-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OkwhewBDDLxk7zdaRRhRnlKeycX8DBphpqVZg+L8yL3agDNQXxuR0tM5VgJf9nDV sZMXApf/b4JGTYUQ2+Uvwg== 0000931731-03-000013.txt : 20030207 0000931731-03-000013.hdr.sgml : 20030207 20030207160424 ACCESSION NUMBER: 0000931731-03-000013 CONFORMED SUBMISSION TYPE: S-2/A PUBLIC DOCUMENT COUNT: 6 REFERENCES 429: 333-102592 FILED AS OF DATE: 20030207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALTAIR NANOTECHNOLOGIES INC CENTRAL INDEX KEY: 0001016546 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 870372759 STATE OF INCORPORATION: A6 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-102592 FILM NUMBER: 03544885 BUSINESS ADDRESS: STREET 1: 1725 SHERIDAN AVE STREET 2: SUITE 140 CITY: CODY STATE: WY ZIP: 82414 BUSINESS PHONE: 3075878245 MAIL ADDRESS: STREET 1: 204 EDISON WAY STREET 2: N/A CITY: RENO STATE: NV ZIP: 89502 FORMER COMPANY: FORMER CONFORMED NAME: ALTAIR INTERNATIONAL GOLD INC DATE OF NAME CHANGE: 19960611 FORMER COMPANY: FORMER CONFORMED NAME: ALTAIR INTERNATIONAL INC DATE OF NAME CHANGE: 19970529 S-2/A 1 altair-s2a.txt ALTAIR S-2A As filed with the Securities and Exchange Commission on February 7, 2003 Registration No. 333-102592 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-2 REGISTRATION STATEMENT Under the Securities Act of 1933 --------------------------------------------- Altair Nanotechnologies Inc. ---------------------------- (Exact name of registrant as specified in its charter)
Canada None (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) William P. Long Copies to: Chief Executive Officer Altair Nanotechnologies Inc. Bryan T. Allen, Esq. 1725 Sheridan Avenue, Suite 140 Brian G. Lloyd, Esq. Cody, Wyoming 82414 STOEL RIVES LLP (307) 587-8245 201 South Main Street, Suite 1100 (Address, including zip code, and telephone number, Salt Lake City, Utah 84111 including area code, of registrant's principal office; Phone: (801) 328-3131 name, address, including zip code, and telephone number, Fax: (801) 578-6999 including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement as determined by market conditions. If any of the securities being registered on this form are to be offered on a delayed or continuing basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X} If the registrant elects to deliver its latest annual report to security holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1) of this form, check the following box. [X} If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ] ------------------------------ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The registration statement of which this prospectus is a part is being qualified under the securities laws of selected states. This prospectus shall not consistitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any state in which such offer, sale or solicitation would be unlawful prior to or absent qualification under the securities laws of such state. - -------------------------------------------------------------------------------- ALTAIR NANOTECHNOLOGIES INC. 2,250,000 Common Shares 750,000 Warrants ------------------ This prospectus relates to the offering and sale of 1,500,000 common shares, no par value, of Altair Nanotechnologies Inc., together with 750,000 Series 2003A Warrants and the 750,000 common shares issuable upon the exercise of such warrants. Each Series 2003A Warrant entitles the holder thereof to purchase one common share of Altair at any time prior to the fifth anniversary of the issue date at the price equal to the greater of (i) $1.00 per share, and (ii) 125% of the average of the closing price of our common shares, as reported on the Nasdaq SmallCap Market, during the calendar week preceding the calendar week in which we receive and accept subscription proceeds for the particular investment. In addition, pursuant to Rule 416 of the Securities Act of 1933, as amended, this prospectus, and the registration statement of which it is a part, covers a presently indeterminate number of shares of common stock issuable upon the occurrence of a stock split, stock dividend, or other similar transaction. We are offering the common shares, together with the Series 2003A Warrants, pursuant to this prospectus on "no-minimum" basis through specified officers and employees. We do no intend to engage any underwriters, placement agents, or finders in connection with this offering. The common shares and Series 2003A Warrants are being offered in units consisting of one common share and one-half Series 2003A Warrant for a purchase price per unit equal to 90% of the average of the closing price of the common shares, as reported on the Nasdaq SmallCap Market, during the calendar week preceding the calendar week in which we receive and accept subscription proceeds. In the United States, our common shares are listed for trading under the symbol ALTI on the Nasdaq SmallCap Market. On January 31, 2003, the closing sale price of our common shares, as reported by the Nasdaq SmallCap Market, was $0.42 per share. Unless otherwise expressly indicated, all monetary amounts set forth in this prospectus are expressed in United States Dollars. As of January 31, 2003, we had 30,378,091 common shares issued and outstanding. - -------------------------------------------------------------------------------- Consider carefully the risk factors beginning on page 4 in this prospectus before investing in the offered securities being sold with this prospectus. - -------------------------------------------------------------------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Dated February 1, 2003 ii Table of Contents Page SUMMARY...................................................................2 RISK FACTORS..............................................................4 FORWARD-LOOKING STATEMENTS...............................................13 USE OF PROCEEDS..........................................................14 DILUTION ................................................................15 PLAN OF DISTRIBUTION.....................................................16 DESCRIPTION OF OFFERED SECURITIES........................................16 LEGAL MATTERS............................................................17 EXPERTS..................................................................17 INFORMATION ABOUT OUR COMPANY............................................18 RECENT DEVELOPMENTS......................................................18 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..........................23 WHERE YOU CAN FIND MORE INFORMATION......................................24 SUBSCRIPTION PROCEDURES..................................................24 Exhibits.................................................................25 SUMMARY This summary highlights some of the information in this prospectus. Because it is a summary, it does not contain all of the information you need to make an investment decision. To understand this offering fully, you should read this entire prospectus. Altair Nanotechnologies Inc. We are a development-stage Canadian company whose primary business is developing and commercializing ceramic oxide nanoparticle products. In the second quarter of 2002, we initiated research and development efforts directed toward the utilization of nanomaterials in the pharmaceuticals industry. In July 2002, we announced the development of a new active pharmaceutical ingredient for the treatment of hyperphosphatemia (elevated serum phosphate levels) in patients undergoing kidney dialysis, as well as a new drug delivery system using inorganic ceramic nanoparticles. In August 2002, we filed a patent application covering these developments. We are currently seeking business relationships with pharmaceutical companies that can conduct additional testing and development, seek necessary FDA approvals and take the other steps necessary to bring the new pharmaceutical ingredient and drug delivery system to market. In addition to pharmaceuticals, we are developing nanomaterials with potential applications in alternative energy--primarily fuel cells and batteries--as well as thermal spray coatings, catalysts, cosmetics and paints. We have also developed prototypes of the Altair Centrifugal Jig and have conducted a feasibility study on a mining property that we lease in Tennessee. However, we are not further developing the jig or the Tennessee mineral property at this time. Our principal office is located at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414 U.S.A., and our telephone number is (307) 587-8245.
The Offering - --------------------------------------------------------------------------------------------------------------------- Offered Securities 1,500,000 common shares and 750,000 Series 2003A Warrants (including the common shares issuable upon exercise of such warrants) in units of one common share and one-half Series 2003A Warrant. - --------------------------------------------------------------------------------------------------------------------- Offering price For each unit, consisting of one common share and one-half Series 2003A Warrant, an amount equal to 90% of the average of the closing price of the common shares, as reported on the Nasdaq SmallCap Market, during the calendar week preceding the calendar week in which we receive and accept subscription proceeds for the particular investment. - ---------------------------------------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------------------------------------- Subscription agreement; limitations on transfer Purchasers will be required to sign a subscription agreement in the form attached to this prospectus as Exhibit II pursuant to which they will agree not to knowingly sell or otherwise transfer the common shares or the 2003A Warrants offered pursuant to this prospectus in Canada for a period of six months after the date of issuance. - --------------------------------------------------------------------------------------------------------------------- Common shares outstanding before this offering 30,378,091(1) - --------------------------------------------------------------------------------------------------------------------- Common shares outstanding after this offering, if all 31,878,091(1) offered securities are sold and the Series 2003A Warrants are exercised - --------------------------------------------------------------------------------------------------------------------- Use of proceeds We are offering the offered securities on a "no-minimum" We intend to use the cash proceeds from the sale of the offered securities for working capital to be used for general corporate purposes. If management determines that capital from other sources is sufficient to fund our ongoing operations, we may use up to $280,000 of the net cash proceeds to prepay indebtedness arising under our $1,400,000 Second Amended and Restated Secured Term Note. In addition, in order to conserve working capital, we may issue the offered securities in non-cash transactions in exchange for the cancellation of indebtedness and accounts payable and in exchange for services, including services rendered in connection with capital-raising activities. - --------------------------------------------------------------------------------------------------------------------- Risk factors Investing in the offered securities involves substantial risks You should read the risk factors beginning on page 3 in this prospectus before making an investment decision. - ---------------------------------------------------------------------------------------------------------------------
(1) As of January 31, 2003. Excludes 4,061,700 common shares authorized for issuance upon exercise of outstanding options that have been granted pursuant to our stock option plans, 9,170,171 common shares subject to outstanding warrants to purchase common shares and an indeterminable number of common shares subject to our $1,400,000 Second Amended and Restated Secured Term Note. 3 RISK FACTORS Before you invest in the offered securities described in this prospectus, you should be aware that such investment involves the assumption of various risks. You should consider carefully the risk factors described below together with all of the other information included in this prospectus before you decide to purchase the offered securities. We have not generated any substantial operating revenues and may not ever generate substantial revenues. - -------------------------------------------------------------------------------- To date, we have not generated substantial revenues from operations. We have not generated revenues from the jig and have scaled back development efforts for the foreseeable future. We have generated only $141,576 of sales revenues in our nanoparticle business as of September 30, 2002 and have not completed exploration of the Tennessee mineral property. We can provide no assurance that we will ever generate revenues from the jig or the Tennessee mineral property or that we will generate substantial revenues from the titanium processing technology. We may continue to experience significant losses from operations. - -------------------------------------------------------------------------------- We have experienced a loss from operations in every fiscal year since our inception. Our losses from operations in 2000 were $6,647,367 and our losses from operations in 2001 were $6,021,532. We will continue to experience a net operating loss until, and if, the titanium processing technology, the jig and/or the Tennessee mineral property begin generating significant revenues. Even if any or all such products or projects begin generating significant revenues, the revenues may not exceed our costs of production and operating expenses. We may not ever realize a profit from operations. We may not be able to raise sufficient capital to meet future obligations. - -------------------------------------------------------------------------------- As of September 30, 2002, we had $306,061 in cash and a working capital deficit of $2,181,380. Although we have raised additional capital since September 30, 2002, we do not expect that this capital, when combined with projected revenues from nanoparticle sales, will be sufficient to fund our ongoing operations. Accordingly, we will need to raise significant amounts of additional capital in the future in order to sustain our ongoing operations and continue the testing and additional development work necessary to place the titanium processing technology into continuous operation. In addition, we will need additional capital for testing and development of the jig or exploration of the Tennessee mineral property. If we determine to construct and operate a mine on the Tennessee mineral property, we will need to obtain a significant amount of additional capital to complete construction of the mine and commence operations. We may not be able to obtain the amount of additional capital needed or may be forced to pay an extremely high price for capital. Factors affecting the availability and price of capital may include the following: 4 o market factors affecting the availability and cost of capital generally; o our financial results; o the amount of our capital needs; o the market's perception of nanotechnology and/or minerals stocks; o the economics of projects being pursued; o industry perception of our ability to recover or produce minerals with the jig or titanium processing technology or from the Tennessee mineral property; and o the price, volatility and trading volume of our common shares. If we are unable to obtain sufficient capital or are forced to pay a high price for capital, we may be unable to meet future obligations or adequately exploit existing or future opportunities, and may be forced to discontinue operations. We have a substantial number of warrants, options and other convertible securities outstanding and may issue a significant number of additional shares upon exercise or conversion thereof. - -------------------------------------------------------------------------------- As of December 31, 2002, there were outstanding warrants to purchase up to 10,653,506 common shares at a weighted average exercise price of $1.79 per share and options to purchase up to 3,911,700 common shares at a weighted average exercise price of $3.98 per share. The existence of such warrants and options may hinder future equity offerings, and the exercise of such warrants and options may further dilute the interests of all shareholders. Future resale of the common shares issuable on the exercise of such warrants and options may have an adverse effect on the prevailing market price of the common shares. In addition, we have issued a Second Amended and Restated Secured Term Note. Under the Second Amended and Restated Secured Term Note, a conversion right with respect to $280,000 of principal accrues on each of March 1, 2003, June 1, 2003, September 1, 2003, December 1, 2003 and March 1, 2004. If the amount that would be subject to a conversion right is prepaid prior to the date of accrual, such conversion right does not accrue. Once a conversion right has accrued, the principal amount subject to that conversion right cannot be prepaid unless all principal amounts not subject to a conversion right have been prepaid in full. Each conversion right gives the holder the right to convert the subject principal amount into common shares at a conversion price equal to the lesser of (a) $1.00 per share and (b) 70% of the average of the closing price of our common shares for the five trading days ending on the trading day immediately preceding the date on which that conversion right accrued. In order to illustrate the relationship between the market price of our common shares and the issuance of common shares upon the exercise of conversion rights that may accrue under the Second Amended and Restated Secured Term Note, the following table sets forth how many additional common shares would be issued upon the exercise of all such conversion rights if all such conversion rights accrue and the average of the closing price of our common stock for the five trading days ending on the day before each conversion right accrues is (a) $1.43 or greater, (b) $0.50 per share, (c) $0.25 per share, or (d) $0.10 per share. 5 Such prices are selected for illustration purposes only and do not reflect our actual estimate of the average of the closing price of our common shares for any particular period.
$1.43 or $0.50 $0.25 $0.10 Greater Shares Issuable(1) 1,400,000 4,000,000 8,000,000 20,000,000 Percentage of Outstanding(2) Common Shares 4.4% 11.7% 20.9% 39.8%
(1) Assumes that shareholder approval is obtained for the transaction in which we issued the Second Amended and Restated Secured Term Note and all related transactions, that no principal is prepaid, that all conversion rights accrue and are exercised at the same time and that no default occurs and that no penalties or premiums are required to be paid. (2) Represents percentage of outstanding common shares following exchange assuming the 20,378,091common shares outstanding on January 31, 2003 are outstanding on the date of conversion. The potential accrual of such conversion rights may hinder future equity offerings, and the exercise of any conversion rights that accrue may further dilute the interests of all shareholders. The sale in the open market of common shares issuable upon the exercise of conversion rights may place downward pressure on the market price of our common shares. Speculative traders may anticipate the exercise of conversion rights and, in anticipation of a decline in the market price of our common shares, engage in short sales of our common shares. Such short sales could further negatively affect the market price of our common shares. Our competitors may be able to raise money and exploit opportunities more rapidly, easily and thoroughly than we can. - -------------------------------------------------------------------------------- We have limited financial and other resources and, because of our early stage of development, have limited access to capital. We compete or may compete against entities that are much larger than we are, have more extensive resources than we do and have an established reputation and operating history. Because of their size, resources, reputation, history and other factors, certain of our competitors may have better access to capital and other significant resources than we do and, as a result, may be able to exploit acquisition and development opportunities more rapidly, easily or thoroughly than we can. We have pledged substantial assets to secure the Second Amended and Restated Secured Term Note. - -------------------------------------------------------------------------------- We have pledged all of the intellectual property, fixed assets and common stock of Altair Nanomaterials, Inc., our second-tier wholly-owned subsidiary, to secure repayment of a Second Amended and Restated Secured Term Note with a face value of $1,400,000 and a due date of March 31, 2004. Altair Nanomaterials, Inc. owns and operates the titanium processing technology we acquired from BHP Minerals International Inc. in 1999. The Second Amended and Restated Secured Term Note is also secured by a pledge of the common stock and 6 leasehold assets of Mineral Recovery Systems, Inc., which owns and operates our leasehold interests in the Camden, Tennessee area. If we default on the Second Amended and Restated Secured Term Note, severe remedies will be available to the holder of the Second Amended and Restated Secured Term Note, including immediate seizure and disposition of all pledged assets. We have issued a $3,000,000 note to secure the purchase of the land and the building where our titanium processing assets are located. - -------------------------------------------------------------------------------- In August 2002, we entered into a purchase and sale agreement with BHP Minerals International Inc. to purchase the land, building and fixtures in Reno, Nevada where our titanium processing assets are located. In connection with this transaction, BHP also agreed to terminate our obligation to pay royalties associated with the sale or use of the titanium processing technology. In return, we issued to BHP a note in the amount of $3,000,000, at an interest rate of 7%, secured by the property we acquired. The first payment of $600,000 of principal plus accrued interest is due February 8, 2006. Additional payments of $600,000 plus accrued interest are due annually on February 8, 2007 through 2010. If we fail to make the required payments on the note, BHP has the right to foreclose and take the property. If this should occur, we would be required to relocate our titanium processing assets and offices, causing a significant disruption in our business. Operations using the titanium processing technology, the jig or the Tennessee mineral property may lead to substantial environmental liability. - -------------------------------------------------------------------------------- Virtually any proposed use of the titanium processing technology, the jig or the Tennessee mineral property would be subject to federal, state and local environmental laws. Under such laws, we may be jointly and severally liable with prior property owners for the treatment, cleanup, remediation and/or removal of any hazardous substances discovered at any property we use. In addition, courts or government agencies may impose liability for, among other things, the improper release, discharge, storage, use, disposal or transportation of hazardous substances. We might use hazardous substances and, if we do, we will be subject to substantial risks that environmental remediation will be required. Certain of our experts and directors reside in Canada and may be able to avoid civil liability. - -------------------------------------------------------------------------------- We are a Canadian corporation, and a majority of our directors and our Canadian legal counsel are residents of Canada. As a result, investors may be unable to effect service of process upon such persons within the United States and may be unable to enforce court judgments against such persons predicated upon civil liability provisions of the United States securities laws. It is uncertain whether Canadian courts would (i) enforce judgments of United States courts obtained against us or such directors, officers or experts predicated upon the civil liability provisions of United States securities laws or (ii) impose liability in original actions against Altair or its directors, officers or experts predicated upon United States securities laws. We are dependent on key personnel. - -------------------------------------------------------------------------------- Our continued success will depend to a significant extent on the services of Dr. William P. Long, our Chief Executive Officer, Dr. Rudi Moerck, our President, and Mr. C. Patrick Costin, our Vice President and President of Fine Gold Recovery Systems, Inc. and Mineral Recovery Systems, Inc., our 7 wholly-owned subsidiaries. The loss or unavailability of Dr. Long, Dr. Moerck or Mr. Costin could have a material adverse effect on us. We do not carry key man insurance on the lives of Dr. Long, Dr. Moerck or Mr. Costin. We may issue substantial amounts of additional shares without stockholder approval. - -------------------------------------------------------------------------------- Our articles of continuance authorize the issuance of an unlimited number of common shares. All such shares may be issued without any action or approval by our stockholders. In addition, we have two stock option plans which have potential for diluting the ownership interests of our stockholders. The issuance of any additional common shares would further dilute the percentage ownership of Altair held by existing stockholders. The market price of our common shares is extremely volatile. - -------------------------------------------------------------------------------- Our common shares are listed on the Nasdaq SmallCap Market. Trading in our common shares has been characterized by a high degree of volatility. Trading in our common shares may continue to be characterized by extreme volatility for numerous reasons, including the following: o Uncertainty regarding the viability of the titanium processing technology, the jig or the Tennessee mineral property; o Dominance of trading in our common shares by a small number of firms; o Positive or negative announcements by us or our competitors; o Uncertainty regarding our ability to maintain our listing on the Nasdaq SmallCap Market or continue as a going concern; o Industry trends, general economic conditions in the United States or elsewhere, or the general markets for equity securities, minerals, or commodities; and o Speculation by short sellers of our common shares or other persons who stand to profit from a rapid increase or decrease in the price of our common shares. We may be delisted from the Nasdaq SmallCap Market. - -------------------------------------------------------------------------------- Our listing on the Nasdaq SmallCap Market is conditioned upon our compliance with the continued listing requirements for such market by June 2, 2003, including the $1.00 per share minimum bid requirement. If the market price for our common shares has not increased to $1.00 per share for at least 10 consecutive days by June 2, 2003, we expect to be delisted from the Nasdaq SmallCap Market. Delisting from the Nasdaq SmallCap Market may have a significant negative impact on the trading price, volume and marketability of our common shares. We have never declared a cash dividend and do not intend to declare a cash dividend in the foreseeable future. - -------------------------------------------------------------------------------- We have never declared or paid cash dividends on our common shares. We currently intend to retain any future earnings, if any, for use in our business and, therefore, do not anticipate paying dividends on our common shares in the foreseeable future. 8 If you purchase shares in this offering, you will face immediate and substantial dilution. - -------------------------------------------------------------------------------- This offering involves immediate substantial dilution to prospective investors. The book value per common share immediately following this offering will be substantially less than the price per common shares. Because we are not required to sell a minimum number of securities in this offering, there is a greater risk that you could lose your investment. - -------------------------------------------------------------------------------- This offering is not subject to a requirement for the sale of a minimum number of shares. We cannot assure you that we will be able to sell all or any portion of the offered shares and Series 2003A Warrants or that proceeds from sales actually made will be sufficient to fund operations. Because the number of offered securities that we will actually sell in this offering is unknown, the risks to initial purchasers of the offered securities are substantially increased. We may be unable to exploit the potential pharmaceutical application of our titanium processing technology. - -------------------------------------------------------------------------------- We do not have the technical or financial resources to complete development of, and take to market, any pharmaceutical application of our titanium processing technology. In order for us to receive any significant, long-term benefit from any potential pharmaceutical application of our technologies, the following must occur: o we must enter into an evaluation license or similar agreement with an existing pharmaceutical company under which such company would pay a fee for the right to evaluate a pharmaceutical use of our technology for a specific period of time and for an option to purchase or receive a license for such use of our technology; o tests conducted by such pharmaceutical company would have to indicate that the pharmaceutical use of our technology is safe, technically viable and financially viable; o such pharmaceutical company would have to apply for and obtain FDA approval of the pharmaceutical use of our technology, or any related products, which would involve extensive additional testing; and o such pharmaceutical company would have to successfully market the product incorporating our technology. Although we could receive some revenues in various stages of the testing and evaluation of the pharmaceutical application of our technology, we may not receive significant revenue unless and until an end product incorporating the technology goes to market. We may not be able to license our technology for titanium dioxide pigment production. - -------------------------------------------------------------------------------- Because of our relatively small size and limited resources, we do not plan to use our titanium processing technology for large-scale production of titanium dioxide pigments; we have, however, entered into discussions with various minerals and materials companies about licensing our technology to such entities for large-scale production of titanium dioxide pigments. We have not 9 entered into any long-term licensing agreements with respect to the use of our titanium processing technology for large-scale production of titanium dioxide pigments and can provide no assurance that we will be able to enter into any such agreement. Even if we enter into such agreement, we would not receive significant revenues from such license until feasibility testing is complete and, if the results of feasibility testing were negative, we would not receive significant revenues at any time. We may not be able to sell nanoparticles produced using the titanium processing technology. - -------------------------------------------------------------------------------- We plan to use the titanium processing technology to produce ceramic oxide nanoparticles. Nanoparticles and other products we intend to initially produce with the titanium processing technology generally must be customized for a specific application working in cooperation with the end user. We are still testing and customizing our nanoparticle products for various applications and have no long-term agreements with end users to purchase any of our nanoparticle products. We may be unable to recoup our investment in the titanium processing technology and titanium processing equipment for various reasons, including the following: o we may be unable to customize our nanoparticle products to meet the distinct needs of potential customers; o potential customers may purchase from competitors because of perceived or actual quality or compatibility differences; o our marketing and branding efforts may be insufficient to attract a sufficient number of customers; and o because of our limited funding, we may be unable to continue our development efforts until a strong market for nanoparticles develops. In addition, the uses for such nanoparticles are limited, and the market for such nanoparticles is small. In light of the small size of the market, the addition of a single manufacturer may cause the price to drop to a point at which we cannot produce the nanoparticles at a profit. Our costs of production may be too high to permit profitability. - -------------------------------------------------------------------------------- We have not produced products using our titanium processing technology and equipment on a commercial basis. Our actual costs of production may exceed those of competitors and, even if our costs of production are lower, competitors may be able to sell titanium dioxide and other products at a lower price than is economical for Altair. In addition, even if our initial costs are as anticipated, the titanium processing equipment may break down, prove unreliable or prove inefficient in a commercial setting. If so, related costs, delays and related problems may cause production of titanium dioxide nanoparticles and related products to be unprofitable. We have not completed testing and development of the jig and are presently focusing our resources on other projects. - -------------------------------------------------------------------------------- 10 We have not completed testing of, or developed a production model of, any series of the jig. We do not expect to complete testing and development of the jig during 2003 and have determined to focus most of our limited resources on the titanium processing technology. We may never develop a production model of the jig. Even if we complete development of the jig, the jig may prove unmarketable and may not perform as anticipated in a commercial operation. - -------------------------------------------------------------------------------- The designed capacity of the Series 12 jig is too small for coal washing, heavy minerals extraction, and most other intended applications of the jig, except use in small placer gold mines or similar operations. Even if the Series 12 jig is completed and performs to design specifications in subsequent tests or at a commercial facility, we believe that, because of its small capacity, the potential market for the Series 12 jig is limited. If we complete development of and begin marketing a production model of the Series 30 jig, it may not prove attractive to potential end users, may be rendered obsolete by competing technologies or may not recover end product at a commercially viable rate. Even if technology included in the jig initially proves attractive to potential end users, performance problems and maintenance issues may limit the market for the jig. The jig faces competition from other jig-like products and from alternative technologies. - -------------------------------------------------------------------------------- Various jig-like products and alternative mineral processing technologies perform many functions similar or identical to those for which the jig is designed. Results from further tests or actual operations may reveal that these alternative products and technologies are better adapted to any or all of the uses for which the jig is intended. Moreover, regardless of test results, consumers may view any or all of such alternative products and technologies as technically superior to, or more cost effective than, the jig. Certain patents for the jig have expired, and those that have not expired may be difficult to enforce. - -------------------------------------------------------------------------------- All of the initial patents issued on the jig have expired, and we are unable to prevent competitors from copying the technology once protected by such patents. Additional patents related to the process through which water is pulsed through the cylindrical screen on the jig expire beginning in 2010, and patents for an efficiency-enhancing aspect of the cylindrical screen expire during 2018. The cost of enforcing patents is often significant, especially outside of North America. Accordingly, we may be unable to enforce even our patents that have not yet expired. We have suspended examining the feasibility of mining the Tennessee mineral property and may not have working capital sufficient to again continue testing efforts. - -------------------------------------------------------------------------------- Due to a shortage of working capital, we have suspended feasibility testing of the Tennessee mineral property. We do not expect to obtain an amount of working capital sufficient to again start feasibility testing of the Tennessee mineral property in the foreseeable future. Even if we again commence feasibility testing on the Tennessee mineral property, we are unable to provide any assurance that mining of the Tennessee 11 mineral property is feasible or to identify all processes that we would need to complete before we could commence a mining operation on the Tennessee mineral property. To the extent early feasibility testing yields positive results, we expect feasibility testing to involve, among other things, the following: o operating a pilot mining facility to determine mineral recovery efficiencies and the quality of end products; o additional drilling and sampling in order to more accurately determine the quantity, quality and continuity of minerals on the Tennessee mineral property; o examining production costs and the market for products produced at the pilot facility; o designing any proposed mining facility; o identifying and applying for the permits necessary for any proposed full-scale mining facility; and o attempting to secure financing for any proposed full-scale mining facility. Our test production at the pilot plant, economic analysis and additional exploration activities may indicate any of the following: o that the Tennessee mineral property does not contain heavy minerals of a sufficient quantity, quality or continuity to permit any mining; o that production costs exceed anticipated revenues; o that end products do not meet market requirements or customer expectations; o that there is an insufficient market for products minable from the Tennessee mineral property; or o that mining the Tennessee mineral property is otherwise not economically or technically feasible. Even if we conclude that mining is economically and technically feasible on the Tennessee mineral property, we may be unable to obtain the capital, resources and permits necessary to mine the Tennessee mineral property. Market factors, such as a decline in the price of, or demand for, minerals recoverable at the Tennessee mineral property, may adversely affect the development of mining operations on such property. In addition, as we move through the testing process, we may identify additional items that need to be researched and resolved before any proposed mining operation could commence. 12 We cannot forecast the life of any potential mining operation located on the Tennessee mineral property. - -------------------------------------------------------------------------------- We have not explored and tested the Tennessee mineral property enough to establish the existence of a commercially minable deposit (i.e. a reserve) on such property. Until such time as a reserve is established (of which there can be no assurance), we cannot provide an estimate as to how long the Tennessee mineral property could sustain any proposed mining operation. We may be unable to obtain necessary environmental permits and may expend significant resources in order to comply with environmental laws. - -------------------------------------------------------------------------------- In order to begin construction and commercial mining on the Tennessee mineral property, we must obtain additional federal, state and local permits. We will also be required to conform our operations to the requirements of numerous federal, state and local environmental laws. Because we have not yet commenced design of a commercial mining facility on the Tennessee mineral property, we are not in a position to definitively ascertain which federal, state and local mining and environmental laws or regulations would apply to a mine on the Tennessee mineral property. Nevertheless, we anticipate having to comply with and/or obtain permits under the Clean Air Act, Clean Water Act and Resource Conservation and Recovery Act, in addition to numerous state laws and regulations before commencing construction or operation of a mine on the Tennessee mineral property. We can provide no assurance that we will be able to comply with such laws and regulations or obtain any such permits. In addition, obtaining such permits and complying with such environmental laws and regulations may be cost prohibitive. The market for commodities produced using the jig or at the Tennessee mineral property may significantly decline. - -------------------------------------------------------------------------------- If the jig is successfully developed and manufactured on a commercial basis, we intend to use the jig, or lease the jig for use, to separate and recover valuable, heavy mineral particles. Active international markets exist for gold, titanium, zircon and many other minerals potentially recoverable with the jig. Prices of such minerals fluctuate widely and are beyond our control. A significant decline in the price of minerals capable of being extracted by the jig could have significant negative effect on the value of the jig. Similarly, a significant decline in the price of minerals expected to be produced on the Tennessee mineral property could have a significant negative effect on the viability of a mine or processing facility on such property. FORWARD-LOOKING STATEMENTS This prospectus contains various forward-looking statements. Such statements can be identified by the use of the forward-looking words "anticipate," "estimate," "project," "likely," "believe," "intend," "expect," or similar words. These statements discuss future expectations, contain projections regarding future developments, operations, or financial conditions, or state other forward-looking information. When considering such forward-looking statements, you should keep in mind the risk factors noted in the previous section and other cautionary statements throughout this prospectus and our periodic filings with the SEC that are incorporated herein by reference. You should also keep in mind that all forward-looking statements are based on 13 management's existing beliefs about present and future events outside of management's control and on assumptions that may prove to be incorrect. If one or more risks identified in this prospectus or any applicable filings materializes, or any other underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected, or intended. Among the key factors that may have a direct bearing on our operating results are risks and uncertainties described under "Risk Factors," including those attributable to the absence of significant operating revenues or profits, uncertainties regarding the development and commercialization of the titanium processing technology and the jig, development risks associated with the Tennessee mineral property and uncertainties regarding our ability to obtain capital sufficient to continue our operations and pursue our proposed business strategy. USE OF PROCEEDS We will receive all of the proceeds from the offer and sale of the offered securities. We intend to use the net cash proceeds, following the payment of any legal costs and other offering expenses, to provide working capital to be used for general corporate purposes. If management determines that capital from other sources is sufficient to fund our ongoing operations, we may use up to $280,000 of the net cash proceeds to prepay indebtedness arising under our $1,400,000 Second Amended and Restated Secured Term Note. The interest rate of this note is 11% per year. Under such note, a conversion right with respect to $280,000 of principal accrues on each of March 1, 2003, June 1, 2003, September 1, 2003, December 1, 2003 and March 1, 2004. If the amount that would be subject to a conversion right is prepaid prior to the date of accrual, such conversion right does not accrue. In order to avoid the dilution associated with the accrual of such a conversion right, management may determine to use up to $280,000 of the net cash proceeds in order to prevent the accrual of a conversion right on March 1, 2003. In addition, in order to conserve working capital, we may issue some or all of the offered securities in non-cash transactions in exchange for the cancellation of indebtedness and accounts payable and in exchange for services, including services rendered in connection with capital raising activities. There is no requirement that we sell a minimum number of shares in this offering. Therefore, we may receive no proceeds from this offering, or insufficient proceeds for our planned use of proceeds set forth above. 14 DILUTION Our net tangible book value (deficit) at September 30, 2002 was $3,038,825 or approximately $0.12 per common share. Net tangible book value of a company is the value of all of its tangible assets, less the value of all liabilities. Net tangible book value per common share is the net tangible book value of the company divided by the number of common shares issued and outstanding. If all of the 1,500,000 common shares and 750,000 Series 2003A Warrants to which this prospectus relates are sold at an assumed sale price of $0.40 per share, and all Series 2003A Warrants are exercised at an assumed exercise price of $1.00 per share, our net tangible book value would be $4,388,825 or $0.15 per common share at September 30, 2002, resulting in an immediate increase in net tangible book value of $1,350,000 or approximately $0.03 per common share to existing shareholders and an immediate dilution of approximately $0.45 per common share to purchasers. The following table illustrates dilution on a per common share and per offering basis:
Per Unit Per Offering -------- ------------ Offering price (1)......................................................... $0.40 $600,000 Net tangible book value (deficit) at September 30, 2002.................... $0.12 $3,038,825 Increase attributable to purchase by new investors(2)...................... $0.03 $1,350,000 Pro forma net tangible book value (deficit) after the offering (2)......... $0.15 $4,388,825 Pro forma net tangible book value dilution to new investors (3)............ $0.45 $1,003,000
(1) Reflects the sale of 1,500,000 common shares and 750,000 Series 2003A Warrants at an estimated purchase price per units of one common share and one-half Series 2003A Warrant of $0.40. The actual purchase price will vary, and may differ materially, from the estimated price. (2) Assumes that the number of common shares outstanding as of September 30, 2002 was 26,203,902 and that the 1,500,000 common shares and 750,000 Series 2003A Warrants to which this prospectus relates are sold at a price of $0.40 per share and that all Series 2003A Warrants are exercised for the purchase of an additional 750,000 common shares at an exercise price of $1.00 per share. Does not reflect the possible issuance of up to 4,061,700 common shares upon the exercise of outstanding stock options or the possible issuance of up to 9,170,177 common shares upon the exercise of outstanding warrants. (3) Dilution represents the difference between the amount paid by investors (average price of $0.60 per share) and the pro forma net tangible book value after the offering contemplated by this prospectus. 15 PLAN OF DISTRIBUTION We are offering and selling the 1,500,000 common shares and 750,000 Series 2003A Warrants to which this prospectus relates directly to purchasers. We have not retained any underwriter, broker or dealer to facilitate the offer or sale of the offered securities, and we will pay no underwriting commissions or discounts in connection with the offer or sale of the offered securities. The offered securities will be offered directly to prospective investors by our President, Rudi E. Moerck, and by the President of our wholly-owned subsidiary Altair Nanomaterials, Inc, Kenneth E. Lyon. In addition, some of our other officers and employees may prepare and deliver written communications regarding the offered securities and respond to inquiries initiated by potential purchasers. No commissions, discounts, or other compensation of any kind will be paid to our officers or employees that participate in the offering. DESCRIPTION OF OFFERED SECURITIES Our Common Shares Our articles of continuance authorize the issuance of an unlimited number of common shares, which do not have par value. As of December 31, 2002, there were 30,244,348 common shares issued and outstanding, held by approximately 500 registered holders. Holders of common shares are entitled to one vote per share on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors. The holders of common shares are entitled to receive dividends, if any, as may be declared from time to time by our board of directors in its discretion from funds legally available therefor. Upon our liquidation, dissolution or winding up, the holders of common shares are entitled to receive ratably any assets available for distribution to shareholders. The common shares have no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions with respect to such shares. All of the outstanding common shares are fully paid and nonassessable. As of December 31, 2002, we had issued and outstanding options to acquire 4,061,700 common shares issued pursuant to its options plans and had issued and outstanding warrants to purchase 9,170,171 common shares issued in various series. Neither our articles nor our bylaws contain any provision that would delay, defer or prevent a change in control. We have, however, adopted an Amended and Restated Shareholder Rights Plan Agreement dated October 15, 1999, which allows our shareholders to acquire additional common shares at a price that would create a strong disincentive to a tender offer or similar change of control transaction, if a person acquires, or announces an intent to acquire, 15% or more of the outstanding common shares, and if certain other conditions are met. A copy of this agreement is attached as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 18, 1999. A copy of this agreement is also available upon written request to us. You should review the entire agreement before making any investment decision. 16 Series 2003A Warrants Each Series 2003A Warrant entitles the holder thereof to purchase one common share at any time prior to the fifth anniversary of the issue date at the price equal to the greater of (i) $1.00 per share, and (ii) 125% of the average of the closing price of the common shares, as reported on our principal trading market, during the calendar week preceding the calendar week in which we receive and accept subscription proceeds for the particular investment. The holder of a Series 2003A Warrant may exercise such Warrant by delivering to the Company at its principal office the Series 2003A Warrant certificate, the Subscription Form attached thereto, and cash or certified check in an amount equal to the exercise price multiplied by the number of Series 2003A Warrants being exercised. The Series 2003A Warrants may only be exercised in increments equal to the lesser of (a) 25,000 common shares and (b) the number of shares subject to the Series 2003A Warrant. Each Series 2003A Warrant is freely assignable, subject to the restrictions of applicable federal, Canadian, state, and provincial securities laws. The Series 2003A Warrants provide for the adjustment of the number of common shares subject thereto and the exercise price in the event of a stock split, stock dividend, merger, consolidation, or similar event. Canadian Transfer Restrictions Neither the common shares nor the 2003A Warrants offered pursuant to this prospectus may be knowingly resold or otherwise transferred in Canada for a period of six months after the date of issuance. Investors will be required to sign a subscription agreement pursuant to which they will agree to comply with this restriction. A form of the Series 2003A Warrant Certificate is attached to this prospectus as Exhibit I. LEGAL MATTERS The validity of the shares being offered hereby is being passed upon for us by Goodman and Carr LLP, Ontario, Canada. EXPERTS The consolidated financial statements incorporated in this prospectus by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2001 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the uncertainty that the Company will be able to continue as a going concern), which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 17 INFORMATION ABOUT OUR COMPANY This prospectus is accompanied by copies of our Annual Report on Form 10-K for the year ended December 31, 2001 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002. These documents contain information about us as of their respective dates. We recommend that you carefully review these documents as part of your review of this prospectus. RECENT DEVELOPMENTS Amendment of Secured Term Note. Effective November 21, 2002, the principal amount of the secured term note that we issued to Doral 18, LLC was reduced from $2,000,000 to $1,400,000 in exchange for our issuance of 1,500,000 common shares to Doral, and the maturity date of the note was extended from March 31, 2003 to March 31, 2004. Interest accrues on the outstanding principal balance of the Second Amended and Restated Secured Term Note at the rate of 11% per annum. Under the Second Amended and Restated Secured Term Note, a conversion right with respect to $280,000 of principal accrues on each of March 1, 2003, June 1, 2003, September 1, 2003, December 1, 2003 and March 1, 2004. If the amount that would be subject to a conversion right is prepaid prior to the date of accrual, such conversion right does not accrue. Once a conversion right has accrued, the principal amount subject to that conversion right cannot be prepaid unless all principal amounts not subject to a conversion right have been prepaid in full. Each conversion right gives the holder the right to convert the subject principal amount into common shares at a conversion price equal to the lesser of (a) $1.00 per share and (b) 70% of the average of the closing price of our common shares for the five trading days ending on the trading day immediately preceding the date on which that conversion right accrued. Change of Name and Jurisdiction of Incorporation. Effective July 2, 2002, we changed our name from Altair International Inc. to Altair Nanotechnologies Inc. and moved our jurisdiction of incorporation from the Ontario Business Corporations Act to the Canada Business Corporations Act. The purpose of the name change was to reflect our strategy of focusing our business on the supply of nanomaterials and to reflect our position in the nanotechnology sector. We changed jurisdiction of incorporation because our business is increasingly being conducted on an international basis, and operating as a Canadian federal company will be more consistent with our international focus. Moreover, a minimum of 25% of the directors of a company incorporated under the Canada Business Corporations Act must be resident Canadians whereas 50% of the directors of a company incorporated under the Ontario Business Corporations Act must be resident Canadians. Thus, the Canada Business Corporations Act's residency requirements will increase the number of qualified nominees for the board from which the Company may draw. 18 Recently Developed Applications of Our Technology In the second quarter of 2002, we initiated research and development efforts directed toward the utilization of nanomaterials in the pharmaceuticals industry. In July 2002, we announced the development of a new active pharmaceutical ingredient for the treatment of elevated serum phosphate levels, or hyperphosphatemia, in patients undergoing kidney dialysis, as well as a new drug delivery system using inorganic ceramic nanoparticles. In August 2002, we filed a provisional patent application covering our new active pharmaceutical ingredient. Our new drug delivery system is based upon nanoparticles that Altair already manufactures for which we already possess composition of matter patents. Altair has also already received patents for the manufacture of titanium dioxide nanoparticles, which are the basis of its drug delivery platform Our New Pharmaceutical Ingredient. We have given our active pharmaceutical ingredient the name RenaZorb(TM). RenaZorb(TM) is a highly active, lanthanum based nanomaterial with low intestinal solubility and excellent in vitro phosphate binding. Animal testing on RenaZorb(TM) has begun in dogs and rats, but no human tests have yet been conducted. Nonetheless, based upon our initial laboratory testing and research in simulated human stomach fluid we believe that RenaZorb(TM) will offer the following advantages over competing products: o Lower dosage requirements because of better phosphate binding per gram of drug compared with existing or proposed drugs; o Fewer and less severe side effects because of less gassing and lower dosage; and o Better patient compliance because of fewer tablets: and o Lower cost than existing or proposed prescription drugs in this therapeutic category In most kidney dialysis patients with end stage renal disease, serum phosphate levels must be kept in check. This is done by ingesting a phosphate binder after meals. Phosphate binders absorb the phosphate in the food that the patient consumes, preventing absorption of phosphate in the patient's gastrointestinal tract. Existing phosphate binders include Tums(TM) antacid, which contains calcium carbonate, and also aluminum hydroxide based products such as Gaviscon(TM) manufactured by Glaxo Smith Kline, both of which are available over the counter, as well as Renagel(TM) (chemical name sevelmer) manufactured by Genzyme, which is available only by prescription. In addition, Fosrenol(TM), lanthanum carbonate tetra hydrate, or LCTH, developed by Shire Pharmaceuticals of the UK, is awaiting United States FDA and foreign regulatory approvals, which are expected in early 2003. According to information published by AnorMED, the worldwide market for phosphate binders for chronic renal failure patients is approximately $400 million to $600 million annually. The growth of this market is limited by high prescription drug costs, high dosage requirements, undesirable side effects and poor patient compliance. We believe this market could grow to over $1.0 billion if these issues can be successfully addressed and that RenaZorb(TM) has the potential to successfully address these issues. While over the counter phosphate binders are relatively inexpensive, they have several disadvantages. Calcium carbonate containing phosphate binders, such as Tums(TM), in high doses, may cause increased blood pressure and increased risk of cardiovascular disease and is generally not recommended for long term use by dialysis patients. With prolonged use, Aluminum hydroxide based phosphate binders, such as Gaviscon(TM), may cause toxic neurological effects and are generally avoided by physicians. Aluminum dementia has been widely reported in kidney dialysis patients using these products. 19 The prescription phosphate binder Renagel(TM) is relatively expensive--approximately $1,300 per patient per year--has a high dosage requirement-- 2 x 800 mg or 4 x 400 mg capsule/tablets three times per day--and water intake is required. The most common side effects related to the use of Renagel(TM) include nausea (7% of patients), constipation (2% of patients), diarrhea (4% of patients), gas or bloating (4% of patients) and heartburn or indigestion (5% patients). Renagel is the only prescription non-calcium phosphate binder currently approved by the United States FDA. Fosrenol(TM) (LCTH), for which US FDA approval is pending, is expected to be marketed as a chewable tablet with a proposed dosage of 1.5 to 3.0 grams active drug per day. As with all medicines, Fosrenol(TM) will probably display some side effects but these are expected to be minor. It has been reported that the use of Fosrenol does increase serum lanthanum levels compared with levels in patients taking a placebo. RenaZorb(TM), which is nanotechnology based, is expected to be developed in a tablet or capsule dosage form with a projected dosage of 0.6 to 2.0 grams per day. Although we have done no human testing on RenaZorb(TM), we believe RenaZorb(TM) has the potential for fewer side effects, lower cost and better patient compliance. We base these possible advantages upon in vitro (laboratory) testing conducted by Altair in which RenaZorb was compared to LCTH, the active chemical in Fosrenol. Our testing showed that RenaZorb binds at least 30% more phosphate per gram of drug than LCTH, therefore requiring a lower dose. Lower dose often correlates well with a reduction of observed side effects in chemically related homologous compounds. Both RenaZorb(TM) and Fosrenol(TM) involve the binding of phosphate by lanthanum compounds. In fact, the end product of the binding mechanism is identical; lanthanum orthophosphate is formed. Based on laboratory tests comparing RenaZorb(TM) with LCTH, the active ingredient in Fosrenol(TM), RenaZorb(TM) required 30% less drug to bind the same amount of phosphate and shows less lanthanum going into solution in simulated stomach fluid at pH values of 3.0 and 4.5. In addition, in Altair's testing, using methods published by AnorMED, RenaZorb(TM) reacts with phosphate more rapidly, possibly because of its high nanoparticle-derived surface area. In 20 minute simulated stomach acid tests conducted by Altair, RenaZorb(TM) absorbs approximately 140 mg of phosphate, Renagel(TM) absorbed less than 100 mg of phosphate and LCTH absorbed approximately 60 mg of phosphate. We have entered into eight confidentiality agreements relating to the development/licensing of RenaZorb(TM), and we have recently received two new inquiries. Animal testing of RenaZorb(TM) began in December 2002 and is currently being conducted by two pharmaceutical companies, one of which is testing in dogs and both of which are testing in rats. Altair has written testing agreements with both these companies. We expect the results of these tests in early March. Assuming such results are positive, RenaZorb(TM) will have to undergo human testing and receive FDA approval before it could be approved for marketing. Human testing typically takes 1 to 2 years and, if merited by the results of animal testing, is expected to begin in 2003. FDA approval typically occurs between 3 and 5 years following the completion of animal testing, although we believe that FDA approval of Fosrenol(TM), a chemically related drug, could accelerate the approval process for RenaZorb(TM). We are currently actively discussing licensing agreements with four pharmaceutical companies. We do not intend to manufacture RenaZorb(TM) ourselves. Rather, we expect to enter into licensing agreements with one or more pharmaceutical companies that can conduct additional testing and development, seek necessary FDA approvals and take the other steps necessary to bring RenaZorb(TM) to market. Our New Drug Delivery System. Our new drug delivery system involves depositing drugs on or inside hollow "wiffle ball" spheres made of titanium dioxide and other metal oxide nanoparticles. To date, our research on drug delivery systems involving the use of nanoparticles has been limited to coating known drugs on the surface of titanium dioxide nanoparticles. We have not done any animal or human testing with our new drug delivery systems and do not have the expertise, resources or capacity to complete such testing. We are currently seeking business relationships with pharmaceutical companies that can conduct additional testing and development 20 using their pharmaceutical active ingredients to coat the Altair nanomaterials and then seek necessary FDA approvals and take the other steps necessary to bring the combined drug delivery system to market. Because of the early stage of development of these drug delivery systems, we are unable to state with any certainty how (or if) such drug delivery systems would be used and, if used, what the uses for such systems would be and what the comparative advantages, sides effects and other aspects of such drug delivery systems would be. Nevertheless, based upon our early testing, we believe that the following uses of a nanoparticle-based drug delivery system are feasible: o New delivery forms for existing drugs; o Delivery methods for new drugs; o Delivery of hard to dissolve drugs; o Delivery of sustained release drugs; and o Delivery of dual action drugs. New Delivery Forms and New Drugs. Our drug delivery system may be useful in connection with drugs whose patents are expiring. On average, patented drugs generate $200 to $400 million in sales, with average sales margins of 90% to 95%. The margin for generic drugs drops, however, to 20% to 30% or less. New dosage forms are patentable and, if patented, may extend the drug's patent protection for 20 years. In addition, new dosage forms may reduce the cost of producing various drugs, increasing margins if exclusive or generic, and may reduce undesirable side effects. Hard to Dissolve Drugs. Our drug delivery system may also be used to deliver drugs that work in the gastrointestinal tract without being absorbed. These types drugs remove unwanted materials from the digestive systems. Possible uses for these types of drugs include lowering cholesterol. Another use for our drug delivery system would be for highly insoluble drugs that need greater absorption to enter the blood stream. The significant increase in surface area of our titanium dioxide micro-spheres usually allows greater drug absorption. This greater absorption may also be used to redevelop previously failed candidate drug compounds that were unsuccessful because of inadequate absorption rates or amounts. Sustained Release Drugs and Dual Action Drugs. We also believe our system may useful in connection with the sustained release of fungicides, including the following applications: o Anti-fungal drugs; o Topical anti-fungal drugs with sustained release; o Tile cleaning products (mold, mildew) with residual action; o Cosmetics (preservatives); o Mildew prevention in paints and coatings; o Fabric mildew protection; o Exterior cleaning systems for removal and prevention of mold, mildew and green algae; o Wood protection and preservation; and o UV protection of wood. 21 Altair's hollow sphere "wiffle ball" like structures can deliver active chemicals or drugs in a sustained release fashion because the active component can be "mounted" on both the outside surface and inside the hollow ball structure. The dissolution and availability of the surface-mounted active component will be different than the active component inside the hollow spheres. Material inside the hollow structure will be released slowly compared to surface-mounted material. An additional feature of Altair's nanoparticle based hollow "wiffle ball" structures is that two different active substances could be mounted, one inside the hollow spheres and another on the surface. This allows the possibility for dual action pharmaceuticals to be developed using this technology. Because of the potential for sustained delivery of active pharmaceutical components use Altair's "wiffle ball" structure, we also believe that our system may provide enhanced drug delivery for topical applications, such as the following: o Wound healing; o Antibiotic incorporation; o Antibiotic sustained release o Pain and itch preparations with sustained release action o After-sun care; and o Sunscreens. 22 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to incorporate by reference the information we file with them. This means that we can disclose information to you by referring you to those documents. The documents that have been incorporated by reference are an important part of this prospectus, and you should review that information in order to understand the nature of any investment by you in our common shares. Information contained in this prospectus automatically updates and supersedes previously filed information. We are incorporating by reference the documents listed below. o Our Annual Report on Form 10-K for the year ended December 31, 2001, filed with the SEC on April 1, 2002. o Our Current Report on Form 8-K filed with the SEC on May 10, 2002. o Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 filed with the SEC on May 15, 2002. o Our Current Report on Form 8-K filed with the SEC on July 17, 2002. o Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 filed with the SEC on August 14, 2002, as amended by the Amendment 1 to Quarterly Report on Form 10-Q/A filed with the SEC on October 15, 2002, as amended by the Amendment No. 2 on Form 10-Q/A filed with the SEC on October 21, 2002. o Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 filed with the SEC on November 14, 2002. o Our Current Report on Form 8-K filed with the SEC on November 27, 2002, as amended by Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on December 4, 2002. We will provide, without charge, to each person to whom this prospectus is delivered, upon written or oral request of any such person, a copy of any or all of the foregoing documents (other than exhibits to such documents which are not specifically incorporated by reference in such documents). Please direct written requests for such copies to the Company c/o Mineral Recovery Systems at 204 Edison Way, Reno, Nevada 89502, U.S.A., Attention: Ed Dickinson, Chief Financial Officer. Telephone requests may be directed to the office of the Director of Finance at (800) 897-8245. You should only rely upon the information included in or incorporated by reference into this prospectus or in any prospectus supplement that is delivered to you. We have not authorized anyone to provide you with additional or different information. You should not assume that the information included in or incorporated by reference into this prospectus or any prospectus supplement is accurate as of any date later than the date on the front of the prospectus or prospectus supplement. 23 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly, and current reports, proxy statements, and other information with the SEC. You may read and copy any reports, statements, or other information that we file at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements, and other information regarding issuers, including us, that file electronically with the SEC. Our common shares are quoted on the Nasdaq SmallCap Market. You can inspect and copy reports, proxy statements and other information concerning us at the Public Reference Room of the National Association of Securities Dealers, 1735 K Street, N.W., Washington, D.C. 20006. This prospectus is a part of the registration statement that we filed on Form S-2 with the SEC. The registration statement contains more information about us and our common shares than this prospectus, including exhibits and schedules. You should refer to the registration statement for additional information about us and the common shares being offered in this prospectus. Statements that we make in this prospectus relating to any documents filed as an exhibit to the registration statement or any document incorporated by reference into the registration statement may not be complete, and you should review the referenced document itself for a complete understanding of its terms. SUBSCRIPTION PROCEDURES Purchasers of common shares and Series 2003A Warrants in this offering will be required to sign a subscription agreement in the form attached to this prospectus as Exhibit II. By signing the subscription agreement, purchasers will, among other things: o Agree not to knowingly sell or otherwise transfer the common shares or Series 2003A Warrants in Canada for a period of six months after the issue date; o Indicate and make a representation as to the location of their principal business address or residence, whichever is applicable, in order to assure compliance with state securities laws; and o Confirm the number of common shares and Series 2003A Warrants being purchased and the purchase price applicable to the purchase. Payment of the purchase price is due at the time of subscription and may be paid by check or wire transfer. We may accept or reject any subscription in our sole and absolute discretion. We will promptly return the purchase price for any subscription that we do not accept. Exhibits The following documents related to our offering of common shares and Series 2003A Warrants are attached to this prospectus: o Exhibit I - Form of Series 2003A Warrant o Exhibit II - Form of Subscription Agreement 24 Ex. I-1 Exhibit I Form of Series 2003A Warrant [see attached] 0 THESE SECURITIES, AND ANY SECURITIES ISSUABLE UPON THE EXERCISE HEREOF, HAVE NOT BEEN QUALIFIED UNDER CANADIAN OR PROVINCIAL SECURITIES LAWS AND MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED IN CANADA FOR A PERIOD OF SIX MONTHS AFTER THE ISSUE DATE OF THE WARRANT. ALTAIR NANOTECHNOLOGIES INC. COMMON SHARE PURCHASE WARRANT _______ Series 2003A Warrants Warrant Certificate No. 2003A-_ Void after 5:00 p.m., Mountain Standard Time on _________________, 2007 ALTAIR NANOTECHNOLOGIES INC. (Incorporated under the laws of Canada) This Series 2003A Warrant Certificate ("Warrant Certificate") is to certify that, for value received, ________________or registered assigns (the "Holder") shall have the right to purchase from Altair Nanotechnologies Inc. (hereinafter called the "Corporation") one fully paid and non-assessable Common Share of the Corporation (a "Common Share") for each Series 2003A Warrant (individually, a "Warrant") represented by this Warrant Certificate during the time period commencing on the date this Warrant is executed by the Company and continuing until 5:00 p.m. (Mountain Standard time) on _______________ [five-years from issue date] (the "Expiry Time"). As specified in the Corporation's Registration Statement on Form S-2, File No. 333-102592, covering the issuance of the Warrants, the exercise price for the purchase of each such Common Share is the greater of (i) $1.00 per share, and (ii) 125% of the average of the closing price of the Common Shares, as reported on the Nasdaq SmallCap Market, during the calendar week preceding the calendar week in which the Corporation received and accepted subscription proceeds for the Warrants. During such week, 125% of the average of the closing price of the Common Shares, as reported on the Nasdaq SmallCap Market, was $_____. Accordingly, the exercise price for the purchase of each such Common Share shall be U.S. $_____ per share (the "Exercise Price"). The number of Common Shares to be received upon the exercise of each Warrant and the Exercise Price may be adjusted from time to time as hereinafter set forth. The Warrants shall be subject to the following terms and conditions: 1. For the purposes of this Warrant, the term "Common Shares" means common shares without nominal or par value in the capital of the Corporation as constituted on the date hereof; provided that in the event of a change, subdivision, redivision, reduction, combination or consolidation thereof or any other adjustment under clause 10 hereof, or successive such changes, subdivisions, redivisions, reductions, combinations, consolidations or other adjustments, then subject to the adjustments, if any, having been made in accordance with the provisions of this Warrant Certificate, "Common Shares" shall thereafter mean the shares, other securities or other property resulting from such change, subdivision, redivision, reduction, combination or consolidation or other adjustment. 2. This Warrant Certificate shall be signed by an officer of the Corporation holding office at the time of signing, or any successor or replacement person and notwithstanding any change in any of the persons Ex. I-1 holding said offices between the time of actual signing and the delivery of the Warrant Certificate and notwithstanding that such officer signing may not have held office at the date of the delivery of the Warrant Certificate, the Warrant Certificate so signed shall be valid and binding upon the Corporation. 3. All rights under any of the Warrants in respect of which the right of subscription and purchase therein provided for shall not theretofore have been exercised shall wholly cease and determine and such Warrants shall be wholly void and of no valid or binding effect after the Expiry Time. 4. The right to purchase Common Shares pursuant to the Warrants may only be exercised by the Holder at or before the Expiry Time by: (a) duly completing and executing a Subscription Form in the form attached hereto, in the manner therein indicated; and (b) surrendering this Warrant Certificate and the duly completed and executed Subscription Form to the Corporation at the address specified in clause 22 below together with payment of the purchase price for the Common Shares subscribed for in the form of cash or a certified cheque payable to the Corporation in an amount equal to the then applicable Exercise Price multiplied by the number of Common Shares subscribed for. 5. Upon receipt of the Subscription Form, this Warrant Certificate, and payment as aforesaid, the Corporation shall cause to be issued to the Holder the number of Common Shares to be issued and the Holder shall become a shareholder of the Corporation in respect of such Common Shares, effective as of the date of receipt by the Corporation of such Subscription Form, Warrant Certificate, and payment and shall be entitled to delivery of a certificate or certificates evidencing such shares. The Corporation shall cause such certificate or certificates to be mailed to the Holder at the address or addresses specified in such Subscription Form within ten (10) business days of such receipt and payment as herein provided or, if so instructed by the Holder, held for pick-up by the Holder at the principal office of the registrar and transfer agent of the Common Shares, Equity Transfer Services Inc. (the "Transfer Agent"). 6. No fractional shares or stock representing fractional shares shall be issued upon the exercise of any Warrant. In lieu of any fractional shares which would otherwise be issuable, the Corporation shall either pay cash equal to the product of such fraction multiplied by the fair market value of one share of Common Stock on the date of exercise, as determined in good faith by the Corporation's Board of Directors, or issue the next largest whole number of Common Shares at the Corporation's option. 7. Neither the Warrants nor any Common Shares issuable upon exercise of the Warrants may be offered or sold into Canada for a period of six months after the issue date of the Warrants. If the Warrants are exercised prior to the expiration of such six-month period, the certificates evidencing the Common Shares issuable upon their exercise shall bear the legend set forth below: THESE SECURITIES HAVE NOT BEEN QUALIFIED UNDER CANADIAN OR PROVINCIAL SECURITIES LAWS AND MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED IN CANADA PRIOR TO [THE DATE SIX MONTH FROM THE ISSUE DATE OF THE WARRANTS]. Ex. I-2 8. The holding of a Warrant shall not constitute the Holder a shareholder of the Corporation nor entitle him to any right or interest in respect thereof except as herein expressly provided. 9. The Corporation covenants and agrees that until the Expiry Time, while any of the Warrants shall be outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the right of purchase herein provided, as such right of purchase may be adjusted pursuant to clauses 10 and 11 hereof. All Common Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof. 10. (a) If and whenever at any time after the date hereof and prior to the Expiry Time the Corporation shall (i) subdivide, redivide or change its then outstanding Common Shares into a greater number of Common Shares, (ii) reduce, combine or consolidate its then outstanding Common Shares into a lesser number of Common Shares or (iii) issue Common Shares (or securities exchangeable for or convertible into Common Shares) to the holders of all or substantially all of its then outstanding Common Shares by way of a stock dividend or other distribution (any of such events herein called a "Common Share Reorganization"), then the Exercise Price shall be adjusted effective immediately after the effective date of any such event in (i) or (ii) above or the record date at which the holders of Common Shares are determined for the purpose of any such dividend or distribution in (iii) above, as the case may be, by multiplying the Exercise Price in effect on such effective date or record date, as the case may be, by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date, as the case may be, before giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would be outstanding if such securities were exchanged for or converted into Common Shares. (b) If and whenever at any time after the date hereof and prior to the Expiry Time, the Corporation shall distribute any class of shares or rights, options or warrants or other securities (other than those referred to in clause 10(a) above), evidences of indebtedness or property (excluding cash dividends paid in the ordinary course) to holders of all or substantially all of its then outstanding Common Shares, the number of Common Shares to be issued by the Corporation under this Warrant shall, at the time of exercise of the right of subscription and purchase under this Warrant Certificate, be appropriately adjusted and the Holder shall receive, in lieu of the number of the Common Shares in respect of which the right to purchase is then being exercised, the aggregate number of Common Shares or other securities or property that the Holder would have been entitled to receive as a result of such event, if, on the record date thereof, the Holder had been the registered holder of the number of Common Shares to which the Holder was theretofore entitled upon the exercise of the rights of the Holder hereunder. (c) If and whenever at any time after the date hereof and prior to the Expiry Time there is a capital reorganization of the Corporation or a reclassification or other change in the Common Shares (other than a Common Share Reorganization) or a consolidation or merger or amalgamation of the Corporation with or into any other corporation or other entity (other than a consolidation, merger or amalgamation which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other securities), or a Ex. I-3 transfer of all or substantially all of the Corporation's assets to another corporation or other entity in which the holders of Common Shares are entitled to receive shares, other securities or other property (any of such events being called a "Capital Reorganization"), the Holder, where he has not exercised the right of subscription and purchase under this Warrant Certificate prior to the effective date of such Capital Reorganization, shall be entitled to receive and shall accept, upon the exercise of such right, on such date or any time thereafter, for the same aggregate consideration in lieu of the number of Common shares to which he was theretofore entitled to subscribe for and purchase, the aggregate number of shares or other securities or property which the Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, he had been the registered holder of the number of Common Shares to which he was theretofore entitled to subscribe for and purchase. (d) If and whenever at any time after the date hereof and prior to the Expiry Time, any of the events set out in clause 10(a), (b) or (c) shall occur and the occurrence of such event results in an adjustment of the Exercise Price pursuant to the provisions of this clause 10, then the number of Common Shares purchaseable pursuant to this Warrant shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Common Shares then otherwise purchaseable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment. (e) If the Corporation takes any action affecting its Common Shares to which the foregoing provisions of this clause 10, in the opinion of the board of directors of the Corporation, acting in good faith, are not strictly applicable, or if strictly applicable would not fairly adjust the rights of the Holder against dilution in accordance with the intent and purposes hereof, or would otherwise materially affect the rights of the Holder hereunder, then the Corporation may execute and deliver to the Holder an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights as aforesaid in such manner as the board of directors of the Corporation may determine to be equitable in the circumstances, acting in good faith. The failure of the taking of action by the board of directors of the Corporation to so provide for any adjustment on or prior to the effective date of any action or occurrence giving rise to such state of facts will be conclusive evidence that the board of directors has determined that it is equitable to make no adjustment in the circumstances. 11. The following rules and procedures shall be applicable to the adjustments made pursuant to clause 10: (a) any Common Shares owned or held by or for the account of the Corporation shall be deemed not be to outstanding except that, for the purposes of clause 10, any Common Shares owned by a pension plan or profit sharing plan for employees of the Corporation or any of its subsidiaries shall not be considered to be owned or held by or for the account of the Corporation; (b) no adjustment in the Exercise Price shall be required unless a change of at least 1% of the prevailing Exercise Price would result, provided, however, that any adjustment which, except for the provisions of this clause 11(b), would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment; (c) the adjustments provided for in clause 10 are cumulative and shall apply to successive subdivisions, consolidations, dividends, distributions and other events resulting in any adjustment under the provisions of such clause; Ex. I-4 (d) in the absence of a resolution of the board of directors of the Corporation fixing a record date for any dividend or distribution referred to in clause 10(a)(iii) above, the Corporation shall be deemed to have fixed as the record date therefor the date on which such dividend or distribution is effected; (e) if the Corporation sets a record date to take any action and thereafter and before the taking of such action abandons its plan to take such action, then no adjustment to the Exercise Price will be required by reason of the setting of such record date; (f) forthwith after any adjustment to the Exercise Price or the number of Common Shares purchaseable pursuant to the Warrants, the Corporation shall provide to the Holder a certificate of an officer of the Corporation certifying as to the amount of such adjustment and, in reasonable detail, describing the event requiring and the manner of computing or determining such adjustment; and (g) any question that at any time or from time to time arises with respect to the amount of any adjustment to the Exercise Price or other adjustment pursuant to clause 10 shall be conclusively determined by a firm of independent chartered accountants (who may be the Corporation's auditors) selected by the board of directors of the Corporation and shall be binding upon the Corporation and the Holder. 12. With 30 days after the effective date or record date, as applicable, of any event referred to in clause 10, the Corporation shall notify the Holder of the particulars of such event and the estimated amount of any adjustment required as a result thereof. 13. On the happening of each and every such event set out in clause 10, the applicable provisions of this Warrant, including the Exercise Price, shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended. 14. The Corporation shall not be required to deliver certificates for Common Shares while the share transfer books of the Corporation are properly closed, having regard to the provisions of clauses 10 and 11 hereof, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment for the Common Shares called for thereby during any such period delivery of certificates for Common Shares may be postponed for not more than five (5) days after the date of the re-opening of said share transfer books. Provided, however, that any such postponement of delivery of certificates shall be without prejudice to the right of the Holder so surrendering the same and making payment during such period to receive after the share transfer books shall have been re-opened such certificates for the Common Shares called for, as the same may be adjusted pursuant to clauses 10 and 11 hereof as a result of the completion of the event in respect of which the transfer books were closed. 15. Subject as hereinafter provided, all or any of the rights conferred upon the Holder by the terms hereof may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement contained herein shall be had against any shareholder or officer of the Corporation either directly or through the Corporation, it being expressly agreed and declared that the obligations under the Warrants are solely corporate obligations and that no personal liability Ex. I-5 whatever shall attach to or be incurred by the shareholders or officers of the Corporation or any of them in respect thereof, any and all rights and claims against every such shareholder, officer or director being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants. 16. (a) The Warrants and the Common Shares issuable upon exercise thereof may not be assigned or transferred in Canada for a period of six months after the issue date of the Warrant. Any purported transfer or assignment made other than in accordance with this Section 16 shall be null and void and of no force and effect. (b) Any assignment permitted hereunder shall be made by surrender of this Warrant Certificate to the Corporation at its principal office with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax. In such event, the Corporation shall, without charge, execute and deliver a new Warrant Certificate in the name of the assignee named in such Assignment Form, and the Warrants represented by this Warrant Certificate shall promptly be cancelled. This Warrant Certificate may be divided or combined with other Warrants which carry the same rights upon presentation thereof at the principal office of the Corporation together with a written notice signed by the Holder thereof, specifying the names and denominations in which new Warrants are to be issued. The terms "Warrant" and "Warrants" as used herein include any Warrants in substitution for or replacement of this Warrant, or into which the Warrant represented by this Warrant Certificate may be divided or exchanged. 17. The Holder may subscribe for and purchase any lesser number of Common Shares than the number of shares expressed in this Warrant Certificate subject to a minimum purchaser per exercise equal to the lesser of (a) 25,000 Common Shares, or (b) the total number of Common Shares subject to the Warrant Certificate. In the case of any subscription for a lesser number of Common Shares than expressed in this or any successor Warrant Certificate or a transfer of any of the Warrants pursuant to clause 16, the Holder shall be entitled to receive at no cost to the Holder a new Warrant Certificate in respect of the balance of Warrants not then exercised or transferred. Any new Warrant Certificate(s) shall be mailed to the Holder or assignee by the Corporation or, at its direction, the Transfer Agent, within five (5) business days of receipt by the Corporation of all materials required by clauses 5 or 16, as applicable. 18. Each Holder of this Warrant, the Warrant Shares or any other security issued or issuable upon exercise of this Warrant shall indemnify and hold harmless the Corporation, its directors and officers, and each person, if any, who controls the Corporation, against any losses, claims, damages or liabilities, joint or several, to which the Corporation or any such director, officer or any such person may become subject under any applicable law, insofar as such losses, claims, damages or liabilities, or actions in respect thereof, arise out of or are based upon the disposition by such Holder of the Warrants or the Common Shares issuable upon the exercise of the Warrants in violation of the terms of this Warrant Certificate. 19. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it may in its discretion acting reasonably impose, issue and sign a new Warrant Certificate of like denomination, tenor and date as the Warrant Certificate so stolen, lost, mutilated or destroyed for delivery to the Holder. 20. The Corporation and the Transfer Agent may deem and treat the registered holder of any Warrant Certificate as the absolute owner of the Warrants represented thereby for all purposes, and the Ex. I-6 Corporation and neither the Corporation nor the Transfer Agent shall be affected by any notice or knowledge to the contrary except where the Corporation or the Transfer Agent is required to take notice by statute or by order of a court of competent jurisdiction. A Holder shall be entitled to the rights evidenced by such Warrant Certificate free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt by any such Holder of the Common Shares purchaseable pursuant to such Warrant shall be a good discharge to the Corporation and the Transfer Agent for the same and neither the Corporation nor the Transfer Agent shall be bound to inquire into the title of any such Holder except where the Corporation or the Transfer Agent is required to take notice by statute or by order of a court of competent jurisdiction. 21. Provisions of this Warrant Certificate may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder of this Warrant Certificate. 22. All notices to be sent hereunder shall be deemed to be validly given to the Holders of the Warrants on the date of receipt if personally delivered, sent by telecopier or overnight courier, charges prepaid, or five days after deposit in the United States mail, by registered or certified mail, postage prepaid, addressed to such holders at their post office addresses appearing in the register of Warrant holders caused to be maintained by the Corporation. All notices to be sent hereunder shall be deemed to be validly given to the Corporation on the date of receipt if personally delivered, sent by telecopier or overnight courier, charges prepaid, or five days after deposit in the United States mail, by registered or certified mail, postage prepaid, addressed to the Corporation at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414 or such other address as the Corporation shall have designated by written notice to such registered owner. 23. This Warrant shall be governed by the laws of the State of Nevada and the federal laws of the United States applicable therein (without reference to the conflict of laws provisions thereof). IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer. DATED as of the ___ day of ______, 2003. ALTAIR NANOTECHNOLOGIES INC. By: ________________________________________ Its: _______________________________________ Ex. I-7 SUBSCRIPTION FORM (Series 2003A Warrant) TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED: The undersigned hereby subscribes for ________________ common shares of Altair Nanotechnologies Inc. according to the terms and conditions set forth in the annexed warrant certificate (or such number of other securities or property to which such warrant entitles the undersigned to acquire under the terms and conditions set forth in the annexed warrant certificate). The subscriber acknowledges and agrees that any legend required by applicable law may be placed on any certificates representing common shares delivered to the undersigned. Address for Delivery of Shares: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Attention: _________________________ Tendered (U.S. $_____ per share) Exercise Price $______________________ Dated at ________________, this _______ day of _______________, _______ Witness: ) ____________________________________ ) Holder's Name ) ) ) ____________________________________ ) Authorized Signature ) ) ) ____________________________________ ) Title (if applicable) Signature guaranteed: Ex. I-8 ASSIGNMENT FORM (Series 2003A Warrant) TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED: TO: ALTAIR NANOTECHNOLOGIES INC. 1725 Sheridan Avenue Suite 140 Cody, Wyoming 82414 By signing below, the undersigned represents, warrants and certifies to Altair Nanotechnologies Inc. as follows: (a) the undersigned is the record and beneficial owner of the Warrant(s) represented by the Warrant Certificate attached hereto; and (b) if the Warrant(s) are to be transferred in Canada, a period of six months has elapsed since the issue date of the Warrant(s). By signing below, the undersigned hereby transfers, assigns and conveys all right, title and interest in and to _________ of the Warrants represented by this Warrant Certificate to _____________________________ ____________________________ residing at ________________________________________ for good and valuable consideration. You are hereby instructed to take the necessary steps to effect this transfer. Dated at ___________________, this ______ day of _____________, _____. Witness: ) ___________________________________ ) Holder's Name ) ) ) ____________________________________ ) Authorized Signature ) ) ) ____________________________________ ) Title (if applicable) Signature guaranteed: Exhibit II Form of Subscription Agreement [see attached] ALTAIR NANOTECHNOLOGIES INC. SUBSCRIPTION AGREEMENT This Subscription Agreement (this "Agreement") is entered into by and between Altair Nanotechnologies Inc., a Canadian corporation (the "Corporation") and the undersigned Subscriber, effective as of the date this Agreement is accepted by the Corporation, with respect to certain Units (as defined below) of the Corporation described in the Prospectus dated February 1, 2003, as amended or supplement to date (the "Prospectus"), relating to the offering of the Units by the Corporation, which Prospectus is a part of the Corporation's Registration Statement on Form S-2, File No. 333-102592. In consideration of the mutual covenants set forth herein, and other good and valuable consideration, the undersigned and the Corporation hereby agree and acknowledge as follows: 1. Purchase of Units. Each "Unit" consists of one common share, no par value, of the Corporation (collectively, "Shares") and one-half Series 2003A Warrant of the Corporation (collectively, "Warrants"). The purchase price per Unit is equal to 90% of the average of the closing price of the Shares, as reported on the Nasdaq SmallCap Market, during the calendar week preceding the calendar week in which the Corporation receives and accepts subscription proceeds. The undersigned hereby subscribes for and agrees to purchase the number of Units specified on the signature page of this Agreement in accordance with the terms hereof. 2. Canadian Transfer Restrictions. Neither the Shares nor the Warrants purchased pursuant to this Agreement, nor the Shares issuable upon the exercise of the Warrants (the "Warrant Shares"), may be knowingly offered or sold into Canada for a period of six months after the issue date of the Units. 3. Signature Page; Review of Prospectus. The information set forth on the signature page of this Agreement, including the information as to the undersigned's residence, is complete and accurate. The undersigned has received and reviewed a copy of the Prospectus. 4. Acceptance by the Corporation. This Agreement may be accepted or rejected by the Corporation in its sole and absolute discretion, and the undersigned shall have no right or interest in any Units unless and until this Agreement is accepted by the Corporation. 5. Governing Law; Counterparts. This Agreement will be governed by the laws of the State of Nevada and the federal laws of the United States applicable therein (without reference to the conflict of laws provisions thereof). This Agreement may be signed in counterparts, all of which taken together shall be one and the same Agreement. A facsimile copy of this Agreement or any counterpart thereto is valid as an original 6. Tender of Signature Page and Subscription Proceeds. Payment of the purchase price for any Units subscribed for is due at the time of subscription (and will be promptly returned to the subscriber if the subscription is not accepted). The purchase price shall be paid by check addressed to the Company and sent, together with an executed copy of this Agreement, to 204 Edison Way, Reno, Nevada 89502, U.S.A., Attention: Edward Dickinson, Chief Financial Officer. The purchase price may also be paid by wire transfer. Please contact Edward Dickinson at (775) 858-3750 for wire transfer instructions or with other subscription and payment questions. [intentionally left blank; signature page follows] Ex. II-1 IN WITNESS WHEREOF, the undersigned has executed this Altair Nanotechnologies Inc. Subscription Agreement as of the _____ day of _____________, 2003. A. ________________________________________________________________________ (Signature of Subscriber) (Signature of Joint Subscriber, if applicable) ________________________________________________________________________ (Name of Subscriber) (Name of Joint Subscriber, if applicable) (Please Print or Type) B. Number of Units subscribed for: _______________________________________ C. Calculation of Purchase Price. ----------------------------- (i) Average of the closing price of the Shares, as reported on the Nasdaq SmallCap Market, during the calendar week preceding the date of execution of this Agreement by subscriber: ___________________________ (ii) 90% of the amount indicated in C(i): ________________ (iii) Aggregate Purchase Price (number of Units multiplied by amount in C(ii)): _____________________________________________________ (Feel free to contact Edward Dickinson, Chief Financial Officer, at (775) 858-3750, with any questions regarding calculation of the purchase price.) D. Subscriber's Residence Address or, if Subscriber is not a natural person, principal business address (please indicate street address--post office address is not legally sufficient): _____________________________________________ _____________________________________________ _____________________________________________ E. Complete mailing address for delivery of certificates, notices and other shareholder communications (if different from residence/business address): _____________________________________________ _____________________________________________ _____________________________________________ F. Name in which Shares and Warrants are to be registered: _____________________________________________ (Please Print) ACCEPTED AS OF _______________________________________, 2003 ALTAIR NANOTECHNOLOGIES Inc. By: __________________________________ Its: _________________________________ Ex. II-2
====================================================== ==================================================== We have not authorized any dealer, salesperson or other person to give any information or represent anything not contained in this prospectus. This prospectus does not offer to sell or buy any 2,250,000 Common Shares securities in any jurisdiction where it is unlawful. 750,000 Warrants The information in this prospectus is current as of February 1, 2003. ALTAIR NANOTECHNOLOGIES INC. ----------------------- 2,250,000 COMMON SHARES 750,000 WARRANTS --------------- Prospectus --------------- February 1, 2003 ====================================================== ====================================================
PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following table sets forth the various expenses of the offering, sale and distribution of the offered securities being registered pursuant to this registration statement (the "Registration Statement"). All of the expenses listed below will be borne by the Company. All of the amounts shown are estimates except the SEC registration fees. Item Amount SEC Commission registration fees $94 NASD registration fees $15,000 Accounting fees and expenses $5,000 Legal fees and expenses $20,000 Blue Sky fees and expenses $3,000 Printing Expenses $1,000 Miscellaneous Expenses $5,906 Total: $50,000 Item 15. Indemnification of Directors and Officers - -------------------------------------------------- Our Bylaws The Registrant's Bylaws provide that, to the maximum extent permitted by law, the Registrant shall indemnify a director or officer of the Registrant, a former director or officer of the Registrant, or another individual who acts or acted at the Registrant's request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Registrant or other entity. The Canada Business Corporations Act Section 124 of the Canada Business Corporations Act provides as follows with respect to the indemnification of directors and officers: (1) A corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation or another individual who acts or acted at the corporation's request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity. (2) A corporation may advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual shall repay the moneys if the individual does not fulfill the conditions of subsection (3). II-1 (3) A corporation may not indemnify an individual under subsection (1) unless the individual (a) acted honestly and in good faith with a view to the best interests of the corporation, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the corporation's request; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual's conduct was lawful. (4) A corporation may with the approval of a court, indemnify an individual referred to in subsection (1), or advance moneys under subsection (2), in respect of an action by or on behalf of the corporation or other entity to procure a judgment in its favor, to which the individual is made a party because of the individual's association with the corporation or other entity as described in subsection (1) against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfills the conditions set out in subsection (3). (5) Despite subsection (1), an individual referred to in that subsection is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual's association with the corporation or other entity as described in subsection (1), if the individual seeking indemnity (a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and (b) fulfills the conditions set out in subsection (3). (6) A corporation may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual (a) in the individual's capacity as a director or officer of the corporation; or (b) in the individual's capacity as a director or officer, or similar capacity, of another entity, if the individual acts or acted in that capacity at the corporation's request. (7) A corporation, an individual or an entity referred to in subsection (1) may apply to a court for an order approving an indemnity under this section and the court may so order and make any further order that it sees fit. (8) An applicant under subsection (7) shall give the Director notice of the application and the Director is entitled to appear and be heard in person or by counsel. (9) On an application under subsection (7) the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel. Employment Agreements With Certain Officers Pursuant to an employment agreement with William P. Long, the Chief Executive Officer and a director of the Registrant, the Registrant has agreed to assume all liability for and to indemnify, protect, save, and hold Dr. Long harmless from and against any and all losses, costs, expenses, attorneys' fees, claims, demands, liability, suits, and actions of every kind and character which may be imposed upon or incurred by Dr. Long on account of, arising directly or indirectly from, or in any way connected with or related to Dr. Long's activities as an officer and member of the board of directors of the Registrant, except as arise as a result of fraud, felonious conduct, gross negligence or II-2 acts of moral turpitude on the part of Dr. Long. In addition, Mineral Recovery Systems, Inc. ("MRS"), a wholly-owned subsidiary of the Registrant, has agreed to assume all liability for and to indemnify, protect, save, and hold harmless Patrick Costin (Vice President of the Registrant and President of MRS) from and against any and all losses, costs, expenses, attorneys' fees, claims, demands, liabilities, suits and actions of every kind and character which may be imposed on or incurred by Mr. Costin on account of, arising directly or indirectly from, or in any way connected with Mr. Costin's activities as manager, officer, or director of MRS or the Registrant. Other Indemnification Information Indemnification may be granted pursuant to any other agreement, bylaw, or vote of shareholders or directors. In addition to the foregoing, the Registrant maintains insurance through a commercial carrier against certain liabilities which may be incurred by its directors and officers. The foregoing description is necessarily general and does not describe all details regarding the indemnification of officers, directors or controlling persons of the Registrant. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The rights of indemnification described above are not exclusive of any other rights of indemnification to which the persons indemnified may be entitled under any bylaw, agreement, vote of stockholders or directors or otherwise. Item 16. Exhibits. The following exhibits required by Item 601 of Regulations S-K promulgated under the Securities Act have been included herewith or have been filed previously with the SEC as indicated below.
Incorporated by Reference/ Exhibit No. Description Filed Herewith (and Sequential Page #) - ---------------- ---------------------------------------- ------------------------------------------------------- 4.1 Form of Common Stock Certificate Incorporated by reference to Registration Statement on Form 10-SB filed with the Commission on November 25, 1996, File No. 1-12497. 4.2 Amended and Restated Shareholder Incorporated by reference to the Company's Current Rights Plan dated October 15, 1999, Report on Form 8-K filed with the Commission on between the Company and Equity November 19, 1999, File No. 1-12497. Transfer Services, Inc. Form of Series 2003A Warrant Included herein beginning on page Ex. I-1 4.3 Opinion of Goodman and Carr LLP as to Filed herewith. 5 legality of securities offered Incorporated by reference to the Company's Annual 10.1 Employment Agreement between Altair Report on Form 10-K filed with the Commission on International Inc. and William P. Long March 31, 1998, as amended by Amendment No. 1 to dated January 1, 1998 Annual Report on Form 10-K/A filed on May 15, 1998.
II-3
10.2 Employment Agreement between Fine Gold Incorporated by reference to Registration Statement Recovery Systems Inc. and C. Patrick on Form 10-SB filed with the Commission on November Costin dated August 15, 1994 25, 1996. 10.3 Altair International Inc. Stock Option Incorporated by reference to the Company's Plan adopted by shareholders on May Registration Statement on Form S-8 filed with the 10, 1996 Commission on July 11, 1997. 10.4 1998 Altair International Inc. Stock Incorporated by reference to the Company's Definitive Option Plan adopted by Shareholders on Proxy Statement on Form 14A filed with the Commission June 11, 1998 on May 12, 1998. 10.5 Form of Mineral Lease Incorporated by reference to the Company's Annual Report on Form 10-K filed with the Commission on March 31, 1998, as amended by Amendment No. 1 to Annual Report on Form 10-K/A filed on May 15, 1998. 10.6 Purchase and Sale Agreement dated Filed herewith August 8, 2002 between the Company and BHP Minerals International Inc. (re Edison Way property) 10.7 Note Amendment Agreement dated Incorporated by reference to the Company's Current November 21, 2002 Report on Form 8-K filed with the Commission on November 27, 2002. 10.8 Installment Note dated August 8, 2002 Filed herewith. (re Edison Way property) 10.9 Stock Pledge Agreement dated December Incorporated by reference to the Company's Current 15, 2000 (Mineral Recovery Systems Report on Form 8-K filed with the Commission on common stock). December 26, 2000. 10.10 Stock Pledge Agreement dated December Incorporated by reference to the Company's Current 15, 2000 (Altair Technologies common Report on Form 8-K filed with the Commission on stock). December 26, 2000. 10.11 First Amendment to Stock Pledge Incorporated by reference to the Company's Current Agreement Report on Form 8-K filed with the SEC on January 4, 2002. 10.12 Second Amended and Restated Secured Incorporated by reference to the Company's Amendment Term Note dated November 21, 2002 No. 1 to Cu rrent Report on Form 8-K filed with the Commission on December 4, 2002, File No. 1-12497. 10.13 Trust Deed dated August 8, 2002 (re Filed herewith. Edison Way property) 10.14 Form of Subscription Agreement Included herein beginning on page Ex. II-1 23.1 Consent of Deloitte & Touche LLP Filed herewith. 23.2 Consent of Goodman and Carr LLP Included in Exhibit No. 5 above. 24 Powers of Attorney Incorporated by reference to the Company's Registration Statement on Form S-2 filed with the Commission on January 17, 2003, File No. 333-102592.
- ----------------------- Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: II-4 (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-2 and has duly caused this Amendment No. 1 to Registration Statement on Form S-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cody, State of Wyoming, on February 5, 2003. ALTAIR NANOTECHNOLOGIES INC. By /s/ William P. Long ---------------------------------- William P. Long Chief Executive Officer
ADDITIONAL SIGNATURES Signature Title Date --------- ----- ---- /s/ William P. Long Chief Executive Officer and Director February 5, 2003 - ------------------------------------ William P. Long (Principal Executive Officer and authorized representative of the Company in the United States) /s/ Edward H. Dickinson Chief Financial Officer and Director February 5, 2003 - ------------------------------------ (Principal Financial Officer and Principal Edward H. Dickinson Accounting Officer) /s/ James I. Golla* Director February 5, 2003 - ------------------------------------ James I. Golla /s/ George E. Hartman* Director February 5, 2003 - ------------------------------------ George E. Hartman /s/ Robert Sheldon* Director February 5, 2003 - ------------------------------------ Robert Sheldon
* By /s/ William P. Long --------------------------------- William P. Long, Attorney-in-Fact II-6 EXHIBIT INDEX The following exhibits required by Item 601 of Regulations S-K promulgated under the Securities Act have been included herewith or have been filed previously with the SEC as indicated below.
Exhibit No. Description Incorporated by Reference/ Filed Herewith (and Sequential Page #) - ---------------- ---------------------------------------- ------------------------------------------------------- 4.1 Form of Common Stock Certificate Incorporated by reference to Registration Statement on Form 10-SB filed with the Commission on November 25, 1996, File No. 1-12497. 4.2 Amended and Restated Shareholder Incorporated by reference to the Company's Current Rights Plan dated October 15, 1999, Report on Form 8-K filed with the Commission on between the Company and Equity November 19, 1999, File No. 1-12497. Transfer Services, Inc. Form of Series 2003A Warrant Included herein beginning on page Ex. I-1 4.3 Opinion of Goodman and Carr LLP as to Filed herewith. 5 legality of securities offered Incorporated by reference to the Company's Annual 10.1 Employment Agreement between Altair Report on Form 10-K filed with the Commission on International Inc. and William P. Long March 31, 1998, as amended by Amendment No. 1 to dated January 1, 1998 Annual Report on Form 10-K/A filed on May 15, 1998. 10.2 Employment Agreement between Fine Gold Incorporated by reference to Registration Statement Recovery Systems Inc. and C. Patrick on Form 10-SB filed with the Commission on November Costin dated August 15, 1994 25, 1996. 10.3 Altair International Inc. Stock Option Incorporated by reference to the Company's Plan adopted by shareholders on May Registration Statement on Form S-8 filed with the 10, 1996 Commission on July 11, 1997. 10.4 1998 Altair International Inc. Stock Incorporated by reference to the Company's Definitive Option Plan adopted by Shareholders on Proxy Statement on Form 14A filed with the Commission June 11, 1998 on May 12, 1998. 10.5 Form of Mineral Lease Incorporated by reference to the Company's Annual Report on Form 10-K filed with the Commission on March 31, 1998, as amended by Amendment No. 1 to Annual Report on Form 10-K/A filed on May 15, 1998. 10.6 Purchase and Sale Agreement dated Filed herewith August 8, 2002 between the Company and BHP Minerals International Inc. (re Edison Way property) 10.7 Note Amendment Agreement dated Incorporated by reference to the Company's Current November 21, 2002 Report on Form 8-K filed with the Commission on November 27, 2002. 10.8 Installment Note dated August 8, 2002 Filed herewith. (re Edison Way property) 10.9 Stock Pledge Agreement dated December Incorporated by reference to the Company's Current 15, 2000 (Mineral Recovery Systems Report on Form 8-K filed with the Commission on common stock). December 26, 2000.
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10.10 Stock Pledge Agreement dated December Incorporated by reference to the Company's Current 15, 2000 (Altair Technologies common Report on Form 8-K filed with the Commission on stock). December 26, 2000. 10.11 First Amendment to Stock Pledge Incorporated by reference to the Company's Current Agreement Report on Form 8-K filed with the SEC on January 4, 2002. 10.12 Second Amended and Restated Secured Incorporated by reference to the Company's Amendment Term Note dated November 21, 2002 No. 1 to Cu rrent Report on Form 8-K filed with the Commission on December 4, 2002, File No. 1-12497. 10.13 Trust Deed dated August 8, 2002 (re Filed herewith. Edison Way property) 10.14 Form of Subscription Agreement Included herein beginning on page Ex. II-1 23.1 Consent of Deloitte & Touche LLP Filed herewith. 23.2 Consent of Goodman and Carr LLP Included in Exhibit No. 5 above. 24 Powers of Attorney Incorporated by reference to the Company's Registration Statement on Form S-2 filed with the Commission on January 17, 2003, File No. 333-102592.
- ----------------------- II-8 EX-5 3 ex5.txt OPINION - GOODMAN & CARR Exhibit 5 GOODMAN AND CARR LLP Jay Goldman Barristers and Solicitors Direct Line: 416.595.2409 Suite 2300, 200 King Street West E-mail: jgoldman@goodmancarr.com ------------------------ Toronto, Ontario File Number: 333-102592 Canada M5H 3W5 February 6, 2003 The Board of Directors of Altair Nanotechnologies Inc. 1725 Sheridan Avenue, Suite 140 Cody, WY 82414 Dear Sirs/Mesdames: Re: Registration Statement on Form S-2 We have acted as Canadian counsel to Altair Nanotechnologies Inc., a corporation incorporated under the Canada Business Corporation Act (the "Corporation") in connection with the preparation of the Corporation's Registration Statement on Form S-2, File No. 333-102592 (the "Registration Statement"), filed under the Securities Act of 1933, as amended (the "Securities Act"), for the registration of common shares (the "Common Shares") and warrants (the "Warrants") of the Corporation for sale by the Corporation. In connection with the opinions hereinafter expressed, we have conducted or caused to be conducted such searches as we have considered necessary, advisable or relevant. We have also prepared or examined all such documents, corporate records of the Corporation, certificates of officers of the Corporation, and other materials as we considered advisable or relevant. We have also examined such statutes, corporate and public records and other documents including certificates or statements of public officials, and considered such matters of law, as we have deemed necessary as a basis for the opinions hereinafter expressed. For the purposes of the opinions set forth below, we have assumed, with respect to all documents examined by us, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to authentic or original documents of all documents submitted to us as certified, conformed, telecopied or photostatic copies and the legal capacity at all relevant times of any natural person signing any such document. We are solicitors qualified to carry on the practice of law in the Province of Ontario only. We express no opinion as to any laws, or matters governed by any laws, other than the laws of the Province of Ontario and the federal laws of Canada applicable therein as such laws exist on the date hereof. Based upon and subject to the foregoing, we are of the opinion that (a) following the issue of such Common Shares and receipt of the consideration specified in the Registration Statement for the issue of such Common Shares, the Common Shares registered under the Registration 1 Statement and issuable otherwise than upon exercise of the Warrants will be legally issued as fully paid and non-assessable shares; (b) following the issue of such Warrants and receipt of the consideration specified in the Registration Statement for the issue of such Warrants, the Warrants registered under the Registration Statement will be legally issued as fully paid and non-assessable warrants; and (c) assuming such Common Shares are issued in compliance with the terms and conditions of the Warrants, including receipt of the exercise price specified in the Warrants, the Common Shares registered under the Registration Statement and issuable upon exercise of the Warrants will be legally issued as fully paid and non-assessable shares. We hereby consent to the reference to our firm under "Legal Matters" in the prospectus which constitutes a part of the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. Yours truly, Goodman and Carr LLP /s/ Goodman and Carr LLP - --------------------------- 2 EX-10.6 4 ex10no6.txt PSA - BHP/ALTAIR ================================================================================ PURCHASE AND SALE AGREEMENT ================================================================================ SELLER: BHP MINERALS INTERNATIONAL INC., a Delaware corporation PURCHASER: ALTAIR NANOTECHNOLOGIES INC., a Canada corporation PROPERTY: 204 Edison Way, Reno, Nevada 89502 August 8, 2002 ================================================================================ LIST OF EXHIBITS Exhibit 1.1.1 Legal Description 2.2.1 Form of Promissory Note 2.2.2 Form of Deed of Trust 3.3 Schedule of Contracts 5.2 Resolution of the Board of Directors of Purchaser 9.2.1 Form of Lender's Policy 9.2.2 Form of Owner's Policy 9.3.1 Form of Grant Bargain and Sale Deed 9.3.2 Form of Bill of Sale 9.3.3 Form of Lease Termination Agreement 9.3.4 Form of Assignment and Assumption of Contracts 9.3.5 Form of Assignment of Warranties and Guarantees 9.3.6 Form of FIRPTA Affidavit 9.3.7 Form of Designation Agreement 9.3.8 Form of Royalty Termination Agreement 9.8 Form of Notice to Tenants/Contractors/ Utility Companies 1 PURCHASE AND SALE AGREEMENT This PURCHASE AND SALE AGREEMENT (this "Agreement") is effective as of August 8, 2002 (the "Effective Date"). It is between BHP MINERALS INTERNATIONAL INC., a Delaware corporation ("Seller"), and ALTAIR NANOTECHNOLOGIES INC., a Canada corporation ("Purchaser"). RECITALS: A. Seller desires to sell certain improved real property commonly known as 204 Edison Way, Reno, Nevada, along with certain related personal and intangible property, and Purchaser desires to purchase such real, personal and intangible property. B. Seller (as Lessor) and Altair International Inc., Purchaser's predecessor in interest, (as Tenant) entered into that certain Lease of Property Located at 204 Edison Way, Reno, Nevada, executed on or about November 16, 1999 (the "Lease"), which Lease will be terminated concurrent with the Date of Closing, as defined in Section 2.3 below, in accordance with the terms set forth herein. C. Seller and Altair International Inc. also entered into that certain Asset Purchase and Sale Agreement dated as of November 16, 1999 (the "1999 Purchase Agreement"), which, among other things, provides for the payment to Seller by Altair of a Royalty, as defined therein, in accordance with Section 6.5 of the 1999 Purchase Agreement. All prospective obligations, liabilities and benefits of each of Seller and Purchaser under the 1999 Purchase Agreement will be terminated concurrent with the Date of Closing, in accordance with the terms set forth herein. NOW, THEREFORE, in consideration of the foregoing, of the covenants, promises and undertakings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Purchaser agree as follows: 1. THE PROPERTY 1.1 Description Subject to the terms and conditions of this Agreement, and for the consideration herein set forth, Seller agrees to sell and transfer, and Purchaser agrees to purchase and acquire, all of Seller's right, title, and interest in and to the following (collectively, the "Property"): (a) Certain land (the "Land") located in City of Reno, County of Washoe, State of Nevada, and more specifically described in Exhibit 1.1.1 attached hereto; (b) All buildings, parking areas, fixtures and other improvements of every kind and character on the Land (the "Improvements"); (c) The wastewater system located on the Land, including without limitation, control boxes; Harrington Tank and filter pump; sperry filter press; 3300 gallon, 100-inch non-potable water tank; associated motors; 1100 gallon storage tank; non-potable water tank numbered 30-09.140; 3000 gallon tank; white tank; Dayton Trivolt industrial duty three-phase TEFC; and associated piping (collectively the "Wastewater System"); 2 (d) Any furniture, machinery, apparatus, equipment and other movable personal property of every kind and character owned by Seller on the Land other than the Wastewater System (collectively, the "Personal Property"); (e) All easements, hereditaments, and appurtenances belonging to or inuring to the benefit of Seller and pertaining to the Land, if any; (f) Any street or road abutting the Land to the center lines thereof; (g) Subject to Section 3.3, all contracts and agreements relating to the operation, repair or maintenance of the Land, the Improvements or the Personal Property the terms of which extend beyond midnight of the day preceding the Date of Closing; (h) All assignable warranties and guaranties issued in connection with the Improvements or the Personal Property; and (i) All transferable consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau or other entity or instrumentality with respect to the Land or the Improvements (collectively, the "Approvals"). 1.2 "As-Is" Purchase Purchaser acknowledges that it has been in possession and control of the Property prior to the Date of Closing (as hereinafter defined) under the terms of the Lease. Purchaser further acknowledges and agrees that it has been or will prior to the Date of Closing be given a full opportunity to inspect and investigate every aspect of the Property, including all matters related to legal status or requirements, physical condition, title, leasing, contracts, and other matters of significance. Purchaser specifically acknowledges and agrees that the Property is being sold in an "AS IS" condition and "WITH ALL FAULTS" as of the date of this Agreement and as of the Closing. Except as expressly set forth in this Agreement, no representations or warranties have been made or are made and no responsibility has been or is assumed by Seller or by any partner, officer, person, firm, agent or representative acting or purporting to act on behalf of Seller as to any matters concerning the Property, including, without limitation, the condition or repair of the Property or the value, expense of operation, or income potential thereof or as to any other fact or condition which has or might affect the Property or the condition, repair, value, expense of operation or income potential of the Property or any portion thereof. The parties agree that all understandings and agreements heretofore made between them or their respective agents or representatives are merged in this Agreement and the Exhibits hereto annexed, which alone fully and completely express their agreement, and that this Agreement has been entered into after full investigation, or with the parties satisfied with the opportunity afforded for full investigation. Purchaser is not relying upon any statement or representation by Seller unless such statement or representation is specifically embodied in this Agreement or the Exhibits annexed hereto. Without limiting the foregoing, Seller makes no representations or warranties as to whether the Property contains asbestos or harmful or toxic substances or pertaining to the extent, location or nature of same. Further, to the extent that Seller has 3 provided or hereafter may provide to Purchaser information from any inspection, engineering or environmental reports concerning asbestos or harmful or toxic substances, Seller makes no representations or warranties with respect to the accuracy or completeness, methodology of preparation or otherwise concerning the contents of such reports. Purchaser acknowledges that Seller has requested Purchaser to inspect fully the Property and investigate all matters relevant thereto and to rely solely upon the results of Purchaser's own inspections or other information obtained or otherwise available to Purchaser, rather than any information that may have been provided by Seller to Purchaser. Without limiting the above, Purchaser on behalf of itself and its successors and assigns waives and releases Seller and its successors and assigns from any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, attorneys' fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, arising from or relating to the Property or any law or regulation applicable thereto, including any environmental claims relating to the presence or alleged presence of asbestos or harmful or toxic substances in, on, under or about the Property, whether arising prior to or after the Closing, including, without limitation, any claims under or on account of (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as the same may have been or may be amended from time to time, and similar state statutes, and any regulations promulgated thereunder, (ii) any other federal, state or local law, ordinance, rule or regulation, now or hereafter in effect, that deals with or otherwise in any manner relates to, environmental matters of any kind, or (iii) this Agreement or the common law. Purchaser expressly waives any all rights under any applicable law that a general release does not extend to claims which the creditor does not know or suspect to exist in its favor at the time of executing the release, which if known by it must have materially affected its settlement with the debtor. The terms and provisions of this paragraph shall survive the Closing hereunder. 1.3 Agreement to Convey Seller agrees to convey, and Purchaser agrees to accept (a) title to the Land and Improvements by grant bargain and sale deed in the form attached hereto as Exhibit 9.3.1, subject to the Permitted Encumbrances (as hereinafter defined), and (b) title to the Personal Property by bill of sale in the form attached hereto as Exhibit 9.3.2 without warranty as to the title or the condition of the Personal Property. 2. PRICE, PAYMENT AND CLOSING 2.1 Purchase Price The purchase price for the Property (the "Purchase Price") is Three Million Dollars (US$3,000,000.00). 4 2.2 Payment Payment of the Purchase Price is to be made as follows: at Closing, Purchaser shall deliver to Seller a fully executed Promissory Note Secured by Deed of Trust ("Note") in the original principal amount of Three Million and No/100 Dollars (US$3,000,000), in the form attached hereto as Exhibit 2.2.1, which shall be secured by a first lien Deed of Trust, Assignment of Leases, Security Agreement and Fixture Filing ("Deed of Trust") encumbering the Property (other than the Personal Property), in the form attached hereto as Exhibit 2.2.2. In addition, Seller shall have the right to file one or more UCC-1 Financing Statements and the Canadian equivalent thereof ("UCC-1 Financing Statements"), in form and consent satisfactory to Seller, with the Nevada Secretary of State, the Wyoming Secretary of State, the appropriate governmental agency of Canada, and/or such other jurisdictions as are necessary to properly perfect Seller's security interest in the Wastewater System secured under the Deed of Trust. 2.3 Closing The closing hereunder (the "Closing") will take place on August 12, 2002, at the offices of Hale Lane Peek Dennison and Howard, 100 West Liberty Street, Tenth Floor, Reno, Nevada 89501 at noon Pacific Daylight Time or at such other time and place as may be mutually agreed upon in writing by Seller and Purchaser (the aforesaid date, or such other agreed date, being referred to in this Agreement as the "Date of Closing"). 3. INFORMATION AND APPROVALS 3.1 Information Seller makes no representations or warranties as to the truth, accuracy or completeness of any materials, data or other information supplied to Purchaser in connection with the Property (e.g., that such materials are complete, accurate or the final version thereof, or that all such materials are in Seller's possession). It is the parties' express understanding and agreement that such materials, if any, are provided only for Purchaser's convenience in making its own examination of the Property, and Purchaser shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller. Purchaser expressly disclaims any intent to rely on any such materials provided to it by Seller in connection with its inspection and agrees that it shall rely solely on its own independently developed or verified information. 3.2 Title Commitment Seller has caused to be delivered to Purchaser a preliminary title report on the Land ("Title Report"), together with copies of all items shown as exceptions to title therein. 3.3 Contracts Purchaser has reviewed and elects to assume the service, maintenance, supply or other contracts relating to operation of the Property which are identified on Exhibit 3.3 attached hereto. 5 3.3 Permitted Encumbrances Purchaser shall be deemed to have approved and to have agreed to purchase the Property subject to the following: 1. All matters shown on the Title Report; 2. All matters directly or indirectly created or consented to by Purchaser; 3. All Contracts identified on Exhibit 3.3 attached hereto 4. The lien of non-delinquent real and personal property taxes and assessments; 5. rights of parties in possession not shown by the public records; 6. water rights, claims or title to water, whether or not shown by the public records; 7. governmental laws, codes, ordinances and restrictions now or hereafter in effect as they may affect the Property; 8. discrepancies, conflicts in boundary lines, shortages in area, encroachments, and any state of facts which an inspection or an ALTA survey of the Property would disclose and which are not shown by the public records; 9. easements or claims of easements not shown by the public records; and 10. any service, installation, connection, maintenance or construction charges due after Closing for sewer, water, electricity, telephone, cable television or gas, subject to the proration provisions of this Agreement. All of the foregoing are referred to herein collectively as "Permitted Encumbrances". 4. PRIOR TO CLOSING Prior to Closing, Seller or Seller's agent shall: 4.1 New Contracts Not enter into any contracts with third parties that in any way affect the Property or this Agreement. 4.2 New Leases Not enter into any new leases related to the Property. 6 5. REPRESENTATIONS AND WARRANTIES 5.1 By Seller Seller represents and warrants to Purchaser that Seller is corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has duly authorized the execution and performance of this Agreement, and such execution and performance will not violate any material term of its certificate of incorporation or by-laws. 5.2 By Purchaser Purchaser represents and warrants to Seller that: (a) Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Canada, is authorized to do business in the State of Nevada, has duly authorized the execution and performance of this Agreement, and such execution and performance will not violate any material term of any of its constitutive documents. (b) The resolution ("Resolution") attached hereto as Exhibit 5.2 is a true and correct copy of a resolution adopted by the Board of Directors of Purchaser pursuant to which the transaction contemplated by this Agreement has been authorized, the Resolution is the complete statement of the Board of Directors of Purchaser in relation to such matters, and the Resolution has not been modified or amended in any way. (c) No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors, or petition seeking reorganization or arrangement or other action under Federal or State bankruptcy laws is pending against or contemplated by Purchaser. (d) Purchaser has inspected the Property fully and completely at its expense and has ascertained to its satisfaction the extent to which the Property complies with applicable zoning, building, environmental, health and safety and all other laws, codes and regulations. (e) Purchaser has reviewed the contracts, expenses and other matters relating to the Property and, based upon its own investigations, inspections, tests and studies, has determined to purchase the Property and to assume Seller's obligations under the contracts and otherwise with respect to the Property. 5.3 Mutual Each of Seller and Purchaser represents to the other that it has had no dealings, negotiations, or consultations with, nor has it engaged, any broker, representative, employee, agent or other intermediary in connection with the Agreement or the sale of the Property. Seller and Purchaser agree to indemnify, defend and hold the other free and harmless from the claims of any other broker(s), representative(s), employee(s), agent(s) or other intermediary(ies) claiming to have represented Seller or Purchaser, respectively, or otherwise claiming to be entitled to compensation in connection with this Agreement or in connection with the sale of the Property. 7 6. COSTS AND PRORATIONS 6.1 Purchaser's Costs Purchaser will pay the following costs of closing this transaction: (a) The fees and disbursements of its counsel, inspecting architect and engineer, if any; (b) One half (1/2) of any escrow or closing fees of the Title Company and real estate transfer, stamp or documentary taxes; (c) Any sales or use taxes relating to the transfer of the Wastewater System and any Personal Property to Purchaser; (d) Any premium charges (above the charges for standard coverage of owner's policy paid for by Seller under Section 6.2(b) below) for any extended coverage under the owner's policy, including endorsements and/or deletions of exception items requested by Purchaser, and any cancellation charges imposed by any title company in the event the owner's title insurance policy is not issued; (e) One half (1/2) of any recording fees; and (f) Any other expenses incurred by Purchaser or its representatives in inspecting or evaluating the Property or closing this transaction. 6.2 Seller's Costs Seller will pay the following costs of closing this transaction: (a) The cost of the premium for a standard coverage of owner's title insurance policy furnished to Purchaser as required by Section 9.2 below; (b) The cost of any lender's title insurance policy obtained by Seller in connection with the transaction contemplated hereunder, including, any additional premium charges for endorsements and/or deletions of exception items and any cancellation charges imposed by any title company in the event a title insurance policy is not issued; (c) One half (1/2) of any escrow or closing fees and real estate transfer, stamp or documentary taxes; and (d) One half (1/2) of any recording fees. 6.3 Prorations Personal property taxes, installment payments of special assessment liens, vault charges, sewer charges, utility charges and normally prorated operating expenses actually paid or payable as of the Date of Closing shall be prorated as of the Date of Closing, provided that within sixty (60) days after the Closing, Purchaser and Seller will make a further adjustment for such taxes or charges which may have accrued or been incurred prior to the Date of Closing, but not collected or paid at that date. All prorations shall be made on a 365-day calendar year basis, using actual number of days in the month. 8 6.4 Taxes General real estate taxes, personal property taxes, special assessments (and installments thereof) and other governmental taxes and charges relating to the Property (collectively, "Taxes") payable during the year in which Closing occurs shall be prorated as of the Date of Closing. If Closing occurs before the actual Taxes payable during such year are known, the proration of Taxes shall be upon the basis of Taxes for the Property payable during the immediately preceding year; provided, however, that if the Taxes payable during the year in which Closing occurs are thereafter determined to be more or less than the Taxes payable during the preceding year (after any appeal of the assessed valuation thereof is concluded), Seller and Purchaser promptly (but no later than December 31, 2002 except in the case of an ongoing tax protest) shall adjust the proration of Taxes and Seller or Purchaser, as the case may be, shall pay to the other any amount required as a result of such adjustment. This covenant shall not merge with the deed delivered hereunder but shall survive the Closing. 6.5 In General Any other costs or charges of closing this transaction not specifically mentioned in this Agreement shall be paid and adjusted in accordance with local custom in Washoe County, Nevada. 6.6 Purpose and Intent Except as expressly provided herein, the purpose and intent as to the provisions of this Agreement relating to prorations, adjustments and apportionments is that Seller shall bear all expenses of ownership and operation of the Property and shall receive all income therefrom accruing through midnight at the end of the day preceding the Closing and Purchaser shall bear all such expenses and receive all such income accruing thereafter. 7. DAMAGE, DESTRUCTION OR CONDEMNATION If, prior to Closing, all or any portion of the building(s) are rendered untenantable or are destroyed, or are taken under power of eminent domain, Purchaser shall close this transaction on the date and at the Purchase Price agreed upon in Section 2, and Seller will assign to Purchaser the physical damage proceeds of any insurance policies payable to Seller, or Seller's portion of any condemnation award, in both cases, up to the amount of the Purchase Price. 8. NOTICES Any notice required or permitted to be given hereunder shall be deemed to be given when hand delivered; or one (1) business day after pickup by UPS, Federal Express, or similar overnight express service; or when delivered by facsimile transmission if transmission and receipt by sender of a transmission confirmation occurs between 8:00 a.m. and 5:00 p.m. Pacific Time on any given business day, or otherwise, the next business day (provided that for any fax 9 transmission, a duplicate will be sent by overnight express service within 24 hours after the fax transmission); in any case addressed to the parties at their respective addresses referenced below: If to Seller: BHP Minerals International Inc. c/o BHP Billiton 1360 Post Oak Blvd., Suite 150 Houston, Texas 77056-3020 Attention: Legal Department Phone: (713) 961-8526 Fax: (713) 961-8507 And a copy to: Morrison & Foerster LLP 425 Market Street San Francisco, California 94105 Attention: Peter Aitelli, Esq. Phone: (415) 268-7085 Fax: (415) 268-7522 If to Purchaser: Altair Nanotechnologies Inc. 230 South Rock Boulevard, #21 Reno, Nevada 89502 Attention: Mr. Edward Dickinson Phone: 702-857-1966 Fax: 702-857-1920 With a copy to: Altair Nanotechnologies Inc. 1725 Sheridan Avenue, Suite 140 Cody, Wyoming 82414 Attention: Dr. William P. Long Phone: 888-4-258247 Fax: 307-587-8357 If to Title Company's First American Title Insurance Company Walnut Creek Office: 1850 Mt. Diablo Boulevard, Suite 300 Walnut Creek, CA 94596 Attn: Kitty Schlesinger Telephone: (925) 927-2100 Facsimile: (925) 927-2180 If to Title Company's Reno Office: First American Title Insurance Company 5310 Kietzke Lane, Suite 100 Reno, Nevada 89511-2043 Attn: Ron Breazeale Telephone: (775) 823-4180 Facsimile: (775) 823-6222 10 or, in each case, to such other address as either party may from time to time designate by giving notice in writing to the other party. Effective notice will be deemed given only as provided above. 9. CLOSING AND ESCROW 9.1 Escrow Instructions Upon execution of this Agreement, the parties shall deliver an executed counterpart of this Agreement to First American Title Guaranty Company, 1850 Mt. Diablo Boulevard, Suite 300, Walnut Creek, California 94596 ("Title Company") to serve as the instructions to the Title Company as escrow holder for consummation of the transaction contemplated herein. Seller and Purchaser agree to execute such additional and supplementary instructions as may be appropriate to enable the Title Company to comply with the terms of this Agreement, provided, however that in the event of any conflict between the provisions of this Agreement and any supplementary instructions, the terms of this Agreement shall prevail. 9.2 Closing Conditions The obligation of Seller sell the Property to Purchaser is subject to the following Closing conditions ("Seller's Closing Conditions"), which are for the benefit of Seller only and may be waived only by Seller in its sole discretion: (i) Title Company shall be irrevocably committed to issue a lender's title insurance policy ("Lender's Policy") to Seller identical in form and content to the pro forma policy attached hereto as Exhibit 9.2.1; (ii) the insurance company issuing the Binder, defined below, shall have issued the Binder; and (iii) Purchaser shall have performed all of its obligations under this Agreement that are to be performed at or prior to the Date of Closing, and Purchaser's representations and warranties shall be true and correct in all material respects as of the Date of Closing. The obligation of Purchaser to purchase the Property from Seller is subject to the following conditions ("Purchaser's Closing Conditions"), which are for the benefit of Purchaser only and may be waived only by Purchaser in its sole discretion: (i) Title Company shall be irrevocably committed to issue a standard coverage of owner's title insurance policy ("Owner's Policy") to Purchaser identical in form and content to the pro forma policy attached hereto as Exhibit 9.2.2; (ii) Seller shall have performed all of its obligations under this Agreement that are to be performed at or prior to the Date of Closing, and Purchaser's representations and warranties shall be true and correct in all material respects as of the Date of Closing. 11 9.3 Seller's Deliveries At or prior to the Closing, Seller shall deliver to Title Company's Reno office (as described in Section 8 above) the following funds and documents, each executed if and where applicable and, if required, acknowledged by the Seller (delivery shall be of documents with original signature(s) unless Buyer and Seller mutually agree that signed facsimile copies are acceptable for Closing, in which case copies with original signature(s) shall be simultaneously sent via overnight courier to Title Company's Reno office): (a) An grant bargain and sale deed in the form attached hereto as Exhibit 9.3.1 (the "Deed"), conveying fee simple title to the Land and Improvements to Purchaser subject to the Permissible Exceptions, to be recorded by Title Company on the Closing Date. (b) A bill of sale in the form attached hereto as Exhibit 9.3.2 conveying the Personal Property to Purchaser. (c) A Lease Termination Agreement in the form attached hereto as Exhibit 9.3.3 (the "Lease Termination Agreement"). (d) An assignment of the Contracts identified on Exhibit 3.3 to Purchaser by way of an assignment and assumption agreement in the form attached hereto as Exhibit 9.3.4 (the "Assignment and Assumption Agreement"). (e) An assignment of all transferable warranties and guarantees then in effect, if any, with respect to the Improvements or the Personal Property or any repairs or renovations to such Improvements and Personal Property, which assignment is in the form attached hereto as Exhibit 9.3.5 (the "Assignment of Warranties and Guaranties"). (f) An affidavit pursuant to the Foreign Investment and Real Property Tax Act in the form attached hereto as Exhibit 9.3.6. (g) A designation agreement in the form attached hereto as Exhibit 9.3.7 (the "Designation Agreement"). (h) A Royalty Termination Agreement in the form attached hereto as Exhibit 9.3.8 (the "Royalty Termination Agreement"). (i) Funds in the amount of One Hundred Thousand Dollars (US$100,000) ("Cash Payment") to be delivered by Title Company to Purchaser at Closing via wire transfer in accordance with wire transfer instructions provided to Title Company by Purchaser, subject to and in accordance with Purchaser's Closing Statement prepared by Title Company and approved by Purchaser. (j) A binder ("Binder") for a policy of environmental insurance from an insurance company acceptable to Seller with respect to the Property with liability coverage in the amount of Ten Million Dollars (US$10,000,000.00) and with a term commencing on August 8, 2002 and continuing for ten (10) years thereafter, which shall identify Seller as the named insured and Purchaser as an additional insured. 12 9.4 Purchaser's Deliveries At or prior to Closing, Purchaser shall deliver to Title Company's Reno office (as described in Section 8 above) the following documents, each executed and, if required, acknowledged by Purchaser (delivery shall be of documents with original signature(s) unless Buyer and Seller mutually agree that signed facsimile copies are acceptable for Closing, in which case copies with original signature(s) shall be simultaneously sent via overnight courier to Title Company's Reno office): (a) The Note. (b) The Deed of Trust, to be recorded by Title Company on the Closing Date immediately after recordation of the Deed. (c) The Lease Termination Agreement. (d) The Assignment and Assumption Agreement. (e) The Assignment of Warranties and Guaranties. (f) The Designation Agreement. (g) The Royalty Termination Agreement. 9.5 Possession Purchaser shall be entitled to exclusive possession of the Property under this Agreement upon conclusion of the Closing. 9.6 Insurance Seller shall terminate its policies of insurance (other than the environmental insurance policy that is the subject of the Binder), as of noon on the Date of Closing, and Purchaser shall be responsible for obtaining its own insurance thereafter. 9.7 Utility Service and Deposits Seller shall be entitled to the return of any deposits posted by it with any utility company and Purchaser shall notify each utility company serving the Property to terminate Seller's account, effective at noon on the Date of Closing. 9.8 Notice Letters Subsequent to Closing, Seller shall provide to Purchaser copies of form letters to contractors and utility companies serving the Property, in the form attached hereto as Exhibit 9.8, advising them of the sale of the Property to Purchaser. 13 10. DEFAULT; FAILURE OF CONDITION 10.1 Default If either of the parties shall refuse or fail to convey the Property or purchase the Property as herein provided for any reason other than (i) a default by the other party and the expiration of the cure period, if any, provided under Section 11.6 hereof, (ii) the existence of a Pending Default (as defined in and contemplated by Section 11.6), or (iii) any other provision of this Agreement which permits a party to terminate this Agreement or otherwise relieves a party of the obligation to convey or purchase the Property, then the other party shall elect as its sole remedy hereunder to terminate this Agreement. 10.2 Failure of Condition If prior to Closing Seller discloses to Purchaser or Purchaser discovers that (i) title to the Property is subject to defects, limitations or encumbrances other than Permitted Encumbrances, or (ii) any representation or warranty of Seller contained in this Agreement is or, as of the Date of Closing, will be untrue, then Purchaser shall promptly give Seller written notice of its objection thereto. In such event, Seller may elect to postpone the Closing for thirty (30) days and attempt to cure such objection, provided that Purchaser may not object to the state of title to the Property on the basis of any Permitted Encumbrances. The parties acknowledge and agree that Seller shall have no obligation to cure any objection. 11. MISCELLANEOUS 11.1 Entire Agreement This Agreement, together with the Exhibits attached hereto, all of which are incorporated by reference, is the entire agreement between the parties with respect to the subject matter hereof, and no alteration, modification or interpretation hereof shall be binding unless in writing and signed by both parties. 11.2 Severability If any provision of this Agreement or application to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances, other than those as to which it is so determined invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law. 11.3 Applicable Law This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada without regard to its rules concerning conflicts or choice of law. The parties hereby submit to the jurisdiction over their persons of the state and federal courts in the State of Nevada with respect to any proceeding arising out of or related in any way to this Agreement. Each of the parties hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum or improper venue as a defense to the 14 maintenance of any such proceeding. The parties irrevocably consent to the service of process in any such proceeding by the mailing of copies of the summons and complaint therein to their respective addresses for notice as set forth in this Agreement. The parties agree that a final judgment in any such proceeding shall be conclusive and may be executed upon and enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. Nothing in this Section 11.3 shall limit the right of the parties to serve legal process in any other manner permitted by law. The terms and conditions of this Section 11.3 and Section 11.9 hereof shall apply with regard to any dispute between the parties concerning any document signed and delivered by either of them at the Closing. 11.4 Assignability Purchaser may not assign this Agreement without first obtaining Seller's written consent, which may be withheld in Seller's sole discretion. Any assignment in contravention of this provision shall be void. If Purchaser requests Seller's written consent to any assignment, Purchaser shall (a) notify Seller in writing of the proposed assignment; (b) provide Seller with the name and address of the proposed assignee; (c) provide Seller with financial information including financial statements of the proposed assignee; and (d) provide Seller with a copy of the proposed assignment. No assignment, whether or not permitted, shall release the Purchaser herein named from any obligation or liability under this Agreement. The Purchaser herein named and any permitted assignee shall be jointly and severally liable for all such obligations and liabilities. Any permitted assignee shall be deemed to have made any and all representations and warranties made by Purchaser hereunder, as if the assignee were the original signatory hereto. 11.5 Successors Bound This Agreement shall be binding upon and inure to the benefit of Purchaser and Seller and their respective successors and permitted assigns. 11.6 Breach Should either party be in breach of or default under or otherwise fail to comply with any of the terms of this Agreement, the complying party shall have the option to cancel this Agreement upon ten (10) days written notice to the other party of the alleged breach followed by failure by such other party to cure such breach within such ten (10) day period; provided, however, that Purchaser shall not be entitled to such notice or cure period for any failure to pay the Purchase Price as provided herein. The non-defaulting party shall promptly notify the defaulting party in writing of any alleged default upon obtaining knowledge thereof. The Date of Closing shall be extended to the extent necessary to afford the defaulting party the full ten-day period within which to cure such default; provided, however, that the failure or refusal by a party to perform on the scheduled Date of Closing (except in respect of a Pending Default by the other party) shall be deemed to be an immediate default without the necessity of notice; and provided further, that if the Date of Closing shall have been once extended as a result of default by a party, such party shall be not be entitled to any further notice or cure rights with respect to that or any other default. For purposes of this Section 11.6, a "Pending Default" shall be a default for which (i) written notice was given by the non-defaulting party, and (ii) the cure period extends beyond the scheduled Date of Closing. 15 11.7 No Public Disclosure; Press Release Prior to the Closing, neither of the parties shall make any public disclosure of the terms of this transaction without the prior written consent of the other party. Purchaser's press release on or after the Date of Closing shall be subject to the prior approval of Seller, which approval shall not be unreasonably withheld, delayed or conditioned; provided that Seller's approval right shall not apply with respect to any portion of such press release that is in the reasonable judgment of Purchaser required to be made by Purchaser under applicable disclosure laws. 11.8 Captions The captions in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Agreement or the scope or content of any of its provisions. 11.9 Attorneys' Fees If either party hereto fails to perform any of its obligations under this Agreement and if any litigation arises between the parties hereto, then the party not prevailing in such litigation shall pay any and all costs and expenses incurred by the other party on account of such default and/or in such litigation, including, without limitation, court costs and reasonable attorneys' fees and disbursements. Any such attorneys' fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys' fees obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment. 11.10 No Partnership Nothing contained in this Agreement shall be construed to create a partnership or joint venture between the parties or their successors in interest. 11.11 Time of Essence Time is of the essence for all purposes of this Agreement. 11.12 Counterparts and Facsimile Execution This Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. This Agreement may be executed and delivered by facsimile, but the copies bearing the original signature or signatures shall be simultaneously exchanged by Federal Express. 16 11.13 Recordation Purchaser and Seller agree not to record this Agreement or any memorandum hereof. 11.14 Proper Execution The submission by Seller to Purchaser of this Agreement in unsigned form shall be deemed to be a submission solely for Purchaser's consideration and not for acceptance and execution. Such submission shall have no binding force and effect, shall not constitute an option, and shall not confer any rights upon Purchaser or impose any obligations upon Seller irrespective of any reliance thereon, change of position or partial performance. The submission by Seller of this Agreement for execution by Purchaser and the actual execution and delivery thereof by Purchaser to Seller shall similarly have no binding force and effect on Seller unless and until Seller shall have executed this Agreement and a counterpart thereof shall have been delivered to Purchaser. 11.15 Tax Protest If, as a result of any tax protest or otherwise, any refund or reduction of any real property or other tax or assessment relating to the Property during the period for which, under the terms of this Agreement, Seller is responsible, Seller shall be entitled to receive or retain such refund or the benefit of such reduction, less equitable prorated costs of collection. 11.16 Survival and Limitation of Representations and Warranties The representations and warranties of Seller set forth in Section 5.1 shall survive the Closing, but written notification of any claim arising therefrom must be received by Seller within six (6) months after the Date of Closing or such claim shall be forever barred and Seller shall have no liability with respect thereto. All other terms and conditions of this Agreement shall survive the Closing if and to the full extent necessary to give full effect thereto. 11.17 Further Assurances The parties agree to execute, acknowledge, and deliver such additional or further assurances as may be reasonably necessary to give effect to the terms and provisions of this Agreement, both before and after the Closing. 17 IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement as of the date set forth above. SELLER: BHP MINERALS INTERNATIONAL INC., a Delaware corporation By: /s/ Earl K [illegible] Name: ___________________________________________ Title: __________________________________________ PURCHASER: ALTAIR NANOTECHNOLOGIES INC., a Canada corporation By: /s/ Edward Dickinson Name: ___________________________________________ Title: __________________________________________ An original, fully executed copy of this Agreement has been received by the Title Company's agent this 12th day of August 2002, and by execution hereof the Title Company's agent hereby covenants and agrees to be bound by the terms of this Agreement and hereby covenants and agrees to enter into a designation agreement in the form attached hereto as Exhibit 9.3.7. First American Title Guaranty Company By: /s/ Kitty Schlesinger ----------------------- Name: Kitty Schlesinger Title: Escrow Officer 18 EXHIBIT 1.1.1 LEGAL DESCRIPTION Parcel A of Parcel Map No. 2242, according to the map thereof, filed in the office of the County Recorder of Washoe County, State of Nevada, on March 2, 1988, as File No. 1229829. EX-10.8 5 ex10no8.txt DEED OF TRUST 1 APN: ______________________ WHEN RECORDED, MAIL TO: ________________________________ ________________________________ ________________________________ ________________________________ - -------------------------------------------------------------------------------- DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH ASSIGNMENT OF LEASES AND RENTS THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH ASSIGNMENT OF LEASES AND RENTS ("Deed of Trust"), is made this 8th day of August, 2002, by Altair Nanotechnologies Inc., a Canada corporation, as trustor and debtor ("Trustor"), whose address is: 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414; to First American Title Insurance Company, a California corporation, as trustee ("Trustee"), whose address is: 1850 Mt. Diablo Boulevard, Suite 300, Walnut Creek, CA 94596; for the benefit of BHP Minerals International Inc., a Delaware corporation, as beneficiary and secured party ("Beneficiary"), whose address is: 1360 Post Oak Blvd., Suite 150, Houston, Texas 77056-3020, Attention: Legal Department. 1. Grant and Assignment. For good and valuable consideration, Trustor hereby irrevocably and unconditionally grants, transfers and assigns to Trustee, in trust, with power of sale, all that certain real property located in Washoe County, Nevada, as more particularly described in Exhibit "A" attached hereto and incorporated herein ("the Land") together with all right, title and interest of Trustor in all buildings, fixtures and improvements now located or hereafter to be constructed thereon (collectively "Improvements"), the Appurtenant Rights and Easements and the Proceeds of the Land Improvements and Appurtenant Rights and Easements, all as more particularly described below, and further grants, assigns and transfers to Beneficiary a security interest in the Wastewater System and the Proceeds of the Wastewater System, as more particularly described below; "Appurtenant Rights and Easements" are any and all interests, claims, or rights which Trustor may hereafter acquire in the Land and Improvements, and all right, title and interest of Trustor in the appurtenances, hereditaments, privileges, reversions, remainders, profits, easements, franchises and tenements thereof, including, but not limited to, all minerals, oil, gas and other hydrocarbon substances thereon or therein, air rights, waters and water rights, "will-serve" letters, and any land lying in the streets, roads or avenues, open or proposed, in front of or adjoining the Land and Improvements, and all contract rights, development and use rights, governmental approvals, permits, licenses, applications, architectural and engineering plans, specifications and 1 drawings, architectural, engineering and construction contracts, chattel paper, instruments, documents, notes, drafts and letters of credit arising from or related to the Land and Improvements (herein "Appurtenant Rights and Easements"); "Wastewater System" is all right, title and interest of Trustor now held, or hereafter acquired, in the wastewater system located on the Land, including without limitation, control boxes; Harrington Tank and filter pump; sperry filter press; 3300 gallon, 100-inch non-potable water tank; associated motors; 1100 gallon storage tank; non potable water tank numbered 30-09.140; 3000 gallon tank; white tank; Dayton Trivolt industrial duty three-phase TEFC; and associated piping and all Proceeds thereof; "Proceeds" are all of Trustor's right, title and interest now held or hereafter acquired, to all proceeds (including claims or demands thereto) from the conversion, voluntary or involuntary, of any of the Land, Improvements, or Appurtenant Rights and Easements, or Wastewater System into cash or liquidated claims, including, without limitation, proceeds of all present and future fire, hazard or casualty insurance policies and all condemnation awards or payments in lieu thereof made by any public body or decree by any court of competent jurisdiction for taking or for degradation of the value in any condemnation or eminent domain proceeding, and all causes of action and the proceeds thereof of all types for any damage or injury to the Land, Improvements, Appurtenant Rights and Easements, or Wastewater System or any part thereof, including, without limitation, causes of action arising in tort or contract and causes of action for fraud or concealment of a material fact, and all proceeds from the sale thereof (herein collectively "Proceeds"); provided, however, that Proceeds shall not include any proceeds payable to Trustor as an additional insured under that certain environmental insurance policy for the Property to be obtained by Beneficiary in accordance with that certain Purchase and Sale Agreement between Trustor and Beneficiary dated on or about even date herewith, as a result of any losses incurred by Trustor not related to the clean-up or remediation of Hazardous Materials, as defined in Section 43 below, on, under or about the Property. IN ADDITION, Trustor absolutely and irrevocably assigns to Beneficiary all right, title and interest of Trustor in and to (i) all leases, rental agreements and other contracts and agreements relating to use and possession of any of the Land or Improvements, or Appurtenant Rights and Easements (collectively "Leases"), and (ii) the rents, issues, profits and proceeds therefrom together with all guarantees thereof and all deposits (to the full extent permitted by law) and other security therefor (collectively "Rents"). (The Land, Improvements, Appurtenant Rights and Easements, Wastewater System, Proceeds, Leases, Rents, and all other rights, titles, and interests of Trustor described above are hereinafter collectively referred to as "the Property".) 2. Obligations Secured. Trustor makes this Deed of Trust for the purposes of securing: 2 (a) Payment of all indebtedness and other obligations evidenced by that certain promissory note of even date herewith ("Note"), made by Trustor payable to the order of Beneficiary in the principal sum of Three Million and 00/100ths Dollars ($3,000,000); (b) Payment and performance of all obligations of Trustor under this Deed of Trust, including payment of all sums expended or advanced by Beneficiary hereunder, together with interest thereon at the rate specified herein, or if no rate is specified, at the rate of seven percent per annum (the "Note Rate"), in the preservation, enforcement and realization of the rights of Beneficiary hereunder or under any of the other obligations secured hereby, including, but not limited to, attorney's fees, court costs, other litigation expenses and foreclosure expenses; (c) Payment and performance of all future advances and other obligations that the then record owner of all or part of the Property may agree to pay or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when such obligation is evidenced by a writing which states that it is secured by this Deed of Trust; (d) Payment and performance of all modifications, extensions and renewals (if any) of one or more of the obligations secured hereby, including without limitation (i) modifications of the required principal payment dates or interest payment dates, deferring or accelerating payment dates wholly or partly, and (ii) modifications, extensions or renewals at a different rate of interest whether or not, in the case of a note or other contract, the modification, extension or renewal is evidenced by a new or additional promissory note or other contract; and (e) Performance of each and every obligation of Trustor as lessor or lessee under any and all leases executed in connection with the Property. The Note and other obligations secured by this Deed of Trust are herein collectively called the "Secured Obligations". All persons who may have or acquire an interest in the Property shall be deemed to have notice of, and shall be bound by, the terms of the Note, this Deed of Trust, and any other instruments, agreements or documents made or entered into in connection herewith (collectively "Documents") and each of the Secured Obligations. 3. Assignment of Leases and Rents. Trustor does hereby sell, assign and transfer unto Beneficiary all of the leases, rents, income and profits now due and which may hereafter become due under or by virtue of any lease, whether written or oral, or any agreement for the use or occupancy of the Property, it being the intention of Trustor and Beneficiary to establish an absolute transfer and assignment of all such leases and agreements, and all of the rents and profits from the Property unto the Beneficiary, and the Trustor does hereby appoint irrevocably the Beneficiary its true and lawful attorney in its name and stead, which appointment is coupled with an interest, to collect all of said rents and profits; provided, Beneficiary grants the trustor the privilege to collect and retain such rents, income, and profits unless and until an Event of Default (as hereinafter defined) exists under this Deed of Trust. Upon the occurrence of an Event of Default, and whether before or after the institution of legal proceedings to foreclose the lien hereof or before or after sale of the Property, or during any period of redemption, and without regard to waste, adequacy of the security or solvency of the Trustor, the Beneficiary may revoke the privilege granted Trustor hereunder to collect the rents, issues and profits of the Property, and may, at its option, without notice: 3 (i) In person or by agent, with or without taking possession of or entering the Property, with or without bringing any action or proceeding, give, or require Trustor to give, notice to any or all tenants under any lease authorizing and directing the tenant to pay such rents and profits to Beneficiary; collect all of the rents, issues and profits; enforce the payment thereof and exercise all of the rights of the landlord under any lease and all of the rights of Beneficiary hereunder; may enter upon, take possession of, manage and operate said Property, or any part thereof; may cancel, enforce or modify any leases, and fix or modify rents, and do any acts which the Beneficiary deems proper to protect the security hereof with or without taking possession of the Property; or (ii) Apply for the appointment of a receiver in accordance with Nevada law, which receivership Trustor hereby consents to, who shall collect the rents, profits and all other income of any kind; manage the Property so as to prevent waste; and execute leases which may expire within or after the period of receivership. (a) Neither the assignment of the Leases and Rents set forth above nor any other provision of any of the Documents shall impose upon Beneficiary any duty to produce Rents from the Property or cause Beneficiary to be (a) a "mortgagee in possession" for any purpose, (b) responsible for performing any of the obligations of the lessor under any Lease, or (c) responsible or liable for any waste by any lessees or any other parties, for any dangerous or defective condition of the Property, for any negligence in the management, upkeep, repair or control of the Property, or for any other act or omission by any other person. The foregoing assignment is an absolute assignment and not an assignment for security only, and Beneficiary's right to the Rents is not contingent upon its possession of the Property. (b) Trustor hereby directs each tenant of the Property, or any portion thereof, to pay such Rents to Beneficiary or Beneficiary's agent, and irrevocably appoints Beneficiary as its true and lawful attorney-in-fact, at the option of Beneficiary, at any time and from time to time, to demand, receive and enforce payment, to give receipts, releases and satisfactions and to use, in the name of Trustor or Beneficiary, for all such Leases and Rents and apply the same to the Secured Obligations; provided, however, Beneficiary confers upon Trustor the authority to collect and retain the Rents as they become due and payable, subject, however, to the right of Beneficiary to revoke said authority at any time after the occurrence of an Event of Default hereunder, and without taking possession of all or any part of the Property. Trustor covenants and agrees that prior to entering into any Lease of the Property, or any interest therein, or any portion thereof, from and after the date of this Deed of Trust, it shall provide at least fifteen (15) days' advanced written notice to Beneficiary, which notice shall identify the proposed lessee and the proposed lessee's use of the leased premises. If the proposed use includes bringing any Hazardous Materials, as defined in Section 43 below, onto the Property, and/or the use thereof on the Property by the proposed lessee, then Beneficiary shall have the right, but not the obligation, within ten (10) days after receipt of such notice, to provide Trustor with language to be included in the proposed lease regarding the use of any such Hazardous Materials, which language may include 4 without limitation reasonable representations, covenants and restrictions related to such use of Hazardous Materials, as well as environmental insurance requirements applicable to the proposed lessee. Any such language provided by Beneficiary within such period must be included in the proposed lease, and the proposed lease shall not be entered into or effective unless and until such language is included in the proposed lease, and such language will not be modified by any extensions, renewals and modifications thereof without the prior written consent of Beneficiary. Trustor agrees that commencing with an event of Default, as hereinafter defined, each tenant of the Property, or any portion thereof, shall make such Rents payable to and pay such Rents to Beneficiary, or Beneficiary's agent, upon Beneficiary's written demand to each tenant therefor, without any liability on the part of such tenant to inquire further as to the existence of a Default by Trustor, provided, however, in the event of Trustor's cure of any such Default as herein provided, Trustor shall again be entitled to recover and collect such rents as provided above prior to the event of Default. (c) Trustor shall (i) fulfill or perform each and every condition and covenant of each Lease to be fulfilled or performed by the lessor thereunder, (ii) give prompt notice to Beneficiary of any notice of default by the lessor or the lessee thereunder received by Trustor together with a complete copy of any such notice, and (iii) enforce, short of termination thereof, the performance or observance of each and every covenant and condition thereof by the lessee thereunder to be performed or observed. (d) Trustor shall furnish to Beneficiary, within thirty (30) days after a request by Beneficiary, a written statement containing the names of all lessees of the Property, the terms of their respective Leases, the space occupied, and the rentals payable and received thereunder and a copy of each Lease. (e) All Leases shall contain the following language, and shall not be entered into by Trustor or effective unless and until such language is included therein (and such language shall not be modified by any extensions, renewals and modifications thereof): "This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate to all mortgages which may now or hereafter affect the property, the building, and/or the leased premises, and each of the terms, covenants and conditions thereto (the "Superior Mortgage(s)"), whether or not such mortgages shall also cover other lands, buildings or leases, to each and every advance made or hereafter to be made under such mortgages, and to all renewals, modifications, replacements and extensions of such mortgages and spreaders and consolidations of such mortgages. This Paragraph shall be self-operative and no further instrument of subordination shall be required. Tenant shall promptly execute, acknowledge and deliver any reasonable instrument that Landlord or the holder of any such mortgage or any of their respective successors in interest may reasonably request to evidence such subordination; if Tenant fails to execute, acknowledge and deliver any such instrument within ten (10) business days after request therefor, Tenant hereby irrevocably constitutes and appoints Landlord as Tenant's attorney-in-fact, coupled with an interest, to execute and deliver any such instrument for and on behalf of Tenant. Without limiting the foregoing, Tenant's failure to execute, acknowledge and deliver such 5 instrument within the aforesaid time period shall constitute a Default hereunder. As used herein, the holder of a Superior Mortgage is herein called "Superior Mortgagee". In the event of a default under any Superior Mortgage, the Superior Mortgagee, in its sole and absolute discretion, may by giving notice to Tenant in accordance with the notice provision of this Lease or by posting notice at the leased premises or by recording notice in the Official Records of Washoe County, elect to either immediately terminate this Lease or to succeed to the rights of Landlord under this Lease. If any Superior Mortgagee elects to succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed (such party so succeeding to Landlord's rights herein called "Successor Landlord"), then, at the sole and absolute discretion of such Successor Landlord, Tenant shall attorn to and recognize such Successor Landlord as Tenant's landlord under this Lease (without the need for further agreement) and shall promptly execute and deliver any reasonable instrument that such Successor Landlord may reasonably request to evidence such attornment. This Lease shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease, except that the Successor Landlord shall not (a) be liable for damages or any previous act or omission of Landlord under this Lease, except to the extent such act or omission shall constitute a continuing Landlord default hereunder; (b) be subject to any offset, not expressly provided for in this Lease; or (c) be bound by any previous modification of this Lease or by any previous prepayment of more than one month's Base Rent, unless such modification or prepayment shall have been expressly approved in writing by the Successor Landlord (or its predecessor in interest)." Without limitation of the foregoing requirement, any tenant entering into a Lease without such language shall be deemed to have agreed to this language as if stated in the Lease word for word. 4. Trustor acknowledges, represents and warrants that Trustor lawfully holds, owns and possesses the Property in fee simple subject to no lien, claim, security interest or encumbrance except those approved by Beneficiary in writing prior to the delivery hereof. 5. Taxes and Assessments. (a) Trustor shall pay prior to delinquency all taxes, assessments, levies and charges of any kind or nature whatsoever imposed by any governmental or quasi-public authority or utility company which are (or, if not paid, may become) a lien upon or cause a loss in value of any interest in any of the Property, including assessments on appurtenant water stock. Trustor shall furnish Beneficiary, within ten (10) days after the date such payments are due and payable, official receipts of the appropriate authority or other proof satisfactory to Beneficiary evidencing the payment thereof. (b) "Costs", as used in this section, means taxes, bond installments, assessments, levies, insurance premiums and other expenses which Trustor agrees to pay under this Deed of Trust. At Beneficiary's option, and 6 upon its demand, each time a payment of principal or interest is due under the Note, Trustor shall pay to Beneficiary an additional amount ("Payment") estimated by Beneficiary to be equal to the total of the amount next due for all Costs, divided by, for each item of Costs the number of payments required under the Note before that item of Costs will become due, less one. Beneficiary shall use the amounts in the account, or at Beneficiary's sole option, Beneficiary may release those amounts to Trustor, for payment of the Costs. Beneficiary shall maintain an account showing all Payments received and all Costs paid by Beneficiary, and shall give Trustor reports on the account as required by law, but not less than annually. If the amounts paid to Beneficiary hereunder are insufficient to discharge the obligations of Trustor to pay such premium or premiums, taxes and assessments as the same become due, Trustor shall pay to Beneficiary upon demand such additional sums as Beneficiary may require to discharge Trustor's obligations to pay the premium or premiums, taxes and assessments. Beneficiary, at its sole option, may refund any amount in the account which exceeds the amount due or may continue to hold the excess and reduce proportionately the Payments for the next year. Trustor grants Beneficiary a security interest in the account to secure payment and performance of the Secured Obligations. Upon the occurrence of any Default and to the extent permitted by law, Beneficiary, at its sole option, may apply all or any part of the account to payment or performance of any Secured Obligation. Trustor shall restore all amounts so applied as a condition of curing the Default in addition to fulfillment of any other conditions. The existence of the account shall not limit Beneficiary's rights under any other provision of this Deed of Trust or any other agreement or statute or rule of law. Trustor shall not receive interest on the account except to the extent and in the amount required by law. The relationship between Beneficiary and Trustor with respect to the account shall be one of debtor and creditor, and Beneficiary shall not be a trustee, special depository or any other fiduciary acting for the benefit of Trustor. 6. Insurance. (a) Trustor shall at its expense, procure for, deliver to and maintain insurance policies providing the following types of insurance relating to the Property for the benefit of Beneficiary until the Secured Obligations are fully repaid, issued by insurance companies with a Best insurance rating of at least A, and with a financial size category equal or better than that of the insurance company(ies) initially providing insurance coverage as described below, such policies to provide that the insurer shall give Beneficiary at least thirty (30) days prior written notice of cancellation or termination, in the manner provided for the giving of notices to Beneficiary under paragraph 33 hereof and to provide that no act or thing done by the insured shall invalidate or diminish the insurance provided to Beneficiary and, except for liability policies, to contain a standard mortgage clause either in form 438BFU NS (Rev. May 1, 1942) X, or other form satisfactory to Beneficiary: (i) Broad form property insurance against all risks of physical loss, including, without limitation, fire, extended coverage, vandalism, malicious mischief and collapse, with waiver of subrogation, to the extent of the full replacement cost of the improvements to the Property, without deduction for depreciation, either without co-insurance requirements or with agreed amount endorsement attached, or in the amount of $3,000,000, whichever is greater; 7 (ii) Public liability insurance, with all-risk endorsement, covering all liabilities incident to the ownership, possession, occupancy and operation of the Property and naming Beneficiary as an additional insured thereunder, having limits of not less than $1,000,000.00 each accident, $1,000,000.00 each person, and $100,000.00 property damage. In addition, Trustor shall furnish Beneficiary with a certificate evidencing an umbrella policy of public liability and property damage insurance in an amount of not less than $3,000,000.00 naming Beneficiary as an additional insured thereunder. (iii) During the period of any construction on or renovation or alteration of the Improvements that requires a building permit from the City of Reno or other applicable governmental agency, a "Builder's Risk-All Risk Completed Value" insurance policy and Worker's Compensation Insurance covering all persons engaged in such construction, renovation or alteration. (b) Trustor covenants and agrees that Beneficiary is hereby authorized and empowered, at its option, to adjust, compromise or settle any loss under any insurance policies maintained pursuant hereto, and to collect and receive the proceeds from any policy or policies. Each insurance company is hereby authorized and directed to make payment for all such losses directly to Beneficiary, instead of to Trustor and Beneficiary jointly. In the event any insurance company fails to disburse directly and solely to Beneficiary, but disburses instead either solely to Trustor or to Trustor and Beneficiary jointly, Trustor agrees immediately to endorse and transfer such proceeds to Beneficiary. Upon the failure of Trustor to endorse and transfer such proceeds as aforesaid, Beneficiary may execute such endorsements or transfers for and in the name of Trustor and Trustor hereby irrevocably appoints Beneficiary as its agent and attorney-in-fact so to do. After deducting from said insurance proceeds all of its expenses incurred in the collection and administration of such sums, including attorneys' fees, Beneficiary may apply the net proceeds or any part thereof, at its sole option, (i) to a pre-payment of the Note, without pre-payment premium or penalty, (ii) to the repair and/or restoration of the Property, upon such conditions as Beneficiary may determine, and/or (iii) for any other purposes or objects for which Beneficiary is entitled to advance funds under this Deed of Trust, all without affecting the lien of this Deed of Trust or any obligations secured hereby. Any balance of such proceeds then remaining shall be paid to Trustor or the person or entity lawfully entitled thereto. Beneficiary shall not be obligated to see to the proper application of any amount paid over to Trustor and shall not be held responsible for any failure to collect any insurance proceeds due under the terms of any policy, regardless of the cause of such failure. (c) At least twenty (20) days prior to the expiration date of each policy maintained pursuant to this paragraph 6, a renewal or replacement thereof meeting the requirements specified above shall be delivered to Beneficiary. Trustor shall deliver to Beneficiary receipts evidencing the full payment of premiums for all such insurance policies and renewals or replacements. In the event Trustor fails to provide, maintain, keep in force or deliver and furnish to Beneficiary the policies of insurance required by this Deed of Trust, Beneficiary may, but shall not be obligated to, procure such insurance and 8 Trustor shall pay all premiums thereon promptly upon demand by Beneficiary; any premiums so paid by Beneficiary shall be added to the principal balance of the Note as of the date paid, shall bear interest thereafter at the interest rate specified in the Note secured hereby, and shall be secured by this Deed of Trust. Beneficiary shall not be responsible for nor incur any liability for the insolvency of the insurer, even though Beneficiary has caused the insurance to be placed with the insurer after failure of Trustor to furnish such insurance. (d) In the event of the foreclosure of this Deed of Trust or any other transfer of title to the Property in extinguishment or partial extinguishment of the Indebtedness, all right, title and interest of the Trustor in and to all insurance policies maintained pursuant to this paragraph 6 then in force shall belong to the purchaser and Beneficiary is hereby irrevocably appointed by Trustor as attorney-in-fact for Beneficiary to assign any such policy to said purchaser, without accounting to Trustor for any unearned premiums therefor. (e) Approval of any insurance by Beneficiary shall not be a representation of the solvency of any insurer or the sufficiency of any amount of insurance. 7. Condemnation Proceeds. All awards of damages and all other compensation payable directly or indirectly by reason of a condemnation for public or private use affecting any interest in any of the Property shall be paid to Beneficiary. Except as otherwise set forth herein, Beneficiary shall apply any such sum to the payment of the Secured Obligations. Any such application of proceeds to the Secured Obligations shall not extend or postpone the due date of installments under the Note or change the amount of such installments. Application of all or any portion of said funds, or the release thereof, shall not cure or waive any Default or notice thereof or invalidate any acts done pursuant to such notice. 8. Liens, Encumbrances and Charges. Trustor shall immediately discharge any lien, claim or encumbrance which has not been approved by Beneficiary in writing, and which has or may attain priority over this Deed of Trust. Trustor shall pay at or prior to maturity all obligations secured by or reducible to liens or encumbrances which shall now or hereafter encumber or appear to encumber all or any interest in any of the Property, whether senior or subordinate hereto. Trustor agrees to appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust. 9. Maintenance and Preservation of the Subject Property. Trustor covenants: (a) To keep the Property in as good a condition and repair as it is on the date hereof; (b) Not to remove or demolish any of the Property without Beneficiary's prior written consent; 9 (c) Not to make any capital improvements in or to any of the Property, other than repairs and maintenance which preserve the value of the Property, without Beneficiary's prior written consent; and to pay when due all claims for labor performed and materials furnished in connection with any work of improvement upon the land. Notwithstanding the foregoing language in this paragraph 9(c), Trustor shall have the right to bring new equipment onto the Property and fix it to the Property without the prior consent of Beneficiary. (d) To complete or restore promptly and in good and workmanlike manner any of the Property which may be damaged or destroyed, or which may be affected by any condemnation or eminent domain proceeding; (e) Not to suffer violation of any, and to comply with all, (i) laws, ordinances, regulations and standards; (ii) covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character; and (iii) requirements of insurance companies for insurability, which laws, covenants or requirements affect any of the Property or pertain to acts committed or conditions existing thereon; (f) Not to initiate or acquiesce in any change in any zoning or other land use or legal classification which affects any of the Property without Beneficiary's prior written consent; (g) Not to commit or permit waste of the Property or to conduct or permit any nuisance thereon or abandon the same; (i) To do all other acts which from the character or use of the Property may be reasonably necessary to maintain and preserve its value; (j) To make no further assignment of Rents or Leases without Beneficiary's prior written consent; and (k) To pay when due all installments owing upon conditional sales or like agreements with respect to any Wastewater System. 10. Defense and Notice of Losses, Claims and Actions. Trustor shall protect, preserve, and defend the Property and title to and right of possession of the Property, the security and priority hereof, and the rights and powers of Beneficiary hereunder at Trustor's sole expense against all adverse claims. Trustor shall give Beneficiary prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to any of the Property, of any condemnation offer or action and of any Default. 11. Inspection. Beneficiary, its agents and employees may enter the Property at any reasonable time upon 24 hours advanced notice (except in the event of an emergency, in which case no advanced notice shall be required) for the purpose of inspecting the Property and ascertaining Trustor's compliance with the terms of this deed of Trust and each of the other Documents. 10 12. Compensation; Exculpation; Indemnification. (a) From and after the occurrence of an Event of Default hereunder, Trustor shall pay to Beneficiary reasonable compensation for services rendered by Beneficiary or its agents which relate to this Deed of Trust, including, without limitation, preparation of any statement of any Secured Obligation. Beneficiary shall not directly or indirectly be liable to Trustor or any other person as a consequence of (i) the exercise of the rights, remedies or powers granted to Beneficiary under this Deed of Trust, (ii) the failure or refusal of Beneficiary to perform or discharge any obligation or liability of Trustor under any agreement related to the Property or under this Deed of Trust, or (iii) any loss sustained by Trustor or any third party resulting from Beneficiary's failure to lease the Property after a Default or from any other act or omission of Beneficiary in managing the Property after a Default unless the loss is caused by the willful misconduct or bad faith of Beneficiary. (b) From and after the occurrence of an Event of Default hereunder, Trustor shall indemnify Beneficiary against, and shall hold it harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which Beneficiary may suffer or incur (i) by reason of enforcement of the provisions of this Deed of Trust or any of the other Documents, (ii) in performance of any act required or permitted hereunder, under any of the other Documents or by law, (iii) as a result of any failure of Trustor to perform any of Trustor's obligations, or (iv) by reason of any alleged obligation or undertaking on Beneficiary's part to perform or discharge any of the representations, warranties, conditions, covenants, or other obligations contained in any other document related to any of the Property. 13. Estoppel Certificate. Trustor shall, at any time and from time to time upon not less than ten (10) days prior written notice from Beneficiary, execute, acknowledge and deliver to Beneficiary a statement (i) certifying that this Deed of Trust and the other Secured Obligations are unmodified and in full force and effect, or, if modified, stating the nature thereof and certifying that each Secured Obligation, as so modified, is in full force and effect and the date to which principal, interest and other sums secured hereby have been paid, and (ii) acknowledging that there are no uncured Defaults under this Deed of Trust or any other Secured Obligation or specifying such Defaults if any are claimed. Any such certificate may be conclusively relied upon by Beneficiary and any prospective purchaser or assignee of any Secured Obligation. Trustor's failure to deliver such certificate within such time shall be conclusive upon Trustor that (i) the Secured Obligations are in full force and effect, without modification, except as may be represented by Beneficiary, and (ii) there are no uncured Defaults thereunder. 14. Further Assurances. Trustor shall promptly make, execute, acknowledge and deliver, in form and substance satisfactory to Beneficiary, all additional instruments, agreements and other documents, and Trustor shall do all other acts, as may at any time hereafter be requested by Beneficiary to effectuate and carry out the purposes of this Deed of Trust and each of the Secured Obligations. 11 15. Expenses and Fees. From and after the occurrence of an Event of Default hereunder, all reasonable expenses, costs and other liabilities, including attorneys' fees, which Beneficiary or Trustee may incur (i) in enforcing, defending, construing or administering this Deed of Trust (or its priority) or any of the other Documents, (ii) for any inspection, evaluation, appraisal, survey or other service in connection with any of the Property, (iii) for any title examination or title insurance policy relating to the title to any of the Property, or (iv) in the exercise by Beneficiary of any rights or remedies granted by this Deed of Trust or any of the other Documents, shall be paid by Trustor upon demand by Beneficiary, together with interest thereon, from the date of expenditure until payment in full, at the Note Rate. 16. Beneficiary's Powers. Beneficiary may commence, appear in, defend or prosecute any assigned claim or action; and Beneficiary may adjust, compromise, settle and collect all claims and awards assigned to Beneficiary, but shall not be responsible for any failure to collect any claim or award regardless of the cause of the failure. Without affecting the liability of any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Property not then or theretofore released as security for the full amount of the Secured Obligations, Beneficiary may, from time to time and without notice (i) release any person so liable, (ii) extend the maturity or alter any of the terms of any such obligation, (iii) grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed, at any time and at Beneficiary's option, any parcel, portion or all of the Property, (v) take or release any other or additional security for any Secured Obligation or (vi) compromise or make other arrangements with debtors in relation thereto. 17. Trustee's Powers. At any time, or from time to time, without liability therefor and without notice, upon written request of Beneficiary and without affecting the effect of this Deed of Trust upon the remainder of the Property, Trustee may (i) reconvey any part of the Property, (ii) consent in writing to the making of any map or plat thereof, (iii) join in granting any easement thereon, or (iv) join in any extension agreement or any agreement subordinating the lien or charge hereof. 18. Security Agreement; Fixture Filing. (a) Trustor hereby grants, assigns and transfers to Beneficiary a security interest in and to the Wastewater System; and this Deed of Trust shall constitute a security agreement pursuant to the Nevada Uniform Commercial Code with respect to Wastewater System located in Nevada (the Nevada Uniform Commercial Code is referred to as the "UCC"). For purposes of treating this Deed of Trust as a security agreement, Trustor shall be deemed to be the "Debtor" and Beneficiary the "Secured Party". (b) Trustor maintains a place of business in the State of Nevada at the address set forth in this Deed of Trust; and Trustor will immediately notify Beneficiary in writing of any change in its place of business. 12 (c) At the request of Beneficiary, Trustor shall join Beneficiary in executing one or more financing statements and continuations and amendments thereof pursuant to the UCC in form satisfactory to Beneficiary. In the event Trustor fails to execute such documents, Trustor hereby authorizes Beneficiary to file such financing statements, and continuations and amendments thereto, and irrevocably constitutes and appoints Beneficiary, or any officer of Beneficiary, as its true and lawful attorney-in-fact to execute the same on behalf of Trustor. (d) In addition to Beneficiary's rights under the UCC, Beneficiary may, but shall not be obligated to, at anytime without notice, (i) give notice to any person of Beneficiary's rights hereunder and, at the expense of Trustor, enforce such rights; (ii) insure, protect, defend and preserve the Wastewater System and any rights or interest of Beneficiary therein; (iii) inspect the Wastewater System; and (iv) at the expense of Trustor, endorse, collect and receive any right to payment of money owing to Trustor under or from the Wastewater System. Beneficiary shall have no duty or obligation to make or give any presentments, demand for performance, notices of nonperformance, notices of protest or notices of dishonor in connection with any of the Wastewater System. (e) Upon the occurrence of a Default, Beneficiary shall have with respect to the Wastewater System, in addition to all of its rights and remedies as stated in this Deed of Trust, all rights and remedies of a secured party under the UCC as well as all other rights and remedies available at law or in equity. (f) PARTS OF THE WASTEWATER SYSTEM ARE, OR ARE TO BECOME, FIXTURES ON THE PROPERTY. (g) Beneficiary has no responsibility for, and does not assume any of, Trustor's obligations or duties under any agreement or obligation which is part of the Wastewater System or any obligation relating to the acquisition, preparation, custody, use, enforcement or operation of any of the Property. (h) Trustor and Beneficiary agree that the filing of a financing statement in the records normally having to do with personal property shall never be construed as in any way derogating or impairing this Deed of Trust and the intention of the parties that everything used in connection with the production of income from the Property or adapted for use therein or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable shall be regarded as, part of the real estate subject to the lien hereof, irrespective of whether (i) any such item is physically attached to improvements located on such real property or (ii) any such item is referred to or reflected in any financing statement so filed at any time. Similarly, the mention in any such financing statement of (A) the Property or (B) any award in eminent domain proceedings for taking or for loss of value or for any cause of action or proceeds thereof in connection with any damage or injury to the Property or any part thereof shall never be construed as in any way altering any of the rights of Beneficiary as determined by this instrument or impugning the priority of Beneficiary's lien granted hereby or by any other recorded document, but such mention in such 13 financing statement is declared to be for the protection of Beneficiary in the event any court shall at any time hold with respect to matters (A) and (B) above that notice of Beneficiary's priority of interest, to be effective against a particular class of persons, including, without limitation, the Federal government and any subdivision or entity of the Federal government, must be filed in the personal property records or other commercial code records. (i) Trustor shall not permit any of the Wastewater System to be removed from the Improvements or the Land, as the case may be without the prior written consent of Beneficiary unless (i) the replacements for such items of Wastewater System are of equivalent or superior value and quality, and (ii) Trustor has good and clear title to such replacements free and clear of any and all liens, encumbrances, security interests, ownership interests, claims of title (contingent or otherwise) or charges of any kind or the rights of any such conditional sellers, vendors or any other third parties have been expressly subordinated, at no cost to Beneficiary, to the lien and security interest granted hereby in a manner satisfactory to Beneficiary. (j) Trustor acknowledges that at the time the security interest created hereby attaches the Wastewater System collateral consists of fixtures and equipment. (k) Trustor hereby acknowledges that the sale of the Wastewater System by Trustee after default of Trustor pursuant to the provisions of this Agreement and Chapter 107 of the Nevada Revised Statutes (as the same may be amended from time to time) or pursuant to a court order rendered in a judicial foreclosure proceeding, shall be deemed to constitute a "commercially reasonable" sale within the meaning of Article 9 of Chapter 104 of the Nevada Revised Statutes, as to the Wastewater System collateral. Notwithstanding any provision to the contrary set forth herein, Beneficiary, may, at its sole discretion, choose such other means for sale of the Wastewater System collateral, or a portion or portions thereof, which Beneficiary deems to be reasonable, so long as such sale complies with the provisions of Article 9 of Chapter 104 of the Nevada Revised Statutes. In such event Beneficiary shall, in its sole discretion, determine whether the Wastewater System is personal property and therefore subject to the provisions of such Article 9. 19. Default. Each of the following events is an event of default hereunder (herein "Event of Default" or "Default"): (a) The occurrence of a default under the Note or the failure to pay or perform any other Secured Obligation as when first due; or (b) The failure by Trustor to perform or comply with any other obligation, covenant or condition contained in this Deed of Trust or any of the other Documents including any loan agreement; or (c) The occurrence of a default, "Default" or "Event of Default" under any of the other Documents; or 14 (d) The occurrence of any transfer prohibited by this Deed of Trust, including, but not limited to, those described in paragraph 41 below; or (e) The fact that any warranty of Trustor contained in this Deed of Trust or in any other Document proves to be untrue or misleading in any respect as of the time made or as of any subsequent time prior to the satisfaction in full of all of the Secured Obligations; or (f) The filing of any federal tax lien against the Property or any portion thereof, or interest therein; or (g) Any Trustor or any maker, endorser or guarantor of the Note (if a corporation) is liquidated or dissolved or its charter expires or is revoked, or any Trustor or any such maker, endorser or guarantor (if a partnership or business association) is dissolved or partitioned, or any Trustor or any such maker, endorser or guarantor (if a trust) is terminated or expires, or any Trustor or any such maker, endorser or guarantor (if an individual) dies; or (h) The filing by any person or entity of any claim in any legal or equitable proceeding challenging the priority of this Deed of Trust as shown on the policy of title insurance insuring this Deed of Trust; or (i) Any Trustor applies for or consents to the appointment of a receiver or trustee for it or any portion of its property, or if such a receiver or trustee is appointed for any Trustor or its property or if any Trustor makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due, or if any Trustor becomes insolvent, or a petition is filed by any Trustor pursuant to any of the provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq., as amended, or any similar or successor statute or such a petition is filed against Trustor. 20. Remedies. Upon the occurrence of a Default, Beneficiary may at any time, at its option and in its sole discretion, declare all Secured Obligations to be due and payable and the same shall thereupon become immediately due and payable, including any prepayment charge or fee payable under the terms of any Secured Obligation; provided, upon the occurrence of any event which causes the automatic acceleration of any Secured Obligation in accordance with the terms of any Document, all Secured Obligations shall automatically become immediately due and payable. Beneficiary may also do any or all of the following, although it shall have no obligation to do any of the following: (a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of Beneficiary's security, enter upon and take possession of the Property, or any part thereof, and do any acts which Beneficiary deems necessary or desirable to preserve the value, marketability or rentability of the Property, or to increase the income therefrom or to protect the security hereof and, with or without taking possession of any of the Property, sue for or otherwise collect all rents and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including attorney's fees and expenses, upon the Secured Obligation, all in such 15 order as Beneficiary may determine. The collection of rents and profits and the application thereof shall not cure or waive any Default or notice thereof or invalidate any act done in response thereto or pursuant to such notice. If Beneficiary elects to seek the appointment of a receiver for the Property, or any portion thereof, Trustor hereby expressly consents to the appointment of such receiver and authorizes the appointment of Beneficiary as such receiver. Beneficiary or the receiver shall be entitled to receive a reasonable fee for so managing the Property. (b) Bring an action in any court of competent jurisdiction to foreclose this instrument or to enforce any of the covenants hereof. (c) Exercise any or all of the remedies available to a secured party under the UCC, including, but not limited to: (i) Either personally or by means of a court appointed receiver, take possession of all or any of the Wastewater System and exclude therefrom Trustor and all others claiming under Trustor and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of Trustor in respect to the Wastewater System; and in the event Beneficiary demands or attempts to take possession of the Wastewater System in the exercise of any of its rights hereunder, Trustor promises and agrees promptly to turn over and deliver complete possession thereof to Beneficiary; (ii) Without notice to or demand upon Trustor, make such payments and do such acts as Beneficiary may deem necessary to protect its security interest in the Wastewater System, including, without limitation, paying, purchasing, contesting or compromising any encumbrance, charge or lien which is prior or superior to the security interest granted hereunder, and in exercising any such powers or authority, to pay all expenses incurred in connection therewith; (iii) Require Trustor to assemble the Wastewater System or any portion thereof at a place designated by Beneficiary and promptly to deliver such Wastewater System to Beneficiary or an agent or representative designated by it. Beneficiary, its agent and representatives, shall have the right to enter upon any or all of the Trustor's premises and property to exercise the Beneficiary's rights hereunder; and (iv) Sell, lease or otherwise dispose of the Wastewater System at public sale, with or without having the Wastewater System at the place of sale, and upon such terms and in such manner as Beneficiary may determine, and Beneficiary may be a purchaser at any such sale. Beneficiary shall not be deemed to have accepted any property other than cash in satisfaction of any Secured Obligation unless Beneficiary shall make an express written election of said remedy under UCC ss.9505 or other applicable law. (d) Elect to sell by power of sale the Property which is Land, Appurtenant Rights and Easements, and Improvements or which Beneficiary has elected under the UCC to treat as Land, Appurtenant Rights and Easements, and 16 Improvements and, upon such election, such notice of default and election to sell shall be given as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law, at the time and place specified in the notice of sale, Trustee shall sell such Property, or any portion thereof specified by Beneficiary, at public auction to the highest bidder for cash in lawful money of the United States. Trustee may, and upon request of Beneficiary shall, from time to time, postpone the sale by public announcement thereof at the time and place noticed therefor. If the Property consists of several lots, parcels or interests, Beneficiary may designate the order in which the same shall be offered for sale or sold. Should Beneficiary desire that more than one such sale or other disposition be conducted, Beneficiary may, at is option, cause the same to be conducted simultaneously, or successively on the same day, or at such different days or times and in such order as Beneficiary may deem to be in its best interest. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. Upon any sale, Trustee shall execute and deliver to the purchaser or purchasers a deed or deeds conveying the Property so sold, but without any covenants or warranty whatsoever, express or implied, whereupon such purchaser or purchasers shall be let into immediate possession. (e) Exercise each of its other rights and remedies under this Deed of Trust and each of the other documents. (f) Except as otherwise required by law, apply the proceeds of any foreclosure or disposition hereunder to payment of the following: (i) the expense of such foreclosure or disposition, (ii) the cost of any search or other evidence of title procured in connection therewith and revenue stamps on any deed or conveyance, (iii) all sums expended under the terms hereof, not then repaid, with accrued interest in the amount provided herein, (iv) all other sums secured hereby and (v) the remainder, if any, to the person or persons legally entitled. (g) Upon any sale or sales made under or by virtue of this section, whether made under the power of sale or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Beneficiary may bid for and acquire the Property or any part thereof. In lieu of paying cash for the Property, Beneficiary may make settlement for the purchase price by crediting the Secured Obligations, or any portion thereof, against the sales price of the Property. (h) Trustor agrees to pay any deficiency arising from any cause after application of the proceeds of the sale held in accordance with applicable law and the provisions hereof. (i) Covenants 1, 3, 4 (interest at the Note Rate), 5, 6, 7 (reasonable counsel fees), 8 and 9 of NRS 107.030 are hereby adopted by reference and made a part hereof to the extent not inconsistent with any other provisions contained herein. 21. Subrogation. Beneficiary shall be subrogated to any mechanic's or vendor's lien, superior titles, mortgages, deeds of trust, liens, encumbrances, rights, equities and charges of all kinds heretofore or hereafter existing on the Property, notwithstanding their release of record, to the extent that the same are paid or discharged from the proceeds of the loan evidenced by the Note, or are otherwise paid by Beneficiary. 17 22. Releases, Extensions, Modifications and Additional Security. Without notice to or the consent, approval or agreement of Trustor, any subsequent owner of any part of the Property, any maker, surety, guarantor, or endorser of this Deed of Trust or any Secured Obligation, or any holder of a lien or other claim on all or any part of the Property, whether senior or subordinate hereto, Beneficiary may, from time to time, do one or more of the following: release any person's liability for the payment of any Secured Obligation, take any action or make any agreement extending the maturity or otherwise modifying the terms of any Secured Obligation, or accept additional security or release all or any portion of the Property and other security for any Secured Obligation. No such release of liability, taking of additional security, release of security, or change in terms of any Secured Obligation, or other action shall release or reduce the personal liability of Trustor, subsequent purchasers of all or any part of the Property, or makers, sureties, guarantors or endorsers of this Deed of Trust or any Secured Obligation, under any covenant of this Deed of Trust or any Secured Obligation, or release or impair the priority of the lien of this Deed of Trust upon any of the Property. 23. No Waiver. Any failure by Beneficiary to insist upon the strict performance by Trustor of any of the terms and provisions of any of the Documents shall not be deemed to be a waiver of any of the terms and provisions of any of the Documents; and Beneficiary, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Trustor of any and all of the terms and provisions of each of the Documents. The acceptance by Beneficiary of any sum after any Default shall not constitute a waiver of the right to require prompt performance of all of the covenants and conditions contained in any of the Documents. The acceptance by Beneficiary of any sum less than the sum then due shall be deemed an acceptance on account only and shall constitute a waiver of the obligation of Trustor to pay the entire sum then due. Trustor's failure to pay said entire sum due shall be and continue to be a Default notwithstanding such acceptance of such lesser amount on account. Beneficiary shall be entitled to exercise all rights conferred upon it following a Default notwithstanding such acceptance. 24. Stamps. If at any time the United States of America, any state thereof or any governmental subdivision of such state shall require revenue stamps to be affixed to the Note or any of the other Documents, or the payment of any other tax paid on or in connection therewith, Trustor shall pay the same with any interest or penalties imposed in connection therewith if Trustor is permitted by law to pay such amount. 25. Cumulative. The rights of Beneficiary arising under this Deed of Trust and the other Documents shall be separate, distinct and cumulative, and none of them shall be in exclusion of the others. No act of Beneficiary shall be construed as an election to proceed under any one provision to the exclusion of any other provision, notwithstanding anything herein or otherwise to the contrary. Any specific enumeration of powers of Beneficiary, or of acts to be done or not to be done by Trustor, shall not be deemed to exclude or limit the general. 18 26. Statement of Condition. Beneficiary shall furnish any statement required by law regarding the obligations secured hereby or regarding the amounts held in any trust or reserve fund hereunder. For any such statement, Beneficiary may charge a reasonable fee, not to exceed the maximum amount permitted by law at the time of the request therefor. 27. Reconveyance. Upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Note to Trustee for cancellation, and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in any such reconveyance of any matters or facts shall be conclusive proof of the truth thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto". Such request and reconveyance shall operate as a re-assignment of the rents, issues and profits herein assigned to Beneficiary. 28. Substitution. Beneficiary may substitute Trustee hereunder in any manner now or hereafter provided by law or, in lieu thereof, Beneficiary may from time to time, by an instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties in which the Land and Improvements are situated, shall be conclusive proof of proper substitution of such successor Trustee, who shall thereupon and without conveyance from the predecessor Trustee, succeed to all its title, estate, rights, powers and duties. 29. Law. Trustor acknowledges and agrees that this Deed of Trust and the other Documents, including provisions with respect to the making of any disbursements, the creation of any monetary obligations and the rights accruing and compensation payable to Beneficiary in connection therewith, shall be governed by and construed in accordance with the laws of the State of Nevada; provided, however, in all instances, Federal Law shall apply to the extent that Beneficiary may have greater rights thereunder, and to the extent Federal law pre-empts state law. 30. Severable. If any provision of this Deed of Trust or its application to any person or ircumstances is held invalid, the other provisions hereof or the application of the provisions to other persons or circumstances shall not be affected. 31. Successors and Assigns. Each of the covenants and obligations of Trustor set forth in this Deed of Trust and each of the other Documents shall run with the land and shall bind Trustor, the heirs, personal representatives, successors and assigns of Trustor and all subsequent encumbrancers and tenants of the Property and shall inure to the benefit of Beneficiary and their respective successors and assigns. Beneficiary agrees that it will not assign its interests under this Deed of Trust without Trustor's prior written consent, except to any entity in which BHP Billiton Limited or BHP Billiton PLC holds an ownership interest. 32. Captions. The captions or headings at the beginning of each section hereof are for the convenience of the parties and are not a part of this Deed of Trust. 19 33. Notice. Except as otherwise provided by law, any notice, request, demand, consent, approval or other communication ("Notice") provided or permitted under this Deed of Trust, or any other instrument contemplated hereby, shall be in writing, signed by the party giving such Notice, and shall be given by personal delivery to the other party or by United States certified or registered mail, postage prepaid, return receipt requested, addressed to the party for whom it is intended at its address as set forth at page 1 hereof. Unless otherwise specified, Notice shall be deemed given when received, but if delivery is not accepted, on the earlier of the date delivery is refused or the third day after same is deposited in any official United States Postal Depository. Any party from time to time, by Notice to the other parties given as above set forth, may change its address from purposes of receipt of any such communication. 34. No Third Party Beneficiaries. This Deed of Trust is made and entered into for the sole protection and benefit of the parties hereto, and no other person or entity shall be a direct or indirect beneficiary of, or shall have any direct or indirect cause of action or claim in connection with this Deed of Trust or any of the other Documents. 35. No Offset. Under no circumstances shall Trustor fail or delay to perform (or resist the enforcement of) any of its obligations in connection with any of the Documents because of any alleged offsetting claim or cause of action against Beneficiary (or any indebtedness or obligation of Beneficiary) which has not been confirmed in a final judgment of a court of competent jurisdiction (sustained on appeal, if any) against Beneficiary, and Trustor hereby waives any such rights of setoff (or offset) which it might otherwise have with respect to any such claims or causes of action against Beneficiary), unless and until such right of setoff is confirmed and liquidated by such a final judgment. Trustor further waives any right that it might otherwise have to require a marshalling of any security of Beneficiary or to direct the order in which Beneficiary pursues its rights or remedies with respect to any of its security. 36. Amendments. This Deed of Trust contains (or incorporates) the entire agreement of the parties hereto with respect to the matters discussed herein, and this Deed of Trust may only be modified or amended by a written instrument executed by each of the parties hereto. 37. Survival of Warranties. All representations, warranties, covenants and agreements of Trustor hereunder shall survive the delivery of this Deed of Trust and shall continue in full force and effect until the full and final payment and performance of all of the Secured Obligations. 38. Time. Time is of the essence of each provision of this Deed of Trust. 39. Continuation of Payments. Notwithstanding any taking by eminent domain or other governmental action causing injury to, or decrease in value of, the Property and creating a right to compensation therefor, Trustor shall continue to make the required payments of principal and interest on the Note. If, prior to the receipt by Beneficiary of such award or compensation, the Property shall have been sold in any action or proceeding to foreclose this Deed of Trust, Beneficiary shall have the right to receive said award or compensation to the extent of any deficiency found to be due upon such sale, with interest thereon, whether or not a deficiency judgment on this Deed of Trust shall have 20 been sought or recovered, together with reasonable counsel fees and the costs and disbursements incurred by Beneficiary in connection with the collection of such award or compensation. 40. Specific Performance. At any time, Beneficiary may commence and maintain an action in any court of competent jurisdiction for specific performance of any of the covenants and agreements contained herein, and may obtain the aid and direction of the court in the performance of any of the covenants and agreements contained herein, and may obtain orders or decrees directing the execution of the same and, in case of any sale hereunder, directing, confirming or approving its or Trustee's acts and granting it such relief as may be warranted in the circumstances. 41. Transfers. In the event that Trustor, or any successor in interest to Trustor in the real property hereby encumbered, either voluntarily or by operation of law, shall sell, transfer, further encumber, mortgage, or convey, or contract to sell, transfer, further encumber, mortgage, or convey, any or all of the Property which is not Wastewater System, or any portion thereof, or any interest therein, at the option of Beneficiary, the obligation secured by this Deed of Trust shall forthwith become due and payable although the time of maturity as expressed therein shall not have arrived. If Trustor is a corporation, partnership, trust or other entity, the transfer, encumbrance or other disposition of the voting control of such entity or of the ownership of more than fifty percent (50%) of the financial interest in Trustor shall be deemed to be a transfer for purposes of this paragraph; provided, however, that the foregoing shall not apply to transfers of Trustor's stock on any public stock exchange so long as Trustor is a publicly traded company. If this Deed of Trust or any Note secured hereby contains any provision conferring on Beneficiary the right to demand any prepayment fee or sum of money for prepayment of any indebtedness secured hereby, Trustor agrees to pay the maximum amount of such fee or sum of money which Beneficiary would have been entitled to demand pursuant to such provision. If Beneficiary has accelerated the debt in accordance with any of the provisions herein, Beneficiary shall nevertheless be entitled to any prepayment fee which may be provided in this Deed of Trust or in the Note which this Deed of Trust secures. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. 42. Further Assurances; After-Acquired Property. At any time, and from time to time, upon request by Beneficiary, Trustor shall make, execute and deliver or cause to be made, executed and delivered, to Beneficiary and, where appropriate, cause to be recorded and/or re-filed at such time and in such offices and places as shall be deemed desirable by Beneficiary, any and all such other and further deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments of further assurances, certificates and other documents as may, in the opinion of Beneficiary, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve, (i) the obligations of Trustor described in the Note and under this Deed of Trust, and (ii) the lien of this Deed of Trust as a first and prior lien upon and security title in and to all of the Property, whether now owned or hereafter acquired by Trustor. Upon any failure by Trustor so to do, Beneficiary may make, execute, record, file, re-record and/or re-file any and all such deeds to secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments, 21 certificates and documents for and in the name of Trustor, and Trustor hereby irrevocably appoints Beneficiary the agent and attorney-in-fact of Trustor so to do. The lien and security title hereof shall automatically attach, without further act, to all after-acquired interests in real property or fixtures attached to and/or used in the operation of the Property or any part thereof, to the extent permitted by law; provided, however that the foregoing shall not be construed to include any after-acquired equipment or machinery used in the operation of Trustor's business. 43. Hazardous Materials. (a) As used herein, Hazardous Materials shall include: (i) oil, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other materials or pollutants which pose a hazard to the Property or to persons on or about the Property, cause the Property to be in violation of any local, state or federal law or regulation, or are defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", or "toxic or words of similar import under any applicable local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto, including, but not limited to: (A) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.9601, et seq.; (B) the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.1801, et seq.; (C) the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq.; (D) the applicable provisions of Nevada Revised Statutes ("NRS") Chapters 444, 445A, 445B, 459, 590 and 618; and the Uniform Fire Code (1988 Edition), each as hereafter amended from time to time, and the present and future rules, regulations and guidance documents promulgated under any of the foregoing; and (E) regulations adopted and publications promulgated pursuant to the aforesaid laws; (ii) asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty (50) parts per million; and (iii) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or may or could pose a hazard to the health and safety of the occupants of the Property or the owners and/or occupants of property adjacent to or surrounding the Property. (b) Trustor shall, at its sole cost and expense, prevent the imposition of any lien against the Property for the cleanup of any Hazardous Material, and shall comply and cause (i) all tenants under any lease or occupancy agreement affecting any portion of the Property, and (ii) any other person or entity on or occupying the Property, to comply with all federal, state and local laws, regulations, rules, ordinances and policies concerning the environment, health and safety and relating to the use, handling, production, disposal, discharge and storage of Hazardous Materials in, on or about the Property. Trustor hereby grants to Beneficiary, its agents, employees, consultants and contractors an irrevocable license to enter upon the Property at any reasonable time upon 24 hours advanced notice (except in the event of an emergency, in which case no advanced notice shall be required) to perform such tests on the Property as are reasonably necessary to conduct an investigation and/or review. (c) Trustor shall promptly take any and all necessary remedial action in response to the presence, storage, use, disposal, transportation or discharge of any Hazardous Materials on, under or about the Property; provided, 22 however that Trustor shall not, without Beneficiary's prior written consent, take any remedial action in response to the presence of any Hazardous Materials on, under, or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any claims, proceedings, lawsuits or actions, completed or threatened pursuant to any Hazardous Materials laws or in connection with any third party, if such remedial action, settlement, consent or compromise might, in Beneficiary's sole determination, impair the value of Beneficiary's security hereunder; Beneficiary's prior consent shall not, however, be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either (i) poses an immediate threat to the health, safety or welfare of any individual, or (ii) is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Beneficiary's consent prior to undertaking such action. In the event Trustor undertakes any remedial action with respect to any Hazardous Materials on, under or about the Property, Trustor shall immediately notify Beneficiary of any such remedial action, and shall conduct and complete such remedial action (A) in compliance with all applicable federal, state and local laws, regulations, rules, ordinances and policies, and (B) in accordance with the orders and directives of all federal, state and local governmental authorities. (d) Trustor agrees that in the event any Hazardous Material is caused to be removed from the Property by Trustor, Beneficiary, or any other person or entity, the number assigned by the Environmental Protection Agency to such Hazardous Material shall be solely in the name of Trustor and Trustor shall assume any and all liability for such removed Hazardous Material. (e) In the event that Trustor shall fail to timely comply with the provisions of this paragraph 43, Beneficiary may, in addition to any rights granted to Beneficiary hereunder, do or cause to be done whatever is necessary to cause the Property to comply with the applicable law, rule, regulation or order, and the cost thereof shall be additional Indebtedness secured hereby, and shall become immediately due and payable without notice and with interest thereon at the default rate specified in the Note. Trustor shall give Beneficiary and its agents and employees access to the Property for the purpose of effecting such compliance and hereby specifically grants to Beneficiary an irrevocable license, effective (x) immediately if, in the good faith opinion of Beneficiary, irreparable harm to the environment, the Property, or persons or material amounts of property is imminent, or (y) otherwise, upon expiration of the applicable cure period, to do whatever necessary to cause the Property to so comply, including, without limitation, to enter the Property and remove therefrom any Hazardous Materials. (f) The covenants and obligations of Trustor in this paragraph 43 shall inure to the benefit of and may be enforced by Beneficiary or any subsequent permitted holder of the note(s) secured hereby. Such covenants and obligations shall survive the termination of this Deed of Trust whether by a foreclosure sale (either judicial or non-judicial) held hereunder or by a conveyance in lieu of foreclosure in the event Beneficiary or other holder of the note(s) secured hereby acquires title to the Property by such foreclosure sale or conveyance in lieu of foreclosure; provided, however, that the obligations of Trustor set forth herein shall not apply to Hazardous Materials which are initially placed on, in, or under all or any portion of the Property after the date Beneficiary or other holder of the note(s) secured hereby so takes title to the Property. 23 IN WITNESS WHEREOF, this Deed of Trust has been duly executed and acknowledged by Trustor as of the day and year first above written. Signature of Trustor: Altair Nanotechnologies Inc., a Canada corporation By: /s/ Edward Dickinson Name: __________________ Title: _________________ 24 STATE OF NEVADA ) ) ss. County of Washoe ) This instrument was acknowledged before me on _________________, 20__, by _____________________________________________ as __________________________ of _______________________________________________. ________________________________________ Notary Public 25 Exhibit "A" Legal Description Parcel A of Parcel Map No. 2242, according to the map thereof, filed in the office of the County Recorder of Washoe County, State of Nevada, on March 2, 1988, as File No. 1229829. EX-10.13 6 ex10no13.txt INSTALLMENT NOTE DO NOT DESTROY THIS NOTE: When paid, this note ("Note") and the Deed of Trust, as defined below, must be surrendered with the request for reconveyance. INSTALLMENT NOTE (Interest-Included) $3,000,000 Washoe County, Nevada, August 8, 2002 In installments and at the times hereinafter stated, Altair Nanotechnologies Inc., a Canada corporation ("Maker"), promise(s) to pay to BHP Minerals International Inc., a Delaware corporation ("Holder"), or order, at such place as Holder shall designate in writing, the principal sum of Three Million and 00/100ths Dollars ($3,000,000), with interest accruing from the date that is three (3) years after the date of this Note, on the amounts of principal remaining from time to time unpaid, until said principal sum is paid, at the rate of seven percent (7%) per annum. The first payment by Maker equal to twenty percent (20%) of the original principal amount of this Note (i.e., $600,000) plus any accrued interest as of the date of such payment shall be due on the date that is forty-two (42) months from the date of this Note. Thereafter, on each of the first, second, third and forth year anniversaries of the date the first payment is due, Maker shall make additional payments under this Note in an amount equal to twenty percent (20%) of the original principal amount of this Note (i.e., $600,000) plus any accrued interest as of the date of each such payment. On the date that is ninety (90) months from the date of this Note (the "Maturity Date"), any balance of principal and interest then remaining unpaid shall be fully paid. THE PRIVILEGE IS RESERVED TO PAY MORE THAN THE SUM DUE AT ANY TIME PRIOR TO MATURITY, WITHOUT PENALTY. Each payment shall be credited first, on the interest then due, and the remainder on the principal sum, and interest shall thereupon cease upon the amount so credited on the said principal sum. This Note is secured by a deed of trust, security agreement and fixture filing with assignment leases and of rents (the "Deed of Trust") of even date herewith executed by Maker in favor of Holder and covering real property located in the County of Washoe, Nevada (the "Property"). In the event that Maker, or any successor in interest to Maker in the Property, either voluntarily or by operation of law, shall sell, transfer, further encumber, mortgage, or convey, or contract to sell, transfer, further encumber, mortgage, or convey, any or all of the Property which is not personal property, or any portion thereof, or any interest therein, at the option of the Holder, the obligation evidenced by this Note shall forthwith become due and payable although the time of maturity as expressed herein shall not have arrived. If Maker is a corporation, partnership, trust or other entity, the transfer, encumbrance or other disposition of the voting control of such entity or of the ownership of more than fifty percent (50%) of the financial interest in Maker shall be deemed to be a transfer for purposes of this paragraph. If this Note contains any provision conferring on Holder the right to demand any prepayment fee or sum of money for prepayment of any indebtedness secured hereby, Maker agrees to pay the maximum amount of such fee or sum of money which Holder would have been entitled to demand pursuant to such provision. If Holder has accelerated the debt in accordance with any of the provisions herein, Holder shall nevertheless be entitled to any prepayment fee which may be provided in this Note. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. In addition to any other remedy at law or in equity, Holder may accelerate this Note, that is, declare the entire unpaid balance due and payable, upon the occurrence of any one of the following events, each of which shall constitute an event of default under this Note: (1) Maker fails to pay when due any installment of principal or interest due hereunder; (2) Maker fails to perform any other covenant contained in this Note, and does not cure such Page 1 of 2 failure within ten (10) days after notice thereof; (3) any default by Maker (as trustor) under the Deed of Trust; (4) any default by the obligor under any obligation secured by a deed of trust having priority over the Deed of Trust; (5) any default by trustor under such prior deed of trust; (6) Maker becomes the subject of any garnishment, attachment, execution, claim and delivery, writ of possession or any other involuntary lien, or process and said lien or process is not extinguished or fully bonded within thirty (30) calendar days after the occurrence thereof; (7) Maker shall liquidate, merge, dissolve, terminate its existence, suspend business operations, suffer or permit the appointment of any custodian or a receiver for all or substantially all of its property, make a general assignment for the benefit of its creditors, become insolvent, or file any voluntary petition under any existing or future bankruptcy or insolvency law; (8) Maker shall have filed against it any involuntary petition under any existing or future bankruptcy or insolvency law, if such petition is not dismissed within forty-five (45) calendar days after the petition date. Protest is waived. Upon any default hereunder or under the Deed of Trust, the undersigned agree to pay all costs of collection and attorney's fees incurred by the trustee and beneficiary under the Deed of Trust in collecting this Note, or in connection with the curing of any default under the Deed of Trust, or in exercising any judicial or non-judicial remedies available to such trustee or to such beneficiary. If any event of default occurs hereunder, or in the Deed of Trust, and the entire principal amount hereof becomes due and payable, whether by acceleration, at the Maturity Date, or otherwise, the entire unpaid balance of said principal sum shall automatically bear an augmented annual interest rate equal to the lesser of the maximum rate permitted by law or thirteen percent (13%) per annum (the "Default Rate"). Holder agrees that it will not assign its interests under this Note without Maker's prior written consent, which shall not be unreasonably withheld, except to any entity in which BHP Billiton Limited or BHP Billiton PLC holds an ownership interest. All amounts payable under this Note are payable in lawful money of the United States. Checks shall constitute payment only when collected. This Note shall be interpreted and enforced in accordance with the laws of the State of Nevada. MAKER: ALTAIR NANOTECHNOLOGIES INC., a Canada corporation By: /s/ Edward Dickinson Name: ________________________ Title: ________________________ EX-23.1 7 ex23-1.txt CONSENT - DELOITTE & TOUCHE Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment 1 to Registration Statement No. 333-102592 of Altair Nanotechnologies Inc. (formerly known as "Altair International, Inc.") on Form S-2 of our report dated March 25, 2002 (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the uncertainty that the Company will be able to continue as a going concern), appearing in the Annual Report on Form 10-K of Altair International, Inc. for the year ended December 31, 2001 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Salt Lake City, Utah February 6, 2003 -----END PRIVACY-ENHANCED MESSAGE-----