EXHIBIT 10.36
THIS DEBENTURE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
No. A- U.S. $__________________
_________ __, 2004
FORM OF
SECURED SERIES A 10% DEBENTURE
DUE SEPTEMBER 30, 2005
THIS SECURED SERIES A DEBENTURE is one of a duly authorized issue of
debentures of NATURAL SODA HOLDINGS, INC., a Colorado corporation, having a
principal place of business at ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Tel: (▇▇▇) ▇▇▇-▇▇▇▇; Fax: (▇▇▇) ▇▇▇-▇▇▇▇) (the "Company"), designated as its
Senior Series A 10% Debentures (the "Secured Series A Debentures") due on
September 30, 2005 (the "Maturity Date"), in an aggregate principal amount of
$9,525,000 plus accrued but unpaid interest. This Secured Series A Debenture is
purchased by ______________________
Capitalized words used in this Secured Series A Debenture not defined in the
preceding paragraph are defined in Section 1, below.
FOR VALUE RECEIVED, the Company promises to pay to the Holder
(i) on or before the Maturity Date the principal sum stated above,
and
(ii) interest to the Holder on the principal sum at the rate of 10%
per annum ("Interest"). Interest shall be paid from the date
hereof, quarterly in arrears beginning June 30, 2004 (each
such date an "Interest Payment Date").
Interest shall be calculated for the actual number of days elapsed for any
period less than a full quarter. The principal of, and Interest on, this Secured
Series A Debenture are payable in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts, at the address of the Holder last appearing on the Company's
records on the date such amounts become due.
This Secured Series A Debenture is subject to the terms of the
Debenture Purchase Agreement, the Securityholder Agreement and the following
additional provisions.
Section 1. Definitions. For the purposes hereof, the following terms
shall have the following meanings:
"AmerAlia" means AmerAlia, Inc., a Utah corporation.
Series A Debenture
1
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of Colorado are authorized or required by law or other government action
to close.
"Collateral" is as defined in Section 2(b).
"Collateral Agent" means, Sentient Resources USA, Inc., a
Colorado corporation.
"Debentures" means the Secured Series A Debentures, the Series
B Debentures, the Series C Debentures, or any of them, as the context may
require.
"Deeds of Trust" means both the Deed of Trust given by the
Company to the Public Trustee and for the benefit of the Collateral Agent for
the holders of the Debentures and the Sentient Entities of even date herewith
and Deed of Trust given by the Subsidiary to the Public Trustee and for the
benefit of the Collateral Agent for the holders of the Debentures and the
Sentient Entities of even date herewith.
"Holder" means any Person who is a registered holder of this
Debenture as listed in the books of the Company.
"Majority of the Holders" is as defined in Section 6(b).
"Material Adverse Effect" means a material adverse effect upon
the business, operations, properties, assets or condition (financial or
otherwise) of the Company or, as the case may be, of the Company and the
Subsidiary taken as a whole.
"Maturity Date" means the date defined in the first paragraph
or (if earlier) the date of any prepayment or acceleration.
"Other Debentures" means the Series B Debentures and the
Series C Debentures.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Pledge Agreement" means the Pledge Agreement dated February
20, 2003, between the Company and the Sentient Entities and Sentient Resources
USA, Inc., as Pledgees' Agent, as amended.
"Debenture Purchase Agreement" means that certain Debenture
Purchase Agreement dated as of the date hereof between the Company, AmerAlia,
the Subsidiary, Sentient Executive GP I, Limited, acting on behalf of the
General Partner of Sentient Global Resources Fund I, L.P., and Sentient (Aust)
Pty. Limited, acting on behalf of Sentient Global Resources Trust No. 1.
"Security Agreements" means the Security Agreement between the
Company and the Collateral Agent for the benefit of AmerAlia, the Subsidiary and
Sentient dated as of the date hereof and the Security Agreement between the
Subsidiary and the Collateral Agent for the benefit of AmerAlia, the Subsidiary
and Sentient dated as of the date hereof.
"Securityholder Agreement" means the Securityholder Agreement,
dated as of the date hereof between the Company, AmerAlia, the Subsidiary and
Sentient.
Series A Debenture
2
"Sentient" means any of Sentient Executive GP I, Limited,
acting on behalf of the General Partner of Sentient Global Resources Fund I,
L.P., or Sentient (Aust) Pty. Limited, acting on behalf of Sentient Global
Resources Trust No. 1.
"Series B Debentures" means the Company's Secured Subordinated
Series B1 Debentures, due February 19, 2008, Secured Subordinated Series B2
Convertible Debentures, due February 19, 2008.
"Series C Debentures" means the Company's Unsecured
Subordinated Series C Debentures, due February 19, 2008.
"Subsidiary" means Natural Soda, Inc., a Colorado corporation
that is wholly-owned by the Company.
Section 2. Seniority, Collateral, and Pari Passu.
(a) The Secured Series A Debentures are senior to all amounts payable
to the holders of the Other Debentures issued by the Company. No principal or
interest may be paid on the Other Debentures while any Event of Default exists
with respect to this Secured Series A Debenture and the other Secured Series A
Debentures. No principal may be paid on the Other Debentures until the principal
and Interest owing with respect to all outstanding Secured Series A Debentures
have been paid in full.
(b) Pursuant to the terms of a Collateral Holding and Liquidation
Agreement, the Security Agreements, the Pledge Agreement and the Deeds of Trust,
Collateral Agent holds a security interest, as collateral for repayment of all
of the Secured Series A Debentures as well as (on a subordinated basis) the
obligations under the Series B Debentures, in all of the outstanding shares of
common stock of the Subsidiary plus all other assets of the Company and the
Subsidiary (the "Collateral"). The Collateral Holding and Liquidation Agreement
is incorporated herein as if fully set forth, and the rights of the Holder are
subject to the terms of said agreements.
(c) No payments will be made to the holder of this Secured Series A
Debenture unless a proportional payment (based on outstanding principal amount)
is made with respect to all other Secured Series A Debentures. This Secured
Series A Debenture will be treated in pari passu with all other Secured Series A
Debentures.
(d) Notwithstanding Section 2(a) above, if the Secured Series A
Debentures issued to AmerAlia are (i) not subject to any pledge agreement or
other security arrangement with a third party or (ii) not held by a third party,
the Secured Series A Debentures shall be pari passu with the Series B Debentures
for all purposes.
Section 3. No Sale or Transfer. This Secured Series A Debenture may not
be sold, transferred, assigned, hypothecated or divided into two or more
Debentures of smaller denominations except to the extent such sale, transfer,
assignment, hypothecation or division has been approved pursuant to the terms of
the Securityholder Agreement. Subject to the foregoing, transfers of this
Debenture shall be registered upon registration books maintained for such
purpose by or on behalf of Company. Prior to presentation of this Secured Series
A Debenture for registration of transfer, Company shall treat the registered
holder hereof as the owner and holder of this Secured Series A Debenture for the
purpose of receiving all payments of principal and interest hereon and for all
other
Series A Debenture
3
purposes whatsoever, whether or not this Secured Series A Debenture shall be
overdue and Company shall not be affected by notice to the contrary.
Section 4. Provisions Regarding Payment of Interest. Interest hereunder
will be paid to the Holder on each Interest Payment Date; provided, however,
that the Interest payable shall not be higher than the maximum interest
allowable under applicable law. If the Interest payable is higher than the
maximum amount payable under applicable law, the Company shall only pay the
amount allowable under applicable law.
Section 5. Trade Sale. Except as provided in the Securityholder
Agreement, if the Company should assign, transfer or sell its interest in the
Subsidiary to a Person unaffiliated with the Company, or should the Subsidiary
sell, assign or transfer, all or substantially all of its assets, the Company
shall be obligated to prepay this Secured Series A Debenture including accrued
and unpaid Interest pari passu with the other Secured Series A Debentures, but
prior to any payment to the obligations under the Other Debentures, to the
extent of the consideration received by the Company or the Subsidiary in such a
transaction.
Section 6. (a) "Event of Default" wherever used herein, means any one
of the following events (whatever the reason and whether it shall be voluntary
or involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court, or any order, rule or regulation of any
administrative or governmental body):
(i) Any default in the payment of the principal
of or Interest on this Secured Series A
Debenture as and when the same shall become
due and payable, (whether on the Maturity
Date or by acceleration or otherwise);
(ii) The Company shall fail to observe or perform
any other covenant, agreement or warranty
contained in, or otherwise commit any breach
of, this Secured Series A Debenture or and
such failure or breach shall not have been
remedied within 30 days after the date on
which notice of such failure or breach shall
have been given;
(iii) The occurrence or existence of any condition
that constitutes an event of default or that
would constitute an event of default with
the giving of notice, the passage of time,
or both, under the terms of any of the
Debentures, or any other material
indebtedness of the Company or the
Subsidiary;
(iv) The occurrence of any event that would, upon
passage of time or otherwise, have a
Material Adverse Effect on the Company, or
the Subsidiary; or
(v) The Company, or the Subsidiary shall
commence a voluntary case under the United
States Bankruptcy Code or insolvency laws as
now or hereafter in effect or any successor
thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the
Company under the Bankruptcy Code and the
petition is not controverted within 30 days,
or is not dismissed within 60 days, after
commencement of such involuntary case; or a
"custodian" (as defined in the Bankruptcy
Series A Debenture
4
Code) is appointed for, or takes charge of,
all or any substantial part of the property
of the Company or the Company commences any
other proceeding under any reorganization,
arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or
liquidation or similar law of any
jurisdiction whether now or hereafter in
effect relating to the Company or there is
commenced against the Company any such
proceeding which remains undismissed for a
period of 60 days; or the Company is
adjudicated insolvent or bankrupt; or any
order of relief or other order approving any
such case or proceeding is entered; or the
Company suffers any appointment of any
custodian or the like for it or any
substantial part of its property which
continues undischarged or unstayed for a
period of 60 days; or the Company makes a
general assignment for the benefit of
creditors; or the Company shall fail to pay,
or shall state that it is unable to pay its
debts generally as they become due; or the
Company shall call a meeting of all of its
creditors with a view to arranging a
composition or adjustment of its debts; or
the Company shall by any act or failure to
act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any
corporate or other action is taken by the
Company for the purpose of effecting any of
the foregoing.
(b) Remedies. The Holder may declare a default under Section 6(a)(i)
upon not less than 15 days' written notice to the Company. For so long as
Sentient holds any of the Secured Series A Debentures, only Sentient may declare
an Event of Default under Sections 6(a)(ii) through (v), and it may do so only
after 15 days' written notice to the Company. If Sentient does not hold any of
the Secured Series A Debentures, the Holder, together with all other holders of
Secured Series A Debentures based on a majority vote by principal amount of the
Holders of all other Secured Series A Debentures (a "Majority of the Holders")
may declare an Event of Default under Sections 6(a)(ii) through (v) on 15 days'
written notice to the Company. If the Company fails to cure an Event of Default
within such period (or if the cure cannot be reasonably completed within such
period, commence the cure of the Event of Default and diligently pursue such
cure), Sentient or (if applicable) a Majority of the Holders may:
(i) Declare all amounts due under the Secured
Series A Debentures (and, if Sentient
declares such default, all other Debentures
then held by the Sentient) immediately due
and owing and exercise all rights with
respect thereto permitted by law;
(ii) Subject to the terms of the Collateral
Holding and Liquidation Agreement, the
Security Agreements and the Pledge
Agreement, cause the Company and the
Subsidiary to transfer ownership of the
Collateral on its books to Sentient on
behalf of the Holder and all other holders
of the Secured Series A Debentures and
Series B Debentures, and exercise all rights
to vote with respect to the Pledged Shares
(including the right to elect the board of
directors of the Subsidiary by shareholder
consent);
(iii) Apply to a court with its seat in Colorado
that has jurisdiction over the Company or
the Subsidiary for the appointment of a
receiver to
Series A Debenture
5
manage the assets and operations of the
Company or the Subsidiary; or
(iv) Assert any other remedy available at law or
in equity.
Section 7. Prepayment. The Company may prepay this Secured Series A
Debenture in whole or in part at any time prior to the Maturity Date upon not
less than 30 days' written notice to the Holder. Any prepayment shall include
payment of accrued and unpaid Interest.
Section 8. No Impairment. Except as expressly provided herein, no
provision of this Secured Series A Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and Interest on, this Secured Series A Debenture at the time,
place, and rate, and in the coin or currency, herein prescribed. This Secured
Series A Debenture is a direct obligation of the Company.
Section 9. No Rights as a Shareholder. This Secured Series A Debenture
shall not entitle the Holder to any of the rights of a stockholder of the
Company, including without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend, meetings of
stockholders or any other proceedings.
Section 10. Mutilated, Lost or Stolen Debentures. If this Secured
Series A Debenture shall be mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed debenture, a new Debenture for the principal amount of
this Secured Series A Debenture so mutilated, lost, stolen or destroyed but only
upon receipt of evidence of such loss, theft or destruction of such Debenture,
and of the ownership hereof, and adequate indemnity, if requested, all
reasonably satisfactory to the Company.
Section 11. Governing Law. This Secured Series A Debenture shall be
governed by and construed in accordance with the laws of the State of Colorado.
Each of the parties consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of Denver, Colorado, or the state courts of
the State of Colorado sitting in Arapahoe County, Colorado in connection with
any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non coveniens, to the bringing of any such proceeding in such jurisdictions. To
the extent determined by such court, the Company shall reimburse the Holder for
any reasonable legal fees and disbursements incurred by the Holder in
enforcement of or protection of any of its rights under any of this Secured
Series A Debenture.
Section 12. Waiver of Jury Trial; No Other Waivers. The Company and the
Holder hereby waive the right to a trial by jury in any action, proceeding or
counterclaim in respect of any matter arising out or in connection with this
Debenture. Any waiver by the Company or the Holder of a breach of any provision
of this Secured Series A Debenture shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Secured Series A Debenture. The failure of the Company or the
Holder to insist upon strict adherence to any term of this Secured Series A
Debenture on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Secured Series A Debenture. Any waiver must be in
writing.
Section 13. Severability. If any provision of this Secured Series A
Debenture is invalid, illegal or unenforceable, the balance of this Secured
Series A Debenture shall remain in effect, and if
Series A Debenture
6
any provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and circumstances.
Section 14. Obligations Due on a Business Day. Whenever any payment or
other obligation hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next calendar month, the preceding Business
Day in the appropriate calendar month).
Section 15. Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or mailed by registered or certified
mail, postage prepaid, or by recognized overnight courier or personal delivery
at the respective addresses of the parties as set forth in the Debenture
Purchase Agreement or on the register maintained by Company. Notice shall
conclusively be deemed to have been given when received.
Series A Debenture
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer duly authorized for such purpose, as of the date first
above indicated.
NATURAL SODA HOLDINGS, INC.
By ________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
Attest:
By: _________________________________
▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, Secretary
Accepted this _____ day of __________, 2004 by the undersigned,
thereunto duly authorized, in accordance with the terms of the Debenture
Purchase Agreement.
AMERALIA, INC.
By: ______________________________
▇▇▇▇ ▇. ▇▇▇▇, President
Series A Debenture
