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