AGREEMENT
This Agreement is made effective as of December 11, 1997, by and between AEM
Corporation, an Alaska Corporation ("AEM"), and SGI International, a Utah
Corporation ("SGI").
WHEREAS, by letter dated 19 November 1996, attached as Exhibit "A" hereto, AEM
offered to sell all of it's right, title and interest in certain cash flows
generated by the Colstrip project (a 35 mw cogeneration project located at
Colstrip, Montana), and actually received by SGI from certain Rosebud
Shareholders who are Xxxxxxx X. Xxxxx, R. Xxx Xxxxxxx, Xxxx Xxxxxxxx, and Xxxxx
X. Xxxxxxxxxx, upon the same terms and conditions as were contained in SGI's
Private Offering Memorandum ("POM") to certain MOP participants, subject to a
vote of AEM's shareholders; and
WHEREAS, said transaction is calculated to include one share of SGI Convertible
Preferred Stock convertible into twenty five thousand seven hundred and fourteen
(25,714) shares of SGI restricted common Stock, and a warrant to purchase twenty
five thousand seven hundred and fourteen (25,714) shares of SGI common stock, at
an exercise price of five dollars and seventy five cents ($5.75) per share,
expiring December 31, 2001; and
WHEREAS, AEM, in said letter, also offered to sell its fifteen percent (15%)
profit interest in The Healy Alaska Project in consideration of the issuance of
a warrant to purchase fifteen thousand (15,000) shares of SGI common stock on
the same terms and conditions as the above-described warrant, subject to a vote
of AEM's shareholders;
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Colstrip. AEM hereby sells, and SGI hereby purchases, all of AEM's right,
title and interest in and to those certain cash flows generated by the Colstrip
Project, and actually received by AEM from the Rosebud shareholders , in
consideration of the issuance of twenty five thousand seven hundred fourteen
(25,714) shares of SGI restricted common stock, and a warrant to purchase twenty
five thousand seven hundred and fourteen (25,714) shares of SGI common stock
upon the terms and conditions depicted in the attached Exhibit "A" hereto, which
Exhibit is incorporated herein by reference.
2. Xxxxx. AEM hereby sells, and SGI hereby purchases, all of AEM's right, title
and interest in and to its twelve percent (12%) of distributed net profits
interest in The Healy Alaska Project, as is more particularly described in the
attached Exhibit "B" hereto, which Exhibit is incorporated herein by reference,
in consideration of the issuance of a warrant to purchase twelve thousand
(12,000) shares of SGI common stock upon the terms and conditions depicted in
the attached Exhibit "A" hereto.
3. Representations and Warranties. AEM acknowledges, represents, warrants and
agrees as follows:
a. It has received and carefully reviewed the 96-B Private Placement
Memorandum (the "Memorandum") and attached Form 10-K and Forms 10-Q, and has
relied only on the information contained therein, information otherwise provided
in writing by SGI, and information from books and records of SGI. AEM
understands that all documents, records and books pertaining to this transaction
have been made available for inspection by it, it's attorney and/or accountant,
and that the books and records of SGI will be available, upon reasonable notice,
for inspection during reasonable business hours at SGI's principal place of
business. AEM and/or it's advisor(s) have had a reasonable opportunity to ask
questions of and receive answers from SGI, or a person or persons acting on its
behalf, concerning the Offering, and to obtain additional information, to the
extent possessed by SGI or obtainable without unreasonable effort or expense,
necessary to verify the accuracy of the information in the Memorandum. All such
questions have been answered to the full satisfaction of AEM. No oral
representations have been made or oral information furnished to AEM or it's
advisor(s) in connection with the Offering which are not contained in the
Memorandum.
b. AEM (i) has adequate means of providing for it's current needs and
possible contingencies, (ii) has no need for liquidity in this transaction,
(iii) is able to bear the substantial economic risks of an investment in the
Securities for an indefinite period, and (iv) at the present time, can afford a
complete loss of such investment. AEM has no reason to anticipate any change in
circumstances, financial or otherwise, which should cause it to sell or
distribute or necessitate or require any sale or distribution of the herein
Securities.
c. AEM is familiar with the nature of and risks attending investments
in securities not registered under the Act, and recognizes that the transaction
herein involves significant risks, including those set forth under the caption
"Risk Factors" in the Memorandum.
d. AEM understands that the Memorandum has not been filed with or reviewed by
certain state securities administrators because of the representation made by
SGI as to the private or limited nature of the Offering.
e. AEM understands that neither the Offering nor the sale of the
Securities has been registered under the Act in reliance upon an exemption
therefrom for non-public offerings. AEM understands that the Securities may have
to be held indefinitely unless the sale or other transfer thereof is
subsequently registered under the Act, or an exemption from such registration is
available (e.g., pursuant to Rule 144 if the 1-year holding period and other
applicable conditions are met). AEM further understands that SGI is under no
obligation to register the Securities on it's behalf, other than as
above-described, or to assist in complying with any exemption from registration.
f. The Securities are being acquired solely for AEM's own account for
investment purposes only and not for the account of any other person and not
with a view toward the distribution, assignment or resale to others of all or
any portion thereof; no other person has a direct or indirect beneficial
interest in such Securities; and under no circumstances will AEM sell, transfer
or assign all or any portion of it's Securities except in compliance with the
provisions of this Agreement.
g. AEM realizes that it may not be able to sell of dispose of its
Securities in an emergency or for any other reason. In addition, AEM understands
that it's right to transfer the Securities will be subject to the condition that
the transfer not be in violation of the Act and applicable state securities laws
(including investor suitability standards), and the requirement that SGI must
consent to such transfer.
h. AEM understands that legends will be placed on the Securities with
respect to the herein described restrictions on the assignment, resale or other
disposition of the Securities and that stop transfer instructions have or will
be placed with respect to the Securities so as to restrict the assignment,
resale or other disposition thereof, except in the case of Registration
Statement being declared effective.
i. AEM further represents that it: (i) is duly authorized and otherwise
duly qualified to acquire and hold the herein Securities; (ii) has its principal
place of business as set forth on the signature page hereof, and (iii) has not
been formed for the specific purpose of acquiring the herein Securities.
j. AEM understands that all projections and assumptions set forth in the
Memorandum are based on various estimates, assumptions, forecasts and
projections determined by SGI and are subject to the caveats set forth in the
Memorandum.
k. AEM will not, in any event, sell its Securities or any portion
thereof unless, in the opinion of it's counsel, which opinion and which counsel
shall be satisfactory to counsel for SGI, such Shares may be legally sold
without registration under the Act, and/or registration and/or qualification
under then applicable state and/or federal statutes, or such Securities shall
have been so registered and/or qualified and an appropriate prospectus shall
then be in effect.
l. AEM UNDERSTANDS THAT THE SECURITIES HAVE BEEN ISSUED BY SGI IN
RELIANCE UPON THE EXEMPTIONS PROVIDED BY SECTION 3(a)(9) AND 4(2) OF THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, AND SECURITIES AND EXCHANGE COMMISSION RULE
506 OF REGULATION D PROMULGATED THEREUNDER, ON THE GROUNDS THAT NO PUBLIC
OFFERING IS INVOLVED, AND UPON THE REPRESENTATIONS, WARRANTIES AND AGREEMENTS
SET FORTH HEREIN.
4. Indemnification. AEM agrees to indemnify and hold harmless SGI, counsel to
SGI, and the respective officers, directors, and Affiliates from and against any
and all damages, losses, liabilities, obligations, actions, judgments, suits,
proceedings, penalties, costs and expenses (including, without limitation,
attorneys' fees and costs and expenses of defense, appeal and settlement) which
may be imposed on, incurred by or asserted against any of such persons by reason
of the failure of AEM to fulfill any of the terms or conditions of this
Agreement, or by reason of any breach of the representations and warranties made
by AEM herein, or in any document provided by the undersigned to SGI.
5. Miscellaneous.
a. AEM agrees not to transfer or assign this Agreement, or any of it's
interest herein, and further agrees that any transfer or assignment of the
Securities acquired pursuant hereto shall be made only in accordance with the
provisions of this Agreement and all applicable laws.
b. This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by all parties.
c. This Agreement shall be governed, construed and enforced in all respects in
accordance with the laws of the State of California.
d. The representations and warranties of AEM set forth herein shall survive the
termination of this Agreement acquisition and sale of the Securities pursuant
to this Agreement.
AEM Corporation
/s/ Xxxxxxx X. Xxxxx
By:------------------------------------------
Xxxxxxx X. Xxxxx, President
Taxpayer Identification No.:
Address of Principal
Corporate Offices:
Executed at ,
this day of , 0000.
XXX International
A Utah Corporation,
/s/ Xxxxxx X. Xxxxxx
By:--------------------------------------
Xxxxxx X. Xxxxxx, Chief Executive Officer
Date:
