EXHIBIT 1
FOURTH AMENDED AND RESTATED
GUARANTY AGREEMENT
This agreement is made and entered into as of the 1st day of April,
2002, by and between AmerAlia, Inc., a Utah corporation whose address is 00000
Xxxx Xxxxx Xxxx Xx, Xxxxxxxxxx, XX 00000 (Telephone: (000) 000 0000; Facsimile:
(000) 000 0000 ) ("AmerAlia") and Xxxxxxxxxx Xxxx as trustee for the Xxxxxxxxxx
Xxxxxx Mars Trust, whose address is 0000 Xxx Xxxxxx, XxXxxx, Xxxxxxxx 00000 (the
"Trust").
RECITALS
A. AmerAlia has commenced operations necessary to build a plant for the
production of sodium bicarbonate on property near Rifle, Colorado (the "Rock
School Project"), and is seeking permanent financing to permit the Company to
commence construction activities.
B. AmerAlia has previously borrowed approximately $7,326,000 from the Bank of
America, N.A. (the "Bank") for working capital purposes and to fund an escrow
account established in accordance with the requirements of a Design/Build
Contract entered into between AmerAlia and U.S. Filter Wastewater Group, Inc., a
Delaware corporation, d/b/a U.S. Filter Corporation, HPD Products ("U.S.
Filter"), which amounts the Trust has previously guaranteed pursuant to a
Guaranty Agreement dated September 13, 1999, a Guaranty Agreement dated January
21, 2000, a Guaranty Agreement dated June 30, 2000, and an amended and restated
guaranty agreement dated as of September 14, 2000; and
C. AmerAlia also previously borrowed an additional loan of approximately
$1,600,000 (the "First Additional Loan") from the Bank to provide working
capital to AmerAlia for certain expenses incurred and its continuing operations
which was reflected in a Second Amended and Restated Guaranty Agreement dated
December 1, 2000; and
D. AmerAlia also borrowed an additional $1,000,000 (the "Second Additional
Loan") from the Bank to provide working capital to AmerAlia for certain expenses
incurred and its continuing operations which was reflected in a Third Amended
and Restated Guaranty Agreement dated November 29, 2001; and
E. All of the existing loans with the Bank (the "Aggregate Loan") are due and
payable on March 31, 2002, and the Trust and AmerAlia wish to extend the
Aggregate Loan for up to three additional months; and
F. Based on discussions, the Bank is willing to extend the loan for up to three
months provided AmerAlia pays interest in advance and the Trust renews its
guaranty; and
G. The Trust is willing to facilitate the Bank's extension of the loan pursuant
to the terms hereof.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration the receipt and
sufficiency whereof is hereby acknowledged, AmerAlia and the Trust: (A) agree
that this Fourth Amended and Restated Guaranty is in addition to and
Guaranty Agreement B AmerAlia, Inc. Page 1
not in replacement of the Third Amended and Restated Guaranty which remains in
effect in accordance with its terms; and (B) further agree as follows:
1. AmerAlia will execute and deliver to the Bank the documents and make
payment to the Bank in the amount necessary to permit the Bank to
extend the Aggregate Loan for one, two, or three months (the period to
be selected by AmerAlia in its discretion).
2. The Trust will execute and deliver to the Bank such forms as may be
necessary or appropriate to provide a guaranty for the repayment of the
Aggregate Loan in a form that is satisfactory to the Bank and to the
Trust, and is consistent with this Agreement (the "Guaranty").
3. As a condition of the Trust's willingness to enter into this Guaranty
Agreement, AmerAlia agrees as follows:
(1) AmerAlia will continue to reduce its corporate, general, and
administrative expenses (including, without limitation, salary
expenses) to the maximum extent possible, with the requirement
that compensation paid to corporate officers shall be
reasonably related to the services they are expected to
perform for AmerAlia;
(2) AmerAlia hereby confirms that it has granted the Trust as
collateral for the repayment of the Aggregate Loan and the
Trust's liability under this Guaranty, AmerAlia's entire
interest in Natural Soda, Inc., a recently-formed Colorado
corporation to acquire AmerAlia's entire interest in the Rock
School Project and the federal lease associated therewith.
(3) AmerAlia will continue to use its best efforts to obtain
necessary financing or a strategic alliance for the
development of the Rock School Project, including the
acquisition of business activities ("Development
Arrangements") as soon as reasonably possible.
o When used in the foregoing paragraph, the term
"necessary financing" means construction financing or
permanent financing reasonably sufficient to carry-out
AmerAlia's business plan as reviewed by the Trust; and
o When used in the foregoing paragraph, the term
"strategic alliance" means a joint venture,
partnership, or other business combination with an
affiliated or unaffiliated entity which will provide
capital or other resources reasonably sufficient for
the development of the Rock School Project.
(4) AmerAlia will apply the net proceeds of any Development
Arrangement, as received, first to repay the Aggregate Loan,
and the amount of the Guaranty will be reduced to the extent
of such repayments. Should this Guaranty Agreement expire or
be terminated for any reason, the Trust may repay the
Aggregate Loan, take assignment from the Bank of its
collateral position and other rights under the Bank's loan
documents with AmerAlia, and take such further action
(including demanding repayment of the Aggregate Loan and
foreclosing on any collateral held) as the Trust in its
discretion may deem appropriate.
Guaranty Agreement B AmerAlia, Inc. Page 2
4. AmerAlia will pay the Trust compensation for executing and delivering
the Guaranty to the Bank in an amount equal to 1.0833% of the amount of
the Aggregate Loan per month the Aggregate Loan is outstanding. This
compensation will be payable in shares of AmerAlia's restricted common
stock valued at $1.00 per share, subject to the following readjustment.
To the extent the average closing price of AmerAlia's common stock as
reported by The Nasdaq Stock Market, Inc. SmallCap Market (or the OTC
Bulletin Board or other quotation medium selected by AmerAlia if
AmerAlia's common stock is not, at that time, quoted on the Nasdaq
SmallCap Market) for the 30 days following the announcement by AmerAlia
that:
A. it has obtained all debt and equity financing necessary for
either: (i) the purchase of the assets of White River
Nahcolite Limited Liability Company ("White River") or (ii)
the construction of a plant of its own on its Rock School
lease, or
B. AmerAlia has made a determination to pursue other arrangements
not involving either those set forth in clause (1)(i) or
(1)(ii)
exceeds $1.00 per share (the "New Price," but not be greater than $2.50
per share), the number of shares issued pursuant to this subscription
agreement shall be recalculated based on the New Price and you will
return any excess shares to AmerAlia (or if the certificate for such
shares have not yet been issued the certificate will represent the
number of shares determined by such recalculation). If the announcement
has not been made by December 31, 2002, then this paragraph will be of
no further force or effect.
If the rules of the Nasdaq Stock Market require that the fee be
approved by the shareholders, then the payment of the fee in shares
will be subject to shareholder approval and, if not approved by the
shareholders, will be payable in cash not later than the date for
repayment of the Aggregate Loan.
5. If the Trust makes any payment to the Bank under the Guaranty, AmerAlia
will indemnify and hold the Trust harmless for any such payment, and
for all other costs and expenses, including reasonable attorneys' fees
incurred in connection therewith.
6. The Trust acknowledges that such shares, when issued, will be
restricted as that term is defined in Rule 144 of the Rules and
Regulations promulgated by the Securities and Exchange Commission. The
Trust further acknowledges, represents and warrants to AmerAlia that:
(1) The Trust is an `accredited investor' as that term is defined
in Section 2(a)(15) of the Securities Act of 1933 (the "1933
Act") and Rule 215 thereunder, and in Rule 501(a) of
Regulation D of the 1933 Act.
(2) AmerAlia has given the Trust and its legal, financial, tax,
and investment advisors the opportunity to ask questions of
and to receive answers from persons acting on AmerAlia's
Guaranty Agreement B AmerAlia, Inc. Page 3
behalf concerning the terms and conditions of this transaction
and the opportunity to obtain any additional information
regarding AmerAlia, its business and financial condition which
AmerAlia possesses or can acquire without unreasonable effort
or expense including (without limitation) all minutes of the
meetings of the Board of Directors of AmerAlia or committees
thereof, and other relevant documents requested by the Trust.
In addition, the Trust has spoken with the independent
auditors for AmerAlia and has made financial or other
inquiries as the Trust or its advisors have deemed necessary
or appropriate in the conduct of the Trust's due diligence
investigation.
(3) The Trust acknowledges and understands that, although there is
currently a market for AmerAlia's common stock, the market is
dependent on a number of factors beyond the control of
AmerAlia and may not continue. Furthermore the Trust
acknowledges that although AmerAlia believes that it is in
compliance with all requirements for continued listing of the
Common Stock on the Nasdaq SmallCap Market, continued listing
on the Nasdaq SmallCap Market is subject to a number of
objective and subjective criteria. Although AmerAlia believes
it is in material compliance with all objective criteria,
there can be no assurance that the staff of the Nasdaq
SmallCap Market may not reach a different conclusion or that
the Nasdaq staff may not reach a conclusion that AmerAlia is,
for some reason, not in compliance with subjective criteria
which is not specified in the rules applicable to the Nasdaq
SmallCap Market.
(4) The Trust understands that the securities being acquired
hereby are and will continue to be restricted securities
within the meaning of Rule 144, and applicable state statutes.
The Trust consents to the placement of an appropriate
restrictive legend or legends on any certificates evidencing
the securities and any certificates issued in replacement or
exchange therefor and acknowledges that AmerAlia will cause
its stock transfer records to note the restrictions.
o The Trust must bear the economic risks of the
investment in the securities for an indefinite period
of time because they have not been registered under the
1933 Act or any state securities laws;
o As "restricted securities" (unless registered for
resale or another exemption from registration is
available for any transfer), the securities must be
held for a minimum of one year following the purchase.
Thereafter, the securities may be sold in only limited
amounts in a specified manner in accordance with the
terms and conditions of Rule 144 (the "Rule") if the
Rule is applicable (there being no representation by
AmerAlia that it will be applicable). In case the Rule
is not applicable, any sales may be made only pursuant
to an effective registration statement or an available
exemption from registration.
o The securities cannot be sold unless they are
registered under the 1933 Act and any applicable state
securities laws or unless an exemption from the
registration requirements is available. To the extent
that AmerAlia files any registration statement under
the 1933 Act (not including a registration statement on
Form X-0, X-0, X-00, or other inappropriate form),
AmerAlia will endeavor to include the
Guaranty Agreement B AmerAlia, Inc. Page 4
Securities in such registration statement, subject to
any requirements that may be imposed by any underwriter
named in the registration statement (which requirements
may include, but are not limited to, a delay in the
ability of the selling security holder to sell the
shares, a requirement that any sales be made through
the underwriter, or a prohibition on any sales by the
selling security holder pursuant to the registration
statement in certain specified circumstances, in the
underwriter's sole discretion).
(5) The Trust has reviewed the terms of this agreement and the
transaction contemplated by this agreement with its legal,
investment, tax, and financial advisors to the extent the
Trust has deemed such consultation appropriate. The Trust has
also consulted with such advisors with regard to the
advisability of this investment to the extent the Trust has
deemed such consultation to be appropriate. The Trust
acknowledges that AmerAlia has advised the Trust that it
recommends that the Trust obtain advice and consultation. The
Trust further acknowledges that it has neither sought nor
received any advice from AmerAlia or any of its agents or
affiliates with respect to any aspect of this Agreement.
(6) The Trust acknowledges that the investment contemplated herein
is one of significant risk, and there can be no assurance that
the securities will ever be valuable. The Trust hereby
represents that the investment in the securities is a suitable
investment for it, taking into consideration the restrictions
on transferability and the other considerations affecting the
securities and AmerAlia as described herein and in AmerAlia's
reports filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended
(the "1934").
(7) The Trust acknowledges that the acquisition of the securities
as contemplated herein will impose certain reporting
obligations on the Trust pursuant to Sections 13(d) and 16(a)
of the 1934 Act, and may impose certain obligations under the
Internal Revenue Code of 1986, as amended. The Trust will make
all necessary filings.
7. The Trust and AmerAlia affirmatively state and agree that no
compensation has been paid under any prior agreement, and none is
currently payable because (although the Trust has performed its
obligations under the prior guaranties) all of the conditions precedent
to payment have not been met. The compensation payable by AmerAlia for
the Trust's guaranty of the Aggregate Loan pursuant to this Guaranty
Agreement and all prior guaranty agreements relating to any portion of
the Aggregate Loan will be determined by this Guaranty Agreement.
8. All notices under this Agreement are to be delivered by (i) depositing
the notice in the mail, using registered mail, return receipt
requested, addressed to the address below or to any other address as
the party may designate by providing notice, (ii) telecopying the
notice by using the telephone number set forth below or any other
telephone number as the party may designate by providing notice, (iii)
overnight delivery service addressed to the address below or to any
other address as the party may designate by providing notice, or (iv)
hand delivery to the individual designated below or to any other
individual as the party may designate by providing notice. The notice
shall be deemed delivered (i) if by registered mail, four (4) days
after the notice is deposited in the mail,
Guaranty Agreement B AmerAlia, Inc. Page 5
(ii) if by telecopy, on the date the notice is delivered, (iii) if by
overnight delivery service, on the date of delivery, and (iv) if by
hand delivery, on the date of delivery.
If to AmerAlia, to the address set forth in the first
paragraph hereof (telecopy number 970-625-9137), with a copy
(which does not constitute notice) to:
Xxxxx, Figa & Will, P.C.
Suite 1030
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Telecopy: 000-000-0000
If to the Trust, to the attention of Xxxxx Xxxxx (telecopy number) 703-519-7075)
at the address set forth in the first paragraph hereof with a copy (which does
not constitute notice) to:
Hills & Xxxxx
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxxx X. Hills, Esq.
Telecopy: 000-000-0000
9. General Provisions
(1) Complete Agreement. The parties agree that this Agreement is
the complete and exclusive statement of the agreement between
the parties, which merges all prior proposals, understandings
and all other agreements, oral or written, between the parties
relating to this Agreement.
(2) Amendment. This Agreement may not be modified, altered or
amended except by written instrument duly executed by both
parties.
(3) Waiver. The waiver or failure of either party to exercise in
any respect any right provided for in this Agreement shall not
be deemed a waiver of any further right under this Agreement.
(4) Severability. If any provision of this Agreement is invalid,
illegal or unenforceable under any applicable statute or rule
of law, it is to that extent deemed omitted. The remainder of
the Agreement shall be valid and enforceable to the maximum
extent possible.
(5) Governing Law. This Agreement and performance hereunder shall
be governed by the laws of the State of Colorado.
Each party acknowledges that it has read and understands this Agreement and
agrees to be bound by its terms.
Guaranty Agreement B AmerAlia, Inc. Page 6
AmerAlia, Inc. The Xxxxxxxxxx Xxxxxx Mars Trust
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxxxxxxx X. Mars
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Xxxx X. Xxxx, President Xxxxxxxxxx X. Mars, Trustee
Guaranty Agreement B AmerAlia, Inc. Page 7
