EXHIBIT 2
ADDITIONAL GUARANTY AGREEMENT
This agreement is made and entered into as of 29th day of March, 2002,
by and between AmerAlia, Inc., a Utah corporation whose address is 000
Xxxxxxxxxxxx Xxxx., Xxxxx, Xxxxxxxx 00000 ("AmerAlia") and the individuals who
execute this agreement below (the "Guarantors").
RECITALS
A. AmerAlia has commenced operations necessary to build or purchase a plant for
the production of sodium bicarbonate on property near Rifle, Colorado (the "Rock
School Project"), and is seeking permanent financing to permit the Company to
commence construction activities and, or alternatively, proceed to complete
negotiations to acquire a nearby property and its production facilities.
B. AmerAlia has previously borrowed approximately $600,000 (the "Original Loan")
pursuant to a guaranty that the Guarantors previously provided to AmerAlia
pursuant to an agreement dated June 2001; and
D. AmerAlia is seeking an additional loan of $600,000 (the "Additional Loan") to
provide working capital to AmerAlia for certain expenses incurred and its
continuing operations; and
E. The Guarantors are willing to facilitate the Additional Loan by guaranteeing
the repayment of the Additional Loan; and
F. AmerAlia is willing to compensate the Guarantors for providing them this
Guaranty Agreement and taking all actions necessary that will result in AmerAlia
receiving the Additional Loan.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration the receipt and
sufficiency whereof is hereby acknowledged, AmerAlia and the Guarantors agree as
follows:
1. AmerAlia will execute and deliver to a bank as AmerAlia and the
Guarantors may agree (the "Bank") an application for a loan for a
minimum period of three months in an amount no greater than $600,000,
the proceeds of which will be used for AmerAlia's working capital
purposes. AmerAlia and the Guarantors agree that this Additional Loan
is separate and different from the Original Loan, and it is not the
intention of this Agreement to treat the Additional Loan as having been
combined with the Original Loan in any respect.
2. The Guarantors will execute and deliver to the Bank such forms as may
be necessary or appropriate to provide a guaranty for the repayment of
the Additional Loan in a form that is satisfactory to the Bank and to
the Guarantors, and is consistent with this Agreement (the "Guaranty").
3. AmerAlia will use the Additional Loan (the "Loan Proceeds") for the
following purposes:
(1) to pay any interest accrued on other indebtedness of AmerAlia
to the extent not previously paid, and to provide for
extension of the repayment date for the other indebtedness;
Guaranty Agreement - AmerAlia, Inc. Page 1
(2) to provide for working capital expenditures for AmerAlia
(including the payment of payables) necessary in connection
with AmerAlia's continuing operations and its negotiations
with IMC Global for the purchase of the White River assets,
Centre Solutions for the debt necessary in connection with
such purchase (or construction of the Rock School plant), and
for the equity necessary for such activities.
4. As a condition of the Guarantors' willingness to enter into this
Guaranty Agreement and to make the funds to be provided by the
Additional Loan available to AmerAlia, AmerAlia agrees as follows:
(1) AmerAlia will continue to reduce its corporate, general, and
administrative expenses (including, without limitation, salary
expenses) to the maximum extent possible;
(2) AmerAlia hereby grants the Guarantors as collateral for the
repayment of the Aggregate Loan and the Guarantors's liability
under this Guaranty, AmerAlia's entire interest in Natural
Soda, Inc., a recently-formed Colorado corporation to acquire
AmerAlia's entire interest in the Rock School Project and the
federal lease associated therewith.
(3) AmerAlia will use its best efforts to obtain necessary
financing or a strategic alliance for the development of the
Rock School Project or the acquisition of the White River
assets, ("Development Arrangements") as soon as reasonably
possible.
X When used in the foregoing paragraph, the term
"necessary financing" means construction financing or
permanent financing reasonably sufficient to
carry-out AmerAlia's business plan as reviewed by the
Guarantors; and
X When used in the foregoing paragraph, the term
"strategic alliance" means a joint venture,
partnership, or other business combination with an
affiliated or unaffiliated entity which will provide
capital or other resources reasonably sufficient for
the development of the Rock School Project or the
purchase of the White River assets.
(4) AmerAlia will apply the net proceeds of any Development
Arrangement, as received, to repay obligations of AmerAlia in
addition to pursuing the development of the Rock School
Project or the purchase of the White River assets.
5. AmerAlia will pay the Guarantors compensation for executing and
delivering the Guaranty to the Bank in an amount equal to 1.0833% of
the amount of the Additional Loan per month the Additional Loan is
outstanding. This compensation will be payable in shares of AmerAlia's
restricted common stock valued at $1.00 per share, subject to the
following readjustment.
To the extent the average closing price of AmerAlia's common stock as
reported by The Nasdaq Stock Market, Inc. SmallCap Market (or the OTC
Bulletin Board or other quotation medium selected by AmerAlia if
AmerAlia's common stock is not, at that time, quoted on the Nasdaq
SmallCap Market) for the 30 days following the announcement by AmerAlia
that:
A. it has obtained all debt and equity financing necessary for
either: (i) the purchase of the assets of White River
Nahcolite Limited Liability Company ("White River") or (ii)
the construction of a plant of its own on its Rock School
lease, or
Guaranty Agreement - AmerAlia, Inc. Page 2
B. AmerAlia has made a determination to pursue other arrangements
not involving either those set forth in clause (1)(i) or
(1)(ii)
exceeds $1.00 per share (the "New Price," but not be greater than $2.50
per share), the number of shares issued pursuant to this subscription
agreement shall be recalculated based on the New Price and you will
return any excess shares to AmerAlia (or if the certificate for such
shares have not yet been issued the certificate will represent the
number of shares determined by such recalculation). If the announcement
has not been made by December 31, 2002, then this paragraph will be of
no further force or effect.
If the rules of the Nasdaq Stock Market require that the fee be
approved by the shareholders, then the payment of the fee in shares
will be subject to shareholder approval and, if not approved by the
shareholders, will be payable in cash not later than the date for
repayment of the Aggregate Loan.
6. If the Guarantors make any payment to the Bank under the Guaranty,
AmerAlia will indemnify and hold the Guarantors harmless for any such
payment, and for all other costs and expenses, including reasonable
attorneys' fees incurred in connection therewith.
7. The Guarantors acknowledge that such shares, when issued, will be
restricted as that term is defined in Rule 144 of the Rules and
Regulations promulgated by the Securities and Exchange Commission. The
Guarantors further acknowledge, represent and warrant to AmerAlia that:
(1) The Guarantors are 'accredited investors' as that term is
defined in Section 2(a)(15) of the Securities Act of 1933 (the
"1933 Act") and Rule 215 thereunder, and in Rule 501(a) of
Regulation D of the 1933 Act.
(2) AmerAlia has given the Guarantors and its legal, financial,
tax, and investment advisors the opportunity to ask questions
of and to receive answers from persons acting on AmerAlia's
behalf concerning the terms and conditions of this transaction
and the opportunity to obtain any additional information
regarding AmerAlia, its business and financial condition which
AmerAlia possesses or can acquire without unreasonable effort
or expense including (without limitation) all minutes of the
meetings of the Board of Directors of AmerAlia or committees
thereof, and other relevant documents requested by the
Guarantors. In addition, the Guarantors have spoken with the
independent auditors for AmerAlia and have made financial or
other inquiries as the Guarantors or their advisors have
deemed necessary or appropriate in the conduct of the
Guarantors's due diligence investigation.
(3) The Guarantors acknowledge and understand that, although there
is currently a market for AmerAlia's common stock, the market
is dependent on a number of factors beyond the control of
AmerAlia and may not continue. Furthermore the Guarantors
acknowledge that although AmerAlia believes that it is in
compliance with all requirements for continued listing of the
Common Stock on the Nasdaq SmallCap Market, continued listing
on the Nasdaq SmallCap Market is subject to a number of
objective and subjective criteria. Although AmerAlia believes
it is in material compliance with all objective criteria,
there can be no assurance that the staff of the Nasdaq
SmallCap Market may not reach a different conclusion or that
the Nasdaq staff may not reach a conclusion that AmerAlia is,
for some reason, not in compliance with subjective criteria
which is not specified in the rules applicable to the Nasdaq
SmallCap Market.
Guaranty Agreement - AmerAlia, Inc. Page 3
(4) The Guarantors understand that the securities being acquired
hereby are and will continue to be restricted securities
within the meaning of Rule 144, and applicable state statutes.
The Guarantors consent to the placement of an appropriate
restrictive legend or legends on any certificates evidencing
the securities and any certificates issued in replacement or
exchange therefor and acknowledge that AmerAlia will cause its
stock transfer records to note the restrictions.
X The Guarantors must bear the economic risks of the
investment in the securities for an indefinite period
of time because they have not been registered under
the 1933 Act or any state securities laws;
X As "restricted securities" (unless registered for
resale or another exemption from registration is
available for any transfer), the securities must be
held for a minimum of one year following the
purchase. Thereafter, the securities may be sold in
only limited amounts in a specified manner in
accordance with the terms and conditions of Rule 144
(the "Rule") if the Rule is applicable (there being
no representation by AmerAlia that it will be
applicable). In case the Rule is not applicable, any
sales may be made only pursuant to an effective
registration statement or an available exemption from
registration.
X The securities cannot be sold unless they are
registered under the 1933 Act and any applicable
state securities laws or unless an exemption from the
registration requirements is available. To the extent
that AmerAlia files any registration statement under
the 1933 Act (not including a registration statement
on Form X-0, X-0, X-00, or other inappropriate form),
AmerAlia will endeavor to include the Securities in
such registration statement, subject to any
requirements that may be imposed by any underwriter
named in the registration statement (which
requirements may include, but are not limited to, a
delay in the ability of the selling security holder
to sell the shares, a requirement that any sales be
made through the underwriter, or a prohibition on any
sales by the selling security holder pursuant to the
registration statement in certain specified
circumstances, in the underwriter's sole discretion).
(5) The Guarantors have reviewed the terms of this agreement and
the transaction contemplated by this agreement with their
legal, investment, tax, and financial advisors to the extent
the Guarantors have deemed such consultation appropriate. The
Guarantors have also consulted with such advisors with regard
to the advisability of this investment to the extent the
Guarantors have deemed such consultation to be appropriate.
The Guarantors acknowledge that AmerAlia has advised the
Guarantors that it recommends that the Guarantors obtain
advice and consultation. The Guarantors further acknowledge
that they have neither sought nor received any advice from
AmerAlia or any of its agents or affiliates with respect to
any aspect of this Agreement.
(6) The Guarantors acknowledge that the investment contemplated
herein is one of significant risk, and there can be no
assurance that the securities will ever be valuable. The
Guarantors hereby represent that the investment in the
securities is a suitable investment for them, taking into
consideration the restrictions on transferability and the
other considerations affecting the
Guaranty Agreement - AmerAlia, Inc. Page 4
securities and AmerAlia as described herein and in AmerAlia's
reports filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended
(the "1934").
(7) The Guarantors acknowledge that the acquisition of the
securities as contemplated herein may impose certain reporting
obligations on the Guarantors pursuant to Sections 13(d) and
16(a) of the 1934 Act, and may impose certain obligations
under the Internal Revenue Code of 1986, as amended. The
Guarantors will make all necessary filings.
8. All notices under this Agreement are to be delivered by (i) depositing
the notice in the mail, using registered mail, return receipt
requested, addressed to the address below or to any other address as
the party may designate by providing notice, (ii) telecopying the
notice by using the telephone number set forth below or any other
telephone number as the party may designate by providing notice, (iii)
overnight delivery service addressed to the address below or to any
other address as the party may designate by providing notice, or (iv)
hand delivery to the individual designated below or to any other
individual as the party may designate by providing notice. The notice
shall be deemed delivered (i) if by registered mail, four (4) days
after the notice is deposited in the mail, (ii) if by telecopy, on the
date the notice is delivered, (iii) if by overnight delivery service,
on the date of delivery, and (iv) if by hand delivery, on the date of
delivery.
If to AmerAlia, to the address set forth here:
AmerAlia, Inc.
00000 X. Xxxxx Xxxx Xx
Xxxxxxxxxx, XX 00000
Telecopy number (000) 000 0000 with a copy (which does
not constitute notice) to:
Xxxxx Xxxx & Xxxx, X.X.
Xxxxx 0000
0000 Xx. Xxxxxxx'x Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Telecopy: 000-000-0000
If to the Guarantors, to the addresses set forth beneath their
signatures, below.
9. General Provisions
(1) Complete Agreement. The parties agree that this Agreement is
the complete and exclusive statement of the agreement between
the parties, which supersedes and merges all prior proposals,
understandings and all other agreements, oral or written,
between the parties relating to this Agreement.
(2) Amendment. This Agreement may not be modified, altered or
amended except by written instrument duly executed by both
parties.
Guaranty Agreement - AmerAlia, Inc. Page 5
(3) Waiver. The waiver or failure of either party to exercise in
any respect any right provided for in this Agreement shall not
be deemed a waiver of any further right under this Agreement.
(4) Severability. If any provision of this Agreement is invalid,
illegal or unenforceable under any applicable statute or rule
of law, it is to that extent deemed omitted. The remainder of
the Agreement shall be valid and enforceable to the maximum
extent possible.
(5) Governing Law. This Agreement and performance hereunder shall
be governed by the laws of the State of Colorado.
Each party acknowledges that it has read and understands this Agreement and
agrees to be bound by its terms.
AMERALIA, INC. GUARANTORS
By: /s/Xxxx Xxxx /s/ Xxxxxxx X. XXxxxxx
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Xxxx X. Xxxx, President Xxxxxxx X. X'Xxxxxx
Address:
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/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Address:
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Guaranty Agreement - AmerAlia, Inc. Page 6
