EXHIBIT G
MANAGEMENT AND COST REIMBURSEMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is executed and delivered on the 19th
day of March, 2004, with an effective date of October 1, 2003, among AMERALIA,
INC., a Utah corporation ("AmerAlia"), SENTIENT EXECUTIVE GP I, LIMITED, ACTING
ON BEHALF OF THE GENERAL PARTNER OF SENTIENT GLOBAL RESOURCES FUND I, L.P.,
SENTIENT (AUST) PTY. LIMITED, ACTING ON BEHALF OF SENTIENT GLOBAL RESOURCES
TRUST NO. 1 (collectively "Sentient"), NATURAL SODA HOLDINGS, INC., a Colorado
corporation (the "Company"), and NATURAL SODA, INC. (the "Subsidiary").
RECITALS:
A. The Company anticipates that AmerAlia will perform managerial and audit
services for the Company and the Subsidiary and will assist with budgetary
services for the Company and the Subsidiary, will incur certain costs and
expenses directly allocable to the Company or the Subsidiary, and will incur
general and administrative expenses (overhead), a portion of which will be
allocable to the Company or the Subsidiary, all on the terms set forth herein.
B. Sentient desires to consent to AmerAlia's compensation and
reimbursement for the activities described in Recital A pursuant to this
Agreement.
C. AmerAlia, Sentient, the Company and the Subsidiary are also entering
into the Securityholder Agreement as of the date hereof (the "Securityholder
Agreement").
D. As a condition to entering into the Debenture Purchase Agreement dated
as of the date hereof between AmerAlia, Sentient, the Subsidiary and the Company
(the "Debenture Purchase Agreement"), the Company has requested that AmerAlia
provide the Company managerial, budgetary and audit services and Sentient has
consented to the provision of such services.
NOW, THEREFORE, intending to be legally bound and for good and adequate
consideration, the receipt and sufficiency whereof both AmerAlia and Sentient
acknowledge, the parties hereto agree as follows:
1. MANAGEMENT SERVICES. The Company shall operate through its board of
directors and management. The Subsidiary shall operate through its board of
directors and management. AmerAlia (through its board of directors and
management, principally through its President and Chief Financial Officer) will
generally manage the operations of the Company and the Subsidiary. Through this
managerial role, AmerAlia will not have any power to act on behalf of the
Company or the Subsidiary, but AmerAlia (through its management, principally
through its President and Chief Financial Officer) may raise issues for the
management and board of directors of the Company and the Subsidiary to consider
with respect to their respective operations, contractual compliance, and other
matters. AmerAlia may also, in its discretion, make available to the employees
of the Company and the Subsidiary participation in employee benefit plans,
equity incentive plans, and other plans that AmerAlia has or may in the future
adopt for the benefit of its employees and the employees of its subsidiaries
(including, without limitation, the Company and the Subsidiary).
2. PAYMENTS TO AMERALIA. The Company shall compensate AmerAlia for its
management services, for assistance with the preparation of the Annual Budget
(as defined in the Securityholder Agreement) and for providing audit services at
the rate of $700,000 per year through September 30, 2005, payable monthly in
arrears, and reimburse AmerAlia for its costs hereunder on an accountable basis
provided the costs are consistent with the Company's budgets as approved by its
board of directors.
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During the first year of this Agreement, the Company shall reduce the annual
payment to AmerAlia by any amounts advanced to AmerAlia prior to the Agreement
for these services; provided that any such reduction shall be prorated over the
year. AmerAlia and the Subsidiary will renegotiate the annual payment for years
following September 30, 2005.
3. BUDGET SERVICES. AmerAlia shall cause the Company and the Subsidiary to
prepare the Annual Budget for the Company and the Subsidiary as set forth in
Section 3.05 of the Securityholder Agreement and shall manage and assist such
preparation. AmerAlia shall also cause the Company and the Subsidiary to revise
the Annual Budget as recommended by the Directors of the Company and the
Subsidiary.
4. TRANSACTIONS WITH AFFILIATES. If (in acting pursuant to this Agreement)
AmerAlia engages affiliates to provide services hereunder, it shall do so on
terms no less favorable to the Company or the Subsidiary (as applicable) than
would be the case in arm's-length transactions with unrelated persons and it
shall do so only in compliance with any agreements to which the Company or the
Subsidiary is a party.
5. AUDIT SERVICES. Within 90 days after the end of each fiscal year,
AmerAlia shall cause independent certified public accountants selected by
AmerAlia (with the consent of the board of directors of the Company with respect
to the audit conducted of the Company's books and records, and with the consent
of the board of directors of the Subsidiary with respect to the audit conducted
of the books and records of the Subsidiary) to conduct an audit of the books and
records of each of the Company and the Subsidiary. The audit shall be conducted
in accordance with generally accepted auditing standards and shall cover all
books and records maintained by the Company and the Subsidiary, as applicable,
all assets and encumbrances, and all transactions and operations conducted
during such fiscal year, including production and inventory records and all
costs for which AmerAlia sought reimbursement under this Agreement, together
with all other matters customarily included in such audits.
6. INDEMNIFICATION.
(a) In additional consideration for receiving payment for the
services pursuant to this Agreement, AmerAlia will indemnify and hold the
Company, the Subsidiary and Sentient harmless from and against any Claims
arising against the Company, the Subsidiary and Sentient from the following
obligations (the "Indemnified Obligations"):
(i) amounts related to X.X. Xxxxxx Co. incurred through
February 29, 2004;
(ii) Xxxxxx X. Xxxxxx;
(iii) Xxxx Xxxxxxxx in excess of certain amounts expressly
assumed as set forth in Exhibit D to the Debenture Purchase Agreement and
subject to Section 7.4 of the Debenture Purchase Agreement;
(iv) amounts related to U.S. Filter Wastewater Group, Inc. in
excess of $860,000 paid in settlement to U.S. Wastewater Group, Inc.;
(v) Obligations to the Bank of America, Xxxxxxx X. X'Xxxxxx,
Xxxxxx Xxxxxxxxxx, Xxxxx X. Xxxxxxxxx, Xx., Xxxxxx Xxxxxxx, and the JKM
Partnership; and
(vi) Any other liabilities that the Company or the Subsidiary
did not expressly assume as set forth in Exhibit D to the Debenture Purchase
Agreement.
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EXHIBIT G
(b) For the purposes of this Section 6, the term "Claims" means any
and all money that the Company or the Subsidiary has paid, must pay or is
requested to pay as a result of demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of the Company or the Subsidiary as a result of any
Indemnified Obligations.
(c) The Company may withhold payments under this Agreement to offset
against obligations that AmerAlia may owe to the Company pursuant to this
provision, any promissory note to the extent then due and payable, or any other
matured contractual obligation of AmerAlia to the Company.
7. PLEDGE. Sentient hereby consents to the pledge by AmerAlia of its
benefits under this Agreement to U.S. Filter Wastewater Group, Inc. as security
for AmerAlia's obligation under its promissory note to U.S. Filter Wastewater
Group, Inc. dated February 21, 2003.
8. NOTICES. All notices, payments and other required or permitted
communications ("NOTICES") to the parties shall be in writing, and shall be
addressed respectively as follows:
IF TO AMERALIA: AmerAlia, Inc.
Attn: Chairman
00000 Xxxx Xxxxx Xxxx Xx
Xxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
WITH A COPY TO: Holland & Xxxx LLP
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
IF TO SENTIENT: Sentient Executive GP I, Limited (on
behalf of the General Partner of Sentient
Global Resources Fund 1, L.P.)
Third Floor, Harbour Centre, PO Box 10795APO
Xxxxxx Town, Grand Cayman, Cayman Islands
Attn: Xxx XxXxxxxxxx
Tel: (000) 000 0000
Fax: (000) 000 0000
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EXHIBIT G
Sentient (Aust) Pty Limited Sentient Asset Management
Trustee of Sentient Global Resources Trust No. 1 Canada Limited
Xxxxx 0, 00 Xxxxxx Xxxxxx 0000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxx, XXX 0000 Xxxxx 0000
Xxxxxxxxx Xxxxxxxx, Xxxxxx X0X-0X0 Xxxxxx
Attn: Xxxxx Xxxxxxx, Director Attn: Xxxx Xxxxxxx, Director
Tel: (000) 0000-0000 Tel: (000) 000-0000
Fax: (000) 0000-0000 Fax: (000) 000-0000
IF TO THE COMPANY: to the Company in care of AmerAlia
IF TO THE SUBSIDIARY: to the Subsidiary in care of AmerAlia
All Notices shall be given (a) by personal delivery to the party, (b) by
electronic communication, capable of producing a printed transmission, (c) by
registered or certified mail return receipt requested; or (d) by overnight or
other express courier service. All Notices shall be effective and shall be
deemed given on the date of receipt at the principal address if received during
normal business hours, and, if not received during normal business hours, on the
next business day following receipt, or if by electronic communication, on the
date of such communication. Any party may change its address by Notice to the
other parties.
9. GENDER. The singular shall include the plural, and the plural the
singular wherever the context so requires, and the masculine, the feminine, and
the neuter genders shall be mutually inclusive.
10. CURRENCY. All references to "DOLLARS" or "$" herein or in any budget
shall mean lawful currency of the United States of America.
11. HEADINGS. The subject headings of the Sections and Subsections of this
Agreement and the Paragraphs and Subparagraphs of the Exhibits to this Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
12. TERM. This Agreement will expire on September 30, 2005, except for
Section 6, unless, prior to its expiration, the Company (with the approval of
two-thirds of its directors) agrees by resolution to extend this Agreement on
terms reasonably acceptable to AmerAlia. A majority of the board of directors of
the Company may terminate this Agreement except for Section 6 before the
expiration of its term if:
(a) AmerAlia shall commence a voluntary case under the United States
Bankruptcy Code or insolvency laws as now or hereafter in effect or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Company under the Bankruptcy Code and the petition is not
controverted within 30 days, or is not dismissed within 60 days, after
commencement of such involuntary case; or a "custodian" (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or any substantial
part of the property of the Company or the Company commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or there
is commenced against the Company any such proceeding which remains undismissed
for a period of 60 days; or the Company is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or the Company suffers any appointment of any custodian or the like for
it or any substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or the Company makes a general assignment for
the benefit of creditors;
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EXHIBIT G
or the Company shall fail to pay, or shall state that it is unable to pay its
debts generally as they become due; or the Company shall call a meeting of all
of its creditors with a view to arranging a composition or adjustment of its
debts; or the Company shall by any act or failure to act indicate its consent
to, approval of or acquiescence in any of the foregoing; or any corporate or
other action is taken by the Company for the purpose of effecting any of the
foregoing;
(b) AmerAlia defaults under its obligations to Xxxxxxxxxx X. Mars,
as Trustee of the Xxxxxxxxxx Xxxxxx Mars Trust dated February 5, 1975, as
amended, Xxxxxxx X. X'Xxxxxx, Xxxxxx Xxxxxxx, any holders of the Company's
Secured Promissory Notes secured by the Series A Debentures and Series C
Debentures issued of a date even herewith, and such party exercises its remedies
pursuant to such default;
(c) an Event of Default (as defined in the Debentures which are
defined in the Securityholders Agreement) shall have occurred and the Holders
(as defined in the Debentures) of the Debentures shall have exercised their
remedies thereunder;
(d) AmerAlia shall sell or transfer its shares of the Company's
common stock.
13. WAIVER. The failure of any party to insist on the strict performance
of any provision of this Agreement or to exercise any right, power or remedy
upon a breach hereof shall not constitute a waiver of any provision of this
Agreement or limit such party's right thereafter to enforce any provision or
exercise any right.
14. MODIFICATION. No modification of this Agreement shall be valid unless
made in writing and duly executed by all parties hereto.
15. DISPUTE RESOLUTION.
(a) All claims, disputes or other controversies arising out of, or
relating to, this Agreement and any other claims, disputes or controversies
arising out of or relating to the management or operations of the Company or the
Subsidiary (hereinafter collectively referred to as a "Dispute") shall initially
be submitted to a senior officer or a member of the board of directors from each
party to a Dispute for resolution by mutual agreement between said officers
(which senior officers or director will not be a Person who is involved in the
regular operations of the Company or the Subsidiary). Any mutual determination
by the senior officers shall be reduced to writing and become final and binding
upon the parties. However, should such senior officers fail to arrive at a
mutual decision as to the Dispute within 20 days after notice to the senior
officers of the Dispute, the parties shall then attempt to resolve such Dispute
by mediation in accordance with the terms and provisions set forth in the
following paragraph.
(b) The parties agree that if the Senior Officers are unable to
resolve the Dispute pursuant to the preceding paragraph, either party may submit
the Dispute to JAMS, Inc. (XXX.XXXXXXX.XXX and 000-000-0000, "JAMS"), or its
successor, for mediation, and if the Dispute is not resolved through mediation,
then it shall be submitted to JAMS, or its successor, for final and binding
arbitration. Any party to this Agreement may commence mediation by providing to
JAMS and the other parties a written request for mediation, setting forth the
subject of the Dispute and the relief requested. The parties will cooperate with
JAMS and with one another in selecting a mediator from JAMS' panel of neutrals,
and in scheduling the mediation proceedings promptly, not later than 20 days
after such request for mediation. The parties covenant that they will
participate in the mediation in good faith, and that they will share equally in
its costs. All offers, promises, conduct and statements, whether oral or
written, made in the course of the mediation by any of the parties, their
agents, employees, experts and attorneys, and by
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EXHIBIT G
the mediator or any JAMS employees, are confidential, privileged and
inadmissible for any purpose, including impeachment, in any arbitration or other
proceeding involving the parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation. Any party may initiate
arbitration with respect to the Disputes submitted to mediation by filing a
written demand for arbitration at any time following the initial mediation
session or 45 days after the date of filing the written request for mediation,
whichever occurs first. The mediation may continue after the commencement of
arbitration if the parties so desire. Unless otherwise agreed by the parties,
the mediator shall be disqualified from serving as arbitrator in the case. The
provisions of this Clause may be enforced by any court of competent
jurisdiction, and the party seeking enforcement shall be entitled to an award of
all costs, fees and expenses, including attorneys' fees, to be paid by the party
against whom enforcement is ordered.
16. FURTHER ASSURANCES. Each of the parties shall take, from time-to-time
and without additional consideration, such further actions and execute such
additional instruments as may be reasonably necessary or convenient to implement
and carry out the intent and purpose of this Agreement.
17. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement contains the
entire understanding of the parties and supersedes all prior agreements and
understandings between the parties relating to the subject matter hereof. This
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and it shall not be necessary that the signatures of more than one
party be contained on any counterpart. Each counterpart shall be deemed an
original, but all counterparts together shall constitute one and the same
instrument.
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EXHIBIT G
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
AMERALIA, INC. NATURAL SODA HOLDINGS, INC.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxx X. Xxxx
------------------------------------- ------------------------------
Name: Xxxx X. Xxxx Name: Xxxx X. Xxxx
Title: President Title: Chairman
NATURAL SODA, INC.
By: /s/ Xxxx X. Xxxx
------------------------------
Name: Xxxx X. Xxxx
Title: Chairman
SENTIENT EXECUTIVE GP I, LIMITED, ON SENTIENT (AUST) PTY. LIMITED, AS
BEHALF OF THE GENERAL PARTNER OF TRUSTEE OF SENTIENT GLOBAL
SENTIENT GLOBAL RESOURCES FUND I, L.P. RESOURCES TRUST NO. 1
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------------- ------------------------------
Xxxx X. Xxxxxxx, Director Xxxxx Xxxxxxx, Director
MANAGEMENT AND COST REIMBURSEMENT AGREEMENT
