AGREEMENT
1. Parties
1.1. This Agreement is made and entered into effective as of July 11,
2000 (the "Effective Date"), by and between United States Antimony
Corporation, and Thomson Kernaghan & Co. Ltd., individually and as agent for
the Purchasers, and the Purchasers identified on Exhibit G.
2. Definition and Accounting Terms
2.1. Definitions. As used in this Agreement:
2.1.1. "Affiliate" means any Person (i) that directly or indirectly
controls, or is controlled by, or is under common control with the Company or
a Subsidiary; or (ii) that directly or indirectly beneficially owns or holds
five percent (5%) or more of any class of voting stock of the Company or any
Subsidiary; or (iii) five percent (5%) or more of the voting stock of which
is directly or indirectly beneficially owned or held by the Company or a
Subsidiary.
2.1.2. "Agent" means Thomson Kernaghan & Col. Ltd., a corporation
incorporated under the laws of Ontario, for itself and as agent for the
Purchasers
2.1.3. "Agent's Fee" shall have the meaning ascribed in paragraph
13.12 of this Agreement.
2.1.4. "Agent's Principal Office" means the Agent's principal
office at 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X 0X0.
2.1.5. "Agent's Warrant" shall have the meaning ascribed in
paragraph 6.2 of this Agreement, and shall be in the form of
Exhibit C.
2.1.6. "Agreement" means this Securities Purchase Agreement, as
amended, supplemented or modified from time to time.
2.1.7. "Capital Lease" means all leases that have been or should be
capitalized on the books of the lessee in accordance with GAAP.
2.1.8. "City" means the City of Moscow, Idaho.
2.1.9. "Closing Bid Price" shall mean the closing bid price per
share of the Common Stock on a Trading Day reported by Bloomburg L.P.
2.1.10. "Closing Date" means the date, time and place at which a
purchase and sale of Debentures closes, or such other date, time and place
as the Agent and the Company may agree in writing to be the Closing Date.
2.1.11. "Code" means the US Internal Revenue Code of 1986, as
amended from time to time, and the regulations and published interpretations
thereof.
2.1.12. "Common Stock" means the Company's common stock, US$.01 par
value.
2.1.13. "Commonly Controlled Entity" means an entity, whether or not
incorporated, that is under common control with the Company, within the
meaning of Section 414(b) or 414(c) of the Code.
2.1.14. "Company" means United States Antimony Corporation, a
corporation incorporated under the laws of the U.S. state of Montana.
2.1.15. "Control" (whether or not capitalized) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
2.1.16. "Conversion Shares" means the aggregate number of shares of
Common Stock into which the Debentures are convertible.
2.1.17. "Debentures" shall mean the Company's 10% Convertible Debentures
due June 30, 2002, in the aggregate principal amount of up to $1,500,000, in
the form of Exhibit A to this Agreement.
2.1.18. "Debt" means (i) indebtedness or liability for borrowed money;
(ii) obligations evidenced by bonds, debentures, Debentures or other similar
instruments; (iii) obligations for the deferred purchase price of property or
services (including trade obligations); (iv) obligations under Capital Leases;
(v) obligations under letters of credit; (vi) obligations under acceptance
facilities; (vii) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent obligations
to purchase, to provide funds for payment, to supply funds to invest in any
Person or entity, or otherwise to assure a creditor against loss; and (viii)
all obligations secured by any Liens, whether or not the obligations have been
assumed.
2.1.19. "Default" means any of the events specified in paragraph 12.1,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
2.1.20. "XXXXX" means the computer system maintained by the SEC for the
receipt, acceptance, review and dissemination of documents submitted to it in
electronic format.
2.1.21. "Effective Date" means the date set forth in paragraph 1.1 of this
Agreement.
2.1.22. "Escrow Agreement" means the Escrow Agreement between the Company
and the Agent dated as of the Effective Date, in the form of Exhibit E to this
Agreement.
2.1.23. "Escrow Shares" shall have the meaning ascribed in paragraph
10.2.3 of this Agreement.
2.1.24. "Estate" means the Estate of Xxxxx X. Xxxxxxxx, Deceased.
2.1.25. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations and published
interpretations thereof.
2.1.26. "Event of Default" means any of the events specified in Section
12.1, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
2.1.27. "Exchange Act" means the United States of America. Securities
Exchange Act of 1934, as amended.
2.1.28. "FSB" means the First State Bank of Thomson Falls, Montana.
2.1.29. "FSB Escrow Instructions" means the written Escrow Instructions
for the First State Bank of Thomson Falls, Montana, dated June __, 2000, to
which Thomson Kernaghan, the City, the Estate, the Company and FSB are
parties.
2.1.30. "GAAP" means generally accepted accounting principles in the U.S.
2.1.31. "Holder" mean the holder of a Debenture.
2.1.32. "Initial Closing Date" means the date on which the purchase and
sale of the Initial Debentures closes, which shall be July 19, 2000, or such
other date as the Agent and the Company may agree in writing to be the Initial
Closing Date.
2.1.33. "Initial Debentures" shall have the meaning ascribed in paragraph
5.5 of this Agreement.
2.1.34. "Known" or "Knowledge" means, with respect to any party, the
knowledge of such party's executive officers after reasonable inquiry.
2.1.35. "Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement or
preferential arrangement, charge or encumbrance of any kind or nature
whatsoever (including without limitation any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement, charge or similar notice under the law of any jurisdiction to
evidence any of the foregoing.
2.1.36. "Material Adverse Effect" means with respect to the Company, any
event, change circumstance or effect that is reasonably likely to be
materially adverse to (i) the business, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole, other than
any event, change, circumstance or effect relating (x) to the economy or
financial markets in general, or (y) in general to the industries in which the
Company or its Subsidiaries operate and not specifically relating to the
Company or its Subsidiaries; or (ii) the ability of the Company to consummate
the transactions contemplated by this Agreement.
2.1.37. "Multiemployer Plan" means a Plan described in Section 4001(a)(3)
of ERISA.
2.1.38. "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
2.1.39. "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
2.1.40. "Plan" means any pension plan which is covered by Title IV of
ERISA and in respect of which the Company or a Commonly Controlled Entity is
an "employer" as defined in Section 3(5) of ERISA.
2.1.41. "Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
2.1.42. "Purchaser" means a Person who purchases a Debenture pursuant to
this Agreement, which may include the Agent.
2.1.43. "Purchaser's Warrant" shall have the meaning ascribed in paragraph
6.1 of this Agreement, and shall be in the form of Exhibit B.
2.1.44. "Registration Rights Agreement" shall have the meaning ascribed in
paragraph 7.1 of this Agreement and shall be in the form of Exhibit D.
2.1.45. "Reportable Event" means any of the events set forth in Section
4043 of ERISA.
2.1.46. "Restricted Settlement Shares" shall have the meaning ascribed in
paragraph 3.1.2 of this Agreement.
2.1.47. "SEC" means the Securities and Exchange Commission of the United
States of America.
2.1.48. "SEC Documents" means all forms, statements, reports and other
documents and information that the Company has filed and in the future may
file with the SEC.
2.1.49. "Securities Act" means the U.S. Securities Act of 1933, as
amended.
2.1.50. "Settlement Agreement" means the Settlement Agreement and Release
of All Claims dated June 30, 2000, between the Company and the Estate.
2.1.51. "Subsidiary" means a corporation of which shares of stock having
ordinary voting power (other than stock having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors
or other managers of that corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by the Company.
2.1.52. "Trading Day" means any day, other than a Saturday or Sunday, on
which the New York Stock Exchange is open for business.
2.1.53. "Transaction Documents" means this Agreement, the Debentures, the
Purchaser's Warrant, the Agent's Warrant, the Escrow Agreement and the
Registration Rights Agreement.
2.1.54. "Unrestricted Settlement Shares" shall have the meaning ascribed
in paragraph 3.1.2 of this Agreement.
2.1.55. "U.S." means the United States of America.
2.1.56. "Warrant Shares" means the aggregate number of shares of Common
Stock issuable upon exercise of the Warrants.
2.1.57. "Warrants" means the Purchasers' Warrant and the Agent's Warrant.
2.2. Singular and Plural Terms. As used in this Agreement, terms defined
in the singular have the same meaning when used in the plural, and terms
defined in the plural have the same meaning when used in the singular.
2.3. Accounting Terms. All accounting terms not specifically defined in
this Agreement shall be construed in accordance with GAAP. All financial data
submitted pursuant to this Agreement shall be prepared in accordance with
GAAP.
2.4. Currency. All currency described or otherwise referred to in the
Transaction Documents is the currency of the United States of America.
3. Recitals
3.1. This Agreement is made with reference to the following facts and
circumstances:
3.1.1. The Company and the Estate have entered into the Settlement
Agreement.
3.1.2. Under the terms of the Settlement Agreement the Company has agreed,
among other things, (i) to pay the Estate $500,000, (ii) to arrange for the
purchase of 614,000 unrestricted shares of Common Stock (the "Unrestricted
Settlement Shares") from the estate by a third party for $90,340, and (iii) to
issue and deliver to the Estate 250,000 restricted shares of Common Stock (the
"Restricted Settlement Shares").
3.1.3. At the Company's request, the Agent has agreed to arrange for the
purchase of up to $1,500,000 in aggregate principal amount of Debentures, and
to purchase the Unrestricted Settlement Shares, on the terms and subject to
the conditions set forth in this Agreement. The proceeds from the sale of the
Debentures will allow the Company to pay the Estate $500,000 as required by
the Settlement Agreement.
3.1.4. The performance of the Settlement Agreement will allow the Company,
the Estate and the City to conclude certain transactions among them described
in the FSB Instructions.
3.1.5. The Agent is willing to purchase the Unrestricted Settlement Shares
and arrange for the purchase of Debentures, on the terms and subject to the
conditions set forth in this Agreement.
3.2. In consideration of the mutual promises contained in this Agreement
and in order to carry out the purpose and intent of the parties set forth in
paragraph 3.1 above, the Company and the Agent have entered into this
Agreement.
4. Performance of Settlement Agreement.
4.1. On the Initial Closing Date, and subject to the satisfaction
of the conditions set forth in this Agreement, (i) the Agent agrees to
purchase, as the third party contemplated by the Settlement Agreement, the
Unrestricted Settlement Shares from the Estate for the purchase price of
$90,340; and (ii) Company shall pay the Estate $500,000 and shall issue and
deliver the Restricted Settlement Shares to Estate.
5. Purchase and Sale of Debentures
5.1. Initial Purchase of Debentures. On the Initial Closing Date, and
subject to the satisfaction of the conditions set forth in paragraph 8.1 of
this Agreement, the Agent agrees to purchase, for the account of the
Purchasers, $600,000 in aggregate principal amount of Debentures (the "Initial
Purchase"), at a price equal to 100% of the face amount thereof.
5.2. Subsequent Purchase of Debentures. At the Company's request, and
subject to the satisfaction of the conditions set forth in paragraph 8.2 of
this Agreement, the Agent agrees to purchase, for the account of the
Purchasers who will be identified on a supplemental Exhibit G on the Closing
Date of each subsequent purchase of Debentures, up to an additional $900,000
in aggregate principal amount of Debentures; provided, however, that the Agent
shall not be obligated to purchase more than $200,000 in principal amount of
Debentures in any thirty (30) day period. The Company shall give the Agent at
least ten (10) Trading Days' notice of any request for the purchase of
additional Debentures, specifying the date and amount thereof.
5.3. Manner of Funding. The Company shall give the Agent written wiring
instructions for the disbursement of the Debenture proceeds, which shall be
either by check or wire transfer as the Company shall designate, and if by
wire transfer the notice shall specify the name, address and ABA routing
number for the Bank, and the Company's account number to be credited with the
proceeds.
5.4. Interest. The Company shall pay interest to Purchasers on the
outstanding and unpaid principal amount of the Loans at the rate of ten
percent (10%) per year, calculated on the basis of a year of 360 days
comprised of twelve 30-day months. Interest shall be payable upon any
prepayment of principal and at maturity, at the Agent's principal office.
5.5. The Debentures. The Debentures shall be in substantially the form of
Exhibit A attached to this Agreement with blanks appropriately filled in,
payable to the order of the Agent or the Purchaser purchasing the same, as the
Agent may specify. The Debentures evidencing the Initial Purchase are referred
to as the "Initial Debentures." Each Debenture shall be dated the date on
which the Agent advances proceeds to the Company, and each of the Debentures
shall be due and payable on the second anniversary of the Closing Date. At any
time beginning thirty (30) days after the Closing Date and prior to their
respective payment in full, all or any part of the principal and interest of
each Debenture may, at the option of the Holder, but subject to the limitation
set forth in paragraph 10.4 of this Agreement, be converted into Common Stock
(the "Conversion Shares"), at a price per share equal to seventy-five percent
(75%) of the average of the three (3) lowest Closing Bid Prices in the twenty
(20) Trading Days immediately preceding (i) the Effective Date or (ii) the
Conversion Date, whichever is lower; provided, however, that the conversion
price shall not exceed ninety cents ($.90) per share; and further provided
that such conversion rights are exercisable only to the extent that there is
sufficient authorized, unissued and unreserved Common Stock available for such
conversion. The number of Conversion Shares and the minimum conversion price
shall be adjusted to reflect (among other events affecting Company's
capitalization) the 3:1 reverse stock split to be effectuated under paragraph
8.2.3 of this Agreement.
5.6. Prepayments. The Company may prepay any Debentures, in whole or in
part, without the Holder's prior written consent.
5.7. Method of Payment. The Company shall make each payment under this
Agreement and under the Debentures at the Agent's principal office not later
than 2:00 P.M., Toronto time on the date when due in lawful currency of the
United States of America and in immediately available funds. Whenever any
payment to be made under this Agreement or under the Debentures shall be
stated to be due on a day other than a Trading Day, such payment shall be made
on the next succeeding Trading Day, and such extension of time shall in such
case be included in the computation of interest due on the Loan.
5.8. Use of Proceeds. The Company shall use the proceeds from the sale of
the Initial Debentures solely for the following purposes and in the following
order and priority: (a) to pay the Agent's Fee; (b) to pay the fees and
expenses of the Agent's counsel in the negotiation and preparation of this
Agreement, not however to exceed $15,000; (c) to pay the Estate the sum of
$500,000 pursuant to the Settlement Agreement; (d) to fund the Company's
performance of all of its other obligations under the Settlement Agreement and
the FSB Escrow; and (e) for the Company's working capital purposes. The
Company shall use the proceeds from the sale of subsequent Debentures solely
for the following purposes and in the following order and priority: (a) to pay
the Agent's Fee; and (b) for the Company's working capital purposes. The
Company hereby authorizes the Agent to withhold from Debenture sale proceeds
the amounts necessary to pay the Agent's Fee and, in connection with the
Initial Purchase only, the fees and expenses of Agent's counsel.
6. Warrants
6.1. Purchasers' Warrant. On the Closing Date, the Company shall issue
and deliver to the Agent for the account of the Purchasers, pro rata,
according to the percentage of the total principal amount of the Debentures
that each Purchaser purchases, a warrant in the form of Exhibit B hereto (the
"Purchasers' Warrant") to purchase the number of shares of Common Stock (the
"Purchasers' Warrant Shares) determined by multiplying .25 by the face amount
of Debentures being sold at such Closing Date and by dividing the resulting
figure by the Closing Bid Price on the Trading Day immediately preceding the
Effective Date, at a price per share equal to the Closing Bid Price on the
Trading Day immediately preceding the Effective Date.
6.2. Agent's Warrant. On the Closing Date, the Company shall issue and
deliver to the Agent, for the Agent's own account, a warrant in the form of
Exhibit C hereto (the Agent's Warrant") to purchase the number of shares of
Common Stock (the "Agent's Warrant Shares) determined by dividing $375,000 by
the Closing Bid Price on the Trading Day immediately preceding the Effective
Date, at a price per share equal to the Closing Bid Price on the Trading Day
immediately preceding the Effective Date.
6.3. Limitations on Exercise of Warrants. The Purchaser's Warrants and
the Agent's Warrants are exercisable only to the extent that there is
sufficient authorized, unissued and unreserved Common Stock available for such
exercise. The rights of the Purchaser and the Agent to exercise their
respective Warrants are subject to the further limitation set forth in
paragraph 10.4 hereof.
6.4. Adjustment. The number of Warrant Shares and the minimum exercise
price shall be adjusted to reflect (among other events affecting Company's
capitalization) the 3:1 reverse stock split to be effectuated under paragraph
8.2.3 of this Agreement. [X. Xxxx to provide clarifying language.]
7. Registration Rights Agreement
7.1. Registration of Common Stock Underlying Debentures and Warrants.
Contemporaneously with the execution of this Agreement, the Company shall
execute and deliver to the Agent a Registration Rights Agreement in the form
of Exhibit D hereto (the "Registration Rights Agreement"). The Company shall
register the issuance, sale and resale of the Conversion Shares and the
Warrant Shares in accordance with the provisions of the Registration Rights
Agreement.
8. Conditions Precedent
8.1. Conditions Precedent to the Agent's and Purchasers' Obligations to
Purchase the Unrestricted Settlement Shares and Initial Debentures. The
obligation of the Agent to purchase the Unrestricted Settlement Shares and to
purchase the Initial Debentures for the account of the Purchasers is subject
to the following conditions precedent:
8.1.1. The Settlement Agreement and the FSB Escrow shall be in full force
and effect.
8.1.2. Each of the Company, the Estate, the City and FSB shall have
confirmed their intent to complete the transactions contemplated by the
Settlement Agreement and the FSB Escrow contemporaneously with the Company's
sale of the Initial Debentures, and the Agent shall have received satisfactory
evidence thereof.
8.1.3. The Agent shall have received, on or before the Initial Closing
Date, each of the following, in form and substance satisfactory to the Agent
and its counsel:
8.1.3.1. Initial Debentures. The Initial Debentures, duly executed by the
Company;
8.1.3.2. Evidence of all corporate action by the Company. Certified (as
of the Closing Date) copies of all corporate action taken by the Company,
including resolutions of its Board of Directors, authorizing the execution,
delivery, and performance of the Transaction Documents and each other
document to be delivered pursuant to this Agreement;
8.1.3.3. Incumbency and signature certificate of the Company. A
certificate (dated as of the Closing Date) of the Secretary of the Company
certifying the names and true signatures of the officers of the Company
authorized to sign the Transaction Documents and any other documents to be
delivered by the Company under this Agreement;
8.1.3.4. Purchasers' Warrants. Purchasers' Warrants for the number of
shares of Common Stock determined under paragraph 6.1 of this Agreement;
8.1.3.5. Agent's Warrant. The Agent's Warrant for the number of shares of
Common Stock determined under paragraph 6.2 of this Agreement;
8.1.3.6. Registration Rights Agreement. The Registration Rights
Agreement;
8.1.3.7. Escrow Agreement. The Escrow Agreement;
8.1.3.8. Opinion of counsel for the Company. A favorable opinion of
counsel for the Company, in substantially the form of Exhibit F hereto, and as
to such other matters as the Agent may reasonably request.
8.1.4. Escrow Shares. The Company shall have deposited with the Escrow
Holder the lesser of the required amount of Escrow Shares pursuant to
paragraph 10.2.3 of this Agreement or the number of Company's remaining
authorized unissued and previously unreserved shares of Common Stock. The
Agent and the Purchasers acknowledge that Company will not have sufficient
shares of authorized and unissued and unreserved shares to fund the escrow at
the Initial Closing Date.
8.2. Conditions Precedent to Company's Obligations. Company's obligations
under this Agreement are subject to the following conditions precedent:
8.2.1. The Settlement Agreement and the FSB Escrow shall be in full force
and effect.
8.2.2. Each of the Estate, the City and FSB shall have confirmed their
intent to complete the transactions contemplated by the Settlement Agreement
and the FSB Escrow contemporaneously with the Company's sale of the Initial
Debentures, and the Company shall have received satisfactory evidence thereof.
8.2.3. Agent and each Purchaser shall have executed and delivered a
counterpart of the Agreement.
8.3. Conditions Precedent to Purchase of Additional Debentures. The
obligation of the Purchasers to purchase additional Debentures shall be
subject to the further conditions precedent that on the Closing Date with
respect to that purchase:
8.3.1. The following statements shall be true and the Agent shall have
received a certificate signed by a duly authorized officer of the Company,
dated the date of such Loan, stating that (i) the representations and
warranties contained in Section 9.1 of this Agreement, are correct on and as
of the Closing Date of such purchase as though made on and as of such date;
and (ii) no Default or Event of Default has occurred and is continuing, or
would result from such purchase;
8.3.2. The Agent shall have received a detailed statement of the
anticipated use of proceeds from the additional Debentures, reasonably
satisfactory to the Agent, certified by the Company's chief financial officer
and chief executive officer;
8.3.3. The Agent shall have received Debentures and Purchasers' Warrants
with respect to the additional Debentures;
8.3.4. The Agent shall have received such other approvals, opinions, or
documents as the Agent may reasonably request;
8.3.5. The Company shall have effected a 1 for 3 reverse split of the
Common Stock, or shall have effected an increase in the number of authorized
shares of Common Stock, so that the aggregate number of authorized and
unissued shares of Common Stock authorized is, on a fully diluted basis,
sufficient to enable the Company to contingently issue and deliver to the
Escrow Holder all of the Conversion Shares and Warrant Shares required by
paragraph 10.2.3 of the Agreement.
8.3.6. Escrow Shares. The Company shall have deposited the required amount
of Escrow Shares with the Escrow Holder pursuant to paragraph 10.2.3 of this
Agreement.
8.3.7. The Company shall have filed the Registration Statement required
under the Registration Rights Agreement; and
8.3.8. For each of the thirty (30) Trading Days immediately preceding such
Closing Date, (i) the Closing Bid Price shall have been above $0.50 (adjusted
for any stock splits or reverse splits, or any reduction in the number of
shares of outstanding Common Stock), and (ii) the number of shares of Common
Stock traded shall be more than 30,000 (adjusted for any stock splits or
reverse stock splits, or any reduction in the number of shares of outstanding
Common Stock).
8.4. Conditions Precedent to Company's Obligation to Sell Additional
Indentures. The obligation of Company to sell additional Debentures shall be
subject to the further conditions precedent that on the Closing Date with
respect to that sale:
8.4.1. Each of the subsequent Purchasers shall have been identified on a
supplement Exhibit G and shall have executed and delivered a counterpart of
this Agreement.
8.4.2. The Company shall have effected a 1 for 3 reverse split of the
Common Stock, or shall have effected an increase in the number of authorized
shares of Common Stock, so that the aggregate number of authorized and
unissued shares of Common Stock authorized is, on a fully diluted basis,
sufficient to enable the Company to contingently issue and deliver to the
Escrow Holder all of the Conversion Shares and Warrant Shares required by
paragraph 10.2.3 of the Agreement.
8.4.3. The SEC shall have accepted for filing the Registration Statement
required under the Registration Right Agreement.
9. Representations and Warranties
9.1. Company's Representations and Warranties. The Company represents and
warrants to the Purchasers that:
9.1.1. Incorporation, Good Standing, and Due Qualification. Each of
Company and its Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation; has the corporate power and authority to own its assets and to
transact the business in which it is now engaged and proposes to be engaged
in; and is duly qualified as a foreign corporation and in good standing under
the laws of each other jurisdiction in which such qualification is required.
The Company has no Subsidiaries.
9.1.2. Capitalization. The capital stock of the Company consists of (i)
10,000,000 shares of preferred stock, $.01 par value, of which 4,500 shares
have been designated Series A, all of which are issued and outstanding,
750,000 shares have been designated Series B, all of which are issued and
outstanding, and 205,966 shares have been designated Series C, all of which
are issued and outstanding; and (ii) 20,000,000 shares of common stock, $.01
par value, of which 17,989,747 are issued and outstanding and 1,010,000 are
subject to and reserved for issuance upon exercise of outstanding options,
covenants and other rights to acquire Common Stock.
9.1.3. Corporate Power and Authority. Except for the shareholder action
contemplated by Section 10.2 and the fact that the Company has insufficient
authorized, unissued and unreserved Common Stock to permit the issuance of the
Conversion Shares and warrant Shares, the execution, delivery and performance
by the Company of the Transaction Documents have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of its shareholders; (ii) contravene its charter or bylaws; (iii)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Company or any Subsidiary; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Company or any Subsidiary is
a party or by which it or its properties may be bound or affected; (v) result
in or require the creation or imposition of any Lien upon or with respect to
any to the properties now owned or hereafter acquired by the Company or any
Subsidiary; and (vi) cause the Company or any Subsidiary to be in default
under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award, or any such indenture, agreement, lease or
instrument.
9.1.4. Legally Enforceable Agreement. This Agreement is, and each of the
other Transaction Documents when delivered under this Agreement will be,
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
9.1.5. Financial Statements. Each financial statement of the Company
contained in the SEC Documents filed as of the Effective Date is complete and
correct, and fairly presents the financial condition of the Company and its
Subsidiaries as at the dates set forth therein and the results of the
operations of the Company and its Subsidiaries for the periods covered by such
statements, all in accordance with GAAP consistently applied (subject to year
end adjustments in the case of the interim financial statements). Since March
31, 2000, there has been no material adverse change in the condition
(financial or otherwise), business, or operations of the Company or any
Subsidiary. There are no liabilities of the Company or any Subsidiary, fixed
or contingent, which are material but are not reflected in the SEC Documents
publicly available on XXXXX, other than liabilities arising in the ordinary
course of business since March 31, 2000.
9.1.6. Full Disclosure. No SEC Document filed as of the Effective Date,
and no information, exhibit or report furnished by the Company to the Agent or
any Purchaser in connection with the negotiation of this Agreement (including
any schedule or exhibit attached hereto) contains any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading.
9.1.7. Labor Disputes and Acts of God. Neither the business nor the
properties of the Company or any Subsidiary are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance) materially and adversely
affecting such business properties or the operation of the Company or such
Subsidiary.
9.1.8. Other Agreements. Except as set forth in the SEC Documents
publicly available on XXXXX or on Schedule 9.1.8, neither the Company nor any
Subsidiary is a party to any indenture, loan, or credit agreement, or to any
lease or other agreement or instrument, or subject to any charter or corporate
restriction which could have a material adverse effect on the business,
properties, assets, operations, or conditions, financial or otherwise, of the
Company or such Subsidiary, or on the Company's ability to perform its
obligations under the Transaction Documents. Neither the Company nor any
Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in
any agreement or instrument material to its business to which it is a party.
9.1.9. Litigation. Except as set forth in the SEC Documents publicly
available on XXXXX or on Schedule 9.1.9, there is no pending or threatened
action or proceeding against or affecting the Company or any Subsidiary before
any court, governmental agency, or arbitrator which may, in any one case or in
the aggregate, materially adversely affect the financial condition,
operations, properties, or business of the Company or such Subsidiary, or the
ability of the Company to perform its obligations under the Transaction
Documents.
9.1.10. No Defaults. Except as set forth in the SEC Documents publicly
available on XXXXX or on Schedule 9.1.10, each of the Company and, to the
Company's knowledge, its Subsidiaries, is not in material default with respect
to any judgment, writ, injunction or decree, or to the company's knowledge,
with respect to any rule or regulation of any court, arbitrator, or federal,
state municipal, or other governmental authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
9.1.11. Ownership and Liens. Each of the Company and its Subsidiaries has
title to, or valid leasehold interests in, all of its properties and assets,
real and personal, including without limitation, all patents, trademarks and
other intellectual property, and including the properties and assets and
leasehold interest reflected in the financial statements referred to in
paragraph 9.1.5 of this Agreement (other than any properties or assets
disposed of in the ordinary course of business), and none of the properties
and assets owned by the Company or any Subsidiary, and none of its leasehold
interests, is subject to any Lien.
9.1.12. ERISA. Except as set forth in the SEC Documents publicly
available on Xxxxx or on Schedule 9.1.12, each of the Company and, to the
Company's knowledge, its Subsidiaries, is in material compliance with all
applicable provisions of ERISA, and neither a Reportable Event nor an
Prohibited Transaction has occurred and is continuing with respect to any
Plan.
9.1.13. Operation of Business. The Company possesses all licenses,
permits, franchises, patents, copyrights, trademarks, and trade names, or
rights thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted, and the Company is not in violation of any
valid rights of others with respect to any of the foregoing.
9.1.14. Taxes. Except as set forth in the SEC Documents publicly
available on XXXXX or on Schedule 9.1.15, the Company and each Subsidiary have
filed all tax returns (federal, state, and local) required to be filed.
9.1.15. Debt. Set forth in the SEC Documents publicly available on XXXXX
or on Schedule 9.1.15 is a complete and correct list of all credit agreements,
indentures, purchase agreements, guaranties, Capital Leases, and other
investments, agreements, and arrangements presently in effect providing for or
relating to extensions of credit (including agreements and arrangements for
the issuance of letters of credit or for acceptance financing) in respect of
which the Company is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, which are
outstanding and which can be outstanding, are correctly stated, and all Liens
of any nature given or agreed to be given as security therefor are correctly
described or indicated in the SEC Documents or on Schedule 9.1.15.
9.1.16. Environment. Except as set forth in the Sec Documents publicly
avaialble on XXXXX or as would not reasonably be expected to have a Material
Adverse Effect on the Company, the Clopnay and, to the Company's knowledge,
its Subsidiaries, have materially complied with, and their respective
businesses, operations, assets, equipment, property, leaseholds and other
facilities are in material compliance with, the applicable provisions of all
federal, state, and local environmental, health and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder.
9.1.17. Registration and Listing of Common Stock. The Company is a
reporting company and has continuously been a reporting company since 1995.
The Common Stock is registered under the Exchange Act and listed on the OTC
Bulletin Board. Since 1995, the Company has filed in an timely manner all SEC
Documents required of it by the Exchange Act, the rules and regulations of the
SEC, and the rules and regulations of the OTC Bulletin Board.
9.1.18. No U.S. Offering. The Company has not offered any of the
Debentures, the Conversion Shares, the Warrants or the Warrant Shares to, or
solicited such an offer from, a U.S. Person (as defined in SEC Rule 902(k)) or
to a Person in the United States.
9.1.19. Offshore Transaction. The negotiations for and the issuance of
the Debentures and the Warrants to the Agent has been made in an offshore
transaction as defined in SEC Rule 902(h).
9.1.20. No Directed Selling Efforts. The Company has not engaged in any
directed selling efforts, as defined in SEC Rule 902(c), with respect to the
Debentures and the Warrants.
9.1.21. Category 3 Securities. The Company has complied with all of the
conditions required of it under SEC Rules 903(a) and 903(b)(3) with respect
to the issuance of the Debentures and Warrants.
9.1.22. Exemption of Debentures and Warrants from Registration. The
Company's issuance of the Debentures and the Warrants is exempt from the
registration requirements of Section 5 of the Securities Act pursuant to the
provisions of Section 4(2)of the Act and SEC Regulation S. In making this
representation, Company has relied on the representations of Agent and each
Purchaser in paragraphs 9.2 and 9.3 of this Agreement.
9.2. Agent's Representations and Warranties. The Agent represents and
warrants to the Company that:
9.2.1. Accredited Investor. It is and each Purchaser will be an
accredited investor as that term is defined in Rule 501(a)(3) of Regulation D
of the SEC.
9.2.2. U. S. Persons. It is not and no Purchaser will be a U.S. Person as
defined in SEC Rule 902(k).
9.2.3. It has complied and each Purchaser will comply with all of the
conditions required of it by SEC Rules 903(a) and 903(b)(3) to be complied
with by it in connection with the transactions contemplated by this Agreement.
9.2.4. All offers and sales of the Debentures and related Warrants to
Purchasers have been and will be made only in accordance with SEC Rule 903, or
pursuant to registration under the Securities Act, or pursuant to an available
exemption from the registration requriements of the Securities Act.
9.3. Purchasers' Representations and Warranties. Each Purchaser represents
and warrants to the Company that:
9.3.1. Accredited Investor. It is an accredited investor as that term is
defined in Rule 501(a)(3) of Regulation D of the SEC.
9.3.2. U. S. Persons. It is not a U.S. Person as defined in SEC Rule
902(k).
9.3.3. It has complied with all of the conditions required of it by SEC
Rule 903(b)(3) to be complied with by it in connection with the transactions
contemplated by this Agreement.
10. Affirmative Covenants
10.1. Financial and Operational Covenants. So long as any of the
Debentures shall remain unpaid or unconverted, and until all of the Warrants
have been fully exercised or expired, the Company will:
10.1.1. Maintenance of Existence. Preserve and maintain, and cause each
Subsidiary to preserve and maintain, its corporate existence and good standing
in the jurisdiction of its incorporation, and qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
required.
10.1.2. Maintenance of Records. Keep, and cause each Subsidiary to keep,
adequate records and books of account, in which complete entries will be made
in accordance with GAAP consistently applied, reflecting all material
financial transactions of the Company and each Subsidiary.
10.1.3. Maintenance of Properties. Maintain, keep and preserve, and cause
each Subsidiary to maintain, keep and preserve, all of its properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
10.1.4. Conduct of Business. Continue, and cause each
Subsidiary to continue, to engage in an efficient and economical manner in a
business of the same general type as conducted by it on the date of this
Agreement.
10.1.5. Maintenance of Insurance. Maintain, and cause each
Subsidiary to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from its coverage.
10.1.6. Compliance With Laws. Materially comply, and cause
each Subsidiary to materially comply, with all applicable laws, codes,
regulations, rules, ordinances and orders, including without limitation paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, if and to the extent
noncompliance would reasonably be expected to have a Material Adverse Effect
on the Company.
10.1.7. Right of Inspection. At any reasonable time and from
time to time, permit the Agent or any Purchaser, or any of their agents or
representatives, to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the Company, and to
discuss its affairs, finances and accounts with any of its officers,
directors and independent accountants.
10.1.8. Reporting Requirements. Furnish to the Agent:
10.1.8.1. Quarterly Financial Statements. The Company's reports on Form 10-Q
or 10-QSB contemporaneously with their filing with the SEC.
10.1.8.2. Annual Financial Statements. The Company's annual reports on Form
10-K or 10-KSB contemporaneously with their filing with the SEC.
10.1.8.3. Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Company or any Subsidiary by independent accountants
in connection with their examination of the financial statements of the
Company.
10.1.8.4. Certificate of No Default. Within twenty-five (25) days after the
end of each month a certificate of the Company's chief financial officer
certifying that to the best of his or her knowledge no Default or Event of
Default has occurred and is continuing or, if a Default or Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action that is proposed to be taken with respect thereto.
10.1.8.5. Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality (domestic or
foreign) or arbitrator, affecting the Company, which, if determined adversely
to the Company, could have a material adverse effect on the financial
condition, properties or operations of the Company.
10.1.8.6. Notice of Defaults and Events of Default. As soon as possible and
in any event within ten (10) days after the occurrence of each material
Default or material Event of Default, a written notice setting forth the
details of such Default or Event of Default and the action that is proposed to
be taken by the Company with respect thereto.
10.1.8.7. The Company's Reporting and Listing Status. The Company shall be
and remain a reporting company under the Exchange Act, and shall file in a
timely manner all SEC Documents required by the Exchange Act or SEC
regulations to be filed by a reporting company; and the Company shall cause
its Common Stock to continuously be quoted on the OTC Bulletin Board or listed
on a Nasdaq market. The Company shall apply for listing on the Nasdaq Small
Cap Market as soon as it is eligible therefor.
10.1.8.8. ERISA reports. As soon as possible, and
in any event within thirty (30) days after the Company knows or has reason to
know that any circumstances exist that constitute grounds entitling the PBGC
to institute proceedings to terminate a Plan subject to ERISA with respect to
the Company or any Commonly Controlled Entity, and promptly but in any event
within two (2) Trading Days of receipt by the Company or any Commonly
Controlled Entity of notice that the PBGC intends to terminate a Plan or
appoint a trustee to administer the same, and promptly but in any event within
five (5) Trading Days of the receipt of notice concerning the imposition of
withdrawal liability with respect to the Company or any Commonly Controlled
Entity, the Company will deliver to the Agent a certificate of the chief
financial officer of the Company setting forth all relevant details and the
action which the Company proposes to take with respect thereto.
10.1.8.9. Reports to Other Creditors. Promptly
after the furnishing thereof, copies of any statement or report furnished by
the Company or any Subsidiary to any other party pursuant to the terms of any
indenture, loan, credit or similar agreement and not otherwise required to be
furnished to the Agent pursuant to any other clause of this Agreement.
10.1.8.9. Other Regulatory Reports and Filings.
Promptly after the sending or filing thereof, copies of all proxy statements,
financial statements and reports that the Company or any Subsidiary sends to
its shareholders, and copies of all regular, periodic and special reports, and
all registration statements that the Company files with the securities
regulatory authorities of any country, province or state, or with any
securities exchange.
10.1.8.10 General Information. Such other information
respecting the condition or operations, financial or otherwise, of the Company
as the Agent or any Purchaser may from time to time reasonably request.
10.2. Additional Covenants. The Company hereby further covenants and agrees
with the Agent that: .
10.2.1. Shareholders Meeting. As soon as possible and in any event within
120 days of the Effective Date the Company shall hold a shareholders meeting
for the purpose of reducing the number of outstanding shares of Common Stock
or increasing the number of authorized shares of Common Stock available for
issuance in order to satisfy the requirements of paragraph 10.2.2. The
Company shall solicit proxies in favor of that action, and shall cause its
directors and officers, who are holders of Common Stock to vote their shares
in favor thereof.
10.2.2. Adequate Available Shares of Common Stock. Subject to shareholder
approval pursuant to paragraph 10.2.1, the Company shall at all times keep an
adequate number duly authorized shares of Common Stock reserved and available
for issuance upon the conversion of Debentures and the exercise of Warrants.
If at any time the Company does not have such an adequate number of shares of
Common Stock reserved and available for issuance, then the Company shall
immediately call and within 120 days hold a special meeting of its
shareholders for the purpose of increasing the number of the Company's
authorized shares of Common Stock. The Company shall cause its directors,
officers, and employees who are holders of Common Stock to vote their shares
in favor of such increase in the Company's number of authorized shares of
Common Stock.
10.2.3. TK Escrow. Contemporaneously with the execution of this Agreement,
the Company shall execute an escrow agreement with the Agent as escrow holder
(the "Escrow Agreement") in the form of Exhibit E to this Agreement. On the
initial Closing Date, the Borrower shall deliver to the Escrow Holder a
certificate for number of shares equal to the lesser of the number of
authorized, unissued and unreserved shares of Common Stock or the sum of 150%
of the Conversion Shares for the Initial Debentures, calculated as if the
Initial Closing Date were the Conversion Date, plus 100% of the related
Warrant Shares. To the extent that the Company has not deposited a sufficient
number of shares of Common Stock to equal 150% of the Conversion Shares (as so
calculated) plus 100% of the related Warrant Shares in connection with the
Initial Purchase, within five (5) Trading Days after the Company receives
authorization from its shareholders pursuant to paragraph 10.2.1, the Company
shall deliver to the Escrow Holder a certificate for additional Conversion
Shares and Warrant Shares so that the aggregate number of Conversion Shares
and Warrant Shares held by the Escrow Holder equals 150% of the Conversion
Shares for outstanding Debentures, calculated as if the Initial Closing Date
were the Conversion Date, plus 100% of the Warrant Shares. As a condition
precedent to the Agent's obligation to purchase additional Debentures, the
Company shall deposit with the Escrow Holder 150% of the Conversion Shares
into which each such Debenture is convertible, calculated as if the Conversion
Date were the Closing Date with respect to such Debenture plus 100% of the
Warrant Shares. All shares of Common Stock deposited with the Escrow Holder
pursuant to this paragraph are referred to as the " Escrow Shares." Until the
Registration Statement is effective, the certificates shall bear an
appropriate restrictive legend. Except for such legend, all Escrow Shares
shall be free and clear of any legends, liens, claims, stop orders or other
restrictions. Within five (5) Trading Days after the effective date of the
Registration Statement, the Company shall cause the Escrow Shares to be
registered in the Agent's street name, in DTC form, free and clear of any
legends, liens, claims, stop orders or other restrictions.
10.2. The Purchasers' Covenants. The Purchasers (i) shall not offer,
sell or otherwise dispose of any securities issued to them respectively,
except in compliance with the provisions of Regulation S, or pursuant to
registration under the Securities Act, or pursuant to an available exemption
from such registration; and (ii) shall not to engage in hedging transactions
with regard to such securities unless in compliance with the Securities Act.
10.3. Limitation on Common Stock Ownership. Agent and each of the
Purchasers covenants and agrees that at no time shall it, either individually
or collectively with each other person deemed for purposes of Exchange Act
Regulation 13D to be a member of a group which includes it, beneficially own
in excess of 9.9% of the then issued and outstanding Common Stock (determined
on an undiluted basis). Debentures may be converted into Common Stock and
Warrants may be exercised for Common Stock only if and to the extent that,
following such conversion or exercise, it (or the group of which it is deemed
to be a member) beneficially owns less than ten percent (10%) of Company's
then outstanding Common Stock. For the purpose of this Agreement, beneficial
ownership of Common Stock shall be determined in accordance with Exchange Act
Rule 13d-3 (as amended).
11. Negative Covenants.
So long as any of the Debentures remains unpaid, or the Agent shall be
obligated to purchase Debentures under this Agreement, the Company will not:
11.1. Mergers, Etc. Wind up, liquidate or dissolve itself, reorganize,
merge or consolidate with or into, or convey, sell, assign, transfer, lease,
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person, and the Company shall not permit any
Subsidiary to do so, except that (1) any Subsidiary may merge into or transfer
assets to the Company, and (2) any Subsidiary may merge into or consolidate
with or transfer assets to any other Subsidiary.
11.2. Sale and Leaseback. Sell, transfer, or otherwise dispose of, or
permit any Subsidiary to sell, transfer, or otherwise dispose of, any real or
personal property to any Person and thereafter directly or indirectly lease
back the same or similar property.
11.3. Dividends. Declare or pay any dividends; or purchase, redeem,
retire, or otherwise acquire for value any of its capital stock now or
hereafter outstanding; or make any distribution of assets to its stockholders
as such whether in cash, assets, or obligations of the Company; or allocate or
otherwise set apart any sum for the payment of any dividend or distribution
on, or for the purchase, redemption, or retirement of any shares of its
capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock; or permit any of its
Subsidiaries to do any of the foregoing or to purchase or otherwise acquire
for value any stock of the Company or another Subsidiary.
11.4. Sale of Assets. Sell, lease, assign, transfer, or otherwise dispose
of, or permit any Subsidiary to sell, lease, assign, transfer, or otherwise
dispose of, any of its now owned or hereafter acquired assets (including,
without limitation, shares of stock and indebtedness of Subsidiaries,
receivables, and leasehold interests), except: (1) inventory disposed of in
the ordinary course of business; (2) the sale or other disposition of assets
no longer used or useful in the conduct of its business; and (3) that any
Subsidiary may sell, lease, assign, or otherwise transfer its assets to the
Company.
11.5. Investments. (i) Make, or permit any Subsidiary to make, any loan
or advance to any Person, or (ii) purchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any capital stock, assets,
obligations, or other securities of, make any capital contribution to, or
otherwise invest in or acquire any interest in any Person, or participate as a
partner or joint venturer with any other Person, except: (1) direct
obligations of the U.S. or any agency thereof with maturities of one year or
less from the date of acquisition; (2) commercial paper of a domestic issuer
rated at least "A-1" by Standard & Poor's Corporation or "P-1" by Xxxxx'x
Investors Service, Inc.; (3) certificates of deposit with maturities of one
year or less from the date of acquisition issued by any commercial bank having
capital and surplus in excess of One Hundred Million U.S. Dollars
(US$100,000,000); and (4) stock, obligations, or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Company or any Subsidiary.
11.6. Guaranties, Etc. Assume, guaranty, endorse, or otherwise be or
become directly or contingently responsible or liable, or permit any
Subsidiary to assume, guaranty, endorse, or otherwise be or become directly or
contingently responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods, or services, or to
supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net
worth, or otherwise to assure the creditors of any Person against loss), for
obligations of any Person, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
11.7. Transactions With Affiliates. Enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate, or permit any Subsidiary to
enter into any transaction, including, without limitation, the purchase, sale,
or exchange of property or the rendering of any service, with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements
of the Company's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would obtain in
a comparable arm's length transaction with a Person not an Affiliate.
11.8. Issue Securities. Issue, or permit any Subsidiary to issue, any
common stock or other equity securities, or any other stock, option, warrant,
right or other instrument that is convertible into or exercisable or
exchangeable for common stock or other equity securities, except for (i)
securities issued pursuant to this Agreement, (ii) securities of a Subsidiary
that are issued to the Company; and (iii) securities sold and options granted
to directors, officers and employees of the Company pursuant to bona fide
employee benefit plans; provided, however, that the Company may issue such
securities with the prior written consent of the Purchasers, which consent the
Purchasers agree not to unreasonably withhold.
12. Events of Default
12.1. Events of Default. If any of the following events shall occur:
12.1.1. The Company should fail to pay the principal of or interest on any
Debenture as and when due and payable, or any amount of any other fee by or
within 10 days after the date that it is due and payable;
12.1.2. Any representation or warranty made or deemed made by the Company
in this Agreement or any other Transaction Document, or which is contained in
any certificate, document, opinion, or financial or other statement furnished
at any time under or in connection with any Transaction Document, shall prove
to have been incorrect, incomplete, or misleading in any material respect on
or as of the date made or deemed made;
12.1.3. The Company shall fail to perform or observe any term, covenant,
or agreement contained in this Agreement or any other Transaction Document to
be performed or observed by it ;
12.1.4. Except as disclosed in the SEC Documents, the Company or any
Subsidiary shall (i) fail to pay any material indebtedness for borrowed money
(other than any Debenture) of the Company or such Subsidiary, as the case may
be, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise), or (ii)
fail to perform or observe any material term, covenant, or condition on its
part to be performed or observed under any agreement or instrument relating to
any such indebtedness, when required to be performed or observed, if the
effect of such failure to perform or observe is to accelerate, or to permit
the acceleration of, after the giving of notice or passage of time, or both,
the maturity of such indebtedness, whether or not such failure to perform or
observe shall be waived by the holder of such indebtedness; or any such
indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
12.1.5. The Company or any Subsidiary (i) shall admit in writing its
inability to pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors, or petition or apply to any tribunal
for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (iii) shall commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution, or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) shall have had any such petition or application
filed or any such proceeding commenced against it in which an order for relief
is entered or an adjudication or appointment is made, and which remains
undismissed for a period of thirty (30) days or more; or (v) shall take any
corporate action indicating its consent to, approval of, or acquiescence in
any such petition, application, proceeding, or order for relief or the
appointment of a custodian, receiver, or trustee for all or any substantial
part of its properties; or (vi) shall suffer any such custodianship,
receivership, or trusteeship to continue undischarged for a period of thirty
(30) days or more;
12.1.6. One or more judgments, decrees, or orders for the payment of money
in excess of $100,000 shall be rendered against the Company or any Subsidiary
and such judgments, decrees, or orders shall continue unsatisfied and in
effect for a period of thirty (30) consecutive days without being vacated,
discharged, satisfied, or stayed or bonded pending appeal;
12.1.7. Any of the following events shall occur or exist with respect to
the Company or any Commonly Controlled Entity under ERISA: any Reportable
Event shall occur; complete or partial withdrawal from any Multiemployer Plan
shall take place; any Prohibited Transaction shall occur; a notice of intent
to terminate a Plan shall be filed, or a Plan shall be terminated; or
circumstances shall exist which constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan, or the PBGC shall institute such
proceedings; and in each case above, such event or condition, together with
all other events or conditions, if any, could subject the Company to any tax,
penalty, or other liability which in the aggregate may exceed Ten Thousand
Dollars ($10,000); or
12.1.8. If the Agent receives its first notice of a hazardous discharge or
an environmental complaint regarding the Company or a Subsidiary from a source
other than the Company, and the Agent does not receive notice (which may be
given in oral form, provided same is followed with all due dispatch by written
notice given by Certified Mail, Return Receipt Requested) of such hazardous
discharge or environmental complaint from the Company within twenty-four (24)
hours of the time the Agent first receives said notice from a source other
than the Company; or if any federal, state, or local agency asserts or creates
a Lien upon any or all of the assets, equipment, property, leaseholds, or
other facilities of the Company or a Subsidiary by reason of the occurrence of
a hazardous discharge or an environmental complaint; or if any federal, state,
or local agency asserts a claim against the Company, a Subsidiary, or its
respective assets, equipment, property, leaseholds, or other facilities for
damages or cleanup costs relating to a hazardous discharge or an environmental
complaint; provided, however, that such claim shall not constitute a default
if, within five (5) Trading Days of the occurrence giving rise to the claim,
(i) the Company can prove to the Agent's satisfaction that the Company has
commenced and is diligently pursuing either: (a) a cure or correction of the
event which constitutes the basis for the claim, and continues diligently to
pursue such cure or correction to completion or (b) proceedings for an
injunction, a restraining order, or other appropriate emergent relief
preventing such agency or agencies from asserting such claim, which relief is
granted within ten (10) Trading Days of the occurrence giving rise to the
claim and the injunction, order, or emergent relief is not thereafter resolved
or reversed on appeal; and (ii) in either of the foregoing events, the Company
has posted a bond, letter of credit, or other security satisfactory in form,
substance, and amount to both the Agent and the agency or entity asserting the
claim to secure the proper and complete cure or correction of the event which
constitutes the basis for the claim;
12.1.9. A change of Control of the Company or any Subsidiary occurs;
then, and in any such event, the Agent may, by notice to the Company, (i)
declare its obligation to purchase Debentures to be terminated, whereupon the
same shall forthwith terminate, and (ii) declare the Debentures, all interest
thereon, and all other amounts payable under this Agreement to be forthwith
due and payable, whereupon the Debentures, all such interest, and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived by the Parent and the Company.
12.2. Agent's Right to Setoff. Upon the occurrence and during the
continuance of any Event of Default, the Agent is hereby authorized at any
time and from time to time, without notice to the Company (any such notice
being expressly waived by the Company), to set off and apply any and all
funds, deposits and accounts at any time held and other indebtedness at any
time owing by the Agent to or for the credit or the account of the Company
against any and all of the obligations of the Company now or hereafter
existing under this Agreement or the Debenture or any other Transaction
Document, irrespective of whether or not the Agent shall have made any demand
under this Agreement or the Debenture or such other Transaction Document and
although such obligations may be unmatured. The Agent agrees promptly to
notify the Company after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Agent under this Section 12.2 are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which the Agent may have.
13. Miscellaneous
13.1. Amendments, Etc. No amendment, modification, termination, or waiver
of any provision of any Transaction Document to which the Company is a party,
nor consent to any departure by the Company from any Transaction Document to
which it is a party, shall in any event be effective unless the same shall be
in writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
13.2. Notices, Etc. All notices given under this Agreement and under the
other Transaction Documents shall be in writing, addressed to the parties as
set forth below, or to such other address as a party may specify by notice
given in accordance with this paragraph, and shall be effective on the
earliest of (i) the date received, or (ii) if given by facsimile transmittal
on the date given if transmitted before 5:00 p.m. the recipient's time,
otherwise it is effective the next day, or (iii) on the second Trading Day
after delivery to a major international air delivery or air courier service
(such as Federal Express or Network Couriers):
If to the Agent:
Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx,
X.X. Xxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx,
President & CEO
Facsimile No. (000) 000-0000
If to the Purchasers
c/o Thomson Kernaghan & Co. Ltd.
as Agent
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
With a copy (that does not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
Attn: Xxxx X. Xxxxxxx
X.X. Xxx 0000
Xxxxx, Xxxxx 00000
In either case, with a copy (that does not constitute notice) to:
Xxxx X. Xxxx
Attorney at Law
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Facsimile No. (000) 000-0000
13.3. No Waiver. No failure or delay on the part of the Agent or any
Purchaser in exercising any right, power, or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy hereunder. The rights and
remedies provided herein are cumulative, and are not exclusive of any other
rights, powers, privileges, or remedies, now or hereafter existing, at law or
in equity or otherwise.
13.4. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, the Agent, the Purchasers and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights under any Transaction Document to which the Company
is a party without the prior written consent of the Agent and the Purchasers.
13.5. Costs, Expenses, and Taxes. If any legal action is necessary to
enforce the obligation of a party hereto, the prevailing party shall be
reimbursed for any expense in protecting or enforcing its rights under this
Agreement including, without limitation, reasonable attorneys' fees and
expenses and all expenses incurred by the prevailing party in exercising its
rights and remedies under this Agreement. Company shall pay any and all stamp
and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing, and recording of any of the Transaction
Documents and the other documents to be delivered under any such Transaction
Documents, and agree to hold the Agent harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission
to pay such taxes and fees. This provision shall survive termination of this
Agreement.
13.6. Integration. This Agreement and the Transaction Documents contain
the entire agreement between the parties relating to the subject matter hereof
and supersede all oral statements and prior writings with respect thereto.
13.7. Governing Law. This Agreement and the Debenture shall be governed
by, and construed in accordance with, the laws of the Province of Ontario,
Canada; provided, however, if any provision of this Agreement is unenforceable
under Ontario law, but is enforceable under the laws of the U.S. State of
Montana, then Montana law shall govern the construction and enforcement of
that provision.
13.8. Severability of Provisions. Any provision of any Transaction
Document which is prohibited or unenforceable in any jurisdiction (after
applying the provisions of paragraph 10.8 of this Agreement to that provision)
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
of such Transaction Document or affecting the validity or enforceability of
such provision in any other jurisdiction.
13.9. Headings. Section and paragraph headings in the Transaction
Documents are included for the convenience of reference only and shall not
constitute a part of the applicable Transaction Documents for any other
purpose.
13.10. Dispute Resolution. The parties agree that the courts of the
Province of Ontario, Canada, shall have jurisdiction and venue for the
adjudication of any civil action between or among any of them arising out of
relating to this Agreement or any other Transaction Document. The parties
hereby irrevocably consent to such jurisdiction and venue, and hereby
irrevocably waive any claim of forum non conveniens or right to change such
venue.
13.11. Agent's Fee. At each Closing Date, the Company shall pay Thomson
Kernaghan & Co. Limited a fee for its services as Agent (the "Agent's Fee") in
an amount equal to ten percent (10%) of the aggregate principal amount of
those Debentures sold by Company at such closing.
13.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which shall
constitute one and the same agreement.
13.13. Indemnity. The Company shall defend, protect, indemnify, and hold
harmless the Agent and each Purchaser, and all of their respective officers,
directors, employees, and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemniteees") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities,
damages, and expenses in connection therewith (irrespective of whether any
such Indemnitee is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in this Agreement
or any other Transaction Document, or any other certificate, instrument, or
document contemplated hereby or thereby; or (b) any breach of any covenant,
agreement, or obligation of the Company contained in this Agreement or any
other Transaction Document; or (c) the activities of the Company or any
Subsidiary, each of their respective predecessors in interest or third parties
with whom they or any of them have or had a contractual relationship, or
arising directly or indirectly from the violation of any environmental
protection, health, or safety law, whether such claims are asserted by any
governmental agency or any other person; or (d) any cause of action, suit, or
claim brought or made against such Indemniteee and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement or
any Transaction Document, or any other instrument, document, or agreement
executed pursuant hereto or thereto by any of the Indemnitees, any transaction
financed or to be financed in whole or in part, directly or indirectly, with
the proceeds of the Debentures or from the exercise of the Warrants, or the
status of the Agent or any Purchaser or holder of any of the Debentures,
Warrants, Conversion Shares or Warrant Shares, or as a stockholder in the
Company; provided, however, that the Company shall not be required to
indemnify the Indemnitees to the extent that any Indemnified Liabilities are
caused by or result from any material misrepresentation or breach of any
material representation or warranty made by the Agent or any Purchaser in this
Agreement, or by the breach of any covenant, agreement or obligation of the
Agent in this Agreement or any of the other Transaction Documents or in any
other certificate, instrument or document contemplated hereby or thereby. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities that is permissible
under applicable law. This indemnity shall survive termination of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
Effective Date.
The Agent:
Thomson Kernaghan & Co. Ltd.
By:/s/ Xxxxxxxx XxXxxxxx
Title: Agent
Date signed: July 20, 2000
The Company:
United States Antimony Corporation
By:/s/ Xxxx X. Xxxxxxxxx
Title: President
Date signed: July 20, 2000
IN WITNESS WHEREOF, the undersigned Purchaser has caused this Agreement
to be duly executed by a duly authorized representative.
Purchaser:
________________________________________
By _____________________________________
Name____________________________________
Title_____________________________________
Date signed_______________________________
EXHIBITS
Exhibits
Exhibit A Debenture
Exhibit B Purchasers Warrant
Exhibit C Agent's Warrant
Exhibit D Registration Rights Agreement
Exhibit E Escrow Agreement
Exhibit F Opinion of Company's Counsel
Exhibit G Purchasers
This Debenture, and the securities issuable upon the conversion hereof
(collectively, the "Securities"), have not been registered under the U.S.
Securities Act of 1933, as amended (the "Act"), nor have they been registered
or qualified under the securities laws of any U.S. state or territory. This
Debenture is being offered and sold pursuant to Regulation S of the U.S.
Securities and Exchange Commission under the Act. The Securities, are
"restricted securities" and may not be offered or sold in the United States or
to a U.S. Person (as defined in Regulation S) unless pursuant to an effective
registration statement under the Act, or pursuant to Regulation S, or pursuant
to other available exemptions from the registration requirements of the Act. A
Holder of any of the Securities may not engage in hedging transaction with
regard to such securities unless in compliance with the Act.
US$ .................... Debenture No. ...............
UNITED STATES ANTIMONY CORPORATION
10% Convertible Debenture Due June 30, 2002
THIS DEBENTURE is one of a duly authorized issue of US$1,500,000 of
10% Convertible Debentures due June 30, 2003 (the "Debentures"), of
xXxxxxxxxxx.xxx Corporation (the "Company"), a corporation duly organized and
existing under the laws of the State of Nevada, designated as its 8%
Convertible Debentures due June 30, 2003. This Debenture is issued pursuant to
the Securities Purchase Agreement (the "Agreement") dated June __, 2000, among
the Company, the Lenders named therein, and Thomson Kernaghan & Co. Limited as
Agent (the" Agent"). Capitalized terms not defined in this Debenture shall
have the meanings ascribed to them in the Agreement.
FOR VALUE RECEIVED, the Company promises to pay to the order of
.................................................... or other registered
holder hereof (collectively, the "Holder"), the principal sum of
................................................................................
. Dollars in lawful currency of the United States of America (US
$............................) on June 30, 2002 (the "Maturity Date"), and to
pay interest on the principal sum outstanding from time to time on the
Maturity Date at the rate of Ten Percent (10%) per year accruing from the date
of initial issuance. Subject to the provisions of paragraph 4 below, the
principal of and interest on this Debenture are payable at the option of the
Holder, in shares of the Company's Common Stock ("Common Stock"). The Company
will pay the principal of and interest upon this Debenture to the Holder in
immediately available funds, in care of the Agent, at the Agent's address, 000
Xxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx, or at such other
address as the Agent shall designate by written notice to the Company. The
delivery of such funds to the Agent shall constitute a payment and shall
satisfy and discharge the liability for principal and interest on this
Debenture to the extent of the sum represented by such payment.
This Debenture is subject to the following additional provisions:
1. This Debenture is exchangeable for an equal aggregate principal
amount of Debentures of different denominations, as requested by the Holders
surrendering the same. No service charge will be made for such registration
or transfer or exchange.
2. This Debenture may be transferred only in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and other
applicable state and foreign securities laws, pursuant to registration
thereunder or exemption therefrom. In the event of any proposed transfer of
this Debenture, the Company may require, prior to issuance of a new Debenture
in the name of such other person, that it receive reasonable transfer
documentation including opinions that the issuance of the Debenture in such
other name does not and will not cause a violation of the Securities Act or
any applicable state or foreign securities laws. Prior to due presentment for
transfer of this Debenture, the Company and any agent of the Company may treat
the person in whose name this Debenture is duly registered on the Company's
Debenture Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Debenture be
overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
3. The Company is obligated to register the shares of Common Stock
into which the principal and interest of this Debenture are convertible
pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement") entered into as of the Effective Date, among the Company, the
Holder, other holders of Debentures and the Agent.
4. The Holder is entitled, at its option, to convert at any time and
from time to time beginning on the thirty-first (31st) day after the date
hereof, all or any part of the principal amount of the Debenture, plus accrued
interest, into shares of Common Stock ("Conversion Shares"). No fraction of
shares or scrip representing fractions of shares will be issued on conversion,
but the number of Conversion Shares issuable shall be rounded to the nearest
whole share. The price per share of Common Stock into which the principal of
and interest on this Debenture is convertible (the "Conversion Price") shall
be seventy-five percent (75%) of the average of the 3 lowest Closing Bid
Prices of the Common Stock quoted by Bloomburg L.P. in the twenty (20) Trading
Days immediately preceding (i) the Effective Date (which is Twenty Nine and
One Eighth Cents (US$.29125)), or (ii) the Conversion Date, whichever is
lower. The Holder may exercise its right to convert this Debenture by
telecopying an executed and completed Notice of Conversion in the form annexed
hereto as Exhibit A (a "Notice of Conversion") to the Company and sending the
original by mail or overnight delivery service. Each Trading Day on which a
Notice of Conversion is telecopied to the Company in accordance with the
provisions hereof shall be deemed a "Conversion Date." Within three Trading
Days after a Conversion Date, the Company will transmit, or instruct its
transfer agent to transmit, the certificates representing the Conversion
Shares issuable upon conversion of this Debenture to the Holder by express
overnight courier or by electronic transfer. If the Company fails to deliver
the Conversion Shares within such three Trading Day period, the Holder shall
be entitled to revoke the Notice of Conversion by delivering a notice to such
effect to the Company whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to delivery of such
Notice of Conversion. Notices of Conversion and any other notices given under
this Debenture shall be delivered as follows:
If to the Holder:
c/o Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
or to such other address as the Holder may specify.
If the Company does not deliver the Conversion Shares to the Escrow Holder
prior to the expiration of five Trading Days after the Holder sends a Notice
of Conversion, the, in addition to all other remedies the Holder may have, the
Company shall pay to the Holder, on demand and in immediately available funds,
as liquidated damages for such failure and not as a penalty, the amounts
stated in the following schedule, which liquidated damages shall begin to
accrue on the sixth Trading Day after the Conversion Date.
Late Payment For Each $10,000
No. Business Days Late of the Debenture Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
>5 $500 +$200 for each Business Day Late beyond 5 days from The Delivery
Date
Nothing in this Debenture shall limit the holder's right to seek specific
performance of the Company's obligations hereunder and other remedies and
damages for the Company's actions or inactions resulting in the transfer
agent's failure to issue and deliver the Common Stock to the holder. The
Company shall not be liable for any damages resulting from the Escrow Holder's
failure to deliver Warrant Shares to the Holder.
5. Any provision in this Debenture or any other document to the contrary not
withstanding, the Holder shall not have the right or power to convert this
Debenture into Common Stock, either in whole or in part, and any attempt to do
so shall be void, if, after having given effect to such conversion, the Holder
shall be or shall be deemed to be the beneficial owner of more than 9.9% of
the then outstanding Common Stock within the meaning or for the purposes of
Section 13(d) or 13(g) of the U.S. Securities Exchange Act of 1934, as
amended, or as the term "beneficial owner" is defined in Rule 13d-3 of the
U.S. Securities and Exchange Commission or otherwise. Any attempt to convert
this Debenture into Common Stock shall also be ineffective to the extent that
the Company does not have sufficient authorized, unissued and unreserved
shares of Common Stock to effectuate the converstion.
6. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on, this Debenture at the time, place and rate, and
in the coin or currency herein prescribed. This Debenture and all other
Debentures now or hereafter issued of similar terms are direct obligations of
the Company.
7. So long as any of the principal of or interest on this Debenture
remains unpaid or unconverted, the Company shall not (i) merge or consolidate
with any other entity; (ii) sell or otherwise dispose of a material portion of
its assets (other than in the ordinary course of business); (iii) pay any
dividend on its shares (including any dividend payable in Common Stock or
other property); (iv) subdivide, split or otherwise increase the number of
shares of Common Stock; or (v) issue any Common Stock or other equity
securities, or any other stock, option, warrant, right or other instrument
that is convertible into or exercisable or exchangeable for Common Stock or
other equity securities, except for (a) securities of a Subsidiary that are
issued to the Company; and (b) securities sold and options granted to
directors, officers and employees of the Company pursuant to bona fide
employee benefit plans; provided, however, that the Company may issue such
securities enumerated in this clause (v) with the prior written consent of the
Holder, which consent the Holder agrees not to unreasonably withhold.
8. The following constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture; or
b. Any of the representations or warranties made by the Company
herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by the Company in connection with the
execution and delivery of this Debenture or any other Transaction Document
shall be false or misleading in any material respect at the time made; or
c. The Company shall fail to timely perform or observe, in any
material respect, any other covenant, term, provision, condition, agreement or
obligation of the Company under this Debenture or any other Transaction
Document; or
d. The Company shall fail to deliver conversion Shares to the
Escrow Holder as provided for in this Debenture or in the Escrow Agreement.
Then, or at any time thereafter, and in each and every case, unless such Event
of Default shall have been waived in writing by the Holder (which waiver shall
not be deemed to be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
8. This Debenture shall be governed by and construed in accordance
with the laws of the Province of Ontario, Canada, provided however, that if
any provision of this Debenture is unenforceable under the laws of Ontario but
is enforceable under the laws of the U.S. State of Montana, then that
provision shall be governed by and construed in accordance with the laws the
State of Montana. The courts of the Province of Ontario, Canada, shall have
jurisdiction and venue for the adjudication of any civil action between or
among any of them arising out of relating to this Debenture. The Company and
the Holder irrevocably consent to such jurisdiction and venue, and
irrevocably waive any claim of forum non conveniens or right to change venue.
The prevailing party in any action or proceeding to enforce or construe this
Debenture is entitled to recover reasonable attorney's fees.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: ______________________________
United States Antimony Corporation
By
Name _______________________________
Title ________________________________
ATTEST:
___________________________________
EXHIBIT "A"
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to Convert the
Debenture)
TO: UNITED STATES ANTIMONY CORPORATION
The undersigned hereby irrevocably elects to convert $________________ of
the principal amount of the above Debenture No. ______ into Shares of Common
Stock of United States Antimony Corporation. according to the conditions
hereof, as of the date written above.
Date of
Conversion
Applicable Conversion
Price
Signature
Name __________________________________________________________
Address:
PURCHASER'S WARRANT
Warrant No. _______
This Warrant, and the securities issuable upon the exercise hereof
(collectively, the "Securities"), have not been registered under the U.S.
Securities Act of 1933, as amended (the "Act"), nor have they been registered
or qualified under the securities laws of any U.S. state or territory. This
Warrant is being offered and sold pursuant to Regulation S of the U.S.
Securities and Exchange Commission under the Act. The Securities, are
"restricted securities" and may not be offered or sold in the United States or
to a U.S. Person (as defined in Regulation S) unless pursuant to an effective
registration statement under the Act, or pursuant to Regulation S, or pursuant
to other available exemptions from the registration requirements of the Act. A
Holder of any of the Securities may not engage in hedging transaction with
regard to such securities unless in compliance with the Act.
UNITED STATES ANTIMONY CORPORATION
Warrant for the Purchase
of Shares of Common Stock
July __, 2000 __________ Shares
FOR VALUE RECEIVED, United States Antimony Corporatioin., a Montana
corporation (the "Company"), hereby certifies that ___________________ or
other holder hereof (collectively, the "Holder"), is entitled, subject to the
provisions of this Warrant, to purchase from the Company, at any time or from
time to time beginning on the date hereof, and ending at 5:00 pm, Toronto
time, on the fifth anniversary of the date hereof (the "Exercise Period")
__________ fully paid and nonassessable shares of common stock of the Company,
par value $_____ per share (the "Common Stock") at the exercise price of $
___________ (the "Exercise Price"). This Warrant is a Purchaser's Warrant
described in and is being issued pursuant to an Agreement (the "Agreement")
effective as of July 11, 2000, between the Company and Thomson Kernaghan & Co.
Limited (the "Agent"). Capitalized terms not defined in this Warrant shall
have the meanings ascribed to them in the Agreement.
For purposes of this Warrant, "Warrant Shares" means the shares of Common
Stock deliverable upon exercise of this Warrant, as adjusted from time to
time. Unless the context requires otherwise all references to Common Stock
and Warrant Shares in this Warrant shall, in the event of an adjustment
pursuant to Section 7 hereof, be deemed to refer also to any securities or
property then issuable upon exercise of this Warrant as a result of such
adjustment.
Section 1. Exercise of Warrant. (a) This Warrant may be exercised, as a
whole or in part, at any time or from time to time during the Exercise Period
or, if such day is not a Trading Day (as defined in the Agreement), then on
the next succeeding Trading Day. The Holder may exercise this Warrant by
telecopying an executed and completed Notice of Exercise in the form annexed
hereto as Exhibit A (a "Notice of Exercise") to the Escrow Holder and the
Company, and sending the original by mail or overnight delivery service to the
Escrow Holder together with the Exercise Price. Each Trading Day on which a
Notice of Exercise is telecopied to the Company in accordance with the
provisions hereof shall be deemed an "Exercise Date." Notices given under
this Warrant shall be delivered as required by the Escrow Agreement, and also
delivered or telecopied as follows:
If to the Holderor Escrow Holder:
c/o Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
or to such other address as the Holder may specify.
If the Company has not delivered the Warrant Shares to the Escrow Holder prior
to the expiration of five Trading Days after the Holder send a Notice of
Exercise, the, in addition to all other remedies the Holder may have, the
Company shall pay to the Holder, on demand and in immediately available funds,
as liquidated damages for such failure and not as a penalty, the amounts
stated in the following schedule, which liquidated damages shall begin to
accrue on the sixth Trading Day after the Conversion Date.
Late Payment For Each $10,000
No. Business Days Late of the Warrant Exercise Price
1 $100
2 $200
3 $300
4 $400
5 $500
>5 $500 +$200 for each Business Day Late beyond 5 days from The Delivery
Date
Nothing in this Warrant shall limit the holder's right to seek specific
performance of the Company's obligations hereunder and other remedies and
damages for the Company's actions or inactions resulting in the transfer
agent's failure to issue and deliver the Warrant Shares to the Holder. The
Company shall not be liablie for any damages resulting from the Escrow
Holder's failure to deliver Warrant Shares to the Holder.
(b) The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of the Warrant
Shares.
(c) Limitation on Right and Power to Exercise. Any provision in this Warrant,
the Agreement or any other document to the contrary not withstanding, the
Holder shall not have the right or power to exercise this warrant, either in
whole or in part, if, and any attempt to do so shall be void, after having
given effect to such exercise, the Holder shall be or shall be deemed to be
the beneficial owner of 10% or more of the then outstanding Common Stock
within the meaning or for the purposes of Section 13(d) or 13(g) of the U.S.
Securities Exchange Act of 1934, as amended, or as the term "beneficial owner"
is defined in Rule 13d-3 of the U.S. Securities and Exchange Commission or
otherwise. Any attempt to exercise the Warrant shall also be ineffective to
the extent that the Company does not have sufficient authrozed, unissued and
unreserved Common Stock to issue the Warrant Shares.
Section 2. Reservation of Shares. Subject to shareholder approval pursuant
to Section 10.2.1 of the Agreement, the Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company or other property from time to time issuable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise in accordance with the terms of this Warrant, shall be validly
issued, fully paid and nonassessable, free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale (other than
any restrictions on sale pursuant to applicable federal and state securities
laws) and free and clear of all preemptive rights.
Section 3. Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 4, be issuable on the exercise of this Warrant (or specified portion
thereof), the Company shall pay an amount in cash calculated by it to be equal
to the then Current Market Value (as hereinafter defined) per share of Common
Stock multiplied by such fraction computed to the nearest whole cent. For the
purposes of any computation under this Warrant, the Current Market Value per
share of Common Stock or of any other equity security (herein collectively
referred to as a "security") at the date herein specified shall be:
(i) if the security is not registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the "Current Market Value" per share of
the security shall be determined in good faith by the Board of Directors of
the Company, or
(ii) if the security is registered under the Exchange Act, the "Current Market
Value" per share of the security shall be deemed to be the average of the
daily market prices of the security for the ten (10) consecutive Trading Days
immediately preceding the day as of which Current Market Value is being
determined or, if the security has been registered under the Exchange Act for
less than ten (10) consecutive Trading Days before such date, then the average
of the daily market prices for all of the trading days before such date for
which daily market prices are available. The market price for each such
Trading Day shall be: (A) in the case of a security listed or admitted to
trading on any securities exchange, the Closing Bid Price on the primary
exchange on which the Common Stock is then listed, on such day, (B) in the
case of a security not then listed or admitted to trading on any securities
exchange, the Closing Bid Price reported by Bloomburg LP on such day, (C) in th
e case of a security not then listed or admitted to trading on any securities
exchange and as to which no such reported sale price or bid and asked prices
are available, the reported high bid on such day, as reported by a reputable
quotation service, or a newspaper of general circulation in the Borough of
Manhattan, City and State of New York, customarily published on each business
day, designated by the Holder, or if there shall be no bid prices on such day,
the high bid price, as so reported, on the most recent day (not more than 10
days prior to the date in question) for which prices have been so reported,
and (D) if there are no bid prices reported during the 10 days prior to the
date in question, the Current Market Value of the security shall be determined
as if the security were not registered under the Exchange Act.
Section 4. Exchange, Transfer, Assignment or Loss of Warrant.
(a) This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company or at the office
of its stock transfer agent or warrant agent, if any, for other warrants of
different denomination, entitling the Holder thereof to purchase in the
aggregate the same number of Warrant Shares and otherwise carrying the same
rights as this Warrant.
(b) This Warrant may be divided or combined by the Holder with other warrants
that carry the same rights upon presentation hereof at the office of the
Company or at the office of its stock transfer agent or warrant agent, if any,
together with a written notice specifying the names and denominations in which
new warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any warrants into which this Warrant may be
divided or for which it may be exchanged.
(c) Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 5. Restrictions on Issuance of Securities. So long as this Warrant
is outstanding, the Company will not issue, or permit any Subsidiary to issue,
any common stock or other equity securities, or any other stock, option,
warrant, right or other instrument that is convertible into or exercisable or
exchangeable for common stock or other equity securities, except for (i)
securities issued pursuant to the Securities Purchase Agreement (which
includes Warrant Shares), (ii) securities of a Subsidiary that are issued to
the Company; and (iii) securities sold and options granted to directors,
officers and employees of the Company pursuant to bona fide employee benefit
plans; provided, however, that the Company may issue such securities with the
prior written consent of the Holder, which consent the Holder agrees not to
unreasonably withhold.
Section 6. Reclassification, Reorganization, Consolidation or Merger. In the
event of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company or in the event of any
consolidation or merger of the Company with or into another corporation (other
than a merger in which merger the Company is the continuing corporation and
that does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the class issuable upon
exercise of this Warrant) or in the event of any sale, lease, transfer or
conveyance to another corporation of the property and assets of the Company as
an entirety or substantially as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that
such other corporation shall assume all of the obligations of the Company
hereunder and the Holder shall have the right thereafter, by exercising this
Warrant, to purchase the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale, lease, transfer or conveyance by a holder of the number of
shares of Common Stock that might have been received upon exercise of this
Warrant immediately prior to such reclassification, capital reorganization,
change, consolidation, merger, sale, lease or conveyance. Any such provision
shall include provision for adjustments in respect of such shares of stock and
other securities and property that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section 8 shall similarly apply to successive
reclassification, capital reorganizations and changes of shares of Common
Stock and to successive changes, consolidations, mergers, sales, leases,
transfers or conveyances. In the event that in connection with any such
capital reorganization, or reclassification, consolidation, merger, sale,
lease, transfer or conveyance, additional shares of Common Stock shall be
issued in exchange, conversion, substitution or payment, as a whole or in
part, for, or of, a security of the Company other than Common Stock, any such
issue shall be treated as an issue of Common Stock covered by the provisions
of Section 5.
Section 7. Transfer to Comply with the Securities Act. Neither this Warrant
nor any of the Warrant Shares may be offered or sold in the United States or
to a U.S. Person (as defined in Regulation S) unless pursuant to an effective
registration statement under the Act, or pursuant to Regulation S, or pursuant
to other available exemptions from the registration requirements of the Act.
The Holder of this Warrant or any of the Warrant Shares may not engage in
hedging transaction with regard to such securities unless in compliance with
the Act.
Section 8. Availability of Information. So long as any of this Warrant
remains unexercised and this Warrant has not expired, the Company shall comply
with the reporting requirements of Sections 13 and 15(d) of the Exchange Act
to the extent it is required to do so under the Exchange Act, and shall
likewise comply with all other applicable public information reporting
requirements of the Securities and Exchange Commission (including those
required to make available the benefits of Rule 144 under the Securities Act)
to which it may from time to time be subject. The Company shall also
cooperate with the Holder of this Warrant and the Holder of any Warrant Shares
in supplying such information as may be necessary for such holder to complete
and file any information reporting forms currently or hereafter required by
the Commission as a condition to the availability of Rule 144 or any successor
rule under the Securities Act for the sale of this Warrant or the Warrant
Shares. The provisions of this Section 8 shall survive termination of this
Warrant, whether upon exercise of this Warrant in full or otherwise. The
Company shall also provide to holders of this Warrant the same information
that it provides to holders of its Common Stock.
Section 9. Registration Rights. The Company is obligated to
register the shares of Common Stock issuable upon exercise of this Warrant
pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement") dated as of the Effective Date, among the Company, the Holder,
other holders of Debentures and the Agent.
Section 10. Successors and Assigns. All the provisions of this Warrant by or
for the benefit of the Company or the Holder shall bind and inure to the
benefit of their respective successors, assigns, heirs and personal
representatives.
Section 11. Headings. The headings of sections of this Warrant have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 12. Amendments. This Warrant may not be amended except by the
written consent of the Company and the Holder.
Section 13. Notices. All notices given under this Agreement and
under the other Transaction Documents shall be in writing, addressed to the
parties as set forth below, or to such other address as a party may specify by
notice
given in accordance with this paragraph and shall be effective on the earliest
of (i) the date received, or (ii) if given by facsimile transmittal on the
date given if transmitted before 5:00 p.m. the recipient's time, otherwise it
is effective the next day, or (iii) on the second Trading Day after delivery
to a major international air delivery or air courier service (such as Federal
Express or Network Couriers):
If to the Holder or Escrow Holder:
c/o Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxxx, Xx. V.P.
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
Section 14. Law Governing; Jurisdiction. This Warrant shall be
governed by and construed in accordance with the laws of the Province of
Ontario, Canada, provided however, that if any provision of this Warrant is
unenforceable under the laws of Ontario but is enforceable under the laws of
the U.S. State of Montana, then that provision shall be governed by and
construed in accordance with the laws the State of Montana. The courts of the
Province of Ontario, Canada, shall have jurisdiction and venue for the
adjudication of any civil action between or among any of them arising out of
relating to this Debenture. The Company and the Holder irrevocably consent to
such jurisdiction and venue, and irrevocably waive any claim of forum non
conveniens or right to change venue. The prevailing party in any action or
proceeding to enforce or construe this Warrant is entitled to recover
reasonable attorney's fees.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed,
as of the day and year first above written.
United States Antimony Corporation
By _____________________________
President and CEO
Date Signed _______________________
ATTEST:
______________________
Secretary
NOTICE OF EXERCISE
To: United States Antimony Corporation:
The undersigned irrevocably exercises this Warrant for the purchase of
____________________ shares (subject to adjustment) of Common Stock of United
States Antimony Corporation (the "Company"): for this Warrant and agrees to
make payment of $____________________ (the "Exercise Price") through the
following method:
9 such payment of the Exercise Price being in cash or by certified or
official bank check payable to the order of the Company .
all at the Exercise Price and on the terms and conditions specified in this
Warrant, and directs that the shares of Common Stock deliverable upon the
exercise of this Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
The undersigned represents, warrants and certifies to the Company that the
undersigned is not a U.S. Person (as defined in SEC Rule 902(k)_, and that
this Warrant is not being exercissed on Behalf of a U.S. Person.
Date: ________________, _______
___________________________________
(Signature of Owner)
___________________________________
(Xxxxxx Xxxxxxx)
___________________________________
(City) (State or Province) (Postal Code)
___________________________________
(Country)
Securities and/or check to be issued to:
Name:
Street Address:
City, State and Zip Code:
1) The signature must correspond with the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
Any unexercised part of the Warrant evidenced by the within Warrant to be
issued to:
Please insert social security or identifying number if U.S. citizen or
resident:
Name:
Street Address:
City, State and Zip Code:
United States Antimony Corporation Purchaser's Warrant
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within Warrant
hereby sells, assigns, and transfers unto the Assignee(s) named below
(including the undersigned with respect to any part of the Warrant not being
assigned hereby) all of the right of the undersigned under the within Warrant,
with respect to the number of shares of Common Stock set forth below:
Name of Assignee
Address of Assignee
Social Security or Other Identifying Number of Assignee
Number of Shares of Common Stock Assigned to Assignee
and does hereby irrevocably constitute and appoint ______________________ as
the undersigned's attorney to make such transfer on the books of
______________________ United States Antimony Corporation maintained for that
purpose, with full power of substitution in the premises.
Date: ______________, ____
________________________________
(Signature of Owner)
________________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
AGENT'S WARRANT
Warrant No. _______
This Warrant, and the securities issuable upon the exercise hereof
(collectively, the "Securities"), have not been registered under the U.S.
Securities Act of 1933, as amended (the "Act"), nor have they been registered
or qualified under the securities laws of any U.S. state or territory. This
Warrant is being offered and sold pursuant to Regulation S of the U.S.
Securities and Exchange Commission under the Act. The Securities, are
"restricted securities" and may not be offered or sold in the United States or
to a U.S. Person (as defined in Regulation S) unless pursuant to an effective
registration statement under the Act, or pursuant to Regulation S, or pursuant
to other available exemptions from the registration requirements of the Act. A
Holder of any of the Securities may not engage in hedging transaction with
regard to such securities unless in compliance with the Act.
UNITED STATES ANTIMONY CORPORATION
Warrant for the Purchase
of Shares of Common Stock
July __, 2000 __________ Shares
FOR VALUE RECEIVED, United States Antimony Corporatioin., a Montana
1(1) The signature must correspond with the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
corporation (the "Company"), hereby certifies that ___________________ or
other holder hereof (collectively, the "Holder"), is entitled, subject to the
provisions of this Warrant, to purchase from the Company, at any time or from
time to time beginning on the date hereof, and ending at 5:00 pm, Toronto
time, on the fifth anniversary of the date hereof (the "Exercise Period")
__________ fully paid and nonassessable shares of common stock of the Company,
par value $_____ per share (the "Common Stock") at the exercise price of $
___________ (the "Exercise Price"). This Warrant is the Agent's Warrant
described in and is being issued pursuant to an Agreement (the "Agreement")
effective as of July 11, 2000, between the Company and Thomson Kernaghan & Co.
Limited (the "Agent"). Capitalized terms not defined in this Warrant shall
have the meanings ascribed to them in the Agreement.
For purposes of this Warrant, "Warrant Shares" means the shares of Common
Stock deliverable upon exercise of this Warrant, as adjusted from time to
time. Unless the context requires otherwise all references to Common Stock
and Warrant Shares in this Warrant shall, in the event of an adjustment
pursuant to Section 7 hereof, be deemed to refer also to any securities or
property then issuable upon exercise of this Warrant as a result of such
adjustment.
Section 1. Exercise of Warrant. (a) This Warrant may be exercised, as a
whole or in part, at any time or from time to time during the Exercise Period
or, if such day is not a Trading Day (as defined in the Agreement), then on
the next succeeding Trading Day. The Holder may exercise this Warrant by
telecopying an executed and completed Notice of Exercise in the form annexed
hereto as Exhibit A (a "Notice of Exercise") to the Escrow Holder and Escrow
Holder, and sending the original by mail or overnight delivery service to the
Escrow Holder together with the Exercise Price. Each Trading Day on which a
Notice of Exercise is telecopied to the Company in accordance with the
provisions hereof shall be deemed an "Exercise Date." Notices given under
this Warrant shall be delivered as required by the Escrow Agreement, and also
delivered or telecopied as follows:
If to the Holder or Escrow Holder:
c/o Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
or to such other address as the Holder may specify.
If the Company has not delivered the Warrant Shares to the Escrow Holder prior
to the expiration of five Trading Days after the Holder send a Notice of
Exercise, the, in addition to all other remedies the Holder may have, the
Company shall pay to the Holder, on demand and in immediately available funds,
as liquidated damages for such failure and not as a penalty, the amounts
stated in the following schedule, which liquidated damages shall begin to
accrue on the sixth Trading Day after the Conversion Date.
Late Payment For Each $10,000
No. Business Days Late of the Warrant Exercise Price
1 $100
2 $200
3 $300
4 $400
5 $500
>5 $500 +$200 for each Business Day Late beyond 5 days from The Delivery
Date
Nothing in this Warrant shall limit the holder's right to seek specific
performance of the Company's obligations hereunder and other remedies and
damages for the Company's actions or inactions resulting in the transfer
agent's failure to issue and deliver the Warrant Shares to the Holder. The
Company shall not be liablie for any damages resulting from the Escrow
Holder's failure to deliver Warrant Shares to the Holder.
(b) The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of the Warrant
Shares.
(c) Limitation on Right and Power to Exercise. Any provision in this Warrant,
the Agreement or any other document to the contrary not withstanding, the
Holder shall not have the right or power to exercise this warrant, either in
whole or in part, if, and any attempt to do so shall be void, after having
given effect to such exercise, the Holder shall be or shall be deemed to be
the beneficial owner of 10% or more of the then outstanding Common Stock
within the meaning or for the purposes of Section 13(d) or 13(g) of the U.S.
Securities Exchange Act of 1934, as amended, or as the term "beneficial owner"
is defined in Rule 13d-3 of the U.S. Securities and Exchange Commission or
otherwise. Any attempt to exercise the Warrant shall also be ineffective to
the extent that the Company does not have sufficient authrozed, unissued and
unreserved Common Stock to issue the Warrant Shares.
Section 2. Reservation of Shares. Subject to shareholder approval pursuant
to Section 10.2.1 of the Agreement, the Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company or other property from time to time issuable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise in accordance with the terms of this Warrant, shall be validly
issued, fully paid and nonassessable, free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale (other than
any restrictions on sale pursuant to applicable federal and state securities
laws) and free and clear of all preemptive rights.
Section 3. Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 4, be issuable on the exercise of this Warrant (or specified portion
thereof), the Company shall pay an amount in cash calculated by it to be equal
to the then Current Market Value (as hereinafter defined) per share of Common
Stock multiplied by such fraction computed to the nearest whole cent. For the
purposes of any computation under this Warrant, the Current Market Value per
share of Common Stock or of any other equity security (herein collectively
referred to as a "security") at the date herein specified shall be:
(i) if the security is not registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the "Current Market Value" per share of
the security shall be determined in good faith by the Board of Directors of
the Company, or
(ii) if the security is registered under the Exchange Act, the "Current Market
Value" per share of the security shall be deemed to be the average of the
daily market prices of the security for the ten (10) consecutive trading Days
immediately preceding the day as of which Current Market Value is being
determined or, if the security has been registered under the Exchange Act for
less than ten (10) consecutive Trading Days before such date, then the average
of the daily market prices for all of the Trading Days before such date for
which daily market prices are available. The market price for each such
Trading Day shall be: (A) in the case of a security listed or admitted to
trading on any securities exchange, the Closing Bid Price on the primary
exchange on which the Common Stock is then listed, on such day, (B) in the
case of a security not then listed or admitted to trading on any securities
exchange, the Closing Bid Price reported by Bloomburg LP on such day, (C) in
the case of a security not then listed or admitted to trading on any
securities exchange and as to which no such reported sale price or bid and
asked prices are available, the reported high bid on such day, as reported by
a reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City and State of New York, customarily published on
each business day, designated by the Holder, or if there shall be no bid
prices on such day, the high bid price, as so reported, on the most recent day
(not more than 10 days prior to the date in question) for which prices have
been so reported, and (D) if there are no bid prices reported during the 10
days prior to the date in question, the Current Market Value of the security
shall be determined as if the security were not registered under the Exchange
Act.
Section 4. Exchange, Transfer, Assignment or Loss of Warrant.
(a) This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company or at the office
of its stock transfer agent or warrant agent, if any, for other warrants of
different denomination, entitling the Holder thereof to purchase in the
aggregate the same number of Warrant Shares and otherwise carrying the same
rights as this Warrant.
(b) This Warrant may be divided or combined by the Holder with other warrants
that carry the same rights upon presentation hereof at the office of the
Company or at the office of its stock transfer agent or warrant agent, if any,
together with a written notice specifying the names and denominations in which
new warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any warrants into which this Warrant may be
divided or for which it may be exchanged.
(c) Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 5. Restrictions on Issuance of Securities. So long as this Warrant
is outstanding, the Company will not issue, or permit any Subsidiary to issue,
any common stock or other equity securities, or any other stock, option,
warrant, right or other instrument that is convertible into or exercisable or
exchangeable for common stock or other equity securities, except for (i)
securities issued pursuant to the Securities Purchase Agreement (which
includes Warrant Shares), (ii) securities of a Subsidiary that are issued to
the Company; and (iii) securities sold and options granted to directors,
officers and employees of the Company pursuant to bona fide employee benefit
plans; provided, however, that the Company may issue such securities with the
prior written consent of the Holder, which consent the Holder agrees not to
unreasonably withhold.
Section 6. Reclassification, Reorganization, Consolidation or Merger. In the
event of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company or in the event of any
consolidation or merger of the Company with or into another corporation (other
than a merger in which merger the Company is the continuing corporation and
that does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the class issuable upon
exercise of this Warrant) or in the event of any sale, lease, transfer or
conveyance to another corporation of the property and assets of the Company as
an entirety or substantially as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that
such other corporation shall assume all of the obligations of the Company
hereunder and the Holder shall have the right thereafter, by exercising this
Warrant, to purchase the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale, lease, transfer or conveyance by a holder of the number of
shares of Common Stock that might have been received upon exercise of this
Warrant immediately prior to such reclassification, capital reorganization,
change, consolidation, merger, sale, lease or conveyance. Any such provision
shall include provision for adjustments in respect of such shares of stock and
other securities and property that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section 8 shall similarly apply to successive
reclassification, capital reorganizations and changes of shares of Common
Stock and to successive changes, consolidations, mergers, sales, leases,
transfers or conveyances. In the event that in connection with any such
capital reorganization, or reclassification, consolidation, merger, sale,
lease, transfer or conveyance, additional shares of Common Stock shall be
issued in exchange, conversion, substitution or payment, as a whole or in
part, for, or of, a security of the Company other than Common Stock, any such
issue shall be treated as an issue of Common Stock covered by the provisions
of Section 5.
Section 7. Transfer to Comply with the Securities Act. Neither this Warrant
nor any of the Warrant Shares may be offered or sold in the United States or
to a U.S. Person (as defined in Regulation S) unless pursuant to an effective
registration statement under the Act, or pursuant to Regulation S, or pursuant
to other available exemptions from the registration requirements of the Act.
The Holder of this Warrant or any of the Warrant Shares may not engage in
hedging transaction with regard to such securities unless in compliance with
the Act.
Section 8. Availability of Information. So long as any of this Warrant
remains unexercised and this Warrant has not expired, the Company shall comply
with the reporting requirements of Sections 13 and 15(d) of the Exchange Act
to the extent it is required to do so under the Exchange Act, and shall
likewise comply with all other applicable public information reporting
requirements of the Securities and Exchange Commission (including those
required to make available the benefits of Rule 144 under the Securities Act)
to which it may from time to time be subject. The Company shall also
cooperate with the Holder of this Warrant and the Holder of any Warrant Shares
in supplying such information as may be necessary for such holder to complete
and file any information reporting forms currently or hereafter required by
the Commission as a condition to the availability of Rule 144 or any successor
rule under the Securities Act for the sale of this Warrant or the Warrant
Shares. The provisions of this Section 8 shall survive termination of this
Warrant, whether upon exercise of this Warrant in full or otherwise. The
Company shall also provide to holders of this Warrant the same information
that it provides to holders of its Common Stock.
Section 9. Registration Rights. The Company is obligated to
register the shares of Common Stock issuable upon exercise of this Warrant
pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement") dated as of the Effective Date, among the Company, the Holder,
other holders of Debentures and the Agent.
Section 10. Successors and Assigns. All the provisions of this Warrant by or
for the benefit of the Company or the Holder shall bind and inure to the
benefit of their respective successors, assigns, heirs and personal
representatives.
Section 11. Headings. The headings of sections of this Warrant have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 12. Amendments. This Warrant may not be amended except by the
written consent of the Company and the Holder.
Section 13. Notices. All notices given under this Agreement and
under the other Transaction Documents shall be in writing, addressed to the
parties as set forth below, or to such other address as a party may specify by
notice
given in accordance with this paragraph and shall be effective on the earliest
of (i) the date received, or (ii) if given by facsimile transmittal on the
date given if transmitted before 5:00 p.m. the recipient's time, otherwise it
is effective the next day, or (iii) on the second Trading Day after delivery
to a major international air delivery or air courier service (such as Federal
Express or Network Couriers):
If to the Holder or Escrow Holder:
c/o Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxxx, Xx. V.P.
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
Section 14. Law Governing; Jurisdiction. This Warrant shall be
governed by and construed in accordance with the laws of the Province of
Ontario, Canada, provided however, that if any provision of this Warrant is
unenforceable under the laws of Ontario but is enforceable under the laws of
the U.S. State of Montana, then that provision shall be governed by and
construed in accordance with the laws the State of Montana. The courts of the
Province of Ontario, Canada, shall have jurisdiction and venue for the
adjudication of any civil action between or among any of them arising out of
relating to this Debenture. The Company and the Holder irrevocably consent to
such jurisdiction and venue, and irrevocably waive any claim of forum non
conveniens or right to change venue. The prevailing party in any action or
proceeding to enforce or construe this Warrant is entitled to recover
reasonable attorney's fees.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed,
as of the day and year first above written.
United States Antimony Corporation
By _____________________________
President and CEO
Date Signed _______________________
ATTEST:
______________________
Secretary
NOTICE OF EXERCISE
To: United States Antimony Corporation:
The undersigned irrevocably exercises this Warrant for the purchase of
____________________ shares (subject to adjustment) of Common Stock of United
States Antimony Corporation (the "Company"): for this Warrant and agrees to
make payment of $____________________ (the "Exercise Price") through the
following method:
9 such payment of the Exercise Price being in cash or by certified or
official bank check payable to the order of the Company .
all at the Exercise Price and on the terms and conditions specified in this
Warrant, and directs that the shares of Common Stock deliverable upon the
exercise of this Warrant be registered or placed in the name and at the
address specified below and delivered thereto.
Date: ________________, _______
___________________________________
(Signature of Owner)
___________________________________
(Xxxxxx Xxxxxxx)
___________________________________
(City) (State or Province) (Postal Code)
___________________________________
(Country)
Securities and/or check to be issued to:
Please insert social security or identifying number if U.S. citizen or
resident:
Name:
Street Address:
City, State and Zip Code:
1() The signature must correspond with the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
Any unexercised part of the Warrant evidenced by the within Warrant to be
issued to:
Please insert social security or identifying number if U.S. citizen or
resident:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered holder of the within Warrant
hereby sells, assigns, and transfers unto the Assignee(s) named below
(including the undersigned with respect to any part of the Warrant not being
assigned hereby) all of the right of the undersigned under the within Warrant,
with respect to the number of shares of Common Stock set forth below:
Name of Assignee
Address of Assignee
Social Security or Other Identifying Number of Assignee
Number of Shares of Common Stock Assigned to Assignee
and does hereby irrevocably constitute and appoint ______________________ as
the undersigned's attorney to make such transfer on the books of
______________________ United States Antimony Corporation maintained for that
purpose, with full power of substitution in the premises.
Date: ______________, ____
________________________________
________________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights Agreement")
is made and entered into as of July 11, 2000 (the "Effective Date"), by and
among United States Antimony Corporation, a Montana corporation (the
"Company") and Thomson Kernaghan & Co. Limited (the "Agent"), pursuant to that
certain Agreement (the "Agreement") of even date herewith between the Company
and the Agent.
Preliminary Statements
In connection with the consummation of the transactions contemplated
by the Agreement, the Company has agreed, upon the terms and subject to the
conditions of the Agreement, to issue and sell to the Agent for the benefit of
certain Purchasers, which may include the Agent, up to $1,500,000 in principal
amount of the Company's 10% convertible Debentures Due June 30, 2002 (the
"Debentures"). At any time beginning 30 days after the Closing Date and prior
to their respective payment in full, all or any part of the principal and
interest of each Debenture may, at the option of the Holder, be converted into
shares (the "Conversion Shares') of the Company's Common Stock , $.01 par
value per share, at a price per share equal to seventy five percent (75%) of
the average of the three (3) lowest Closing Bid Prices in the twenty (20)
Trading Days immediately preceding (i) the Effective Date, and (ii) the
Conversion Date, whichever is lower.
The Company has also agreed, upon the terms and subject to the conditions
of the Agreement, to issue to the Agent, for the pro rata benefit of the
Purchasers, a Warrant (the "Purchaser's Warrant") to purchase the number of
shares of Common Stock (the Purchaser's Warrant Shares") determined by
multiplying .25 by the face amount of Debentures being sold at such Closing
Date and dividing the resulting figure by the Closing Bid Price on the Trading
Day immediately preceding the Effective Date; at a price per share equal to
1(1) The signature must correspond with the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
the Closing Bid Price on the Trading Day immediately preceding the Effective
Date, and (ii) to issue to the Agent a Warrant (the "Agent's Warrant") to
purchase the number of shares of Common Stock (the "Agent's Warrant Shares")
determined by dividing $375,000 by the Closing Bid Price on the Trading Day
immediately preceding the Effective Date.
To induce the Agent to execute and deliver the Purchase Agreement, the
Company has agreed, pursuant to the terms and conditions of this Registration
Rights Agreement, to provide certain registration rights with respect to the
Common Shares, the Conversion Shares and the Warrant Shares.
Agreement
In consideration of the foregoing, the mutual covenants and conditions
set forth in this Registration Rights Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to become legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Registration Rights Agreement, the following terms shall
have the following respective meanings:
"Agent" shall mean Thomson Kernaghan & Co. Limited.
"Agent's Warrant" shall have the meaning ascribed to such term in the
Preliminary Statements to this Registration Rights Agreement.
"Agent's Warrant Shares" shall have the meaning ascribed to such term in
the Preliminary Statements to this Registration Rights Agreement.
"Agreement" shall have the meaning ascribed to such term in the
Preliminary Statements to this Registration Rights Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Registration Rights Agreement.
"Company" shall mean United States Antimony Corporation..
"Conversion Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Registration Rights Agreement.
"Debentures" shall have the meaning ascribed to such term in the
Preliminary Statements to this Registration Rights Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as in effect from time to time.
"Effective Date" shall have the meaning ascribed to such term in the
Preliminary Statements to this Registration Rights Agreement.
"Filing Deadline" shall have the meaning ascribed to such term in Section
2.1 of this Registration Rights Agreement.
"Holder" or "Holders" shall mean (a) each Purchaser, to the extent that
the Purchaser holds Registrable Securities, (b) the Agent, to the extent that
the Agent holds Registrable Securities, and (c) any Person holding Registrable
Securities as a transferee of a Purchaser or the Agent (directly or
indirectly, including subsequent transfers).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing with the Commission one or more
registration statements covering Registrable Securities in compliance with the
Securities Act that is declared or ordered effective by the Commission.
"Registrable Securities" shall mean the Conversion Shares, the
Purchaser's Warrant Shares and the Agent's Warrant Shares, and any shares of
capital stock issued or issuable with respect to the Securities, the
Purchaser's Warrant Shares or the Agent's Warrant Shares as a result of any
stock split, stock dividend, recapitalization, exchange or similar event;
provided, however, that such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to such securities
shall have been declared effective under the Securities Act and such
securities shall have been disposed of pursuant to the registration statement,
(b) such securities are distributed to the public pursuant to Rule 144(k) (or
any successor provisions) promulgated under the Securities Act or (c) such
securities shall have ceased to be outstanding.
"Registration Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Registration Rights Agreement.
"Registration Expenses" shall mean all expenses incurred in order to
comply with Article II hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of one (1) counsel for the Holders,
blue sky fees and expenses, and the expense of any special audits incident to
or required by any such registration, but excluding the compensation of
regular employees of the Company (which shall be paid in any event by the
Company) and excluding Selling Expenses.
"Registration Rights Agreement" shall mean this Registration Rights
Agreement, made and entered into as of July 11, 2000, by and between the
Company and the Agent.
"Restricted Securities" shall mean Registrable Securities that are
"restricted securities" as defined in Rule 144 under the Securities Act.
"Securities" shall mean the Debentures, the Warrants, the Conversion
Shares and the Warrant Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions incurred in connection with the sale of securities pursuant to a
registration effected hereunder.
"Warrant Shares" shall mean the Purchaser's Warrant Shares and the
Agent's Warrant Shares.
Capitalized terms used in this Registration Rights Agreement and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchase Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Mandatory Registration.
(a) The Company shall prepare and file with the Commission within
sixty (60) days from the Initial Closing Date (the "Filing Deadline") a
registration statement (the "Registration Statement") on Form S-3, if the
Company is eligible to use that form, otherwise on Form SB-2 or Form S-1,
covering (i) the issuance of the Conversion Shares and the Warrant Shares, and
(ii) the resale of all of the Registrable Securities. The Registration
Statement shall initially register for resale the lesser of the number of
authorized, unissued and unreserved shares of Common Stock or the sum of 150%
of the Conversion Shares, calculated by assuming that the Initial Closing Date
is the Conversion Date, plus 100% of the Warrant Shares. The Company shall use
its best efforts, including calling shareholders' meetings for such purpose,
to ensure that it has sufficient shares of authorized, unissued and reserved
Common Stock available to register all of the Registrable Securities. The
Company shall use its best efforts to have the registration statement declared
effective by the Commission within one hundred and twenty (120) days after the
Closing Date (the "Registration Deadline") as to the number of Registraable
Securities then authorized, unissued annd unreserved. The Company shall permit
the registration statement to become effective within five (5) business days
after receipt of a "no review" notice from the Commission. The Company shall
amend the registration statement to include additional Registrable Securities
promptly following authorization of additional shares of Common Stock pursuant
to the Agreement, and shall keep the registration statement current and
effective for a period of at least ninety (90) days after (x) all of the
Debentures shall have been converted into Conversion Shares or paid and (y)
the Agent's Warrant and the Agent's Warrant shall have been fully exercised or
expired.
(b) If the Company has not filed a Registration Statement with respect to the
number of then authorized, unissued and unreserved Registrable Securities by
the Filing Deadline, the Company shall pay the Agent liquidated damages per
day equal to two percent (2%) per month of the unpaid principal amount of all
issued Debentures outstanding on the date of such Filing Deadline plus two
percent (2%) per month of the aggregate exercise price of all issued
Purchasers'Warrants and Agent's Warrants, for each day after the Filing
Deadline until the Company files a Registration Statement.
(c) If a Registration Statement with respect to the Registrable Securities is
not effective on any day after the Registration Deadline, the Company shall
pay the Agent liquidated damages per day equal to two percent (2%) per month
of the unpaid principal amount of all issued Debentures outstanding on the
date of such Registration Deadline, plus two percent (2%) per month of the
aggregate exercise price of all issued Purchasers' Warrants and Agent's
Warrants, for each day after the Registration Deadline that the Registration
Statement is not effective.
Section 2.2 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 2.1 shall be borne by the Company; and all Selling
Expenses in connection with such registration, qualification or compliance
shall be borne by the holders of the securities so registered pro rata on the
basis of the number of shares so registered.
Section 2.3 Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Article II, the Company will keep the Agent advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense, the Company will:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(b) furnish to the Agent such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirement of the
Securities Act, and such other documents as the Agnet may reasonably request
(including a conformed copy of the registration statement filed with the
Commission and any amendments thereto and an original executed underwriting
agreement entered into in connection with such registration) in order to
facilitate the disposition of Registrable Securities owned by the Holders;
(c) use reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Agent,
provided that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(d) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with the managing
underwriter(s) of such offering; each Holder participating in such
underwriting shall also enter into and perform its obligations under such
underwriting agreement;
(e) notify the Agent at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing; and
(f) furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Article II, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with registration pursuant to this Article II, if such securities
are being sold through underwriters, or on the date that the registration
statement with respect to such securities becomes effective, if such
securities are not being sold through underwriters, (i) a copy of any opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters of the Company, and (ii) a
copy of any letter, dated such date, from the independent accountants of the
Company, addressed to the underwriters of the Company.
Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (f) of this Section 2.3, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of a supplemented or amended prospectus and, if so directed by the Company,
such Holder will deliver to the Company (at the Company's expense), all
copies, other than permanent file copies then in such Holder's possession, of
the prospectus covering such Registrable Securities that was in effect prior
to such amendment or supplement. In the event the Company shall give any such
notice, the period set forth in clause (a) of this Section 2.3 shall be
extended by the number of days during the period from and including the date
of the giving of such notice pursuant to clause (e) of this Section 2.3 to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of a supplemented or
amended prospectus.
Section 2.4 Indemnification.
(a) The Company will indemnify each Holder, each Holder's officers,
directors and partners, and each Person controlling such Holder (collectively,
"Holder's Parties"), participating in any registration, qualification, or
compliance effected pursuant to this Article II with respect to Registrable
Securities held by such Holder and each underwriter, if any, and each Person
who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other similar document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii)
any violation by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder's Parties
each such underwriter, and each Person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
as incurred, provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission, made in reliance on and in
conformity with written information furnished to the Company by such Holder's
Parties or underwriter or Person controlling such underwriter specifically for
use in the preparation thereof.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, severally and not jointly, indemnify the
Company, each of its directors and officers, each underwriter, if any, of the
Company securities covered by such a registration statement, and each Person
who controls the Company or such underwriter within the meaning of the
Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact contained in any
such registration statement, prospectus, offering circular or other similar
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Company, such directors, officers,
Persons, underwriters or control Persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as incurred, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon
and in conformity with the written information furnished to the Company by
such Holder specifically for use in the preparation thereof, or (ii) any
violation by any such Holder of any federal, state or common law rule or
regulation applicable to such Holder in connection with the distribution of
securities pursuant to a registration statement, and will reimburse the
Company, such directors, officers, Persons, underwriters or control Persons
for any legal any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or action,
as incurred; provided, however, that the obligations of each such Holder
hereunder shall be limited to an amount equal to the aggregate proceeds
received by such Holder in such offering.
(c) Each party entitled to indemnification under this Section 2.4
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has received written notice of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld). The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying
Party shall bear the expense of such defense of one counsel representing the
Indemnified Party if representation of both parties by the same counsel would
be inappropriate due to actual or potential conflicts of interest. The
failure of any Indemnified Party to give notice as provided herein shall not rel
ieve the Indemnifying Party of its obligations under this Section 2.4, except
to the extent such failure to give notice shall materially and adversely
prejudice the Indemnifying Party in the defense of any such claim or any such
litigation. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) (i) If the indemnification provided for in this Section 2.4 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred
to herein, then the Indemnifying Party hereunder shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations. The relative fault of
the Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Indemnifying Party or by the Indemnified Party
and the parties' relevant intent, knowledge, access to information and
opportunities to correct or prevent such statement or omission.
(ii) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 2.4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above. The amount paid or payable by
an Indemnified Party as a result of the claims, losses, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
such action or claim.
(iii) No Holder that is a seller of Registrable Securities covered by
such registration statement or Person controlling such seller other than the
Company shall be obligated to make contribution hereunder that in the
aggregate exceeds the total public offering price of the Registrable
Securities sold by such Holder, less the aggregate amount of any damages that
such Holder and its controlling Persons have otherwise been required to pay
pursuant to this Section 2.4. The obligations of such Holders to contribute
are several in proportion to their respective ownership of the securities
covered by such registration statement and not joint.
(iv) The indemnity and contribution provided herein shall be in
addition to, and not in lieu of, any other liability that one party may have
to another.
Section 2.5 Information by Holder. Each Holder of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
II.
Section 2.6 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may at any
time permit the sale of the Restricted Securities to the public without
registration, the Company agrees to:
(a) use its best efforts to facilitate the sale of the Restricted
Securities to the public without registration under the Securities Act,
pursuant to Rule 144 under the Securities Act;
(b) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public;
(c) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements);
and
(d) so long as a Holder owns any Restricted Securities to furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the public information requirements of said Rule 144, and the
reporting requirements of the Securities Act and the Exchange Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing a Holder to sell any such securities without registration.
Section 2.7 Transfer of Registration Rights. The rights granted
under this Article II may be assigned or otherwise conveyed by any Holder of
Registrable Securities to any transferee, subject to compliance with all
applicable securities laws and regulations.
Section 2.8 Certain Limitations in Connection with Future Grants of
Registration Rights.
From and after the date of this Registration Rights Agreement, without
the prior written consent of the Holders of a majority of the Registrable
Securities, the Company shall not enter into any agreement with any holder or
prospective holder of any securities of the Company providing for the granting
to such holder of registration rights that would be superior to those granted
to Holders pursuant to Section 2.1.
Section 2.9 Restrictions on Market Manipulation. In the event any
shares of Common Stock are offered or sold by any Holder in a registration,
each such Holder will:
(a) advise the Company in writing of any offer, sale or other
disposition by it of any Common Stock in any manner other than as set forth in
the registration statement or any prospectus included therein on or for the
30-day period prior to the filing of such registration statement until the
distribution under the registration statement has been completed;
(b) not effect any stabilization activity in connection with the
Company's Common Stock;
(c) not bid or purchase, for any account in which it has a beneficial
interest, any Common Stock except as may be permitted pursuant to Rule 10b-6
under the Exchange Act (if applicable);
(d) not until it has sold all of such shares of Common Stock, attempt
to induce any Person to purchase any Common Stock except as may be permitted
pursuant to Rule 10b-6; and
(e) not until it has sold all such shares of Common Stock, pay any
compensation for soliciting another to purchase any securities of the Company,
except as may be permitted pursuant to Rule 10b-6.
ARTICLE III
MISCELLANEOUS
Section 3.1 Governing Law; Jurisdiction and Venue. This Registration
Rights Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Ontario, Canada; provided, however, that if any
provision of this Registration Rights Agreement is unenforceable under the
laws of the Province of Ontario , but is enforceable under the laws of the
State of Montana, then such provision shall be governed by and interpreted in
accordance with the laws of the State of Montana. The parties agree that the
courts of the Province of Ontario, Canada, shall have jurisdiction and venue
for the adjudication of any civil action between or among any of them arising
out of relating to this Registration Rights Agreement or any other Transaction
Document. The parties hereby irrevocably consent to such jurisdiction and
venue, and hereby irrevocably waive any claim of forum non conveniens or right
to change venue.
Section 3.2 Successors and Assignees. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assignees, heirs, executors and administrators (as the
case may be) of the parties hereto.
Section 3.3 Entire Agreement. This Registration Rights Agreement
constitutes the full and entire understanding and agreement between the
parties with regard to the subject matter hereof.
Section 3.4 Notices, etc. All notices given under this
Registration Rights Agreement and under the other Transaction Documents shall
be in writing, addressed to the parties as set forth below, and shall be
effective on the earliest of (i) the date received, or (ii) if given by
facsimile transmittal on the date given if transmitted before 5:00 p.m. the
recipient's time, otherwise it is effective the next day, or (iii) on the
second Trading Day after delivery to a major international air delivery or air
courier service (such as Federal Express or Network Couriers):
If to the Agent or the Escrow Holder:
Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
If to the Purchasers
c/o Thomson Kernaghan & Co. Ltd.
as Agent
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile No. (000) 000-0000
With a copy (that does not constitute
notice) to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
Attn: Xxxx X. Xxxxxxx
X.X. Xxx 0000
Xxxxx, Xxxxx 00000
Facasimile No. (000) 000-0000
In either case, with a copy (that does not
constitute notice) to:
Xxxx X. Xxxx
Attorney at Law
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Facsimile No. (000) 000-0000
Section 3.5 Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any Holder of any Registrable
Securities, upon any breach or default of the Company under this Registration
Rights Agreement, shall impair any such right, power or remedy of such Holder
nor shall it be construed to be a waiver of any such breach or default or an
acquiescence therein or of or in any similar breach or default thereunder
occurring nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
Any waiver, permit, consent or approval of any kind or character on the part
of any Holder of any breach or default under this Registration Rights
Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Registration Rights Agreement must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Registration Rights Agreement or by law or
otherwise afforded to any Holder shall be cumulative and not alternative.
Section 3.6 Counterparts. This Registration Rights Agreement may be
executed in any number of counterparts, each of which may be executed by less
than all of the parties hereto, each of which shall be enforceable against the
parties actually executing such counterparts and all of which together shall
constitute one instrument.
Section 3.7 Severability. In the event any provision of this
Registration Rights Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 3.8 Amendments. The provisions of this Registration Rights
Agreement may be amended at any time and from time to time, and particular
provisions of this Registration Rights Agreement may be waived, with and only
with, an agreement or consent in writing signed by the Company and by the
Holders of a majority of the Registrable Securities voting as a single class.
The parties have executed this Registration Rights Agreement as of the
date first written above.
United States Antimony Corporation and Thomson Kernaghan & Co. Ltd Escrow
Agreement
-15-
The Agent:
Thomson Kernaghan & Co. Ltd.
By ________________________________
Name ______________________________
Title _______________________________
Date signed _________________________
The Company:
United States Antimony Corporation
By ________________________________
Name ______________________________
Title _______________________________
Date signed _________________________
Escrow Agreement
1. Parties
1.1. This Escrow Agreement (this " Escrow Agreement") is made and entered
into effective as of July 11, 2000 (the "Effective Date"), by and between
United States Antimony Corporation (the "Company") and Thomson Kernaghan & Co.
Limited as escrow holder (the "Escrow Holder").
2. Recitals.
2.1. This Escrow Agreement is made with reference to the following facts and
circumstances:
(a) The Company and Thomson Xxxxxxxx & Co. Limited, as Agent, are entering
into an Agreement effective as of July 11, 2000 (the "Agreement"), pursuant to
which the Company will issue to the Agent up to an aggregate of US$1,500,000
of debentures (the "Debentures"). The Debentures are convertible, at the
option of the holder or holders thereof, into shares of the Company=s common
stock, $0. 01 par value ("Common Stock"). Under the terms of the Agreement,
the Company has agreed to issue and deliver to the Agent a Purchaser's Warrant
and an Agent's Warrant (collectively, the "Warrants"). The shares of Common
Stock into which the Debentures are convertible are referred to as the
"Conversion Shares." The shares of Common Stock underlying the Warrants are
referred to as the "Warrant Shares." The Conversion Shares and the Warrant
Shares are issuable in such amounts and upon the terms set forth in the
Agreement. Capitalized terms used but not defined in this Escrow Agreement
shall have the meanings ascribed to them in the Agreement.
(b) Under the terms of a Registration Rights Agreement between the Company
and the Agent, the Company has agreed to file a registration statement (the
"Registration Statement") under the United States Securities Act of 1933 as
Amended (the "Securities Act"), for the purpose of registering the issuance
and resale of the Conversion Shares and the Warrant Shares.
(c) Under the terms of the Agreement, the Company has agreed to execute
this Escrow Agreement with the Escrow Holder, to issue certificates for the
Conversion Shares (the "Conversion Shares Certificates") and the Warrant
Shares (the "Warrant Shares Certificates"), registered in the name of the
Escrow Holder, and to deliver those certificates to the Escrow Holder pursuant
to the terms of this Escrow Agreement.
2.1. In consideration of the premises, and in order to establish the escrow
for the Conversion Shares and the Warrant Shares required by the Agreement,
the Company is entering into this Escrow Agreement with the Escrow Holder.
3. Escrow
3.1. Contemporaneously with the execution of this Escrow Agreement, the
Company shall issue and deliver to the Escrow Holder, to the extent that the
Company has authorized shares available, a certificate for the Conversion
Shares and Warrant Shares underlying the Initial Debentures and the Warrants.
Prior to any additional sale of Debentures, the Company shall have obtained
its shareholders' consent to authorize, and shall have delivered to the Escrow
Holder, all of the Conversion Shares and Warrant Shares required by the
Agreement. Prior to each additional sale of Debentures, the Company shall, if
necessary, issue and deliver to the Escrow Holder a certificate for such
additional Conversion Shares as may be necessary to ensure that the
appropriate number of Conversion Shares underlying the Debentures have been
issued and delivered to the Escrow Holder.
3.2. All certificates for Conversion Shares and Warrant Shares delivered to
the Escrow Holder shall be registered in the name of Thomson Kernaghan & Co.
Ltd.. Until such time as the registration statement covering the Conversion
Shares and the Warrant shares is effective, the certificates shall bear a
legend indicating that they have been issued in a transaction that is exempt
from the registration requirements of the Securities Act, and may not be
transferred except pursuant to registration under the Securities Act or an
exemption from such registration. Except for such legend, the Common Stock
underlying the Purchasers= Warrants and the Agent=s Warrant shall be free and
clear of any legends, liens, claims, stop orders or other restrictions.
3.3. Not later than the third Business Day following the effective date of
the Registration Statement, the Company shall cause the Common Stock
underlying the Purchasers= Warrants and the Agent=s Warrant to be registered
in Agent=s street name, in DTC form, free and clear of any legends, liens,
claims, stop orders or other restrictions.
3.4. All Conversion Shares and Warrant Shares deposited by the Company after
the effective date of the Registration Statement shall be registered in the
street name of Thomson Kernaghan & Co. Ltd., in DTC form, free and clear of
any legends, liens, claims, stop orders or other restrictions.
4. Release of Conversion Shares and Warrant Shares
4.1. Upon receipt of a Conversion Notice, the Escrow Holder shall promptly
(and in any event within three business days) release the number of Conversion
Shares specified in the Conversion Notice to the person specified therein. If
all of the unpaid principal of and interest on the Debenture is being
converted; then the Escrow Holder shall endorse the Debenture as paid in full,
and transmit the Debenture, so endorsed, and the Conversion Notice, to the
Company. If the conversion is for less than all of the unpaid principal of and
interest on the Debenture, the Escrow Holder shall endorse upon the Debenture
the amount of principal thereof and interest thereon that is being converted,
and transmit a copy of the Debenture, so endorsed, and the Conversion Notice,
to the Company.
4.2. Upon receipt of a Warrant, together with an executed Purchase Form and
the Exercise Price for the number of Warrant Shares specified therein, the
Escrow Holder shall promptly (and in any event within three business days (i)
release the number of Warrant Shares specified in the Purchase Form to the
person specified therein; (ii) transmit a copy of the Warrant and Purchase
Form to the Company; and (ii) disburse the Exercise Price for such Warrant
Shares to the Company, either by check or wire transfer as the Company shall
specify by written instructions
United States Antimony Corporation and Thomson Kernaghan & Co. Ltd Escrow
Agreement
-17-
to the Escrow Holder. Promptly upon the written request of the Escrow Holder,
the Company shall issue replacement Warrants and deliver them to the Escrow
Holder, upon any partial exercise of a Warrant ,or upon the transfer of a
Warrant or any interest therein.
5. Termination and Resignation
5.1. This Escrow Agreement, unless sooner terminated, shall terminate on the
date on which all of the Debentures have been redeemed or converted, and all
of the Warrants have been exercised or expired.
5.2. The Escrow Holder may resign as such at any time, without liability
therefor, by giving the Company and the Agent not less than 10 days prior
written notice of its election to do so. In the event of the Escrow Holder=s
resignation, the Company shall promptly appoint a successor Escrow Holder
acceptable to the Agent.
6. Limitation on the Escrow Holder=s Liability; Indemnification.
6.1. The Escrow Holder shall not be liable to the Company, to any Debenture
holder, to any Warrant holder, or to any other person or entity for any action
taken or omitted by it, except for the Escrow Holder=s own gross negligence or
willful misconduct. Without limiting the generality of the foregoing:
(a) The Escrow Holder may rely upon, and shall be protected in acting or
refraining from acting in reliance upon, any notice, certificate, instrument,
request, paper or other document believed by it to be genuine and made, sent,
signed or presented by the Company, any Debenture holder, any Warrant holder,
or any other person or entity.
(b) The Escrow Holder shall not be responsible or liable for the genuineness,
validity or sufficiency of any Debenture, Warrant, stock certificate, notice
or other instrument delivered to it, including without limitation the
genuineness of any signature thereon, or of the identity or authority of any
person executing or delivering the same.
6.2. The Escrow Holder shall not be obligated to take any action to defend or
enforce this Escrow Agreement, or to appear in, prosecute or defend any action
or legal proceeding, or to file any income or other tax return that, in the
Escrow Holder=s opinion, would or might involve any cost, expense, loss or
liability, unless, and as often as required by it, the Company shall furnish
it with security and indemnity satisfactory to it against all such cost,
expense, loss and liability.
6.3. The Escrow Holder shall not be responsible for the validity or
enforceability of any provision of this Escrow Agreement, or for the execution
thereof by the Company, or for the truth or accuracy of any recitals or other
statements of fact contained in this Escrow Agreement.
6.4. The Escrow Holder is not, and shall not be deemed for any purpose to be,
a fiduciary under this Escrow Agreement or otherwise, for the Company, for any
Debenture holder, for any Warrant holder, or for any other person or entity.
6.5. Except for matters for which the Escrow Holder is liable to the Company
under paragraph 6.1 of this Escrow Agreement, the Company hereby agrees to
defend and indemnify the Escrow Holder and its shareholders, directors,
officers, employees and agents, and to hold each of them harmless from and
against any and all judgments, awards, orders, damages, claims, demands,
liability, penalties, costs, and expenses (including attorney fees and court
or arbitration costs) of any nature whatsoever, directly or indirectly
arising out of or relating to this Escrow Agreement, or any act or omission of
the Escrow Holder hereunder. This indemnity shall survive termination of this
Escrow Agreement.
7. Miscellaneous Provisions.
Surgical Safety Products, Inc., and Thomson Kernaghan & Co. Ltd Escrow
Agreement
-18-
7.1. No amendment, modification, termination, or waiver of any provision of
this Escrow Agreement, nor consent to any departure by the Company from any of
its provisions, shall in any event be effective unless the same shall be in
writing and signed by the Escrow Holder, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
7.2. All notices given under this Escrow Agreement shall be in writing,
addressed to the parties as set forth below, and shall be effective on the
earliest of (i) the date received, or (ii) if given by facsimile transmittal
on the date given if transmitted before 5:00 p.m. the recipient=s time,
otherwise it is effective the next day, or (iii) on the second business day
after delivery to a major international air delivery or air courier service
(such as Federal Express or Network Couriers):
If to the Agent or Escrow Holder:
Thomson Kernaghan & Co. Ltd.
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx X. Xxxxxxxxx, Chairman
Facsimile No. (000) 000-0000
If to the Company:
United States Antimony Corporation
0000 Xxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxx, President & CEO
Facsimile No. (000) 000-0000
With a copy (that does not constitute
notice) to:
Xxxx X. Xxxx
Attorney at Law
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Facsimile No. (000) 000-0000
With a copy (that does not constitute
notice) to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
Attorneys and Counselors
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 83 702
Attention: Xxxx X. Xxxxxxx
7.3. No failure or delay on the part of the Escrow Holder in exercising any
right, power, or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power, or remedy preclude
any other or further exercise thereof or the exercise of any other right,
power, or remedy hereunder. The rights and remedies provided herein are
cumulative, and are not exclusive of any other rights, powers, privileges, or
remedies, now or hereafter existing, at law or in equity or otherwise.
7.4. This Escrow Agreement shall be binding upon and inure to the benefit of
the Company and the Escrow Holder, and their respective successors and
assigns, except that the Company may not assign or transfer any of its r
rights under this Escrow Agreement without the prior written consent of the
Escrow Holder.
7.5 The Company agrees to pay on demand all costs and expenses incurred by
the Escrow Holder in connection with the preparation, execution, delivery,
filing, and administration of this Escrow Agreement, and of any amendment,
modification, or supplement hereto, including, without limitation, the fees
and out-of-pocket expenses of counsel for the Escrow Holder incurred in
connection with advising the Escrow Holder as to its rights and
responsibilities hereunder. The Company also agrees to pay all such costs and
expenses, including court costs, incurred in connection with enforcement of
this Escrow Agreement, or any amendment, modification, or supplement thereto,
whether by negotiation, legal proceedings, or otherwise. In addition, the
Company shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the issuance, transfer and deliver
of any Warrant or Warrant Shares, and agrees to hold the Escrow Holder
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees. This
provision shall survive termination of this Escrow Agreement.
7.6. This Escrow Agreement shall be governed by, and construed in accordance
with, the laws of the Province of Ontario, Canada; provided, however, if any
provision of this Escrow Agreement is unenforceable under Ontario law, but is
enforceable under the laws of the U.S. State of Montana, then Montana law
shall govern the construction and enforcement of that provision.
-19-
United States Antimony and Thomson Kernaghan & Co. Limited Agreement
-19-
7.7. The parties agree that the courts of the Province of Ontario, Canada,
shall have jurisdiction and venue for the adjudication of any civil action
between or among any of them arising out of relating to this Agreement or any
other Transaction Document. The parties hereby irrevocably consent to such
jurisdiction and venue, and hereby irrevocably waive any claim of forum non
conveniens or right to change such venue.
IN WITNESS WHEREOF, the Company and the Escrow Holder have executed this
Escrow Agreement as of the Effective Date.
The Escrow Holder:
Thomson Kernaghan & Co. Limited
By _________________________________
Name ______________________________
Title _______________________________
Date signed _________________________
The Company:
United States Antimony Corporation
By _________________________________
Name ______________________________
Title _______________________________
Date signed _________________________
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
This Settlement Agreement and Release of All Claims (Agreement), is entered
into by, between, and among United States Antimony company, a Montana
Corporation ("USAC") and the Estate of Xxxxx X Xxxxxxxx, by and through its
personal representative, Xxxx X. XxXxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, XX
00000 (Xxxxxxxx)
Whereas, Xxxxxxxx has conducted a thorough analysis of the current operations
of USAC and has determined USAC&WP1-9;s financial situation is such that the
existing debt structure owed by USAC to Xxxxxxxx could potentially interfere
with USAC&WP1-9;s future reclamation program at the Preacher&WP1-9;s Cove Mill
Site on the Yankee Fork of the Salmon River in Xxxxxx County Idaho and the
Yellow Jacket Mine and Mill in Lemhi County, Idaho ("Reclamation Sites"), and,
based upon advice from an independent CPA that providing relief from a portion
of the indebtedness owed by USAC to Xxxxxxxx would significantly improve USACs
ability to meet the financial obligations required for future reclamation
work, Xxxxxxxx has, in consideration of assisting USAC in meeting its
reclamation obligations and for indemnification by USAC to Xxxxxxxx and
Hamilton&WP1-9;s successors for environmental liabilities associated with past
mining operations; and
Whereas Xxxxxxxx, as part of this Agreement, will void the note owed by USAC
to Xxxxxxxx and convey the common stock owned by Xxxxxxxx as directed by USAC
in escrow instructions supplied by USAC, the parties have agreed as follows
AGREEMENT
Inconsideration of the mutual covenants, conditions, promises, and other
matters contained in this Agreement, the sufficiency of which as consideration
is acknowledged, the parties agree as follows
1. Payment.
A. USAC will pay the sum of Five Hundred Thousand Dollars ($500,000) by
cashier's check or wire transfer to The Estate of Xxxxx X Xxxxxxxx.
B. USAC will arrange the purchase of 614,000 shares of USAC stock
owned for which Xxxxxxxx will be paid an additional $93,440.00
from a third party.
C. USAC will convey to Xxxxxxxx 250,000 shares of USAC common stock
bearing a restrictive legend for transfer or conveyance.
2. Mutual Release Of All Claims.
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS - 1
In consideration of the payments enumerated in paragraph 1, together with
other valuable consideration the adequacy of which is acknowledged and
received, USAC and Hamilton, on their behalf, and on behalf of all their
insurers, agents, personal representatives, devisees, assigns, contractors,
and successors in interest, do hereby mutually release and forever discharge
the other party, their respective predecessors, subsidiaries, successors,
affiliates, shareholders, officers, directors, employees, agents, brokers,
contractors, attorneys, insurers, reinsurers, administrators, assigns,
personal representatives, devisees, and all other persons, firms,
corporations, and other entities who may be deemed to act, who have acted, or
who may be deemed to act in the future, on behalf of either of them, from any
and all claims, demands, actions, causes of action, or suits of every nature
whatsoever, and whether on account of past or present liability, contingent or
liquidated, potential future liability arising from either past or present
acts, whether actual or alleged, of either party for personal injury, property
damage, economic loss and/or impairment or diminution of or other interference
with any other right or amenity protected by law or equity, which liability
relates to or arises from any injuries, damages, of any kind or nature
including, without limitation, all obligations relating to the Agreement in
Exhibit A hereto, save and except therefrom the indemnity provision in
Paragraph 15 therein and the specific indemnification by USAC to Xxxxxxxx
related to the Reclamation Sites as stated below It is the express intent of
the parties that this Agreement shall operate to release and forever mutually
discharge each party from any and all obligations, whether actual or alleged,
known or unknown, accrued or unaccrued, existing, or which may under any
circumstances arise in the future to the fullest extent possible
3. Retained Indemnification By USAC to Xxxxxxxx for Reclamation Sites
DEFINITIONS
(a) "Claims" means any and all actual out-of-pocket costs (including,
without limitation, reasonable attorneys fees), expense or loss arising from
any claim, liability, damage, injunctive relief, injury to person, property or
natural resources incurred, by or asserted against Xxxxxxxx. the Indemnified
Party, and arising, directly or indirectly, in whole or in part, out of the
release or presence, or alleged release or alleged presence, of any Hazardous
Substance at the Reclamation sites whether foreseeable or unforeseeable,
regardless of the source of such release or when the presence is discovered.
Without limiting the generality of the preceding, and for purposes of
clarification only, Claims also include (1) actual out-of-pocket costs
incurred by Xxxxxxxx in connection with (i)
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS - 2
determining whether the Reclamation Sites are in compliance with all
applicable Environmental Laws, and (ii) any removal, remediation of any kind
and disposal of any Hazardous Substances present in, on or under the
Reclamation Sites, to the extent required by Applicable Environmental Laws in
effect at the time of such removal, remediation or disposal.
(b) "Environmental Laws" means all federal, state and local
environmental, health or safety laws, regulations and rules of common law
regulating Hazardous Substances, as such laws, regulations and rules may be
in effect from time to time and be applicable to the Reclamation Sites.
(c) "Hazardous Substances" means any toxic or hazardous wastes,
pollutants, or substances, including, without limitation, asbestos, PCBs,
petroleum products and by-products, substances defined or listed as
"hazardous substances" or toxic substances" or similarly identified in or
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as now or later amended, 42 U S C. Section 9601 et seq,
"hazardous materials" identified in or pursuant to the Hazardous Materials
Transportation Act, as now or later amended, 00 X X X Xxxxxxx 0000, et seq ,
"Hazardous Wastes"; identified in or pursuant to The Resource Conservation and
Recovery Act, as now or later amended, 42 U S C Section 6901 et seq , any
chemical substances or mixture regulated under the Toxic Substance Control
Act of 1976, as now or later amended, 15 U.S C Section 2601 et seq., any
"toxic pollutant"; under the Clear Water Act, as now or later amended, 33
U S C Section 1251 et seq , any hazardous air pollutant under the Clear Air
Act, as now or later amended, 42 U S C Section 7901 et seq, and any hazardous
or toxic substance or pollutant now or later regulated under any other
applicable federal, state or local Environmental Laws.
(d) "Indemnified Parties" means Xxxxxxxx and its personal
representative, agents and employees, and its assigns and successors.
ENVIRONMENTAL INDEMNIFICATION BY USAC
USAC agrees to defend, indemnify and hold the Indemnified Parties
harmless from and against, and shall reimburse the Indemnified Parties for
any Claims.
All Indemnities of this Agreement shall inure to the benefit of each
Indemnified Party's successors and assigns, and shall be binding upon
the heirs, successors, and assigns of Xxxxxxxx and USAC.
4. Incorporation of Prior Agreements.
A. Each of the parties hereto have participated in the preparation of this
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS - 3
agreement after consulting with counsel of its choice Accordingly, the
language of this Agreement shall not be presumptively construed against any of
the parties hereto.
B. This Agreement supersedes all prior agreements, understandings and
discussions among the parties hereto concerning any of the matters contained
herein.
C. No promise, inducement or agreement not herein expressed has been made
to either party.
D. The parties hereto have read this Agreement in its entirety, have
reviewed it with their counsel fully understand and acknowledge all of its
terms and enter into this Agreement voluntarily and with authority to do so.
5. Entire Agreement; Controlling Law.
This agreement contains the entire agreement between the parties and
the terms contained herein are contractual and not a mere recital. To the
extent construction or interpretation becomes necessary the Agreement shall be
constructed in accordance with Washington Law. To the extent that this
Agreement or any part thereof, may be inconsistent with Washington law
currently existing or that in the future, that the parties nonetheless intend
to confirm their agreement notwithstanding any contrary existing Idaho law,
contrary law of any other jurisdiction or any subsequent changes in applicable
or potentially applicable law.
6. Successors in Interest.
This Agreement shall inure to the benefit of and shall be binding upon
the parties' respective successors, heirs and assigns.
7. Approval and Acceptance of Terms by Parties.
This Agreement is hereby approved by both parties as to form and
content, and both parties agree to be bound by all of the terms hereon.
8. Additional Documents.
The parties agree to execute such additional documentation as is or
may become necessary to fully effectuate the terms, conditions, and
provisions of this Agreement.
9. No Modification.
No change, amendment, or modification of this Agreement is valid unless
it is made in writing and signed by the parties.
10. Attorney Fees.
In the event any suit action or other proceeding arises under the terms of
this Agreement,
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS-4
or in connection with this or any of the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney fees and
other costs incurred in this action.
DATED this ________ day of June 0000
XXXXXX XXXXXX ANTIMONY COMPANY
/s/Xxxx X. Xxxxxxxx
Its President
ESTATE OF XXXXX X. XXXXXXXX
/s/ Xxxx X. XxXxxxxxx
Personal Representative
STATE OF )
as: )
County of ____________ )
On this day personally appeared before me, the undersigned, a notary public in
and for the State of ___________ known or identified to me to be the president
of United States Antimony Company, the corporation that executed the within
instrument or the person who executed the instrument on behalf of said
corporation and acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seat
this
-- day of June 2000.
Notary Public,
State of residing at
Commission expires
STATE OF
On this day personally appeared before me, the undersigned, a notary public in
and for the
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS - 5
State of -------- X. XxXxxxxxx, Known or identified to me to be the person
whose name iS subscribed to the within instrument as Personal Representative
of the ESTATE OF XXXXX X. XXXXXXXX, deceased, and acknowledged to me that he
executed the same as such Personal Representative.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
this day of June 2000.
Notary Public, State of
residing at
Commission expires:
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS - 6
