June 7, 2001
Altair International Inc.
Mineral Recovery Systems, Inc.
Fine Gold Recovery Systems, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
Attn: Xxxxxxx X. Xxxx
Re: Amendment of Certain Agreements Related to $7,000,000
Asset-Backed Exchangeable Term Note
Xx. Xxxx:
This letter sets forth the agreement (the "Amendment") among Altair
International Inc., an Ontario corporation ("Altair"), Mineral Recovery Systems,
Inc., a Nevada corporation ("MRS"), Fine Gold Recovery Systems, Inc., a Nevada
corporation ("Fine Gold"; and together with Altair and MRS, the "Altair
Parties") and Doral 18, LLC, a Cayman Islands limited liability company
("Doral"), regarding the $7,000,000 Asset-Backed Exchangeable Term Note dated
December 15, 2000 (the "Note") made by the Altair Parties in favor of Doral, the
Securities Purchase Agreement dated December 15, 2000 (the "Purchase Agreement")
between Doral and Altair, the Stock Pledge Agreement dated December 15, 2000
(the "Pledge Agreement") between Doral and Altair, and the Registration Rights
Agreement dated December 15, 2000 (the "Registration Rights Agreement"; and
collectively with the Note, the Purchase Agreement and the Pledge Agreement, the
"Agreements") between Doral and Altair. For ease of reference, capitalized terms
used without separate definition in this Amendment shall have the meanings set
forth in the Agreements. Now therefore, in consideration of the mutual covenants
set forth herein, the Altair Parties and Doral hereby agree as follows:
1. Amendments to Agreements.
------------------------
(a) Accrual Provisions. Section 2(b)(iv) of the Note is
deleted in its entirety and the following is inserted in its stead:
(iv) Accrual. Notwithstanding anything to the
contrary in this Note, during the period commencing
on the Effective Date and continuing until the later
of June 29, 2001 and the fifth day following the
effective date of the registration statement
contemplated by the Registration Rights Agreement
(the "Registration Statement"), if the Consolidated
Companies do not pay on or before the applicable Due
Date any portion of the Monthly Payment Amount that
would otherwise be due and payable, the unpaid
portion of such Monthly Payment Amount will
automatically accrue and the Consolidated Companies
shall have no obligation to pay such Monthly Payment
Amounts during such period. By providing Doral
written notice and the payment specified below at any
time on or before the later of June 29, 2001 and the
fifth day following the effective date of the
Registration Statement, the Consolidated Companies
shall have the option to redeem not more than
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$1,652,252.43 and not less than $500,000 of the
unpaid Monthly Payment Amounts that have accrued
during the period identified in the preceding
sentence; provided, however, in order to reflect a
10% redemption premium, for each $100 paid by the
Consolidated Companies to redeem accrued Monthly
Payment Amounts, such accrued Monthly Payment Amounts
will be reduced by only $90.9091. (For example, if
the Consolidated Companies pay $1,000,000, the
accrued Monthly Payment Amounts will be reduced by
$909,091.) Any amounts not redeemed by the
Consolidated Companies on or before 5:00 P.M. Eastern
Time on the later of June 29, 2001 and the fifth day
following the effective date of the Registration
Statement shall immediately become convertible
pursuant to Section 2(b)(i) of the Purchase Agreement
at the applicable Exchange Price (except as set forth
in paragraph 2(e) below). All payments of accrued
Monthly Payment Amounts shall be applied in
chronological order (e.g. applied first to the
Monthly Payment Amount outstanding for the longest
period, next to Monthly Payment Amount outstanding
for the next longest period, etc.)
(b) Registration Deadlines.
----------------------
(i) Section 2(f) of the Registration Rights
Agreement is deleted in its entirety, and the following is inserted in its
stead:
(f) Penalty for No Effective Registration
Statement. In the event the initial
Registration Statement has not been declared
effective by the SEC on or before July 31,
2001, Altair shall pay to Investor a penalty
by (i) granting to the Investor 75,000
warrants to purchase common shares of Altair
at an exercise price of $3.00 per share and
(ii) granting to the Investor an additional
number of warrants to purchase common shares
of Altair at an exercise price of $3.00 per
share, which number shall be equal to the
product of (A) 100,000 and (B) the quotient
obtained by dividing (1) the number of days
between July 31, 2000 and the date on which
the Registration Statement is declared
effective by (2) 31. Except as provided in
the preceding sentence, the form and
substance of the such warrants shall be
identical to the Warrants (as defined in the
Purchase Agreement). If the initial
Registration Statement has not been declared
effective by the SEC on or before August 31,
2001, an event of default shall be deemed to
have occurred under the Note, and interest
payable under the Note shall accrue at the
default interest rate.
(ii) The last sentence of Section 2(a) of the
Registration Rights Agreement is hereby amended to read as follows: "The Company
shall use its best efforts to have the Registration Statement declared effective
by the SEC as soon as practicable, but in no event later than August 31, 2001.
(iii) Section 11(a)(i) of the Note is hereby
amended to read as follows: "(i) failure of the Company's Registration Statement
to be declared effective on or before August 31, 2001."
(c) Redemption Cap. Upon the payment by the Consolidated
Companies of $1,000,000 in accrued Monthly Payment Amounts pursuant to Section
1(a)(iv) above, Section 4(b) of the Note shall be deleted in its entirety.
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The words "Optional Monthly Redemption Right" in Section 4(c) of the Note shall
be replaced with "Optional Monthly Redemption." The words "Effective Date" in
the second sentence of Section 2(b)(i) of the Note shall be replaced with the
words "Issuance Date." The parties agree and acknowledge that, notwithstanding
the deletion of Section 4(b), Altair retains the right to redeem each Monthly
Payment Amount on or before each Due Date as provided in Section 2(b)(i) of the
Note, as amended hereby.
(d) Extension of Pledge Agreement. Section 8 of the Pledge
Agreement is deleted in its entirety and the following is inserted in its stead:
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 earliest to
occur of (i) the date upon which the inception-to-date gross
revenues of the Pledgor exceed $3,000,000, or (ii) the date
upon which the amount of principal outstanding under the Note
(excluding any portion of the Note that is secured or
collateralized by the letter of credit) is equal to $2,225,000
or less.
2. Additional Covenants.
--------------------
(a) Sale of Remaining Call Shares; Payment Credit. Pursuant
to Section 7.13 of the Purchase Agreement, Doral received 247,678 common shares
of Altair ("Call Shares"), a portion of which it has sold pursuant to an
existing registration statement on Form S-3. Of the original Call Shares, Doral
is currently holding 51,206 Call Shares. As of the date of this Amendment,
whether or not Doral has actually sold the remaining Call Shares and
notwithstanding anything in the Agreements to the contrary, (i) the option set
forth in Section 7.12 of the Purchase Agreement shall terminate, and (ii) Altair
shall be deemed to have paid $106,150.04 (based upon the current Exchange Price
of $2.073) to satisfy the entire interest portion of the Monthly Payment Amount
due on June 15, 2001, with any amount in excess of the required interest portion
of such Monthly Payment Amount to be applied against the principal balance of
the Note.
(b) Special Meeting To Approve Transaction. Upon request made
by Doral on or before September 30, 2001, Altair shall take all steps necessary
to notice and convene a special meeting of shareholders on or before December
31, 2001 in order to seek shareholder approval of the transaction contemplated
and effected by the Agreements, including the potential issuance of common
shares of Altair in excess of 20% of the outstanding common shares of Altair.
(c) Waiver of Penalty Payments; Issuance of Additional
Warrants. Altair shall grant to Doral warrants to purchase 150,000 common
shares. Except for the number of such warrants, the form and substance of such
warrants shall be identical to the Warrants. Upon Altair's grant of the warrants
described in the preceding sentence, Altair shall be released from any
obligation to pay the penalties contemplated by Section 2(f) of the Registration
Rights Agreement and Section 11(a)(i) of the Note, each as amended by this
Amendment, for all periods prior to July 31, 2001. Further in exchange for such
grant, Doral hereby waives any fee or penalty that may have accrued, or that may
accrue, as a result of Altair's Registration Statement on Form S-3 (File No.
333-54902) not going effective on or before July 31, 2001.
(d) Clawback on Held Shares. In addition to the warrants to
be granted under the preceding subparagraph 2(c), Altair shall grant to Doral
warrants to purchase an additional 150,000 common shares. Except for the number
of such warrants, the form and substance of such warrants shall be identical to
the Warrants. In exchange for Altair's grant of such warrants, Doral agrees that
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if, at any time, (i) it obtains a right to exchange any Exchange Amount for
common shares (an "Exchange Right"), and (ii) it fails to exercise 100% of such
Exchange Right within 90 days of the date such Exchange Right becomes
exercisable, Altair shall automatically have an option to redeem the unexercised
portion of such Exchange Right at a price equal to the product of (A) the
Exchange Amount attributable to the unexercised portion of the Exchange Right
and (B) 1.05.
(e) Exchange of Shares for Indebtedness. Notwithstanding
anything in the Note to the contrary, the Exchange Price for the first 30,000
common shares that Doral receives upon exercise of the conversion rights set
forth in Section 2(b)(i) of the Note shall be equal to the lesser of (1) $2.073,
and (2) the applicable Exchange Price, determined in accordance with the
provisions of the Note. In addition, if Doral elects to acquire common shares in
transactions with parties other than the Consolidated Companies (which number of
common shares shall not exceed 100,000), and Altair and Doral agree to treat
Doral's acquisition of such common shares as satisfaction of all or any portion
of an Exchange Amount, the Exchange Price to be used with respect to the
exchange of such common shares and the cancellation of the applicable Exchange
Amount shall also be equal to the lesser or (1) $2.073, and (2) the applicable
Exchange Price, determined in accordance with the provisions of the Note.
3. Conflict of Terms. In the event of any conflicts between the
terms of this Amendment and any of the Agreements, the terms of this Amendment
shall prevail. Except as amended by this Amendment, the Agreements are hereby
ratified and affirmed.
4. Miscellaneous Provisions. (a) This Amendment is the complete
and exclusive agreement between the parties relating to the subject matter
hereof, and supersedes all prior or contemporaneous proposals, understandings,
representations, warranties, promises and other communications, whether oral or
written, relating to such subject matter; (b) this Amendment shall be deemed to
have been executed in the State of Illinois and shall be governed by the laws of
the State of Illinois (regardless of the laws that might otherwise govern under
applicable Illinois principles of conflicts of law); (c) no party may assign its
rights or obligations under this Amendment without the express written consent
of the other party; (d) all notices shall be in writing and sent by registered
mail, overnight mail, express courier, or transmitted by facsimile to the
addresses and facsimile numbers indicated in this Amendment, or such other
address as either party may indicate by at least ten (10) days prior written
notice to the other party; (e) this Amendment may be executed in manual or
electronic counterparts, all of which taken together shall form an original
agreement; and (f) a facsimile or electronic copy of this Amendment or any
portion thereof shall be valid as an original.
If the foregoing correctly sets forth your understanding and agreement
with respect to the matters set forth herein, please execute this letter in the
space provided below and return such executed copy to the undersigned.
Doral 18, LLC
By:/s/ Xxxxx Xxxxx
Xxxxx Xxxxx, Director
Address:
0000 Xxxxx Xxx Xxxx, Xxxxx 000 Xxxxxxxx Xxxx,
Xxxxxxxx 00000
Facsimile (000) 000-0000
Attn: Xxxxx Xxxxx
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The undersigned agree to be bound by the terms and conditions of the foregoing
letter.
Altair International Inc.
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Its:____________________________
Mineral Recovery Systems, Inc.
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Its:____________________________
Fine Gold Recovery Systems, Inc.
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Its:____________________________
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