altair_8k-ex1003.htm


    
      

    

     

    Exhibit
      10.3

     

    
 

    
      


      


      [JP
        Morgan Dealer Letterhead]

      


      April
        21,
        2006

      


      


      STRICTLY
        CONFIDENTIAL

      


      Altair
        Nanotechnologies Inc.

      204
        Edison Way

      Reno,
        Nevada 89502-2306

      


      
        	
                Attention:

              	
                Alan
                  J. Gotcher, Chief Executive Officer,

                
                  Ed
                    Dickinson, Chief Financial Officer, and

                  C.
                    Robert Pedraza, Vice President, Strategy & Business
                    Development

                

              


      

       

      Ladies
        and Gentlemen:

      


      Pursuant
        to our recent discussions, we are pleased to confirm the arrangements under
        which J.P. Morgan Securities Inc. (“JPMorgan") is
        exclusively engaged by Altair Nanotechnologies Inc., a Canadian corporation
        (collectively with its subsidiaries and affiliates, the ”Company”) to act as its
        financial advisor in connection with the Company's strategic
        planning.

      


      Section
        1.  Financial
        Advisory Services.  During the term of this agreement we
        will:

      


      (a)
        familiarize ourselves with the
        financial condition and business of the Company and review the Company's
        structural defenses, including its charter and by-law provisions;

      


      (b)
        provide advice concerning amendments to the Company’s shareholder rights plan
        (the “Rights Plan”), including the appropriate exercise price for the Rights
        Plan;

      


      (c)
        periodically update the Company’s
        senior management and Board of Directors regarding prevailing market conditions
        for mergers and acquisitions, with a particular focus on hostile activity
        and
        shareholder responses to various defensive strategies;

      


      (d)
        prepare a financial analysis of the Company and consider the appropriateness
        of
        various strategic and financial alternatives;

      


      (e)
        assist the Company in organizing a defense team of executive, financial,
        legal
        and other key personnel who would respond to any unsolicited offer for the
        Company;

      


      (f)
        analyze the composition of the Company’s shareholder base and monitor any
        significant changes in such base;  and

      


      (g)
        evaluate on a preliminary basis any
        proposal the Company may receive to sell or merge the Company or any of its
        businesses, or to enter into any other form of business
        combination.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          Altair
            Nanotechnologies Inc.

          April
            __, 2006

        

      

       

       

      The
        Company and JPMorgan agree that the Standard Terms and Conditions attached
        hereto form an integral part of this agreement and are hereby incorporated
        herein by reference in their entirety.

      


      Section
        2.  Other
        Assignments.  As compensation for JPMorgan providing the services
        provided for above, that Company agrees that if, within two years of the
        date
        hereof, the Company receives any proposal or offer (collectively, a “Proposal”)
        to sell or merge the Company or any of its businesses, or to enter into any
        other form of business combination involving a majority of its capital stock
        or
        all or substantially all of its assets or operations (a
“Transaction”),  the Company shall offer JPMorgan the right to act as
        its exclusive financial advisor with respect to any such Proposal and as
        exclusive financial advisor or dealer manager, as applicable, with respect
        to a
        Transaction or any other transactions that may result from the Company’s
        receiving such Proposal (including (i) any merger, sale, acquisition,
        divestiture, joint venture or other business combination, any repurchase
        by the
        Company of a significant amount of its securities (but excluding any license
        of
        the Company’s technology unless such license applies to all or substantially all
        of the technology of the Company), or (ii) any recapitalization of the Company,
        or any spin-off, split-off or other extraordinary dividend of cash, securities
        or other assets of the Company to shareholders of the Company (an “Alternative
        Transaction”)).

      


      In
        addition, in the event the Company,
        within two years of the date hereof, determines to issue any equity or debt
        securities through a public or Rule 144A offering or a private placement,
        enter
        into a syndicated credit facility, any interest rate hedging, foreign exchange
        hedging or equity derivative transaction or any escrow arrangement, or pursue
        any restructuring of debt securities of the Company (by consent, tender offer
        or
        otherwise), and in any such case determines to engage a financial advisor,
        investment bank, placement agent or similar advisor in connection with such
        transaction, the Company shall offer JPMorgan the right to act as lead manager
        and sole bookrunner in the case of any such offering, as exclusive placement
        agent in the case of any such placement, as lead arranger and sole bookrunner
        in
        the case of any such credit facility, as exclusive structuring advisor and
        arranger in the case of any such hedging or derivative transaction, as escrow
        agent in the case of any such escrow arrangement and as exclusive financial
        advisor or dealer-manager in the case of any such restructuring of debt
        securities.

      


      If
        JPMorgan agrees to act in any
        capacity referred to above, the Company and JPMorgan will enter into the
        appropriate form of agreement relating to the type of transaction involved
        and
        containing customary terms and conditions acceptable to the Company and
        JPMorgan, including provisions relating to the scope of JPMorgan’s services,
        JPMorgan’s compensation and an indemnification of JPMorgan.  However,
        unless specifically covered by a separate agreement setting forth such
        arrangement, the provisions of Section 1 of the Standard Terms and Conditions
        shall apply to each such transaction.  The Company acknowledges that
        the foregoing is neither an express nor implied commitment by JPMorgan to
        act in
        any such capacity or to purchase or place securities, or to provide or be
        responsible to provide any financing or other financial services, which
        commitment shall only be set forth in a separate written agreement in customary
        form for the type of services being provided.

      


      Section
        3.  Expenses and
        Payments. In addition to our fees for professional services, you agree to
        reimburse us for, and we will separately bill, our reasonable expenses as
        incurred, including travel costs, document production and other similar
        expenses, and reasonable fees of counsel and other professional advisors;
        provided, however, the Company shall not be required to reimburse JP Morgan
        for
        more than $30,000 in fees and expenses of any kind in the aggregate without
        its
        prior written consent, not to be unreasonably withheld (and except as otherwise
        provided in Section 1 of the attached Standard Terms and
        Conditions  or any separate written agreement between the Company and
        JPMorgan). All amounts payable under this agreement (including the Standard
        Terms and Conditions) shall be paid in immediately available funds in U.S.
        dollars, without setoff and without deduction for any withholding, value-added
        or other similar taxes, charges, fees or assessments.

       

      
         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

            Altair
              Nanotechnologies Inc.

            April
              __, 2006

          

        

         

         

         

      

      Section
        4.  Term. This agreement will be effective as of April 4,
        2006 and will expire on the date two years from the
        date hereof.  Our services hereunder may be earlier terminated with or
        without cause by you or by us at any time, in any case without liability
        or
        continuing obligation to you or to us; provided that the provisions of Section
        2
        hereof shall survive any termination by the Company or expiration of this
        agreement, and the provisions of Section 3 hereof (with respect to expenses
        incurred by us to the date of termination and the last sentence of such Section
        3) and Sections 1, 2 and 4 of the Standard Terms and Conditions shall survive
        any termination or expiration of this agreement.

      


      Section
        5.  Compliance
        With Law.  JP Morgan represents that it has all licenses, permits
        and qualifications required in order to provide its services under this
        Agreement and agrees to provide such services in compliance with all applicable
        laws and regulations.

      


      If
        the terms of our engagement as set
        forth in this agreement (including the attached Standard Terms and Conditions)
        are satisfactory, kindly sign the enclosed copy of this letter and return
        it to
        the undersigned.  We look forward to working with the Company on this
        assignment.

      


      
        
          	 	
                  Very
                    truly yours,

                  


                  J.P.
                    MORGAN SECURITIES INC.

                  


                  By:  /s/                                                              

                           Name:

                           Title:    Managing
                    Director

                


        

      

       

       

      Accepted
        and Agreed As Of

      The
        Date
        First Written Above:

      


      Altair
        Nanotechnologies Inc.

      


      By:
        /s/                                                      

          Name:

          Title:

      


      Enclosure

       

      
        
          
          

        

        
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          Altair
            Nanotechnologies Inc.

          April
            __, 2006

        

      

       

       

      


      STANDARD
        TERMS AND CONDITIONS

      


      


      The
        following general terms and conditions shall be incorporated by reference
        into
        the engagement letter dated April 21, 2006 between Altair Nanotechnologies
        Inc. and JPMorgan to which these terms are attached (the
“Engagement Letter”).  Capitalized terms used below without definition
        shall have the meanings assigned to them in the Engagement Letter and any
        references herein to the “Agreement” shall mean the Engagement Letter together
        with these Standard Terms and Conditions.

      


      Section
        1. Indemnification and
        Contribution.

      


      (a) The
        Company
        agrees (i) to indemnify and hold harmless JPMorgan and its affili­ates, and
        the respective direc­tors, officers, agents, and employees of JPMorgan and
        its affiliates (JPMorgan and each such entity or person being referred to
        as an
“Indemnified Person”), from and against any losses, claims, demands, damages or
        liabilities of any kind (collectively, “Liabilities”) relating to or arising out
        of activities per­formed or services furnished pursu­ant to the
        Agreement, any transac­tion or JPMorgan's role in connection there­with,
        and (ii) to reimburse each Indemni­fied Person for all reasonable expenses
        (including reasonable fees and disbursements of coun­sel) incurred by such
        Indemni­fied Person in connection with investigat­ing, preparing or
        defending any investigative, administrative, judicial or regulatory action
        or
        proceeding in any jurisdiction related to or arising out of such activities,
        services, transaction or role, whether or not in connection with pending
        or
        threatened litigation to which any Indemnified Person is a party, in each
        case
        as such expenses are incurred or paid.  The Company will not, however,
        be responsible for any such Liabilities or expens­es to the extent that they
        are finally judicially determined to have result­ed primarily from an
        Indemnified Person’s bad faith, gross negligence or willful
        misconduct.  The Company also agrees that no Indemnified Person shall
        have any liability (whether direct or indirect, in contract, tort or otherwise)
        to the Company or any of its securityholders or creditors for or in connection
        with the Agreement, any transaction or JPMorgan's role or services in
        connec­tion there­with, except to the extent that any such
        Liabil­ities or expens­es incurred by the Company are finally judicially
        deter­mined to have resulted primarily from an Indemnified Person's bad
        faith, gross negligence or willful misconduct. In no event shall any Indemnified
        Person be responsible for any special, indirect or consequential
        damages.

      


      (b)  The
        Company shall not be
        liable for any settlement of any litigation or proceeding ef­fected without
        its written consent.  The Company will not, without JPMorgan’s written
        consent, settle, compromise, consent to the entry of any judgment in or
        otherwise seek to terminate any claim, action or proceeding in respect of
        which
        indemnity may be sought hereunder, whether or not any Indemnified Person
        is an
        actual or potential party thereto, unless such settlement, compromise, consent
        or termination includes an unconditional release of each Indemnified Person
        from
        any liabilities arising out of such claim, action or proceeding. If the Company
        enters into any agreement or arrangement with respect to, or effects, any
        proposed sale, exchange, dividend or other distribution or liquidation of
        all or
        a significant portion of its assets in one or a series of transactions or
        any
        significant recapitalization or reclassification of its outstanding securities,
        the Company shall provide for the assumption of its obligations under this
        Section 1 by another party reasonably satisfactory to JPMorgan.

      


      (c)  If
        the foregoing
        indemnification is unavailable or insufficient to hold an Indemnified Person
        harmless in respect of any Liabilities (and related expenses) referred to
        therein then, in lieu of indemnifying such Indemnified Person hereunder,
        the
        Company shall contribute to the amount paid or payable by such Indemnified
        Person as a result of such Liabilities (and related expenses) in such proportion
        as is appropriate to reflect the relative benefits to the Company, on the
        one
        hand, and JPMorgan, on the other hand, of the financial advice rendered by
        JPMorgan and also the relative fault of each of the Company and JPMorgan,
        as
        well as any other relevant equitable considerations; provided,
however, that in no event shall the Indemnified Persons be required
        to
        contribute an aggregate amount in excess of the aggregate amount of fees
        actually received by JPMorgan under the Engagement Letter.

       

      
        
          
            
            

          

          
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            Altair
              Nanotechnologies Inc.

            April
              __, 2006

          

        

         

         

      

      Section
        2. Financial Advisory Role,
        Information, Reliance, Confidentiality, etc.

      


      (a)  The
        Company understands
        that JPMorgan is acting solely as a financial advisor, is acting as an
        independent contractor and is not undertaking to provide any legal, accounting
        or tax advice in connection with its engagement under the Agreement and
        that JPMorgan's role
        in any due diligence will be limited solely to performing such review as
        it
        shall deem necessary to support its own advice and analysis and shall not
        be on
        behalf of the Company.

      


      (b)
        The Company agrees to provide to
        JPMorgan all information requested by JPMorgan for the purpose of its engagement
        under the Agreement and also to provide access to employees and directors
        of the
        Company.  The Company also agrees that upon closing of any
        Transaction, the Company shall notify JPMorgan, in writing, (i) whether it
        expects to treat the consummated Transaction as a “reportable transaction”
within the meaning of Treasury Regulation Section 1.6011-4(b), and (ii) if
        so,
        the applicable category of “reportable transaction”.  JPMorgan shall
        be entitled to rely upon and assume, without any obligation of independent
        verification, the accuracy and completeness of all information that is publicly
        available and of all information that has been furnished to it by the Company
        or
        any party to a potential Transaction or Alternative Transaction or otherwise
        reviewed by JPMorgan, and JPMorgan shall not assume any responsibility or
        have
        any liability therefor.  JPMorgan has no obligation to conduct any
        appraisal of any assets or liabilities or to evaluate the solvency of the
        Company or any other party to a Transaction or Alternative Transaction under
        any
        state or federal laws relating to bankruptcy, insolvency or similar
        matters.

      


      (c)
        In order to enable JPMorgan to
        bring relevant expertise to bear on its engagement under the Agreement from
        among its global affiliates, the Company agrees that JPMorgan may share
        information obtained from the Company hereunder with its affiliates, and
        may
        perform the services contemplated hereby in conjunction with its affiliates,
        and
        that any JPMorgan affiliates performing services hereunder shall be entitled
        to
        the benefits and subject to the terms of the Agreement. The Company agrees
        that
        JPMorgan shall have the right to review and pre-approve any reference to
        it or
        its role as financial advisor under the Agreement in any public statement
        made
        by the Company (such approval not to be unreasonably withheld).

      


      (d)
        JPMorgan’s financial advice is
        intended solely for the benefit and use of the Board of Directors of the
        Company
        in considering the matters to which the Engagement Letter relates, is not
        on
        behalf of, and shall not confer rights or remedies upon, any shareholder
        or
        creditor of the Company or any other person, and may not be used or relied
        upon
        for any other purpose.  Except as otherwise required by applicable law
        or governmental or stock exchange regulation, the Company will treat JPMorgan’s
        advice as confidential and will not disclose it to any third party (other
        than,
        on a confidential basis, to its counsel and other advisors in connection
        with a
        Transaction) in any manner without JPMorgan's prior written
        approval.

      


      (e)
        Information provided by the Company
        to JPMorgan in connection with this Agreement will be kept confidential and
        will
        only be used by JPMorgan for purposes of its engagement hereunder, except
        information that (i) was in JPMorgan's possession prior to its disclosure
        by the
        Company; (ii) is publicly disclosed other than by JPMorgan in violation of
        the
        Agreement; (iii) is obtained by JPMorgan from a person other than the Company
        who, to the knowledge of JPMorgan, is not bound by a confidentiality agreement
        with the Company; (iv) the Company agrees may be disclosed; or (v) is required
        or requested to be disclosed under compulsion of law (whether by oral question,
        interrogatory, subpoena, civil investigative demand or otherwise), by order
        or
        act of any court or governmental or regulatory authority or body or by
        JPMorgan's independent auditors or accountants. JPMorgan may also disclose
        such
        information to those of its own and its affiliates’ respective officers,
        directors, employees, representatives, auditors and professional advisors
        who
        need to know such information for purposes of performing the services described
        in the Agreement, and to potential parties to an Alternative Transaction
        who
        have executed confidentiality agreements with or for the benefit of the Company
        in a form reasonably satisfactory to the Company.  JPMorgan’s
        obligations under the first sentence of this paragraph shall terminate two
        years
        from the date hereof.

       

      
        
          
            
            

          

          
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            Altair
              Nanotechnologies Inc.

            April
              __, 2006

          

        

      

      
 

      (f)
        Notwithstanding any other provision
        herein, the Company and each of its employees, representatives or other agents
        may disclose to any and all persons, without limitation of any kind, the
        U.S.
        income and franchise tax treatment and the U.S. income and franchise tax
        structure of the transactions contemplated hereby and all materials of any
        kind
        (including opinions or other tax analyses, if any) that are provided to the
        Company relating to such tax treatment and tax structure insofar as such
        treatment and/or structure relates to a U.S. income or franchise  tax
        strategy, if any, provided to the Company by JPMorgan or its
        affiliates.

      


      Section
        3. Other Business
        Relationships.

      


      (a)
        You understand that JPMorgan and
        its affiliates (collectively, “Morgan”) comprise a full service securities firm
        and a commercial bank engaged in securities trading and brokerage activities,
        as
        well as providing investment banking, asset management, financing, and financial
        advisory services and other commercial and investment banking products and
        services to a wide range of corporations and individuals.  In the
        ordinary course of our trading, brokerage, asset management, and financing
        activities, Morgan may at any time hold long or short positions, and may
        trade
        or otherwise effect transactions, for our own account or the accounts of
        customers, in debt or equity securities or senior loans of the Company or
        any
        other company that may be involved in any transaction with the Company. Morgan
        recognizes its responsibility for compliance with federal securities laws
        in
        connection with such activities.

      


      (b)
        In addition, Morgan may have and
        may in the future have investment and commercial banking, trust and other
        relationships with parties other than the Company, which parties may have
        interests with respect to the Company or a transaction with the Company or
        any
        other party thereto. Without limiting the foregoing, the Company acknowledges
        that, in agreeing to provide the advisory services contemplated by the
        Agreement, JPMorgan reserves the right of Morgan to pursue opportunities
        to
        arrange and/or provide new financing to other potential parties to a transaction
        with the Company specifically in connection with such transaction.
 Notwithstanding anything contained herein,
        Morgan shall not act as M&A financial advisor to any party (other than the
        Company) in connection with any such transaction with the Company during
        the
        term of the Agreement. Although Morgan in the course of such other relationships
        may acquire information about any such transaction or such other parties,
        Morgan
        shall have no obligation to disclose such information, or the fact that Morgan
        is in possession of such information, to the Company or to use such information
        on the Company’s behalf.  Furthermore Morgan may have fiduciary or
        other relationships whereby Morgan may exercise voting power over securities
        of
        various persons, which securities may from time to time include securities
        of
        the Company or others with interests with respect to a transaction with the
        Company. The Company acknowledges that Morgan may exercise such powers and
        otherwise perform its functions in connection with such fiduciary or other
        relationships without regard to its relationship to the Company
        hereunder.

      


      Section
        4.
Miscellaneous.  The Agreement may not be assigned by the
        Company or JPMorgan without the prior written consent of the other. The
        Agreement constitutes the entire understanding of the parties with respect
        to
        the subject matter thereof, supersedes all prior agreements with respect
        thereto, may not be amended except in writing signed by both of the parties,
        has
        been duly authorized and executed by each of the parties hereto and constitutes
        the legal, binding obligation of each such party.  The Agreement shall
        be governed by and construed in accordance with the laws of the State of
        New
        York without reference to principles of conflicts of law. Each of the Company
        and JPMorgan irrevocably and unconditionally submits to the exclusive
        jurisdiction and venue of any State or Federal court sitting in New York
        City
        over any action, suit or proceeding arising out of or relating to this
        Agreement.  Each of the Company and
        JPMorgan irrevocably and unconditionally waives any objection to the laying
        of
        venue of any such action brought in any such court and any claim that any
        such
        action has been brought in an inconvenient forum.  JPMorgan and the
        Company (on its own behalf and, to the extent permitted by law, on behalf
        of its
        shareholders) each waives any right to trial by jury in any action, claim,
        suit
        or proceeding with respect to JPMorgan’s engagement as financial advisor under
        the Agreement or its role in connection herewith.

      


      
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