Note Termination and Issuance Agreement

         This Note Termination and Issuance  Agreement (the "Agreement") is made
and  entered  into  this  28th  day  of  December,  2001,  by and  among  Altair
International Inc., an Ontario corporation ("Altair"), Mineral Recovery Systems,
Inc., a Nevada  corporation  ("Mineral  Recovery  Systems"),  Fine Gold Recovery
Systems,  Inc., a Nevada  corporation ("Fine Gold"),  Altair  Nanomaterials Inc.
("Nanomaterials";  collectively  with Altair,  Mineral Recovery Systems and Fine
Gold,  the  "Altair  Parties"),  and Doral 18,  LLC,  a Cayman  Islands  limited
liability  company  ("Lender").  (Each of the  Altair  Parties  and  Lender  are
sometimes  individually  referred to as "Party" and collectively  referred to as
the "Parties").

                                    Recitals:

         WHEREAS, Altair and Lender entered into a Securities Purchase Agreement
dated December 15, 2000 (the "Purchase Agreement"), pursuant to which the Altair
Parties issued to Lender a $7,000,000 Asset-Backed  Exchangeable Term Note dated
December 15, 2000 (as amended, the "Note"); and

         WHEREAS,  Lender and the Altair  Parties  desire to terminate the Note,
issue  a new  note  and  cause  the  Purchase  Agreement  and  other  associated
agreements to be amended,  terminated,  superseded or ratified, all as set forth
herein;

                                   Agreement:

         NOW  THEREFORE,  to that  end  and in  consideration  of the  premises,
covenants and agreements contained herein, and the mutual benefits to be derived
from this Agreement, the Parties agree as follows:

         1.       General Transaction.

                  A.  Termination  of Letter of Credit.  At Closing  (as defined
below),  Altair and Lender shall  execute and deliver to American  National Bank
and Trust Company of Chicago (the "Issuer") and each other, and cause the Issuer
to execute  and deliver to Altair and  Lender,  the letter in the form  attached
hereto as Exhibit A (the "LOC  Termination  Letter"),  pursuant to which (i) the
letter of credit (the "Letter of Credit")  dated December 14, 2000 issued by the
Issuer on behalf of the Altair  Parties in favor of Lender is terminated and all
obligations  of the Altair Parties with respect  thereto are released,  and (ii)
the Altair Parties direct the Issuer to transfer to Lender via wire transfer Two
Million Five Hundred  Thousand Seven Hundred Thirty Two and 92/100 U.S.  Dollars
($2,500,732.92)  of the cash  collateral  securing  the  Letter of Credit and to
transfer any remaining cash collateral to Altair.

                  B.  Termination of Note; Issuance of New Note. At Closing, the
Altair Parties shall execute and deliver to Lender, and Lender shall execute and
deliver to the Altair Parties, the Secured Term Note in the form attached hereto
as Exhibit B (the "New Note").  Upon  execution  and delivery of the New Note by
the parties thereto and Lender's receipt of the $2,500,000 transfer described in
Section  1(A)(ii),  (i) the Note,  including all principal,  interest,  exchange
rights, penalties, fees and any other amounts owed by any Altair Party to Lender
with  respect to the Note,  shall be deemed to have been paid in full,  and (ii)
the Note shall  immediately and  automatically  terminate and the Altair Parties
shall have no further obligations  thereunder.  At Closing, Lender shall deliver
to the Altair  Parties the  original  Note  marked  "Cancelled,"  provided  that
Lender's  failure to deliver such  cancelled Note shall not affect or negate the
termination of such Note as set forth in the preceding sentence.

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                  C.  Additional   Investment  Warrants.  As  consideration  for
Lender's willingness to enter into this Agreement, terminate the Note and accept
the New Note,  Altair  shall (i)  execute  and  deliver to Lender a Warrant  for
200,000 common shares of Altair ("Common Shares") in the form attached hereto as
Exhibit  C  (the  "Fixed  Warrant");  (ii)  execute  and  deliver  to  Lender  a
Conditional  Warrant for up to 500,000 Common Shares in the form attached hereto
as Exhibit D (the  "Conditional  Warrant"),  and (iii)  execute  and  deliver to
Lender the Warrant Amendment  Agreement in the form attached hereto as Exhibit E
(the "Warrant Amendment").

                  D.  Registration Rights Agreement.  At Closing, each of Altair
and  Lender  shall  execute  and  deliver  to the  other a  Registration  Rights
Agreement in the form attached hereto as Exhibit F (the "New Registration Rights
Agreement"). Upon the mutual execution of the New Registration Rights Agreement,
the  Registration  Rights  Agreement  dated  December  15,  2000 (the  "Existing
Registration  Rights Agreement"),  between Altair and Lender, as amended,  shall
immediately  and  automatically  terminate and the Altair  Parties shall have no
further obligation thereunder.

                  E.  Amendment to Stock Pledge Agreement.  At Closing,  each of
Mineral  Recovery  Systems and Lender shall executed and deliver to the other an
Amendment to Stock Pledge Agreement in the form attached hereto as Exhibit G.

         2.       Closing. The Parties agree to close the transaction  described
in Section 1 of this Agreement (the "Closing") on the date first set forth above
or, if all Parties  agree to a later  Closing or a later date for Closing is set
pursuant to Section 6(C),  such date as is agreed to by all of the Parties or as
is set pursuant to Section 6(C) (the  "Closing  Date").  The Closing  shall take
place at the offices of the manager of Lender at 600 Central Avenue,  Suite 214,
Highland Park,  Illinois 60035 at 10:00 a.m.,  Central Time, on the Closing Date
and shall be effective as of 12:01 a.m. on the Closing Date.

         3.       Representations and Warranties of the Altair Parties. In order
to induce Lender to enter into this Agreement, Altair represents and warrants to
Lender as follows:

                  A.  Organization and Qualification. Each of the Altair Parties
are corporations  duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are incorporated,  and have the requisite
corporate power and  authorization to own their properties and to carry on their
business as now being  conducted.  Each of the Altair Parties are duly qualified
as a  foreign  corporation  to do  business  and is in good  standing  in  every
jurisdiction  in which its  ownership  of property or the nature of the business
conducted by it makes such  qualification  necessary,  except to the extent that
the failure to be so qualified or be in good standing  would not have a Material
Adverse Effect.  As used in this Agreement,  "Material Adverse Effect" means any
material adverse effect on the business, properties, assets, operations, results
or operations,  financial  condition or prospects of any of the Altair  Parties,
taken  as a  whole,  or on  the  transactions  contemplated  hereby  or  by  the
agreements and instruments to be entered into in connection herewith,  or on the
authority  or  ability  of  the  Altair  Parties  to  perform  their  respective
obligations under the Transaction Documents (as defined below).

                  B.  Authorization; Enforcement;  Validity. (i) To the extent a
party to such agreements, each of the Altair Parties has the requisite corporate
power  and  authority  to  enter  into  and  perform  this  Agreement,  the  LOC
Termination  Letter, the New Note, the Fixed Warrant,  the Conditional  Warrant,
the Warrant Amendment and the New Registration  Rights Agreement and each of the
other  agreements  entered  into by the Parties  hereto in  connection  with the
transactions  contemplated  by this Agreement  (collectively,  the  "Transaction
Documents"), and Altair has the requisite corporate power and authority to issue

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<PAGE>

the Common Shares of Altair  issuable under the New Note or upon exercise of the
Fixed Warrant,  the Conditional  Warrant or the Warrant Amendment (the "Shares")
in accordance with the terms hereof and thereof; (ii) the execution and delivery
of the Transaction Documents by each of the Altair Parties to the extent a party
to such agreement and the consummation of the transactions  contemplated  hereby
and  thereby  have been duly  authorized  by Board of  Directors  of each of the
Altair Parties and no further consent or authorization is required by the Altair
Parties or their  respective  Boards of  Directors  or  stockholders;  (iii) the
Transaction  Documents  have been duly  executed  and  delivered  by each of the
Altair  Parties;  and (iv) the  Transaction  Documents  constitute the valid and
binding  obligations  of the Altair  Parties to extent  they are a party to such
agreement  enforceable  against them in accordance  with their terms,  except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization,  moratorium, liquidation or similar laws
relating to, or affecting  generally,  the enforcement of creditors'  rights and
remedies.  Upon issuance,  the New Note,  the Fixed Warrant and the  Conditional
Warrant will be, and upon exchange or exercise in accordance  with the Note, the
Warrant Amendment,  the New Note, the Fixed Warrant or the Conditional  Warrant,
as the  case  may be,  the  Shares  will  be,  validly  issued,  fully  paid and
non-assessable  and free from all taxes,  liens and charges  with respect to the
issue thereof.

                  C.  Capitalization.  As of the  date  hereof,  the  authorized
capital stock of Altair  consists of an unlimited  number of Common  Shares,  of
which as of the date  hereof,  22,094,142  shares are  issued  and  outstanding,
3,666,700 shares are reserved for issuance pursuant to Altair's stock option and
purchase  plans and 2,787,007  shares are reserved for issuance upon exercise of
outstanding  warrants to purchase Common Shares.  All of such outstanding shares
have  been,  or upon  issuance  will be,  validly  issued and are fully paid and
nonassessable.  In addition to the foregoing,  in order to satisfy the condition
precedent set forth in Section 6(A)(4) of this Agreement, Altair may enter into,
or have entered into,  subscription agreements for the sale of its capital stock
and/or warrants to purchase its capital stock.

                  D.  Conflicts. The execution,  delivery and performance of the
Transaction  Documents by Altair and the  consummation  by the Altair Parties of
the transactions contemplated hereby and thereby (including, without limitation,
the  reservation for issuance and issuance of the Shares) will not (i) result in
a violation of the  Certificate  of  Incorporation  or the By-laws of any of the
Altair Parties or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default)  under,  or give to
others any rights of termination,  amendment,  acceleration or cancellation  of,
any  material  agreement,  indenture  or  instrument  to which any of the Altair
Parties are a Party,  or result in a  violation  of any law,  rule,  regulation,
order,  judgment  or decree  (including  federal and state  securities  laws and
regulations) applicable to any of the Altair Parties or by which any property or
asset of any of the Altair Parties are bound or affected.

                  E.  Absence  of   Litigation.   There  is  no  action,   suit,
proceeding,  inquiry  or  investigation  before or by any court,  public  board,
government  agency,  self-regulatory  organization  or body  pending  or, to the
knowledge of any of the Altair Parties,  threatened  against or affecting any of
the Altair Parties, the Common Shares or any of the officers or directors of any
of the Altair Parties in their capacities as such.


         4.       Representations  and  Warranties  of  Lender.   Lender  hereby
represents and warrants to the Altair Parties that:

                  A. Organization and Qualification. Lender is limited liability
company duly  organized and validly  existing in good standing under the laws of
the jurisdiction in which it is organized,  and has the requisite  company power
and  authorization  to own its  properties  and to carry on its  business as now
being  conducted.  Lender is duly qualified as a foreign  company to do business
and is in good standing in every jurisdiction in which its ownership of property

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<PAGE>

or  the  nature  of  the  business  conducted  by it  makes  such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing would not have a Material Adverse Effect.

                  B. Authorization;  Enforcement;  Validity.  (i) Lender has the
requisite  company  power and  authority  to enter into and perform  each of the
Transaction Documents to which it is a Party in accordance with the terms hereof
and thereof;  (ii) the  execution and delivery of the  Transaction  Documents to
which Lender is a Party by Lender and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized and no further consent
or authorization  is required by Lender,  any manager of Lender or any member of
Lender;  (iii) the  Transaction  Documents  to which Lender is a Party have been
duly executed and  delivered by Lender;  and (iv) the  Transaction  Documents to
which Lender is a Party  constitute  the valid and binding  obligation of Lender
enforceable  against  Lender in  accordance  with  their  terms,  except as such
enforceability  may be  limited by general  principles  of equity or  applicable
bankruptcy, insolvency, reorganization,  moratorium, liquidation or similar laws
relating to, or affecting  generally,  the enforcement of creditors'  rights and
remedies.

                  C. Absence  of   Litigation.    There  is  no  action,   suit,
proceeding,  inquiry  or  investigation  before or by any court,  public  board,
government  agency,  self-regulatory  organization  or body  pending  or, to the
knowledge of Lender,  threatened  against or affecting Lender or any of Lender's
managers or members in their capacities as such.

                  D. Investment Representations.

                     (i)   Investment Purpose. Lender is acquiring the New Note,
the Fixed Warrant,  the  Conditional  Warrant,  the Warrant  Amendment,  and the
Shares  (collectively,  the "Securities") as principal,  for its own account for
investment only and not with a view towards,  or for resale in connection  with,
the public sale or distribution thereof,  except pursuant to sales registered or
exempted under the 1933 Act.

                     (ii)  Investor Status.Lender is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D  promulgated  under the 1933
Act.

                     (iii) Reliance on Exemptions.  Lender  understands that the
Securities  are being offered and sold to it (and any  securities  terminated or
amended  pursuant to the Transaction  Documents are being terminated or amended)
in reliance on specific exemptions from the registration  requirements of United
States federal and state securities laws and that Altair is relying in part upon
the truth and accuracy of, and Lender's  compliance  with, the  representations,
warranties,  agreements,  acknowledgments and understandings of Lender set forth
herein  in  order to  determine  the  availability  of such  exemptions  and the
eligibility of Lender to acquire such Securities.

                     (iv)  Information.  Lender and its  advisors,  if any, have
been  furnished  with all  materials  relating  to the  business,  finances  and
operations of the Altair Parties and materials relating to the offer and sale of
the  Securities  (and the  termination  or  amendment  of any  securities  being
terminated or amended by the Transaction Documents) which have been requested by
Lender.  Lender and its advisors,  if any, have been afforded the opportunity to
ask questions of the Altair  Parties.  Neither such  inquiries nor any other due
diligence  investigations  conducted by Lender or its  advisors,  if any, or its
representatives shall modify, amend or affect Lender's right to rely on Altair's
representations and warranties as set forth herein.  Lender understands that its
investment in the Securities  involves a high degree of risk.  Lender has sought
such accounting,  legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.

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<PAGE>

                     (v)   No Governmental Review.  Lender  understands  that no
United States  federal or state agency or any other  government or  governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

                     (vi)  Transfer  or Resale.  Lender  understands  that:  (i)
except as provided in the  Existing  Registration  Rights  Agreement  or the New
Registration  Rights  Agreement,  the Securities have not been and are not being
registered  under  the 1933 Act or any  state  securities  laws,  and may not be
offered  for  sale,  sold,  assigned  or  transferred  unless  (A)  subsequently
registered  thereunder,  (B) Lender shall have delivered to Altair an opinion of
counsel,  in a generally  acceptable form, to the effect that such Securities to
be sold, assigned or transferred may be sold,  assigned or transferred  pursuant
to an exemption from such  registration,  or (C) Lender  provides Altair with an
assurance  (which  assurance  shall be  acceptable  to Altair in its  reasonable
discretion)  that such  Securities  could then be sold,  assigned or transferred
pursuant  to Rule  144  promulgated  under  the 1933  Act (or a  successor  rule
thereto) ("Rule 144");  (ii) any sale of the Securities made in reliance on Rule
144 may be made only in  accordance  with the terms of Rule 144 and further,  if
Rule 144 is not applicable,  any resale of the Securities under circumstances in
which the seller (or the person  through whom the sale is made) may be deemed to
be an  underwriter  (as  that  term is  defined  in the 1933  Act)  may  require
compliance  with  some  other  exemption  under  the 1933 Act or the  rules  and
regulations of the Securities and Exchange  Commission ("SEC")  thereunder;  and
(iii)  neither  Altair nor any other person is under any  obligation to register
such  securities  under the 1933 Act or any state  securities  laws or to comply
with the terms and conditions of any exemption thereunder.

                     (vii) Legends.   Lender  understands  that,  in addition to
other legends as may be required by applicable  securities  laws of the Province
of Ontario, the certificates or other instruments representing the New Note, the
Fixed Warrant,  the Conditional  Warrant and, until such time as the sale of the
Shares have been registered under the 1933 Act and Altair has received a written
commitment  from Lender that all Shares will be re-sold in  accordance  with the
prospectus  delivery  requirements  of the  1933  Act,  the  stock  certificates
representing  the Shares shall bear a restrictive  legend in  substantially  the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):


         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR  APPLICABLE  STATE
         SECURITIES  LAWS. THE SECURITIES  HAVE BEEN ACQUIRED FOR INVESTMENT AND
         MAY NOT BE OFFERED  FOR SALE,  SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE
         ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE STATE SECURITIES
         LAWS, OR AN OPINION OF COUNSEL,  IN A GENERALLY  ACCEPTABLE  FORM, THAT
         REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID  ACT OR  APPLICABLE  STATE
         SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

The legend set forth above shall be removed and Altair shall issue a certificate
without  such legend to the holder of the  Securities  upon which it is stamped,
if, unless otherwise  required by state securities laws, (i) such Securities are
registered  for sale  under  the 1933 Act and  Altair  has  received  a  written

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<PAGE>

commitment  that all such  Securities  will be  re-sold in  accordance  with the
prospectus delivery requirements of the 1933 Act, (ii) in connection with a sale
transaction,  such  holder  provides  Altair  with an opinion of  counsel,  in a
generally  acceptable  form,  to the effect that a public  sale,  assignment  or
transfer of the Securities may be made without  registration under the 1933 Act,
or (iii)  such  holder  provides  Altair  with  reasonable  assurances  that the
Securities can be sold pursuant to Rule 144.

                     (vii) Residency. Lender is a resident of and subject to the
securities  laws of Cayman  Islands.  Lender is not, and at no time prior to the
date of this  Agreement has Lender ever been, a resident of the United States of
America or Canada.

         5.       Additional Covenants.

                  A. Reporting  Status.  Until the earlier of (i) the date which
is one year after the date as of which Lender may sell all of the Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto),  or (ii) the date on which (A)  Lender  shall have sold all the Shares
and (B) no  amounts  under  the New Note are due and  owing  (the  "Registration
Period"),  Altair  shall  file all  reports  required  to be filed  with the SEC
pursuant to the  Securities  Exchange Act of 1934,  as amended (the "1934 Act"),
and Altair shall not terminate its status as an issuer  required to file reports
under the 1934 Act even if the 1934 Act would otherwise permit such termination.

                  B. Additional  Financing.   During  the term of the New  Note,
Altair  shall not,  without  the prior  written  consent  of  Lender,  issue any
variably-priced debt or variably-priced equity securities of any type.

                  C. Limitation on Number of Exchange and Warrant Shares. Altair
shall not be obligated to issue more than 19.9% of its total outstanding  Common
Shares  upon  exercise  of the  Note,  the New  Note,  the  Fixed  Warrant,  the
Conditional  Warrant and all other Warrants issued to Lender to date under or in
connection  with this  Agreement or the Purchase  Agreement if such  issuance is
prohibited  by the listing  requirements  of the  principal  market on which the
Common Shares are traded (the  "Principal  Market").  The  foregoing  limitation
shall  not  apply  in  the  event  that  Altair  obtains  the  approval  of  its
stockholders  as  required by the  Principal  Market (or any  successor  rule or
regulation)  for  issuances of Common  Shares in excess of such  amount.  In the
event Altair is  prohibited  from issuing  Shares under the New Note,  the Fixed
Warrant, or the Conditional Warrant as a result of the operation of this Section
5(C),  Altair shall be subject to the  restrictions  described in the applicable
instrument.

                  D. Minimum Cash  Requirement.  The Altair  Parties  shall have
cash or "cash equivalents" in an amount equal to or greater than $250,000 (i) on
each March 31, June 30,  September 30 and December 31 during the term of the New
Note, and (ii) at all times during the term of the Amended Note that the closing
price of Altair's  Common  Shares has been below  $1.00 for ten or more  trading
days. In order to verify Altair's  compliance  with subsection (ii) above,  upon
the request of Lender at any time the closing  price of Altair's  Common  Shares
has been  below  $1.00 per  share for ten or more  trading  days,  Altair  shall
provide  Lender  with a  current  balance  sheet  and/or  copies of cash or cash
equivalent  account statements dated as of any date specified by Lender on which
closing  price of Altair's  Common Shares has been below $1.00 per share for ten
or more trading days.

                  E. Post-Effective  Amendments.   Altair  hereby  covenants and
agrees that,  during the period commencing on the date of Closing until the date
that is 60 days after the Prospectus  Supplement (as defined in the Registration
Rights  Agreement)  is filed,  the Company shall not enter into any agreement or
take any other  action that would  require the Company to file a  post-effective
amendment to the Existing Registration Statement (as defined in the Registration
Rights Agreement).

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<PAGE>

         6.       Conditions Precedent to Closing.

                  A. Conditions Precedent to Obligations of Lender. Lender shall
not be required to close the transactions  contemplated by this Agreement unless
and until:

                  1. Representations.  The representations and warranties of the
Altair  Parties  contained  in this  Agreement  are  then  true in all  material
respects with the same effect as though the  representations  and warranties had
been made at such time  (except for any  representations  and  warranties  which
relate solely to another time).

                  2. No Defaults.  There are no existing conditions,  events, or
acts which  constitute a default of any Altair  Parties  hereunder,  or with the
passing  of time or giving of notice  would  constitute  a default of any Altair
Parties hereunder.

                  3. Tender of  Closing.   The Altair  Parties  are  prepared to
deliver all of the documents, agreements and other items that the Altair Parties
are required to deliver at Closing pursuant to this Agreement.

                  4. Raising  of  Additional  Funds.   Altair  has  received  an
additional $750,000 for working capital on or prior to the Closing Date pursuant
to commitments which were received on or prior to December 13, 2001.


                  B. Condition's Precedent to Obligations of Lender. None of the
Altair Parties shall be required to close the transactions  contemplated by this
Agreement unless and until:

                  1. Representations.   The  representations  and  warranties of
Lender  contained in this Agreement are then true in all material  respects with
the same effect as though the  representations  and  warranties had been made at
such time (except for any  representations and warranties which relate solely to
another time).

                  2. No Defaults.  There are no existing conditions,  events, or
acts which constitute a default of Lender hereunder, or with the passing of time
or giving of notice would constitute a default of Lender hereunder.

                  3. Tender of Closing. Lender is prepared to deliver all of the
documents,  agreements and other items that the Lender is required to deliver at
Closing pursuant to this Agreement.

                  C. Obligation to Close.  Lender and each of the Altair Parties
shall be required to close the  transactions  contemplated  by this Agreement no
later  than two  business  days  following  (1) the  satisfaction  of all of the
conditions  precedent to such Party's  obligation to close, and (2) receipt from
any other Party hereto of a written demand  requesting  that such Party close as
specified date and time no sooner than two business days  following  delivery of
such demand.  In the event that any Party shall fail to close as provided in the
preceding  sentence,  in addition to any and all  remedies  available  at law or
equity, any nonbreaching Party shall have the option to terminate this Agreement
with  respect  to such  breaching  Party at the close of  business  on such date
without liability to any other Party.

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<PAGE>

         7.       Miscellaneous Provisions.

                  A.   Superseding  of  Purchase   Agreement;   Confirmation  of
Collateral Documents; References to Note.

                  (i)  Purchase  Agreement.  Effective  as of the  Closing,  the
Purchase  Agreement  (other than Article VIII  thereof)  shall  immediately  and
automatically  terminate and be of no further force and effect.  Notwithstanding
the foregoing,  Article VIII of the Purchase  Agreement  shall survive until the
payment in full of the New Note.

                  (ii) Collateral Documents; References to Note. Notwithstanding
the  termination  of the Note,  the New Note shall be  secured  by the  Security
Agreement  dated  December  15,  2000 as the same was amended on August 31, 2000
between Altair Nanomaterials, Inc. and Doral 18, LLC (including the Intellectual
Property  Security  Agreement  attached  thereto  as  Exhibit  A as the same was
amended  on  August  31,  2000 (the  "Security  Agreement"),  the  Stock  Pledge
Agreement dated December 15, 2000 between Doral and Altair, and the Stock Pledge
Agreement dated December 15, 2000 between  Mineral  Recovery  Systems,  Inc. and
Doral 18, LLC as the same was amended as of the date  hereof (the "Stock  Pledge
Agreements")  to the  same  extent  and in the same  manner  as the Note and all
references to the Note in the Security Agreement and the Stock Pledge Agreements
shall be deemed to refer to the New Note.

                  B.   Governing Law;  Jurisdiction;  Jury Trial.  All questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement  shall be  governed  by the  internal  laws of the State of  Illinois,
without  giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other  jurisdictions)  that would cause
the  application  of the  laws of any  jurisdictions  other  than  the  State of
Illinois.   Each  Party  hereby   irrevocably   submits  to  the   non-exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or in connection  herewith or with any
transaction  contemplated  hereby or discussed  herein,  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit, action or proceeding is brought in an inconvenient  forum or that the
venue of such  suit,  action  or  proceeding  is  improper.  EACH  PARTY  HEREBY
IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE,  AND AGREES  NOT TO  REQUEST,  A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                  C.   Counterparts. This  Agreement may be executed in multiple
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
Party and  delivered  to the  other  Parties.  A  facsimile  signature  shall be
considered  due execution  and shall be binding upon the signatory  thereto with
the same force and effect as if the signature were an original signature.

                  D.   Headings.   The  headings  of  this   Agreement  are  for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation of, this Agreement.

                  E.   Severability. If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

                  F.   Entire Agreement;  Amendments.  This Agreement supersedes
all other  prior  oral or  written  agreements  between  Lender,  Altair,  their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the Parties  with  respect to the matters

                                       8
<PAGE>

covered  herein and therein.  and,  except as  specifically  set forth herein or
therein,  neither  Altair nor the  Lender  makes any  representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be amended other than by an instrument in writing signed by Altair
and  the  Lender,  and no  provision  hereof  may be  waived  other  than  by an
instrument in writing signed by the Party against whom enforcement is sought.

                  G.   Notices.   Any  notices,   consents,   waivers  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
actual receipt, when delivered  personally;  (ii) upon actual receipt, when sent
by  facsimile   (provided   confirmation  of  transmission  is  mechanically  or
electronically  generated and kept on file by the sending  Party);  or (iii) one
business  day after  deposit  with a nationally  recognized  overnight  delivery
service,  in each case properly  addressed to the Party to receive the same. The
addresses and facsimile numbers for such communications shall be:

If to any of the Altair Parties:

ALTAIR INTERNATIONAL, INC.

Dr. William P. Long
1725 Sheridan Ave., Suite 140
Cody, Wyoming 82414
Facsimile: (307) 587-8357

Edward Dickinson
230 South Rock Blvd., Suite 21
Reno, Nevada 89502
Facsimile: (775) 856-1619

With copies to:

Stoel Rives, LLP
201 South Main Street , Suite 1100
Salt Lake City, Utah 84111
Attn: Brian G. Lloyd
Facsimile: (801) 578-6999

Equity Transfer Services
120 Adelaide Street West, Suite 420
Toronto, Canada M5H 4C3
Attn: Peter Lindeman

If to the Lender:

Doral 18, LLC
600 Central Avenue
Suite 214
Highland Park, Illinois 60035
Telephone:         (847)681-8600
Facsimile:         (847)681-1541
Attention:         David A. White

                                       9
<PAGE>

With a copy to:

David B. Solomon, Esq. and Susan M. Hermann, Esq.
Pedersen & Houpt
161 N. Clark St.  Suite 3100
Chicago, IL 60601
(p) (312) 261-2214 and (312) 261-2120
(f)  (312) 261-1214 and (312) 261-1120

or at such other address and/or facsimile number and/or to the attention of such
other person as the  recipient  Party has  specified by written  notice given to
each other Party five days prior to the effectiveness of such change.

                  H. Successors and Assigns.   This  Agreement  shall be binding
upon and inure to the benefit of the Parties and their respective successors and
assigns.  No Party may  assign  this  Agreement  or any  rights  or  obligations
hereunder without the prior written consent of the other Parties hereto.

                  I. No Third Party  Beneficiaries.  This  Agreement is intended
for the benefit of the Parties hereto and their respective  permitted successors
and  assigns,  and is not for the  benefit of, nor may any  provision  hereof be
enforced by, any other person.

                  J. Publicity.  Each of the Parties hereto shall have the right
to approve  before  issuance any press  releases or any other public  statements
with respect to the transactions  contemplated hereby;  provided,  however, that
the Parties shall each be entitled,  without the prior approval of the other, to
make  any  press  release  or  other  public  disclosure  with  respect  to such
transactions  as is required by applicable  law and  regulations  (although such
Party shall consult the other in connection with any such press release or other
public  disclosure  prior  to its  release  and  shall be  provided  with a copy
thereof).

                  K. Further  Assurances.  Each Party shall do and  perform,  or
cause to be done and  performed,  all such  further  acts and things,  and shall
execute and deliver all such other  agreements,  certificates,  instruments  and
documents,  as the other Party may reasonably  request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  L. No Strict Construction. The language used in this Agreement
will be deemed to be the language  chosen by the Parties to express their mutual
intent, and no rules of strict construction will be applied against any Party.


               [intentionally left blank; signature page follows]

                                       10
<PAGE>

         IN WITNESS WHEREOF, Lender and the Altair Parties have caused this Note
Termination  and Issuance  Agreement to be duly executed and delivered as of the
date first written above.


"Lender"

         Doral 18, LLC,
         a Cayman Islands limited liability company


         By: /s/ David White
         -------------------
                 David White, authorized signatory


"Altair Parties"


         Altair International Inc.,
         an  Ontario corporation

         By:/s/ William P. Long
         ----------------------
         Its:_____________________________


         Mineral Recovery Systems, Inc.
         a  Nevada corporation

         By:/s/ William P. Long
         ----------------------
         Its:_____________________________


         Fine Gold Recovery Systems, Inc.
         a  Nevada corporation

         By:/s/ William P. Long
         ----------------------
         Its:_____________________________


         Altair Nanomaterials Inc.
         a  Nevada corporation

         By:/s/ C. Patrick Costin
         ----------------------
         Its:_____________________________


                                       11
<PAGE>



                                    EXHIBIT A


                             LOC TERMINATION LETTER


                                 [SEE ATTACHED]



                                       12
<PAGE>



                                    EXHIBIT B


                                    NEW NOTE


                                 [SEE ATTACHED]



                                       13
<PAGE>



                                    EXHIBIT C


                                  FIXED WARRANT

                                 [SEE ATTACHED]



                                       14
<PAGE>



                                    EXHIBIT D


                               CONDITIONAL WARRANT

                                 [SEE ATTACHED]



                                       15
<PAGE>



                                    EXHIBIT E


                                WARRANT AMENDMENT


                                 [SEE ATTACHED]



                                       16
<PAGE>



                                    EXHIBIT F


                        NEW REGISTRATION RIGHTS AGREEMENT


                                 [SEE ATTACHED]



                                       17
<PAGE>



                                    EXHIBIT G


                       AMENDMENT TO STOCK PLEDGE AGREEMENT


                                 [SEE ATTACHED]



                                       18