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DEBT SETTLEMENT AGREEMENT
-------------------------
THIS AGREEMENT is dated for reference the 30th day of September, 1997,
BETWEEN:
XXXXX INTERNATIONAL CORP., of
Suite 101 - 000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000
(hereinafter referred to as the "Creditor")
OF THE FIRST PART
AND:
ICHOR CORPORATION, of 000 Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxxx, XX 00000-0000
(hereinafter referred to as the "Corporation")
OF THE SECOND PART
WHEREAS:
A. The Corporation is indebted to the Creditor and the Creditor has agreed
to accept payment of the said indebtedness in the amount of $600,000
(the "Indebtedness") by delivery of 5% Cumulative Convertible Redeemable
Preferred Shares, Series 1 of the Corporation having rights, privileges,
restrictions and conditions which substantially conform to those
contemplated by Schedule "A" hereto (the "Preferred Shares") as
hereinafter set forth;
B. The Creditor has agreed to accept the issuance of Preferred Shares in
the capital of the Corporation at a deemed price of $10.00 per Preferred
Share in full discharge and complete satisfaction of the Indebtedness
and to grant the Corporation a release on receipt of the Preferred
Shares;
NOW THEREFORE this agreement witnesseth that in consideration of the
premises and the mutual covenants and agreements hereinafter contained and
the sum of $10.00 paid by each party to the other (the receipt of which is
hereby acknowledged) and other good and valuable consideration the parties
hereto COVENANT AND AGREE AS FOLLOWS:
1. Upon creation of the Preferred Shares, the Corporation shall forthwith
issue and deliver a certificate representing the Preferred Shares to the
Creditor in full settlement and satisfaction of the Indebtedness to the
Creditor at the address first above written.
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2. The Creditor hereby covenants with the Corporation that he will accept
the issuance and delivery of a certificate representing the Preferred
Shares from the Corporation at any time up to 5:00 p.m. on or before the
31st day of March, 1998 in full settlement and satisfaction of the
Indebtedness, and hereby absolutely releases and fully discharges the
Corporation from the Indebtedness. In the event that the Preferred
Shares have not been delivered to the Creditor by March 31, 1998, the
Creditor may, at its option, rescind this agreement, whereupon this
agreement shall be terminated with effect from the date hereof.
3. The Creditor represents and warrants to the Corporation and covenants
with the Corporation that:
(a) it is a company duly incorporated and existing under the laws of
its incorporating jurisdiction and at the closing date will have
the power and capacity to own the Preferred Shares and to enter
into this agreement and to carry out its terms and conditions to
the full extent;
(b) the acceptance of the Preferred Shares in lieu of payment has been
validly authorized by all necessary corporate acts;
(c) the Creditor is purchasing the Preferred Shares as principal and is
not a partnership, syndicate, trust, or unincorporated
organization;
(d) the Creditor is, by virtue of its net worth and investment
experience, or by virtue of consultation with or advice from a
person who is not a promoter of the Corporation and is a registered
adviser or registered dealer, able to evaluate the merits of the
investment in the Preferred Shares based upon information requested
of or presented by the Corporation;
(e) the Creditor is not purchasing the Preferred Shares on the basis of
any information respecting the Corporation not generally known save
knowledge of this transaction;
(f) due to the nature and stage of the Corporation's business and
properties the Creditor acknowledges that an investment in the
Preferred Shares must be considered speculative; and
(g) the Creditor understands that the Preferred Shares have not been
registered by the Corporation under the United States Securities
Act of 1933 (the "1933 Act") and that the Corporation does not
plan, and is under no obligation to provide for registration of the
Preferred Shares in the future. Offer or sale of the Preferred
Shares in the United States or to a U.S. person would constitute a
violation of United States law unless made in compliance with the
registration requirements of the 1933 Act or pursuant to an
exemption therefrom. The term "United States" means the United
States of America and includes its territories, possessions and all
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areas subject to its jurisdiction; and the term "U.S. person" has
the meaning as defined in Regulation S made under the 0000 Xxx.
4. The Corporation represents and covenants, as the case may be, that:
(a) it is duly incorporated and validly existing under the laws of the
State of Delaware;
(b) it has all necessary corporate authority to enter into this
agreement and to effect the issuance of the Preferred Shares agreed
to hereby; and
(c) its shares trade through the National Association of Securities
Dealers Automated Quotation System SmallCap market.
5. In exchange for the Preferred Shares, the Creditor hereby agrees not to
commence any action or proceeding whatsoever against the Corporation
including the filing of any charge, lien or encumbrance against the
Corporation, its properties, or assets, existing or future during the
term of this agreement and this agreement may be pleaded as a defence to
any such action or proceeding commenced and shall deliver to the
Corporation a release of any and all claims related to the subject
matter hereof in a form reasonably satisfactory to the Corporation upon
receipt of the Preferred Shares.
6. Time is of the essence of this agreement.
7. This Agreement shall be governed and enforced in accordance with the
laws of Switzerland, without regard to its conflict of laws and
principles, and the parties hereto agree to submit any dispute hereunder
to the jurisdiction of the courts of the Canton of Geneva.
8. All references to sums of money shall be deemed to refer to the legal
tender of the United States unless otherwise specified.
9. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
10. The parties hereto agree to execute such further and other agreements as
may be necessary to give effect to the meaning and intent of this
agreement.
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11. This agreement may be executed in several parts in the same form and by
facsimile and such parts as so executed shall together constitute one
original document, and such parts, if more than one, shall be read
together and construed as if all the signing parties had executed one
copy of the said agreement.
IN WITNESS WHEREOF the parties hereto have hereunto executed this agreement
as of the day and year first above written.
XXXXX INTERNATIONAL CORP.
By: /s/ Xxxxxxx X. Xxxxx
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Name:
--------------------------
Title:
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ICHOR CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name:
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Title:
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SCHEDULE "A"
ICHOR CORPORATION
SUMARY OF TERMS AND PROVISIONS TO BE ATTACHED TO
THE PREFERRED SHARES
I. Securities: 5% Cumulative Redeemable Convertible Preferred Shares,
----------- Series 1 ("Series 1 Preferred Shares")
II. Dividends: The Holders of the Series 1 Preferred Shares shall be
---------- entitled to receive and the Corporation shall pay
thereon, as and when declared by the Board of
Directors of the Corporation, out of the monies of
the Corporation properly applicable to the payment of
dividends, preferential cumulative cash dividends
payable quarterly on the last day of each of March,
June, September and December in each year commencing
March 31, 1998. in an amount per share of $0.125
(subject to appropriate pro rata adjustment for the
initial dividend).
III.Conversion Rights: Each Holder of Series 1 Preferred Shares will have
------------------ the right to convert such shares into common shares
(the "Common Shares") of the Corporation. Such
conversion shall occur with respect to each Common
Share at a conversion price equal to 90% of the fair
market value thereof (the "Conversion Price")
calculated as at the date of conversion based upon
the Corporation's 20 day average closing trading
price on the stock exchange or quotation system
through which the largest number of Common Shares
traded during such period immediately preceding the
date that notice of conversion is delivered to the
Corporation (the "Conversion Date"). The number of
Common Shares to be delivered upon conversion of each
Series 1 Preferred Share shall be equal to the issue
price thereof plus all accrued but unpaid dividends
outstanding as at the Conversion Date divided by the
Conversion Price. The right to convert the Series 1
Preferred Shares shall be exercisable from the date
of issue thereof and shall terminate if notice of
exercise is not received by the Corporation on or
before the day that is five years following the date
of issue.
IV. Voting Rights: The Holders of the Series 1 Preferred Shares will not
-------------- be entitled as such to receive notice of or to attend
at or vote at any meetings of the shareholders of the
Corporation.
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V. Redemption: The Corporation may redeem at any time all of the
----------- outstanding Series 1 Preferred Shares, or from time to
time, any part thereof on payment, for each such share
to be redeemed of $10.00 together with accrued and
unpaid dividends to the date fixed for redemption, the
whole constituting the "Redemption Price". Notice of
any redemption shall be given by the Corporation at
least 30 days prior to the date fixed for redemption.
If less than all of the outstanding Series 1 Preferred
Shares are at any time to be redeemed, the shares to
be redeemed shall be selected by lot or in such other
manner as the Corporation may determine.
VI. Priority as to Capital:
-----------------------
In the event of the liquidation, dissolution or
winding up of the Corporation or other distribution of
its assets among its shareholders for the purpose of
winding up its affairs, the holders of the Series 1
Preferred Shares will be entitled to receive an amount
equal to $10.00 per share together with all accrued
and unpaid dividends thereon before any amounts are
paid or any assets of the Corporation are distributed
to the holders of any common shares or other shares
ranking junior to the Series 1 Preferred Shares. Upon
payment to the holders of the Series 1 Preferred
Shares of the amounts so payable to them, such holders
shall not be entitled to share in any further
distribution of the assets of the Corporation.
VII. Restrictions on Dividends and Retirement of Shares:
---------------------------------------------------
So long as any of the Series 1 Preferred Shares are
outstanding, the Corporation will not, without the
prior approval of the holders of the Series 1
Preferred Shares voting at a meeting of such holders:
(a) declare or pay any dividend on any shares of the
Corporation ranking junior to the Series 1
Preferred Shares (other than stock dividends in
any shares ranking junior to the Series 1
Preferred Shares); or
(b) redeem, purchase or make any capital distribution
in respect of any shares of the Corporation
ranking junior to the Series 1 Preferred Shares;
(c) except pursuant to any purchase obligation,
sinking fund, retraction privilege or mandatory
redemption provision, redeem, purchase or make any
capital distribution in respect of any other
shares ranking on a parity with the Series 1
Preferred Shares,
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unless in each such case all dividends on the
Series 1 Preferred Shares and on all other shares
of the Corporation ranking in parity with the
Series 1 Preferred Shares accrued up to and
including the immediately preceding dividend
payment date shall have been declared and paid or
set apart for payment.
