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GUARANTY AGREEMENT
This agreement is made and entered into as of the 13th day of
September, 1999, by and between AmerAlia, Inc., a Utah corporation whose address
is 000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("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 established an escrow account (the "Escrow") at the
NationsBank N.A. (The "Bank") in accordance with the requirements of a
Design/Build Contract (the "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"); and
B. The Contract requires that AmerAlia make certain deposits into the
Escrow; and
C. AmerAlia is seeking a loan from the Bank to complete the required
funding of the Escrow; and
D. The Trust is willing to facilitate the loan by guaranteeing the
repayment of the loan in a manner satisfactory to the Bank;
E. AmerAlia is willing to compensate the Trust for providing this
guarantee; and
F. AmerAlia is seeking new equity investment of approximately $4,000,000.
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 agree as
follows:
1. AmerAlia will execute and deliver to the Bank an application for a loan
for a period not to exceed one year, in the approximate amount of
$4,200,000, the proceeds of which will be used to pay the expenses of
obtaining the loan (not to exceed $50,000) and to deposit funds into
the Escrow.
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
such loan in a form that is satisfactory to the Bank and to the Trust,
and is consistent with this Agreement (the "Guaranty").
3. The Escrow is governed by an Escrow Agreement among the Bank, AmerAlia,
and U.S. Filter. AmerAlia agrees that it will not enter into (a) any
amendment of the Escrow
Guaranty Agreement -- AmerAllia, Inc. Page 1
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Agreement, or (b) any amendment of the contract which may materially
affect the rights or interests of the Trust as guarantor, without the
consent of the Trust.
4. AmerAlia will apply the net proceeds, as received, of its proposed new
equity financing to repay the loan from the Bank, and the amount of the
Guaranty will be reduced to the extent of such repayments.
5. AmerAlia will pay the Trust compensation for executing and delivering
the Guaranty to the Bank in an amount equal to 10% of the actual amount
guaranteed, payable in shares of AmerAlia's restricted common stock
valued at the average closing price as reported by The Nasdaq Stock
Market, Inc. SmallCap Market for the 30 days following the announcement
by AmerAlia of a commitment for permanent financing with TIAA-CREF or
other lender. . For example, if the amount guaranteed is $4,200,000 and
the average price is $4.25, AmerAlia will issue 98,824 shares of
restricted common stock to the Trust. The shares will be issued to the
Trust within three business days of this determination.
6. 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.
7. 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:
(a) 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.
(b) 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.
(c) 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
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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.
(d) 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
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registration statement in certain specified circumstances,
in the underwriter's sole discretion).
(e) 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.
(f) 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 Act").
(g) 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.
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 in the first paragraph
hereof, with a copy (which does not constitute notice) to:
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Norton x Xxxxxxxx, P.C.
Suite 850, The Quadrant
0000 XXX Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Telecopy: 000-000-0000
If to the Trust, to the attention of Xxxx Xxxxxxxxx (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
9. General Provisions
(a) 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.
(b) Amendment. This Agreement may not be modified, altered or amended
except by written instrument duly executed by both parties.
(c) 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.
(d) 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.
(e) Governing Law. This Agreement and performance hereunder shall be
governed by the laws of the State of Colorado.
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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: By:
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Xxxx X. Xxxx, President Xxxxxxxxxx Xxxx, Trustee
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