NOTE

– COMMITMENTS AND CONTINGENCIES

Capital Commitment - Construction

As discussed further in Note

in conjunction with the Land Use Rights obtained by Northern Altair, the Company agreed to make fixed asset investments on the land of approximately

$314.85

million, subject to loan guarantees and other incentives from Wu’an, China, over an unspecified period of time up to the

-year life of the Land Use Rights, with initial construction occurring in

2013.

The remaining commitment as of

December

31,

2016

$202.48

million.

Capital Commitment – Equipment

The Company has contractual obligations to vendors of machine and equipment related to future capital expenditures as of

December

31,

2016.

The Company's commitment for minimum payment under these contractual obligations as of

December

31,

2016

$25.47

million. The Company's commitment for minimum payment under these contractual obligations as of

December

31,

2016

is as follow:

Minimum future commitments under capital agreements payable (in thousands of dollars):

	Capital commitments

Year ending December 31, 2017	$	22,926
Year ending December 31, 2018		2,547
Total	$	25,473

Lease

The Company leased a

70,000

square feet facility in Flagship Business Accelerator Building located at

3019

Enterprise Drive, Anderson, Indiana under a triple net lease with Flagship Enterprise Center, Inc. The facility was used for the production of prototype batteries and battery systems. The lease amended on

January

27,

2015

will expire on

June

30,

2017.

Any lease renewal options will be negotiated no less than

six

(6)

months prior to the expiration of this lease. Annual rent under this lease is

$0.26

million plus IT fees, utilities and maintenance. Effective

May

2016,

the Company agreed to pay

$0.14

million as a payment to terminate the lease effective by the end of

May

2016.

Use of the facility has been agreed upon until a new

tenant

is found. The landlord will give the Company

thirty

days’ notice at their discretion to vacate the premises. The Company expects to find new office space for the current employees in the general Anderson, Indiana area at a reduced rate and space requirement by the end of the

second

quarter of

2017.

Environmental Settlement

The Company has received from the State of Nevada a request to contribute to the clean-up of an environmental issue on the Company’s Reno property at

204

Edison Way, Reno, NV. Based on a phase II environmental study for soil and water testing, the Company identified a few non-biodegradable chemicals contaminating the ground in specific areas that the Company’s business did not cause or contribute to during its ownership of the property. The Company plans to settle with the State of Nevada in the

first

half of

2017,

as soon as the settlement amount has been agreed upon. The Company has already spent approximately

$150,000

on monitoring wells, the removal of a building and engineering and legal fees and has accrued an estimated

$170,000

for the settlement, as of

December

31,

2016.

Litigation

The Company is in certain legal proceedings that arise from time to time in the ordinary course of our business. Legal expenses associated with the contingency are expensed as incurred. Material legal proceedings that are currently pending are as follows:

In re Altair Nanotechnologies Shareholder Derivative Litigation,

1:14

-cv-

09418,

1:14

-cv-

09958

(S.D.N.Y.)

: In late

2014,

two

shareholder derivative actions were filed against the Company and certain of its current and former officers and directors of the Company in the United States District Court for the Southern District of New York. Altair was named as a nominal defendant. The

two

cases, which were consolidated on

May

15,

2015,

allege violations of Section

14(a)

of the Securities Exchange Act of

1934,

as well as breaches of fiduciary duty and unjust enrichment based on substantially the same facts underlying the putative securities litigation. In

July

2016,

certain parties executed a stipulation of settlement, without defendants admitting liability, whereby Altair agreed to adopt certain governance proposals and pay an amount not exceeding

$150,000

in plaintiffs’ attorneys’ fees and expenses. This initial stipulation and settlement was modified following the deregistration of the Altair as a reporting issuer in

November

2016

because certain of the agreed to governance proposals would not apply to a corporation that was not a reporting issuer. The court entered an order preliminarily approving this modified stipulation and settlement on

March

2017.

A final settlement hearing has been scheduled for

August

10,

2017.

If the settlement receives final approval, this action will be dismissed in its entirety. Notice of the proposed settlement is available on Altair’s website. A summary notice has also been published online.

In the Matter of Altair Nanotechnologies, Inc.

(LA-

4452):

In or around

January

2015,

SEC opened an investigation into the resignation of Crowe Horwath LLP (“Crowe”) as Altair’s independent auditor in

August

2014.

As part of its investigation, the SEC issued several subpoenas to the Company and its current and former officers relating to Crowe’s resignation and a Form

-K filed by the Company on

March

13,

2015.

May

2016,

the SEC sent Altair a Wells Notice identifying possible violations of Sections

13(a)

and

13(b)(2)(B)

of the Securities Exchange Act of

1934

and Rules

13a

and

13a

thereunder. On

August

29,

2016,

the Company made an offer of settlement to the SEC whereby it consented to the entry of an order, without admitting or denying the findings therein except as to the SEC’s jurisdiction, that the Company: (i) cease and desist from committing or causing violations of Sections

13(a)

and

13(b)(2)B)

of the Exchange Act and Rules

13a

and

13a

thereunder; (ii) make certain filings with the SEC by

November

15,

2016

or have the registration of its securities under the Exchange Act revoked; and (iii) pay a civil money penalty in the amount of

$250,000

within

days of the entry of the order. Such offer of settlement was accepted by the SEC and resulted in a Release No.

78997

dated

September

29,

2016

with respect to the same. As of the balance sheet date, the Company did not have reasonable estimation of settlement amount. In

August

2016,

the Company paid

$250,000

and deposited the funds into escrow which was paid from escrow to the SEC in

October

2016.

However, on

November

17,

2016,

the SEC found that Altair had not fully complied with the settlement agreement and issued an Order Making Findings and Revoking Registration of Securities Pursuant to Section

12(j)

of the Securities Exchange Act of

1934.

In the matter of James Zhan v. Altairnano, Inc., Altair Nanotechnologies, Inc., Guohua Sun, and Andy Wei, Case No.:

CV16

01674

(Second Judicial District Court for the State of Nevada, Washoe County).

Holland & Hart is handling a case brought by the company’s former CEO, James Zhan. Mr. Zhan’s employment with Altairnano, Inc. ended on or about

September

23,

2015,

and he has brought a lawsuit against Altair Nanotechnologies, Altairnano, Inc., Andy Wei, and Guohua Sun

(two

Board members), asserting the following claims for relief:

(1)

breach of contract,

(2)

breach of the implied covenant of good faith and fair dealing, and

(3)

fraud. Because Mr. Zhan’s employment agreement contains an alternative dispute resolution clause (mediation and arbitration in Indiana, under Indiana law), we moved to compel alternative dispute resolution. The Court held the ruling in abeyance to allow the parties to participate in mediation, which took place on

March

13,

2017

in Reno, Nevada. The mediation is unsuccessful, and as a result, on

April

12,

2017,

the parties appeared for a

one

-day evidentiary hearing on our motion to compel arbitration. We prevailed on the motion, and the case has been dismissed. We submitted a memorandum of costs on Friday,

April

28,

2017,

and we are working on a motion for attorney’s fees. At this point, it is unknown whether opposing counsel will submit a request to arbitrate. Because of the procedural status of the case, to date, we have not received an actual calculation of Mr. Zhan’s alleged damages.

As of the balance sheet date, the Company has accrued

$100,000

for the insurance deductible.