STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into as
of the 15th day of December, 2000 by and among Altair International, Inc., an
Ontario corporation ("Pledgor") and Doral 18, LLC, a Cayman Islands limited
liability company ("Pledgee").
Preliminary Statement
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A. Pledgor and Pledgee have agreed to enter into a Securities Purchase
Agreement dated as of December 15, 2000 (the "Securities Purchase Agreement")
pursuant to which Pledgee has agreed to purchase from Pledgor (i) an Asset
Backed Exchangeable Term Note in the form of Exhibit A attached to the
Securities Purchase Agreement (the "Note") and a Warrant in the form of Exhibit
B attached to the Securities Purchase Agreement (the "Warrant").
B. Pledgor owns one hundred percent (100%) of the shares of the common
stock (the "Securities") of Mineral Recovery Systems, Inc. ("Mineral Recovery
Systems"), a Nevada corporation.
C. Mineral Recovery Systems is a wholly-owned subsidiary of the
Pledgor. Mineral Recovery Systems owns certain leasehold interests in mineral
deposits as described in various Memoranda of Mineral Leases as set forth in
Exhibit A attached hereto.
D. As security for the payments to be made to Pledgee by Pledgor under
the Note, Pledgor desires to pledge the Securities to Pledgee as Collateral on
the Note.
NOW, THEREFORE, in consideration of the premises set forth herein, it
is hereby agreed as follows:
1. Collateral. The term "Collateral" shall mean the Securities and all
dividends, distributions and other amounts or additional securities to which
Pledgor (with or without additional consideration) is or becomes entitled by
virtue of its ownership of any of the Securities or as the result of any
corporate reorganization, merger, consolidation, stock split, stock dividend,
conversion, preemptive right or otherwise, and the proceeds thereof.
2. Deposit of Collateral. To secure payment of the Pledgor's
obligations under the Loan Agreement, Pledgor hereby pledges and deposits the
Securities with Pledgee and hereby grants to Pledgee a valid and perfected first
lien on and security interest in the Securities and other items of the
Collateral.
3. Representations and Warranties. Pledgor hereby represents and
warrants to Pledgee that as to the Collateral deposited by such Pledgor with
Pledgee on the date hereof, (i) Pledgor is the legal and beneficial owner of
such Collateral; (ii) such Collateral is validly issued, fully paid and
non-assessable and is registered in the name of Pledgor; (iii) the pledge of
Collateral pursuant to the terms of this Agreement, together with delivery
thereof, creates a valid and perfected first lien on and security interest in
such Collateral in favor of Pledgee; (iv) the stock power attached to the
certificate(s) representing such Collateral have been duly executed and
delivered by Pledgor to Pledgee; (v) none of such Collateral is subject to any
lien, except for the perfected first security interest granted to Pledgee hereby
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and, so long as any portion of the Note remains unpaid, Pledgor will not create
or permit to exist any lien upon or with respect to such Collateral without the
consent of Pledgee; (vi) Pledgor will not sell, transfer, convey, assign or
otherwise divest its interests in such Collateral, or any part thereof, to any
other person; (vii) Pledgor hereby represents and warrants that Mineral Recovery
Systems currently has good and valid title to the leasehold interests as
described in the Memoranda of Mineral Leases as set forth in Exhibit A attached
hereto, and the same are not subject to any liens, security interests, suits,
judgments or any other encumbrances; and (viii) Pledgor shall not cause Mineral
Recovery Systems to sell, transfer, convey, assign or otherwise divest its
interests in the leasehold interests, or any part thereof, to any other person
nor will Pledgor permit Mineral Recovery Systems to create or permit to exist
any lien on any leasehold interest during the term hereof.
4. Stock Splits, Stock Dividends, Etc.
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4.1 Pledgor agrees that if by virtue of Pledgor's ownership of
the Collateral, Pledgor becomes entitled (with or without additional
consideration) to other or additional securities as the result of any corporate
reorganization, merger, consolidation, stock split, stock dividend, conversion
or preemptive right or otherwise, such Pledgor shall:
4.1.1 Cause the issuer of such additional securities to deliver to
Pledgee the certificates evidencing Pledgor's ownership thereof and hereby
authorizes and empowers Pledgee to demand the same from such issuer, and agrees
if such certificates are delivered to Pledgor, to take possession thereof in
trust for Pledgee;
4.1.2 Deliver to Pledgee a stock power with respect to such securities,
executed in blank by Pledgor;
4.1.3 Deliver to Pledgee such other certificates, forms and other
instruments as Pledgee may request in connection with such pledge.
4.2 Pledgor agrees that such additional securities shall
constitute a portion of the Collateral and be subject to this Pledge Agreement
in the same manner and to the same extent as the securities pledged hereby to
Pledgee on the date hereof.
5. Dividend Rights/Voting Power. Unless and until an Event of Default
shall have occurred under the Note and such default shall not have been cured
within the applicable cure period, Pledgor shall be entitled to receive all
dividends paid on the Securities and to exercise all voting powers in all
corporate matters pertaining to the Collateral for any purpose not inconsistent
with, or in violation of, the provisions of the Securities Purchase Agreement or
the Note.
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6. Default and Remedies.
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6.1 If an Event of Default shall occur under the Note and such
default shall not have been cured within the applicable cure period, Pledgee, at
its option, may:
6.1.1 Cause the Collateral to be registered in its
name or in the name of its nominee;
6.1.2 Exercise all voting powers pertaining to the
Collateral and otherwise act with respect thereto as though Pledgee
were the owner thereof;
6.1.3 Receive all dividends and all other
distributions of any kind whatsoever on all or any of such Collateral;
6.1.4 Exercise any and all rights of collection,
conversion or exchange, and any and all other rights, privileges,
options or powers of Pledgor pertaining or relating to the Collateral;
6.1.5 Sell, assign and deliver the whole, or from
time to time, any part of such Collateral at any private sale, with or
without demand for performance or advertisement of the time or place of
sale or adjournment thereof or otherwise, and free from any right of
redemption (all of which hereby expressly are waived by Pledgor) for
cash, for credit or for other property, for immediate or future
delivery, and for such price and on such terms as Pledgee in its sole
discretion may determine; and
6.1.6 Exercise any other remedy specifically granted
under this Agreement or now or hereafter existing in equity or at law,
by virtue of statute or otherwise.
With respect to the actions described in each of subsections 6.1.2 and 6.1.4
above, Pledgor hereby irrevocably constitutes and appoints Pledgee its proxy and
attorney-in-fact with full power of substitution and acknowledges that the
constitution and appointment of such proxy and attorney-in-fact are coupled with
an interest and are irrevocable.
6.2 At any sale made pursuant to Section 6.1 above, Pledgee
may bid for and purchase, free from any right or equity of redemption on the
part of the Pledgor (the same hereby being waived and released by Pledgor), any
part or all of the Collateral that is offered for sale, and Pledgee, upon
compliance with the terms of sale and other applicable federal regulatory
requirements, may hold, retain and dispose of such Collateral without further
accountability therefor.
6.3 Pledgee shall apply the proceeds of any sale of the whole
or any part of the Collateral and any other monies at the time held by Pledgee
under the provisions of this Agreement in satisfaction of the Note.
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6.4 Pledgee shall not have any duty to exercise any of the
rights, privileges, options or powers or, except as otherwise required by law,
to sell or otherwise realize upon any of the Collateral, as hereinbefore
authorized, and Pledgee shall not be responsible for any failure to do so or
delay in so doing.
6.5 Any sale of all or any portion of the Collateral pursuant
to Section 6.1 above shall operate to divest all right, title and interest of
the Pledgor to the Collateral which is the subject of any such sale.
6.6 Pledgor acknowledges that Pledgee may be unable to effect
a public sale of all or a part of the Collateral or that it may be able to do so
only after delay which might adversely affect the value that might be realized
upon the sale of the Collateral. Accordingly, Pledgor agrees that Pledgee may
sell the Collateral or any part thereof in one or more private sales to a
restricted group of purchasers who may be required to agree, among other things,
that they are acquiring the Collateral for their own account, for investment
purposes only, and not with a view toward the distribution or resale thereof.
Pledgor agrees that any such private sale may be at prices or on terms less
favorable to the owner of the Collateral than would be the case if such
Collateral was sold at public sale, and that any such private sale shall not be
deemed not to have been made in a commercially reasonable manner by virtue of
such sale having been a private sale.
6.7 Pledgee shall give not less than ten (10) business days
prior written notice to the Pledgor of any sale pursuant to this Section 6.
Pledgor hereby agrees that such notice is commercially reasonable.
7. Pledgee's Obligations, Custodial Agreement, Performance Rights,
Pledge Does Not Make Pledgee Shareholder. Pledgee shall not have any duty to
protect, preserve or enforce rights against the Collateral other than a duty of
reasonable custodial care of any such Collateral in its possession, it being
understood that Pledgee shall have no responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to the Collateral, whether or not Pledgee has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to the Collateral, or (iii)
making any capital contributions or other payments on behalf of Pledgor with
respect to the Collateral.
8. Termination of Pledge Agreement. The Pledgee shall deliver to the
Pledgor the Collateral in its possession and this Agreement thereupon shall be
terminated upon the earlier to occur of (i) the payment and performance in full
of all amounts due under the Note or (ii) at such time after the effectiveness
of the resale registration statement on Form S-3 to be filed with Securities and
Exchange Commission pursuant to the terms and conditions of the Securities
Purchase Agreement which covers the resale of the shares of Common Stock of the
Pledgor by the Pledgee (the "Registration Statement") when the closing price of
the Pledgor's common shares on its principal exchange has been above $2.25 for
five consecutive days.
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9. Delivery of Additional Collateral.
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Within five (5) business days of the execution of this Agreement,
Pledgor shall be obligated to deliver to Pledgee a fully executed original copy
of an Absolute Assignment of Leases and Rents substantially in the form attached
hereto as Exhibit A (the "Lease Assignment") covering Mineral Recovery Systems'
interests in the mineral deposits which are described in the Memoranda of
Mineral Leases set forth in Exhibit B attached hereto (the "Mineral Leases"). In
the event the Registration Statement does not become effective on or prior to
the 180th day after the date hereof and/or the closing price of the Pledgor's
common shares on its principal exchange has not been above $2.25 for five
consecutive days during such 180 day period, the Pledgee, at the at the
Pledgor's sole cost and expense, shall be entitled to record the Lease
Assignment in the proper jurisdictions to perfect Pledgee's security interest in
Mineral Leases. Upon the effectiveness of the Registration Statement and at such
time as the closing price of the Pledgor's common shares on its principal
exchange has been above $2.25 for five consecutive days, the Pledgee shall no
longer be entitled to record the Lease Assignment and shall immediately return
the Lease Assignment to Pledgor or if the Lease Assignment has previously been
recorded, the Pledgee shall immediately record a document in a form sufficient
to release the security interest created through the prior recordation of the
Lease Assignment in the proper jurisdictions.
10. Miscellaneous.
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10.1 Each and every right, remedy and power granted to Pledgee
hereunder shall be cumulative and in addition to any other right, remedy or
power specifically granted herein or now or hereafter existing in equity or at
law, by virtue of statute or otherwise and may be exercised by Pledgee, from
time to time, concurrently or independently and as often and in such order as
Pledgee may deem expedient. Any failure or delay on the part of Pledgee in
exercising any such right, remedy or power, or abandonment or discontinuance of
steps to enforce the same, shall not operate as a waiver thereof or affect
Pledgee's right thereafter to exercise the same, and any single or partial
exercise of any such right, remedy or power shall not preclude any other right,
remedy or power, and no such failure, delay, abandonment or single or partial
exercise of Pledgee's rights hereunder shall be deemed to establish a custom or
course of dealing or performance among the parties hereto.
10.2 Any modification or waiver of any provision of this
Agreement, or any consent to any departure by Pledgor therefrom, shall not be
effective in any event unless the same is in writing and signed by Pledgee, and
then such modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose given. Any notice to or demand on
Pledgor in any event not specifically required of Pledgee hereunder shall not
entitle Pledgor to any other or further notice or demand in the same, similar or
other circumstances unless specifically required hereunder.
10.3 Pledgor agrees that at any time, and from time to time,
after the execution and delivery of this Agreement, Pledgor shall, upon the
request of Pledgee and at the expense of Pledgor, promptly execute and deliver
such further documents and do such further acts and things as Pledgee may
request in order to effect fully the purposes of this Agreement and to subject
to the security interest created hereby any property intended by the provisions
hereof to be covered hereby.
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10.4 Pledgor agrees that it will warrant, preserve, maintain
and defend, at its own expense, the right, title and interest of Pledgee in and
to the Collateral and all right, title and interest represented thereby against
all claims, charges and demands of all persons whomsoever.
10.5 Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three (3) business days after depositing
it in the United States mail with postage prepaid and properly addressed. For
the purposes hereof, the address of each party hereto shall be as provided in
the Securities Purchase Agreement hereto, or at such other address as such party
may subsequently advise the other parties hereto.
10.6 In the event that any provision of this Agreement is
deemed to be invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed as
not containing such provision and the invalidity of such provision shall not
affect the validity of any other provision hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in full
force and effect.
10.7 This Agreement shall inure to the benefit of the
successors and assigns of Pledgee and shall be binding upon the heirs, legatees,
administrators, legal representatives, successors and assigns of Pledgor.
10.8 This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall be one and the same instrument.
10.9 Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Note.
10.10 This Agreement shall be governed by the laws and
decisions of the State of Illinois.
[Signature page follows]
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292403 v4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PLEDGOR:
ALTAIR INTERNATIONAL, INC.
By: __________________________
Its: _________________________
Accepted by: PLEDGEE:
DORAL 18, LLC
By: __________________________
Its: _________________________
Acknowledged and Agreed: MINERAL RECOVERY SYSTEMS, INC.
By: __________________________
Its: _________________________
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EXHIBIT A
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EXHIBIT B
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