means (i) the Company's common shares, without par
value, and (ii) any capital stock into which such Common Shares shall have
been changed or any capital stock resulting from a reclassification of such
Common Shares.
(iv) "Exchangeable Securities" means any stock or securities (other
than Options) directly or indirectly exchangeable into or exchangeable for
Common Stock, other than the Note.
(v) "Note" means the Asset-backed Exchangeable Term Note issued
pursuant to the Securities Purchase Agreement.
(vi) "Expiration Date" means the date which is five (5) years from the
date of this Warrant; provided, if any such date falls on a Saturday, Sunday
or other day on which banks are required or authorized to be closed in the
City of Chicago or the State of Illinois or on which trading does not take
place on the principal exchange or automated quotation system on which the
Common Stock is traded (a "Holiday"), the next date that is not a Holiday.
(vii) "Options" means any rights, warrants or options to subscribe for
or purchase Common Stock or Exchangeable Securities.
(viii) "Other Securities" means (i) those warrants of the Company
issued prior to, and outstanding on, the date of issuance of this Warrant,
(ii) the Note and (iii) the shares of Common Stock issued upon exchange of
the Note.
3
<PAGE>
(ix) "Person" means a natural person, a partnership, a corporation, a
limited liability company, an association or a joint stock company, a trust,
a joint venture, an unincorporated organization or a governmental agency or
any department, or agency or political subdivision thereof.
(x) "Principal Market" means Nasdaq National Market or other comparable
national exchange or trading market.
(xi) "Securities Act" means the Securities Act of 1933, as amended and
the rules and regulations
promulgated thereunder.
(xii) "Warrant" means this Warrant, and all warrants issued in
exchange, transfer or replacement of any thereof.
(xiii) "Warrant Exercise Price" means $3.00, subject to adjustment as
provided in SECTION 2(F) and SECTION 3.
Capitalized terms used herein not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement.
SECTION 2. EXERCISE OF WARRANT.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the Company, in
whole or in part, at any time on any business day on or after the opening of
business on the date hereof and prior to 11:59 P.M. Eastern Time on the
Expiration Date by (i) delivery of a written notice, in the form of the
subscription notice attached as EXHIBIT A hereto (the "Exercise Notice"), of
such holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased (ii) payment to the Company of an
amount equal to the appropriate Warrant Exercise Price multiplied by the number
of Warrant Shares as to which this Warrant is being exercised (plus any
applicable issue or transfer taxes) (the "Aggregate Exercise Price") in cash or
by check or wire transfer and (iii) the surrender to a common carrier for
delivery to the Company as soon as practicable following such date, this Warrant
(or an indemnification undertaking with respect to this Warrant in the case of
its loss, theft or destruction); provided, that if such Warrant Shares are to be
issued in any name other than that of the registered holder of this Warrant,
such issuance shall be deemed a transfer and the provisions of SECTION 8 shall
be applicable. In the event of any exercise of the rights represented by this
Warrant in compliance with this SECTION 2(A), a certificate or certificates for
the Warrant Shares so purchased, in such denominations as may be requested by
the holder hereof and registered in the name of, or as directed by, the holder,
shall be delivered at the Company's expense to, or as directed by, such holder
as soon as practicable, and in no event later than three business days, after
the Company's receipt of the Exercise Notice, the Aggregate Exercise Price and
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction). Upon delivery of the Exercise
Notice and Aggregate Exercise Price referred to in clause (ii)(A) above the
holder of this Warrant shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of this Warrant as
4
<PAGE>
required by clause (iii) above or the certificates evidencing such Warrant
Shares. In the case of a dispute as to the determination of the Warrant Exercise
Price, the Closing Bid Price, the last reported sale price (as reported by
Bloomberg) or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the holder the number of shares of Common Stock that is
not disputed and shall submit the disputed determinations or arithmetic
calculations to the holder via facsimile within one business day of receipt of
the holder's subscription notice. If the holder and the Company are unable to
agree upon the determination of the Warrant Exercise Price, the Closing Bid
Price, the last reported sale price (as reported by Bloomberg) or arithmetic
calculation of the Warrant Shares within three business days of such disputed
determination or arithmetic calculation being submitted to the holder, then the
Company shall within two business days submit via facsimile (i) the disputed
determination of the Warrant Exercise Price, the Closing Bid Price, or the last
reported sale price (as reported by Bloomberg) to an independent, reputable
investment banking firm or (ii) the disputed arithmetic calculation of the
Warrant Shares to its independent, outside accountant. The Company shall use all
commercially reasonable efforts to require the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the holder of the results no later than forty-eight
(48) hours from the time it receives the disputed determinations or
calculations. Such investment banking firm's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive absent manifest
error.
(b) Unless the rights represented by this Warrant shall have expired or
shall have been fully exercised, the Company shall, as soon as practicable and
in no event later than five (5) business days after any exercise and at its own
expense, issue a new Warrant identical in all respects to this Warrant except it
shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which such Warrant is exercised.
(c) The minimum number of shares of Common Stock for which this Warrant
may be exercised shall be twenty thousand (20,000) shares, unless the aggregate
number of shares for which this Warrant may be exercised is less than twenty
thousand (20,000), in which event, this Warrant may be exercised with respect to
the full amount of such aggregate number.
(d) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.
(e) If the Company shall fail for any reason or for no reason to issue
(subject to extension in accordance with SECTION 2(A) for a good faith dispute
made in accordance with SECTION 2(A)) to the holder (i) within five (5) business
days after the Company's receipt of the Exercise Notice, the Aggregate Exercise
Price and this Warrant, a certificate for the number of shares of Common Stock
to which the holder is entitled upon the holder's exercise of this Warrant and
(ii) if this Warrant is being exercised for less than all of the number of
shares of Common Stock covered by this Warrant, within ten (10) business days
after the Company's receipt of the Exercise Notice, the Aggregate Exercise Price
and this Warrant, a new Warrant for the number of shares of Common Stock to
which such holder is entitled pursuant to SECTION 2(B) hereof, the Company
shall, in addition to any other remedies under this Warrant or the Securities
Purchase Agreement or otherwise available to such holder, including any
indemnification under Section 8 of the Securities Purchase Agreement, pay as
additional damages in cash to such holder on each day such fifth (5th) business
day such exercise is not timely effected and/or after the tenth (10th) business
day such new Warrant is not delivered, as the case may be, an amount equal to
0.5% of the product of (A) the sum of the number of shares of Common Stock not
issued to the holder on a timely basis and to which the holder is entitled
and/or, the number of shares represented by the portion of this Warrant which is
not being converted, as the case may be, and (B) the average of the Closing Bid
Prices of the Common Stock for the three consecutive trading days immediately
preceding the last possible date which the Company could have issued such Common
Stock or Warrant, as the case may be, to the holder without violating this
SECTION 2.
(f) If the registration statement (the "Registration Statement")
covering the resale of the Warrant Shares issuable upon exchange of this Warrant
required to be filed by the Company pursuant to the Registration Rights
Agreement between the Company and the original purchaser of this Warrant (the
"Registration Rights Agreement") is not (A) filed with the Securities and
Exchange Commission (the "SEC") on or before the Filing Deadline (as defined in
the Registration Rights Agreement), or (B) if after the Registration Statement
has been declared effective by the SEC, sales cannot be made pursuant to the
Registration Statement 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, 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, during which time the Company shall
use all commercially reasonable efforts to file such financial statements at the
earliest practicable date. In that event, as partial relief for the damages to
the holder of this Warrant by reason of any such delay in or reduction of its
ability to sell the underlying shares of Common Stock (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Warrant
Exercise Prices shall be adjusted as follows: each Warrant Exercise Price in
effect at such time shall be reduced by an amount equal to the product of (A)
the Warrant Exercise Price in effect as of the original issuance date of this
Warrant and (B) the sum of (I) with respect to the first 30 Registration Default
Days (as defined below), the product of (x) .00167 multiplied by (y) the sum of
the (i) the number of days after the Filing Deadline that the relevant
Registration Statement has not been filed with the SEC, (ii) the number of days
after the Effectiveness Deadline that the Registration Statement has not been
declared effective by the SEC and (iii) the number of days that sales cannot be
made pursuant to the Registration Statement in accordance with the Registration
Rights Agreement after the Registration Statement has been declared effective
(the days set forth in the preceding clauses (I), (II) and (III) collectively
are referred to herein as "Registration Default Days"), plus (II) the product of
.0025 and the number of Registration Default Days in excess of 30.
(g) Notwithstanding the foregoing, if, at any time after the Effective
Date, and as long as the holder may sell the Warrant Shares pursuant to an
effective Registration Statement, or otherwise without restriction, the Closing
Price of the Common Stock is equal to or greater than $12.00 for five (5)
consecutive days, the Company shall have the right to require the exercise of
the Warrants within 60 days of the Company's written notification to the holder
of such requirement. Following the expiration of such 60-day period, this
Warrant shall expire and have of no further force or effect.
SECTION 3. ADJUSTMENT.
The Warrant Exercise Price shall be subject to adjustment from time to
time as hereinafter provided in this SECTION 3:
(a) 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 Warrant Exercise Price in effect immediately prior to the time of
such issuance or sale, then, upon such issuance or sale the Warrant Exercise
Price shall be adjusted to that price equal to the fraction (i) the numerator of
which shall be equal to (A) (x) the Warrant Exercise 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 Corporation 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 of Exchangeable Securities (including any Notes held by the holder)
and exercises of Stock Purchase Rights (including any Warrants held by the
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 covenants or (4) the
acquisition of assets to be used in the operation of the Company's business.
(b) Stock Dividends, Subdivisions and Combinations. If and whenever the
Company subsequent to the date hereof:
(i) 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,
(ii) subdivides its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the Warrant Exercise Price shall be adjusted to that price determined by
multiplying the Warrant Exercise 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 the holder) and exercises of Stock Purchase Rights (including
any Warrants held by the holder).
7
<PAGE>
(c) 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 Warrant Exercise Price in
effect immediately prior to the time of such issuance or sale, then upon such
issuance or sale the Warrant Exercise Price shall be adjusted as provided in
Section 3(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 Warrant Exercise Price, provided that , no adjustment shall
be made with respect to the issuance of shares of Common Stock issued upon (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.
(d) Readjustment of Warrant Exercise Price. Upon (i) each change in the
purchase price payable for any Stock Purchase Rights or Exchangeable Securities
referred to in Section 3(c) (ii) 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 Warrant Exercise Price in effect at
the time of such event shall forthwith be readjusted to the Warrant Exercise
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.
(e) 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
8
<PAGE>
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, there shall thereafter be deliverable upon the exercise of this
Warrant 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 exercise of this Warrant or
any portion thereof at the time would have been entitled upon such transaction
or event.
(f) 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 Warrant
Exercise Price or to any of the other terms of this Warrant that would not
fairly protect the exercise rights and other rights represented by this Warrant
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.
(g) Maximum Warrant Exercise Price. At no time shall the Warrant
Exercise Price exceed the initial Warrant Exercise Price set forth in Section
3(a) hereof except as a result of an adjustment thereto pursuant to Section
3(b)(iii).
(h) 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.
(i) Waiver. In the event that the 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 Warrant or any other Warrant in
excess of such limit or at all, as the terms of such consent may dictate.
(j) Notice of Adjustments to Warrant Exercise Price. As promptly as
practicable after the occurrence of any event requiring any adjustment under
this SECTION 3 to the Warrant Exercise Price (or to the number or kind of
securities or other property deliverable upon the exercise of this Warrant), the
Company shall, at its expense, mail to the 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 Warrant Exercise Price and the number of shares of Common Stock
issuable upon exercise of this Warrant after giving effect to such adjustment.
(k) 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 Warrant, such provisions (or any more favorable portion thereof)
shall be deemed to be incorporated herein as if fully set forth in this Warrant
and, to the extent inconsistent with any provision of this Warrant, shall be
deemed to be substituted therefor.
9
<PAGE>
SECTION 4. COVENANTS AS TO COMMON STOCK.
The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and validly
issued.
(b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.
(c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Warrant Exercise Price.
(d) The Company shall promptly secure the listing of the shares of
Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Company shall
so list on each national securities exchange or automated quotation system, as
the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant if and so long
as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(e) The Company will not, by amendment of its Articles of Incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. The Company (i) will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above any Warrant
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.
(f) This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets.
10
<PAGE>
SECTION 5. TAXES.
The Company shall pay any and all taxes, excluding income taxes, which
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.
SECTION 6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.
Except as otherwise specifically provided herein, no holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this SECTION 6, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
SECTION 7. REPRESENTATIONS OF HOLDER.
The holder of this Warrant, by the acceptance hereof, represents that
it is acquiring this Warrant and the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution of this Warrant or the Warrant Shares, except
pursuant to sales registered or exempted under the Securities Act; provided,
however, that by making the representations herein, the holder does not agree to
hold this Warrant or any of the Warrant Shares for any minimum or other specific
term and reserves the right to dispose of this Warrant and the Warrant Shares at
any time in accordance with or pursuant to a registration statement or an
exemption under the Securities Act. The holder of this Warrant further
represents, by acceptance hereof, that, as of this date, such holder is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
(an "Accredited Investor"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder's
exercise of this Warrant that the Company receive such other representations as
the Company considers reasonably necessary to assure the Company that the
issuance of its securities upon exercise of this Warrant shall not violate any
United States or state securities laws.
11
<PAGE>
SECTION 8. OWNERSHIP AND TRANSFER.
(a) 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 the
holder hereof), a register for this Warrant, in which the Company shall record
the name and address of the person in whose name this Warrant has been issued,
as well as the name and address of each transferee. The Company may treat the
person in whose name any Warrant is registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary, but
in all events recognizing any transfers made in accordance with the terms of
this Warrant.
(b) This Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together with
a properly executed warrant power in the form of EXHIBIT B attached hereto;
provided, however, that any transfer or assignment shall be subject to the
conditions set forth in SECTION 8(C) below.
(c) The holder of this Warrant understands that this Warrant has not
been and is not expected to be, registered under the Securities Act or any
applicable securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, or (b) such holder
shall have delivered to the Company an opinion of counsel, in form and substance
reasonably acceptable to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; provided that (i) any sale of such
securities made in reliance on Rule 144 promulgated under the Securities Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act; and (ii) neither
the Company nor any other person is under any obligation to register this
Warrant under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder.
(d) The Company is obligated to register the Warrant Shares for resale
under the Securities Act pursuant to the Registration Rights Agreement and the
initial holder of this Warrant (and certain assignees thereof) is entitled to
the registration rights in respect of the Warrant Shares as set forth in the
Registration Rights Agreement.
SECTION 9. PURCHASE RIGHTS; REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.
(a) In addition to any adjustments pursuant to SECTION 3 above, 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 the holder of this Warrant will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
such holder could have acquired if such holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant 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.
12
<PAGE>
(b) 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") written agreement (in form and substance
satisfactory to the holder of this Warrant) to deliver to such holder, in
exchange for such Warrant, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant
and satisfactory to the holder hereof (including, an adjusted warrant exercise
price equal to the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, and exercisable for a corresponding number of
shares of Common Stock acquirable and receivable upon exercise of the Warrant,
if the value so reflected is less than the Warrant Exercise Prices in effect
immediately prior to such consolidation, merger or sale). Prior to the
consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the holder of this Warrant) to
insure that the holder hereof 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 exercise of
such holder's Warrant, 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 exercise of this Warrant as of the date of
such Organic Change (without taking into account any limitations or restrictions
on the exercise ability of this Warrant).
SECTION 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT.
If this Warrant is lost, stolen, mutilated or destroyed, the Company
shall, on receipt of an indemnification undertaking, issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
SECTION 11. NOTICES.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Warrant must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
13
<PAGE>
If to the Company:
ALTAIR INTERNATIONAL, INC.
Dr. William P. Long
1725 Sheridan Ave., Suite 140
Cody, Wyoming 82414
Edward Dickinson
230 South Rock Blvd., Suite 21
Reno, Nevada 89502
With copies to:
Stoel Rives, LLP
210 South Main Street
Salt Lake City, Utah 84111
Attn: Brian G. Lloyd
Equity Transfer Services
120 Adelaide Street West, Suite 420
Toronto, Canada M5H 4C3
Attn: Peter Lindeman
If to the Buyer:
DORAL 18, LLC C/O JE Matthew, LLC 600 Central Avenue Suite 214
Highland Park, Illinois 60035
Telephone: (847)681-8600
Facsimile: (847)681-1541
Attention: David A. White
With a copy to:
John Muehlstien, Esq.
Pedersen & Houpt
161 N. Clark St. Suite 3100
Chicago, IL 60601
(p) (312) 261-2200
(f) (312) 261-6895
or to such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by prior written notice given
to each other party five days prior to the effective date of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
14
<PAGE>
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
SECTION 12. DATE.
The date of this Warrant is December 15, 2000. This Warrant, in all
events, shall be wholly void and of no effect after the close of business on the
Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of SECTION 8 shall continue in full force and effect after such date
as to any Warrant Shares or other securities issued upon the exercise of this
Warrant.
SECTION 13. AMENDMENT AND WAIVER.
The provisions of this Warrant may only be amended upon a written
instrument executed by the Company and the holders hereof.
SECTION 14. DESCRIPTIVE HEADINGS; GOVERNING LAW.
The descriptive headings of the several Sections and paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant. All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois.
SECTION 15. SUCCESSORS AND ASSIGNS.
This Warrant shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any purchasers of
this Warrant. The Company shall not assign this Warrant or any rights or
obligations hereunder without the prior written consent of the holder of this
Warrant, including by merger, consolidation or reorganization, except pursuant
to a Special Event (as defined in SECTION 2(b)(ii) of the Note) consolidation or
reorganization with respect to which the Company has satisfied its obligations
under SECTION 2 of the Note and SECTION 9(B). The holder of this Warrant may
assign some or all of its rights hereunder to (i) without the consent of the
Company, any person or entity who, immediately prior to such assignment, is an
affiliate of such holder (a "Permitted Assignee") and (ii) with the prior
written consent of the Company, which consent shall not be unreasonably
withheld, to any person or entity which is not a Permitted Assignee; provided,
however, that any such assignment shall not release the holder of this Warrant
from its obligations hereunder unless such obligations are assumed by such
assignee and the Company has consented to such assignment and assumption, which
consent shall not be unreasonably withheld. Notwithstanding anything to the
contrary contained herein, the holder of this Warrant shall be entitled to
pledge the this Warrant and the shares of Common Stock issuable upon exercise of
this Warrant in connection with a bona fide margin account.
15
<PAGE>
SECTION 16. LIMITATION ON NUMBER OF WARRANT SHARES.
The Company shall not be obligated to issue more than 19.9% of its
total outstanding shares of Common Stock upon exercise of this Warrant and/or
the conversion or exchange of the Note, except that such limitation shall not
apply in the event that the Company obtains the approval of its stockholders as
required by the Principal Market (or any successor rule or regulation) for
issuances of Common Stock in excess of such amount. Upon the holder's request,
the Company shall seek approval of its Stockholders at its next annual meeting
of Stockholders for the issuance of 20% or more of its Common Stock upon the
earlier to occur of (i) the actual issuance of 3,000,000 Exchange Shares or (ii)
the falling below $1.00 of the per-share closing bid price of the Common Stock
for five consecutive trading days. In the event the Company is prohibited from
issuing Warrant Shares as a result of the operation of this SECTION 16, upon
exercise of the Warrants, the Company shall redeem for cash those Warrant Shares
which can not be issued, at a price equal to the difference between the last
reported sale price (as reported by Bloomberg) and the Exercise Price of such
Warrant Shares as of the date of the attempted exercise.
[SIGNATURE PAGE FOLLOWS]
16
<PAGE>
ALTAIR INTERNATIONAL, INC.
By: _________________________________________________
[Name]
[Title]
17
<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS WARRANT ALTAIR
INTERNATIONAL, Inc.
The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of ALTAIR
INTERNATIONAL, Inc., an Ontario corporation (the "Company"), evidenced by the
attached Warrant (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Type of Warrants. The aggregate number of Warrants exercised
pursuant to this Subscription Form shall be comprised of one (1) Warrant.
2. Payment of Warrant Exercise Price. In the event that the holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the holder shall pay the sum of $___________________ to
the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
------------------
Name:
Title:
18
<PAGE>
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of ALTAIR INTERNATIONAL, Inc., an
Ontario corporation, represented by warrant certificate no. _____, standing in
the name of the undersigned on the books of said corporation. The undersigned
does hereby irrevocably constitute and appoint ______________, attorney to
transfer the warrants of said corporation, with full power of substitution in
the premises.
Dated: _________, ____
------------------------------------
By: _____________________________
Its: _____________________________
