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EXHIBIT 10.12
AMENDED AND RESTATED
GUARANTY AGREEMENT
This agreement is made and entered into as of the 1st day of September,
2000, by and between AmerAlia, Inc., a Utah corporation whose address is 311
Raleigh Road, Kenilworth, Illinois 60043 ("AmerAlia") and Jacqueline Mars as
trustee for the Jacqueline Badger Mars Trust, whose address is 6885 Elm Street,
McLean, Virginia 22101 (the "Trust") to amend and restate in their entirety
certain previous guaranty agreements entered into between the Trust and AmerAlia
as described in Recital B.
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. To assist AmerAlia in securing financing for its corporate operations
and the Rock School Project, the Trust has guaranteed loans to AmerAlia
from Bank of America, N.A. (previously NationsBank) totaling
approximately $7,326,000 in principal amount, plus accrued interest,
and the Trust and AmerAlia have entered into three Guaranty Agreements
relating to such loans as follows:
(1) Guaranty Agreement dated September 13, 1999, relating to a loan of
approximately $4,200,000 in principal amount (the "Original
Loan");
(2) Guaranty Agreement dated January 21, 2000, relating to a loan of
approximately $1,000,000 in principal amount; and
(3) Guaranty Agreement dated June 30, 2000, relating to a loan of
approximately $2,126,000 in principal amount (which funds were
used, in part, to pay accrued interest on the previous loans),
which are referred to collectively as the "Previous Guaranties."
C. The Trust's compensation for entering into the Previous Guaranties is
due and payable only following AmerAlia's announcement of permanent
financing from TIAA-CREF or other lender, which announcement has not
been made because the permanent financing has not been secured.
D. The Original Loan has matured, and the Trust is willing to extend its
guaranty which will result in the Bank extending the maturity date of
the Original Loan and the loans involved in the other Previous
Guaranties, and AmerAlia desires that the Trust extend its guaranty.
E. The Trust is willing to facilitate the extension of the Original Loan
and the other loans through September 14, 2001, and to provide for the
payment of the fees required by the Previous Guaranties and this
Agreement herein; and
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F. AmerAlia's board of directors has determined that such an extension, on
the terms and conditions set forth herein, is in the best interests of
AmerAlia and its shareholders.
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. The Previous Guaranties are hereby modified in their entirety and
incorporated herein. The Previous Guaranties are of no further force or
effect.
2. AmerAlia has filed certain loan applications with the Bank, and will
file such applications as may be necessary for the Bank to extend the
loans represented by the Previous Guaranties to and until September 14,
2001.
3. 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 loans in a form that is satisfactory to the Bank and to the Trust,
and is consistent with this Agreement (the "Guaranty").
4. AmerAlia will apply the net proceeds of any equity financing to repay
the loans 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 (the "Trust's Fee") for
executing and delivering the Guaranty to the Bank in an amount equal to
15% of the actual amount guaranteed, payable in shares of AmerAlia's
restricted common stock calculated as follows:
(a) If AmerAlia issues a public announcement of a commitment for
permanent financing from any person before the close of business
on September 14, 2001 (the "Announcement"), AmerAlia will pay the
Trust's Fee 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. For example, if the amount guaranteed is $7,326,000
and the average price is $2.50, AmerAlia will issue 439,560 shares
of restricted common stock to the Trust. The shares will be issued
to the Trust within three business days of this determination.
(b) If AmerAlia does not make the Announcement before the close of
business on September 14, 2001, AmerAlia will pay the Trust's Fee
in shares of AmerAlia's restricted common stock valued at the
average of the ten highest closing prices as reported by The
Nasdaq Stock Market, Inc. SmallCap Market for the calendar year
2000 through August 31, 2000 (which average price is $3.34).
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:
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(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 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.
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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 S-4, S-8, S-11, 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).
(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.
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If to AmerAlia, to the address set forth in the first paragraph
hereof, with a copy (which does not constitute notice) to:
AmerAlia, Inc.
818 Taughenbaugh Blvd
Rifle, CO 81650
Attn: Bill H. Gunn, President
Telecopy: 970-625-9134
and to:
Norton A Lidstone, P.C.
Suite 850, The Quadrant
5445 DTC Parkway
Englewood, CO 80111
Attn: Herrick K. Lidstone, Jr., Esq.
Telecopy: 303-221-5553
If to the Trust, to the attention of Vito Spitaleri (telecopy
number) 410-827-4261) at the address set forth in the first
paragraph hereof, with a copy (which does not constitute notice)
to:
Hills & Stern
1200 Nineteenth Street, N.W.
Washington, D.C. 20036
Attn: Roderick M. Hills, Esq.
Telecopy: 202-822-1622
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.
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(e) 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 Jacqueline Badger Mars Trust
By: By:
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Bill H. Gunn, President Jacqueline Mars, Trustee
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