This Secured Term Note and any securities to which Holder hereof is
entitled upon exercise of exchange rights arising hereunder have not been
registered under the Securities Act of 1933, as amended, or any applicable state
securities acts and may not be offered sold, pledged or otherwise disposed of in
the absence of an effective registration statement or an exemption from
registration under such acts.
Secured Term Note
Chicago, Illinois
December 28, 2001 $2,000,000 (U.S.D.)
FOR VALUE RECEIVED, Altair International, Inc., an Ontario corporation
(the "Company"), Altair Nanomaterials, 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 promise to pay to the order of Doral 18, LLC, a Cayman
Islands limited liability company or registered assigns ("Holder") the principal
amount of Two Million (U.S.) Dollars ($2,000,000) on March 31, 2003 (the
"Maturity Date"), and to pay interest on the unpaid principal balance hereof as
described in Section 2 hereof, at the rate of Eleven Percent (11%) per annum
from the date hereof (the "Issuance Date") until the unpaid principal balance
becomes due and payable, whether at maturity, upon acceleration, upon prepayment
in accordance with the terms hereof. Interest on unpaid principal under this
Secured Term Note (this "Note") shall be computed on the basis of a 365-day year
and actual days elapsed and shall be payable as provided in Section 2 hereof.
Any amount of this Note which is not paid when due shall bear interest at the
rate of 18% per annum (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 an "Exchange Right" pursuant to Section 2(B) hereof has accrued shall
be deemed to have been paid when due.
1. Payment Terms.
A. Method of Payment. All payments of principal and interest on
this Note (to the extent such principal and/or interest is not exchanged for
common shares of the Company ("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, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, XX 00000, XXX 000000000, 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.
B. Prepayments. This Note may be prepaid at any time by the
Consolidated Companies but shall be subject to a prepayment penalty equal to 5%
of the principal amount of the Note being prepaid. Any prepayment by the
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Consolidated Companies shall be made in cash and shall be applied against
amounts due and payable in the manner as determined by the Holder in its sole
and absolute discretion.
2. Redemption or Exchange of Accruing Interest.
A. Monthly Interest Payment. Commencing on the first monthly
anniversary of the Issuance Date and continuing on each monthly anniversary of
the Issuance Date thereafter (each such monthly anniversary, a "Due Date"), the
Consolidated Companies shall be obligated to pay to Holder, as provided in this
Section 2(A) or Section 2(B) below, an amount equal to all unpaid interest that
has accrued and since the immediately preceding Due Date (the "Monthly Payment
Amount"). Notwithstanding the foregoing, commencing on the first Due Date
subsequent to the Issuance Date, and continuing on each Due Date thereafter,
subject to the existence of a Cash Payment Event described in Section 4, 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 sentence (an "Optional Monthly Redemption"). If the
Consolidated Companies elect to satisfy all or part of a Monthly Payment Amount
through an Optional Monthly Redemption, the Consolidated Companies shall pay to
Holder that portion of the Monthly Payment Amount that the Consolidated
Companies have elected to redeem in cash on or before the respective Due Date.
B. Accrual of Exchange Right. Subject to the existence of a Cash
Payment Event described in Section 4, if the Consolidated Companies elect not to
redeem an entire Monthly Payment Amount through an Optional Monthly Redemption
as provided in Section 2(A), the portion of the Monthly Payment Amount that is
not redeemed through an Optional Monthly Redemption on or before the respective
Due Date (the "Exchange Amount") shall become immediately exchangeable into
shares of Common Stock at a price equal to 75% of the average of the closing
price of the Common Stock (as reported by Bloomberg) for the five (5) trading
days ending on the trading day immediately preceding the respective Due Date or
(the "Exchange Price"). Thereafter, so long as the exchange is permitted under
all applicable laws and regulations, Holder shall be entitled to convert the
Exchange Amount into fully paid and nonassessable shares of Common Stock at the
Exchange Rate applicable to such Exchange Amount. The Exchange Rate with respect
to any Exchange Amount shall be a number of shares of Common Stock equal to the
Exchange Amount divided by the Exchange Price applicable to such Exchange
Amount. The exchange rights of Xxxxxx described in this Section 2(B) (the
"Exchange Rights") shall be cumulative and, subject to Section 2(C), shall be
exercisable in whole or in part at any time prior to repayment in full of the
Note.
C. Redemption of Exchange Right. At any time the Consolidated
Companies have paid, or intend to pay, all outstanding principal under the Note
in full, the Company may give Holder written notice (the "Redemption Notice")
stating that the Consolidated Companies have paid, or intend to pay, all
outstanding principal under the Note in full and specifying the portion of any
accumulated and unexercised Exchange Rights the Consolidated Companies intend to
redeem in connection therewith. Upon receipt of a Redemption Notice, Holder
shall have a period of three Business Days during which to exercise any or all
Exchange Rights that may be subject to such Redemption Notice, after which the
Consolidated Companies may redeem the number of accumulated and unexercised
Exchange Rights designated in the Exchange Notice (or a lesser amount equal to
all accumulated and unexercised Exchange Rights if such number is less than the
number specified in the Redemption Notice) in exchange for the "Exchange
Redemption Price." The Exchange Redemption Price shall be equal to the product
of 1.05 multiplied by the aggregate Exchange Amounts for all Exchange Rights
being redeemed.
D. Exercise of Exchange Right. The exchange or conversion of
Exchange Rights under this Note shall be conducted in the following manner:
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(i) Holder's Delivery Requirements. To exercise any accumulated
Exchange Rights 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.
(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 of the Company, as the same may be designated by the Company from
time to time (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, 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. Delivery of shares in accordance with
Section 2(D)(ii) shall be considered payment in full of the Exchange Amount
designated in the Exchange Notice.
(iii) Dispute Resolution. In the case of a dispute as to the
determination of the Exchange Price or 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 to
Holder via facsimile within one (1) Business Day of receipt of Holder's Exchange
Notice. If Xxxxxx and the Company are unable to agree upon the determination of
the Exchange Price or 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 the disputed
determination to an independent, reputable investment bank selected by the
Company and approved by Holder or 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 exercise of Exchange Rights shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Exchange Date.
(v) Book-Entry. Upon exercise of any accumulated Exchange
Rights hereunder in accordance with the terms hereof, Xxxxxx shall not be
required to physically surrender this Note to the Company. Holder and the
Company shall maintain records showing the respective Exchange Amounts that have
been accumulated, the Exchange Rates applicable to such Exchange Amounts and the
Exchange Amounts exchanged from time to time 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.
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(vi) 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 exercise of Exchange Rights under this Note.
(vii) Fractional Shares. The Company shall not issue any
fraction of a share of Common Stock upon any exercise of Exchange Rights. 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 (if greater than or
equal to .50) or down (if less than .50)to the nearest whole share.
E. Limitation on Beneficial Ownership. The Holder shall not have
the right to exchange any Exchange Right pursuant to Section 2(D) to the extent
that after giving effect to such exchange 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 exchange. For purposes of the foregoing
sentence, the definitions of "person" and "affiliate" shall have the meanings
applicable to calculations in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the number and
percentage of shares of Common Stock beneficially owned by a person and its
affiliates or acquired by a person and its affiliates shall be calculated in
accordance with Section 13(d) of the Exchange Act, except that the number of
shares of Common Stock beneficially owned by a person and its affiliates or
acquired by a person and its affiliates shall include the number of shares of
Common Stock issuable upon the exercise of Exchange Rights under 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 any unexercised Exchange Rights under 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. Notwithstanding anything to the
contrary contained herein, each Exchange Notice shall constitute a
representation by Holder that, after giving effect to such Exchange Notice, to
the best of Holder's knowledge, Holder will not beneficially own (as determined
in accordance with this Section 2(E)) 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) 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.
F. 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 Exchange Rights, such number of shares of Common Stock as shall
from time to time be sufficient to effect the exchange of all accumulated
Exchange Rights.
3. Anti-Dilution.
A. Certain Definitions. For purposes of this Section, the
following terms shall have the following meanings:
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(i) "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.
(ii) "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.
(iii) "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. 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 Exchange Price applicable to
all accumulated Exchange Amounts shall be adjusted to that price determined by
multiplying the 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).
C. 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, (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, there shall thereafter be
deliverable to Holder 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 receive
which Holder would have been entitled had the Holder owned the Common Stock
attributable to the accumulated Exchange Rights at the time such transaction or
event occurred.
D. Notice of Adjustments to 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 exercise of accumulated Exchange Rights, 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 Exchange Price and the number of shares of Common Stock issuable upon
exercise of accumulated Exchange Rights after giving effect to such adjustment.
5
4. Mandatory Payment of Monthly Payment in Cash.
A. Mandatory Cash Payment Events. On the Due Date immediately
following the occurrence of a Cash Payment Event (as defined below), and on each
Due Date thereafter until the Due Date following the "cure" of such Cash Payment
Event, the Consolidated Companies will be required to redeem the Monthly Payment
Amount for such month, on or before the Due Date, at a price equal to 100% of
such Monthly Payment Amount. On each Due Date following the "cure" of a Cash
Payment Event, the Consolidated Companies shall be permitted, at their
discretion, to effect an Option Monthly Redemption as described in Section 2.A
or to permit Exchange Rights to accrue as described in Section 2.B.
(Notwithstanding a subsequent "cure" of a Cash Payment Event, the Consolidated
Companies shall not be permitted to request a refund of Monthly Payment Amounts
paid in cash or to cause Exchange Rights to accrue with respect thereto). For
purposes of this Note, "Cash Payment Event" means any of the following events or
time periods:
(i) 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 120 days (until such event has been cured by the completion of 20
consecutive trading days without a suspension of the Common Stock from trading);
(ii) if for any reason following January 7, 2002 sales cannot
be made for four (4) consecutive trading days or for a total of ten (10) trading
days out of the preceding 120 days pursuant to the Company's registration
statement, file no. 333-54092 (the "Existing Registration Statement") because
the Company has filed one or more post-effective amendments thereto, (the
"Existing Registration Statement Amendment") and such amendment or amendments
have not been declared effective, provided, however, that such Cash Payment
event shall be cured at any time sales can be made under the Existing
Registration Statement for 20 consecutive trading days;
(iii)if, without shareholder approval, the issuance of all
shares of Common Stock issuable upon exercise of Exchange Rights, together with
the shares of Common Stock issued to date upon exercise, conversion or exchange
of all exchange rights and warrants issued to Holder pursuant to the Securities
Purchase Agreement dated December 15, 2000 between the Company and Holder (the
"Purchase Agreement") and the Note Termination and Issuance Agreement dated as
of even date herewith among the Consolidated Parties and Holder (the
"Termination Agreement"), would result in the issuance of more than 19.9% of the
aggregate number of outstanding shares of Common Stock on December 15, 2000;
(iv) if the closing price of a share of Common Stock (as
reported by Bloomberg) has been below $1.00 for ten consecutive trading days
(until such event has been cured by the closing price of a share of Common Stock
(as reported by Bloomberg) subsequently equaling or exceeding $1.00 for ten
consecutive trading days thereafter); or
(v) if for any reason following the effective date of the New
Registration Statement (as defined in the Registration Rights Agreement entered
into between Lender and the Company on even date herewith) sales cannot be made
for four (4) consecutive trading days or for a total of ten (10) trading days
out of the preceding 120 days pursuant to the New Registration Statement because
the Company has filed one or more post-effective amendments thereto and such
amendments have not yet been declared effective; provided, however, that such
Cash Payment event shall be cured at any time sales can be made under the
Registration Statement for 20 consecutive trading days.
B. Mechanics of Cash Payment. Within one (1) day after the
occurrence of a Cash Payment Event, the Company shall deliver a written notice
thereof via facsimile and overnight courier ("Notice of Redemption") to Holder.
6
Until such Cash Payment Event has been cured, the Company shall pay each Monthly
Payment Amount in cash on or before the relevant Due Date as provided in Section
1(A). As long as the Company pays each Monthly Payment Amount in cash on or
before the relevant Due Date prior to the cure of a Cash Payment Event, the
occurrence of such Cash Payment Event shall not be an Event of Default under the
Note.
6. 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 reasonably 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 exercise of Exchange Rights under this 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 exercise of Exchange
Rights under this Note as of the date of such Organic Change (without taking
into account any limitations or restrictions on the convertibility of the Note).
7. Security for Note. Notwithstanding the termination of the
$7,000,000 Asset Backed Exchangeable Term Note dated December 15, 2000 as the
same was amended on August 31, 2001 described therein (the "Prior Note"), this
Note shall be secured by the Security Agreement dated December 15, 2000 as the
same was amended on August 31, 2000 between Altair Nanomaterials, Inc. and Doral
18, LLC (including the Intellectual Property Security Agreement attached thereto
as Exhibit A as the same was amended on August 31, 2000 (the "Security
Agreement"), the Stock Pledge Agreement dated December 15, 2000 between Doral
and Altair, and the Stock Pledge Agreement dated December 15, 2000 between
Mineral Recovery Systems, Inc. and Doral 18, LLC as the same was amended as of
the date hereof (the "Stock Pledge Agreements") to the same extent and in the
same manner as the Prior Note and all references to the Prior Note in the
Security Agreement and the Stock Pledge Agreements shall be deemed to refer to
this Note.
8. Defaults and Remedies.
A. Events of Default. An "Event of Default" is (i) default in
payment of principal, interest or Default Interest on this Note when and as due;
(ii) failure by the Consolidated Companies for thirty (30) days after notice to
it to comply with any other material provision of this Note; (iii) 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 $200,000; (iv) if any representation made by the Consolidated Companies in
the Termination Agreement was untrue as of the date it was made; (v) any failure
to observe or perform any of the covenants set forth in the Termination
Agreement which is not remedied by the Consolidated Companies within 30 days
after notice thereof to the Company by Holder; (vi) any event occurs or
7
condition exists which is specified as an event of default under the Security
Agreement or the Stock Pledge Agreements or the failure to observe or perform
any of the covenants set forth in the Security Agreement or Stock Pledge
Agreements which is not remedied within the applicable cure period, if any;
(vii) if any of the Consolidated Companies pursuant to or within the meaning of
any Bankruptcy Law (as defined below): (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 (as defined below) 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; (vii) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (A) is for relief
against any of the Consolidated Companies in an involuntary case; (B) appoints a
Custodian for any of the Consolidated Companies or for all or substantially all
of their properties; or (C) orders the liquidation of any of the Consolidated
Companies or any subsidiary thereof, and the order or decree remains unstayed
and in effect for ninety (90) days; (viii) if the "cash or cash equivalents"
item reflected on the balance sheet of the Consolidated Companies included in a
Quarterly Report on Form 10-Q or an Annual Report on Form 10-K filed with the
Securities and Exchange Commission is less than $250,000; or (ix) if, at any
time the closing price of the Common Stock (as reported by Bloomberg) has been
below $1.00 for three consecutive trading days and Holder requests a current
balance sheet and/or copies of cash or cash equivalent account statements of the
Consolidated Companies as of the date of such request, the "cash or cash
equivalents" item reflected on such balance sheet of the Consolidated Companies
is less than $250,000. The term "Bankruptcy Law" means the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada),
Title 11, U.S. Code, or 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.
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 (vi) or (vii), this Note shall become
due and payable without further action or notice by Holder.
9. Miscellaneous Provisions.
A. Amendment. This Note and any provision hereof may only be
amended by an instrument in writing signed by the Consolidated Companies (or
only 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.
B. Termination of Previous Note. Upon the execution of this Note by
Xxxxxx, the Prior Note shall immediately and automatically, without any action
on the part of any person, be deemed to be canceled, terminated and paid in
full.
C. 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 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 Consolidated Companies shall execute and deliver a new Note of like
tenor and date.
D. 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,
8
receivership or other proceedings affecting creditors' rights and involving a
claim under 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.
E. 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.
F. Note Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by Xxxxxx at the principal office of the
Company, for a new Note or Notes (in principal amounts of at least $100,000)
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 Consolidated Companies initially issue this Note will be
deemed to be the "Issuance Date" hereof regardless of the number of times a new
Note shall be issued.
X. Xxxxxx of Notice. To the extent permitted by law, the
Consolidated Companies hereby waive demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
H. 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.
I. Remedies. 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 Consolidated
Companies to comply with the terms of this Note.
J. Construction. 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.
K. 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.
L. Restrictions on Transfer. Holder, by acceptance of this Note,
agrees that it will not, absent any effective registration statement under the
1933 Act and any applicable state securities acts covering the disposition of
this Note or the Common Stock issued in connection with this Note, sell or
transfer this Note or such shares of Common Stock, as the case may be, without
first providing the Company with any opinion of counsel reasonably acceptable to
the Company (which may be counsel for the Company) to the effect that such sale
or transfer will be exempt from registration under the 1933 Act and any
applicable state securities acts. Holder consents to the Company making a
notation on its records or giving appropriate instructions to any transfer agent
in order to implement such restrictions on transferability.
M. Transfer Restriction Legend. Each certificate, if any, for
shares of Common Stock issued in connection with this Note shall, unless at the
time of such issuance the re-sale of such shares of Common Stock, are registered
under the 1933 Act and any applicable state securities acts, bear a legend, in
9
addition to other legends as may be required by applicable securities laws of
the Province of Ontario, in substantially the following form on the face
thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES ACTS
AND MAY NOT BE TRANSFERRED OR RESOLD WITHOUT REGISTRATION
UNDER SUCH ACTS, UNLESS IN THE OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE CORPORATION (WHICH MAY BE COUNSEL TO THE
CORPORATION) AN EXEMPTION FROM REGISTRATION UNDER SUCH ACTS IS
AVAILABLE.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution under a registration statement of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel to the Company, the securities represented thereby may be transferred as
contemplated by such holder without violation of the registration requirements
of the 1933 Act and any applicable state securities acts.
N. Notices. All notices and other communications required under or
contemplated by this Note shall be provided in the manner, and be subject to the
other terms of, Section 7(F) of the Termination Agreement.
O. Judgment Currency.
(i) If, for the purpose of obtaining or enforcing judgment
against the Consolidated Companies in any court in any jurisdiction, it becomes
necessary to convert into any other currency (such other currency being
hereinafter in this Section 9(O) 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 (A) 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 (B) 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 9(O) being hereinafter in this Section 9(O) referred to as the
"Judgment Conversion Date").
(ii) If, in the case of any proceeding in the court of any
jurisdiction referred to in Section 9(O)(i), 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 Consolidated
Companies 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 Consolidated Companies under
Section 9(O)(ii) 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. The term "rate of exchange" in this Section 9(O) means the rate of
exchange at which 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.
10
P. 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.
Q. Criminal Rates of Interest. If any provision of this Note would
obligate the Consolidated Companies 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 Holder under this Section 9(Q); and (ii)
thereafter, by reducing any fees, commissions, premiums and other amounts
required to be paid to 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 Holder, to obtain reimbursement from Holder in
an amount equal to such excess, and pending such reimbursement, such amount
shall be deemed to be an amount payable by Holder to the Consolidated Companies.
Any amount or rate of interest referred to in this Section 9(Q) 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.
11
IN WITNESS WHEREOF, the Consolidated Parties and Lender have caused
this Secured Term Note to be duly executed and delivered as of the 28th day of
December, 2001.
The "Consolidated Parties"
ALTAIR INTERNATIONAL, INC.
By:/s/ Xxxxxxx X. Xxxx
-----------------------------------------
Its:
---------------------------------------
MINERAL RECOVERY SYSTEMS, INC.
By:/s/ Xxxxxxx X. Xxxx
-----------------------------------------
Its:
---------------------------------------
FINE GOLD RECOVERY SYSTEMS, INC.
By:/s/ Xxxxxxx X. Xxxx
-----------------------------------------
Its:
---------------------------------------
ALTAIR NANOMATERIALS, INC.
By:/s/ X. Xxxxxxx Xxxxxx
-----------------------------------------
Its:
---------------------------------------
"Lender"
Doral 18, LLC
By:_______________________________
Xxxxx Xxxxx, authorized signatory
12
EXHIBIT A
ISSUER EXCHANGE NOTICE
Reference is made to the $2,000,000 Secured Term Note dated December 28, 2001
issued by Altair International, Inc. and certain subsidiaries of Altair
International Inc. (the "Note"). Capitalized terms used in this Issuer Exchange
Notice shall have the meaning set forth in the Note. In accordance with and
pursuant to the Note, the undersigned hereby elects to convert the Exchange
Amount(s) designated below into shares of Common Stock at the Exchange Rate
applicable thereto:
------------------------- -------------- -------------------------- --------------------- --------------------------
Total Monthly Payment Applicable Monthly Payment Amount Applicable Common Shares
Amount Due Date Exchanged Exchange Price Issuable to Holder
------------------------- -------------- -------------------------- --------------------- --------------------------
------------------------- -------------- -------------------------- --------------------- --------------------------
------------------------- -------------- -------------------------- --------------------- --------------------------
------------------------- -------------- -------------------------- --------------------- --------------------------
------------------------- -------------- -------------------------- --------------------- --------------------------
Acknowledged and Agreed to:
Altair International, Inc.
By:__________________________
Its:__________________________
Doral 18, LLC
By:__________________________
Its:__________________________
13
