<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: DECEMBER 18, 1996
LOGAN INTERNATIONAL CORP.
(Exact name of Registrant as specified in its charter)
Washington
(State of Incorporation)
0-26354 91-1636980
(Commission File Number) (I.R.S. Employer Identification No.)
#108 - 1201 SW 7th Street, P.O. Box 860, Renton, WA, 98055-0860
(Address of principal executive offices, including postal code)
(206) 271-3550
(Registrant's telephone number, including area code)
<PAGE>
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 16, 1996, Logan International Corp. (the "Company") completed the
indirect acquisition of an outstanding loan to Enviropur Waste Refining and
Technology, Inc. (the "Loan") from Arbatax International Inc. ("Arbatax") for
$2,425,000. The purchase price was paid out of Logan's cash reserves. The
Company subsequently sold the Loan to ICHOR Corporation ("ICHOR") on December
17, 1996 in exchange for 2,500,000 common shares of ICHOR at an issue price of
$0.40 per share and a secured promissory note in the amount of $1,425,000
which, among other things, matures three years after the date of issuance and
accrues interest at the rate of 8% per annum.
As at December 16, 1996, the Loan was in default with approximately $5.0
million outstanding thereunder. Certain assets of the borrower, consisting of
a waste oil refining facility near Chicago, Illinois (the "Facility") which
converts waste oil into re-refined lube oil and processes and disposes of oily
waste waters, are scheduled to be sold at a court ordered auction. ICHOR, as
the indirect holder of the Loan, is entitled to the proceeds of such sale, up
to the amount owing under the Loan, or alternatively, can bid for the Facility
and set-off the purchase price against the outstanding amount of the Loan.
As a result of these transactions, the Company now owns approximately 50.3% of
the outstanding shares of common stock of ICHOR. ICHOR is an environmental
remediation company based in Pittsburgh, Pennsylvania whose shares of common
stock are listed on the NASDAQ SmallCap Market. ICHOR provides services
relating to the remediation of facilities that have been contaminated by
hazardous substances. These services include contamination assessment,
remediation design and engineering, decontamination activities, and health and
safety services. Michael J. Smith, Jimmy S.H. Lee and Leonard Petersen are
directors and officers of the Company and of ICHOR. Jimmy S.H. Lee and
Michael J. Smith are also directors and officers of Arbatax. The terms of the
above-mentioned transactions were approved by the disinterested directors of
Arbatax, the Company and ICHOR, respectively.
ITEM 5. OTHER EVENTS.
On December 16, 1996, the Company completed the issuance of 4,172,082 shares
of common stock of the Company to Arbatax at a price of $0.58 per share or an
aggregate of $2,425,000. Prior to such acquisition, Arbatax owned 3,300,695
shares of common stock of the Company. In addition, Arbatax controls Drummond
Financial Corporation which owns all of the outstanding Preferred Stock,
Series B of the Company. As a result of the foregoing transaction, Arbatax
now owns 7,472,777 shares of common stock of the Company, being approximately
69.0% of the issued and outstanding shares of common stock of the Company.
Michael J. Smith and Jimmy S.H. Lee, officers and directors of the Company,
are also officers and directors of Arbatax. The terms of the agreement were
approved by the disinterested directors of Arbatax and the Company.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
Exhibit
Number Description
------- -----------
2.1 Subscription Agreement between Logan International Corp.
and Arbatax International Inc. dated for reference
December 2, 1996. Incorporated by reference to Schedule
13D/A (Amendment No. 1) dated December 16, 1996.
2.2 Assignment Agreement between Logan International Corp.
and Arbatax International Inc. dated effective December
2, 1996.
2.3 Purchase and Sale Agreement between Logan International
Corp. and ICHOR Corporation dated December 13, 1996.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LOGAN INTERNATIONAL CORP.
By: /s/ Michael J. Smith
---------------------------------
Michael J. Smith, Chief Financial
Officer and Director
Date: December 20, 1996
<PAGE> 4
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -----------
2.1 Subscription Agreement between Logan International Corp.
and Arbatax International Inc. dated for reference
December 2, 1996. Incorporated by reference to Schedule
13D/A (Amendment No. 1) dated December 16, 1996.
2.2 Assignment Agreement between Logan International Corp.
and Arbatax International Inc. dated effective December
2, 1996.
2.3 Purchase and Sale Agreement between Logan International
Corp. and ICHOR Corporation dated December 13, 1996.
<PAGE> 1
ASSIGNMENT AGREEMENT
--------------------
THIS AGREEMENT dated effective December 2, 1996
BETWEEN:
ARBATAX INTERNATIONAL INC., a corporation duly
incorporated pursuant to the laws of the Yukon Territory,
having an office at Brandschenke Strasse 64, 8002 Zurich,
SWITZERLAND
(the "Assignor")
AND:
LOGAN INTERNATIONAL CORP., a corporation duly
incorporated pursuant to the laws of the State of Washington,
having an office at Suite 1250, 400 Burrard Street,
Vancouver, B.C. V6C 3A6 CANADA
(the "Assignee")
WHEREAS:
A. The Assignor and Drummond Financial Corporation ("Drummond") entered into
a purchase agreement dated December 2, 1996, (the "Purchase Agreement")
whereby the Assignor will acquire the Purchased Securities (as defined in
the Purchase Agreement) from Drummond;
B. The Purchase Agreement provides that the Assignor may assign all or part
of its interest in the Purchase Agreement to the Assignee; and
C. The Assignor wishes to sell and assign to the Assignee, and the Assignee
wishes to acquire, all of the Assignor's right, title and interest in and
to the Purchase Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises,
representations, warranties and covenants contained herein, the parties
covenant and agree as follows:
1. In consideration of the sum of TWO MILLION FOUR HUNDRED AND TWENTY-FIVE
THOUSAND DOLLARS ($2,425,000) (U.S.) (the "Purchase Price") paid by the
<PAGE> 2
Assignee to the Assignor, the Assignor hereby sells, assigns and transfers
to the Assignee and the Assignee purchases and acquires all of the right,
title and obligation of the Assignor in the Purchase Agreement, a copy of
which is attached as Schedule "A" hereto, to hold the same unto the
Assignee absolutely.
2. The Assignor represents and warrants to the Assignee that:
(a) the Assignor has the full right, power and authority to enter into
this agreement (the "Agreement");
(b) the Assignor has not previously assigned any interest in the Purchase
Agreement;
(c) this Agreement has been duly executed and delivered by and on behalf
of the Assignor and constitutes a legal, valid and binding obligation
of the Assignor enforceable in accordance with its terms, except as
enforceability may be limited by a bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally; and
(d) there is no outstanding allegation, claim, counterclaim, set-off,
action, cause of action, demand or dispute with respect to the
Purchase Agreement.
3. The Assignee represents and warrants to the Assignor that:
(a) the Assignee has the full right, power and authority to enter into
this Agreement; and
(b) this Agreement has been duly executed and delivered by and on behalf
of the Assignee and constitutes a legal, valid and binding obligation
of the Assignee enforceable in accordance with its terms, except as
enforceability may be limited by a bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
4. The Assignor covenants and agrees:
(a) that it will not, without the prior written consent of the Assignee,
consent or agree to the termination or to any modification or
amendment of the Purchase Agreement;
<PAGE> 3
(b) to execute and do all deeds, documents and things which, in the
opinion of the Assignee, may reasonably be necessary or desirable in
connection with this Agreement; and
(c) that the Assignee may grant extensions and generally deal with the
Purchase Agreement in its absolute discretion without consent of or
notice to the Assignor.
5. The Assignee covenants and agrees:
(a) to observe, perform, keep and be bound by every covenant, attornment,
term, condition and agreement contained in the Purchase Agreement to
the same extent as if the Assignee had been an original party and as
such had executed the Purchase Agreement; and
(b) to indemnify and save harmless the Assignor from and against all
damages, costs and expenses suffered or incurred by the Assignor in
relation to this Agreement and any enforcement of the Purchase
Agreement that can reasonably be considered to be attributable to the
actions or omissions of the Assignee.
6. The Assignor authorizes the Assignee, in the name of the Assignor, to sue
for and enforce the Purchase Agreement and interest therein and to do any
act or thing or make any proceeding thought expedient by the Assignee.
The Assignor irrevocably constitutes and appoints the Assignee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in place
and stead of the Assignor and in the name of the Assignor or its own name,
from time to time, in the Assignee's discretion for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purpose of this Agreement.
7. Nothing herein shall be construed as an attempt to assign to the Assignee
any of the contracts, engagements, commitments, claims, and demands of the
Assignor (collectively, the "Rights") having the following character:
(a) any contract, engagement, or commitment that, as a matter of law or
by the terms thereof, is not assignable without the consent of the
other party or parties to such assignment, unless such consent has
been given; or
(b) any claim or demand thereunder as to which all the remedies for the
enforcement
<PAGE> 4
thereof enjoyed by the Assignor would not, as a matter of law, pass
to the Assignee as an incident of the transfers to be made under this
Agreement.
Until assigned to the Assignee with such consent, the Assignor shall hold
the Rights in trust for the Assignee. In order that the full value of the
Rights may be realized for the benefit of the Assignee, the Assignor
shall, at the request and expense and under the direction of the Assignee,
in the name of the Assignor or otherwise as the Assignee specifies, take
all such action and do or cause to be done all such things as are, in the
opinion of the Assignee, necessary or proper in order that the obligations
of the Assignor thereunder may be performed in such manner that the value
of such Rights is preserved and enures to the benefit of the Assignee.
8. The Assignor shall obtain, where required, consents of all requisite
parties to the assignment by the Assignor to the Assignee of the Rights.
The Assignor shall pay the cost of obtaining such consents. In the event
any party will not so consent to such assignment of a Right, the Assignor
shall hold the same in trust for the Assignee and shall carry out and
comply with the terms and provisions thereof as agent for the Assignee at
the Assignee's costs and for the Assignee's benefit.
9. This Agreement will be governed by and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein, irrespective of the choice of laws principles of the Province of
British Columbia, and the parties hereto irrevocably attorn to the
exclusive jurisdiction of the courts of British Columbia sitting in
Vancouver.
10. All covenants, agreements, representations and warranties made by the
parties will survive the assignment of the Purchase Agreement.
11. Each of the parties will at all times and from time to time and upon
reasonable request do, execute and deliver all further assurances, acts
and documents for the purpose of giving full force and effect to the
covenants, agreements, representations and warranties in this Agreement.
12. This Agreement will enure to the benefit of and be binding upon the
successors and assigns of the parties, as applicable.
13. If any provision of this Agreement shall be found or determined to be
invalid, illegal or unenforceable it shall be severable from this
Agreement and the remainder of this Agreement shall be read and construed
as if such invalid, illegal or unenforceable provision or part had been
deleted herefrom.
<PAGE> 5
14. 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 this Agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement effective as
of the date first written above.
ARBATAX INTERNATIONAL INC.
By: /s/ Michael J. Smith
----------------------------
Name: Michael J. Smith
----------------------------
Title: President
----------------------------
LOGAN INTERNATIONAL CORP.
By: /s/ Leonard Petersen
----------------------------
Name: Leonard Petersen
----------------------------
Title: Director
----------------------------
<PAGE> 6
SCHEDULE "A"
ARBATAX INTERNATIONAL INC.
Brandschenke Strasse 64
8002 Zurich, Switzerland
December 2, 1996
DRUMMOND FINANCIAL CORPORATION
Suite 1250, 400 Burrard Street
Vancouver, BC
V6C 3A6
ATTENTION: PRESIDENT
- --------------------
Dear Sirs:
We understand that Drummond Financial Corporation (the "Vendor") is the legal
and beneficial owner of 1,500,001 of the issued and outstanding common shares
and a promissory note of 501164 B.C. Ltd. (the "Corporation"), a corporation
incorporated under the laws of British Columbia.
All monetary amounts referred to herein are in lawful currency of the United
States of America, unless otherwise expressly stated.
1. PURCHASE OF SECURITIES OF THE CORPORATION
1.1 Subject to the terms and conditions hereof, Arbatax International Inc.
(the "Purchaser") hereby offers to purchase from the Vendor and by its
acceptance hereof the Vendor agrees to sell to the Purchaser:
(a) 1,500,001 common shares in the capital of the Corporation (the
"Purchased Common Shares"); and
(b) a promissory note issued by the Corporation in favour of the Vendor
dated effective September 1, 1995, with an outstanding amount owing as at
December 1, 1996 of $3,281,694 (the "Purchased Note"),
for an aggregate purchase price of $2,425,000.
<PAGE> 7
The Purchased Common Shares and the Purchased Note are collectively referred
to herein as the "Purchased Securities".
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE VENDOR
2.1 The Vendor, by its acceptance hereof, covenants, represents and warrants
as follows and acknowledges and confirms that the Purchaser is relying upon
such covenants, representations and warranties in connection with the
purchased by the Purchaser of the Purchased Securities:
(a) all the Purchased Securities are now, and at the Time of Closing
will be, owned by the Vendor as the sole legal and beneficial owner of record
with a good and marketable title thereto, free and clear of any mortgage,
liens, charges, restrictions, security interests, adverse claims, pledges,
encumbrances or demands whatsoever, and the Purchased Common Shares are issued
and outstanding as fully paid and non-assessable;
(b) no person, firm or corporation has any agreement or option, or any
right or privilege (whether by law, pre-emptive or contractual) capable of
becoming an agreement or option for the purchase, acquisition or transfer from
the Vendor of any of the Purchased Securities or any interest therein or right
thereto, except the Purchaser pursuant hereto;
(c) the Vendor does not act as nominee, agent, trustee, executor,
administrator or other legal representative on behalf of any other person,
firm or corporation is respect of the Purchased Securities;
(d) the Vendor is a validly subsisting corporation under the laws of
Delaware and the Vendor has all necessary corporate power and authority to
execute and deliver the agreement resulting from its acceptance hereof (the
"Agreement"), to sell the Purchased Securities to the Purchaser and to perform
its obligations hereunder;
(e) the Agreement has been duly executed and delivered by and on behalf
of the Vendor and constitutes a legal, valid and binding obligation of the
Vendor enforceable against the Vendor in accordance with its terms;
(f) the authorized and issued capital of the Corporation, including
convertible securities, warrants and options or other rights to acquire shares
of the Corporation, is as set out in Schedule "A" attached hereto;
(g) other than the Purchased Securities, there are no other shares,
options, warrants, notes or securities of the Corporation issued or issuable;
<PAGE> 8
(h) the Purchased Securities are now, and at all times up to and
including the Time of Closing will continue to be, registered in the name of
the Vendor on the applicable securities registers of the Corporation;
(i) the execution and delivery of the Agreement and the completion of
the transactions contemplated hereby will not conflict with, result in a
default under, or accelerate or permit the acceleration of the performance
required by, any agreement or instrument to which the Vendor or the
Corporation is a party;
(j) the Corporation has, on a timely basis, duly filed or delivered all
reports, filings, disclosures, releases and other materials required to be
filed with or delivered to any regulatory authority having jurisdiction under
applicable law;
(k) the Corporation has no assets other than a loan (the "Loan")
initially made by the Vendor to Enviropur Waste Refining and Technology, Inc.
("Enviropur") and assigned by the Vendor to the Corporation pursuant to an
assignment and assumption agreement made between the Vendor and the
Corporation dated effective September 1, 1995 ;
(l) the Loan is now, and at the Time of Closing will be, owed to the
Corporation and has not and will not be sold, assigned or transferred,
provided that no representation or warranty is given by the Vendor as to the
collectability of the amount outstanding under the Loan;
(m) other than administering the Loan, the Corporation has not and does
not carry on any other business;
(n) the Corporation has not had and does not have any employees who
receive any remuneration; and
(o) the Corporation does not have any liabilities other than those
related to its interest in the Loan, comprised of accounts payable owed to the
Vendor and others in an amount that does not exceed $300,000 as at December 1,
1996 and liabilities that may arise with respect to the administration of the
Loan, which are currently not quantifiable, including an existing action
against the Corporation and the Vendor with respect to Enviropur West
Corporation, a subsidiary of Enviropur.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
3.1 The Purchaser covenants, represents and warrants as follows and hereby
acknowledges and confirms that the Vendor is relying upon such covenants,
representations and warranties in connection with the sale by it of the
Purchased Securities:
<PAGE> 9
(a) the Purchaser has all necessary power and authority to execute and
deliver this offer, to purchase the Purchased Securities pursuant to the
provisions hereof and to perform its obligations hereunder; and
(b) this offer has been duly executed and delivered by and on behalf of
the Purchaser and the Agreement will constitute a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance
with its terms.
4. CLOSING PROCEDURE
4.1 The closing of the purchase and sale of the Purchased Securities shall
take place at 10:00 (a.m.) on December 16, 1996, at the offices of the
Purchaser or at such other time or place as may be mutually agreed upon. The
date of the closing of the purchase and sale of the Purchased Securities is
referred to herein as the "Closing Date" and the time of closing on such date
is referred to herein as the "Time of Closing".
4.2 At the Time of Closing on the Closing Date, the Vendor agrees to deliver
to the Purchaser definitive certificates representing the Purchased Common
Shares and the original Purchased Note duly endorsed for transfer to the
Purchaser, or as the Purchaser may in writing direct, against the delivery by
the Purchaser to the Vendor, or as the Vendor may in writing direct, of a
certified cheque of the Purchaser or bank wire transfer, in either case
payable to or to the order of the Vendor in the amount of the purchase price
for the Purchased Securities. Contemporaneously with the closing of the
purchase and sale of the Purchased Securities, the certificates representing
the Purchased Common Shares and the original Purchased Note delivered by the
Vendor as aforesaid shall be tendered to the Corporation and the parties shall
arrange for the immediate delivery to the Purchaser of definitive certificates
representing the Purchased Common Shares and a promissory note in replacement
of the Purchased Note duly issued and registered in the name of the Purchaser
or as it may in writing direct.
5. CONDITIONS OF CLOSING
5.1 The obligation of the Purchaser to purchase the Purchased Securities
shall be subject to the following conditions for the exclusive benefit of the
Purchaser to be fulfilled and/or performed at or prior to the Time of Closing
on the Closing Date:
(a) no action or proceeding shall be pending or threatened by any
person, company, firm, governmental authority, securities commission,
regulatory body or agency to enjoin or prohibit the purchase and sale of the
Purchased Securities contemplated hereby or the right of the Purchaser to own
the Purchased Securities or to suspend or stop trading in securities of the
Corporation;
<PAGE> 10
(b) the covenants, representations and warranties of the Vendor
contained in Article 2 hereof shall be true and correct on and as of the date
of the acceptance of this offer by the Vendor and shall also be true and
correct on and as of the Closing Date with the same force and effect as though
such covenants, representations and warranties had been made on and as of such
date;
(c) the Vendor shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it;
(d) except to the extent contemplated by section 5.2 hereof, without
the Purchaser's prior written consent, since the date hereof, the Corporation
shall not have taken any act, entered into or become a party to or subject to
any agreement or transaction or incurred or become liable for any obligation
except in the ordinary course of business, and no such act, agreement,
transaction, liability or obligation in the ordinary course of business shall
result in, or shall upon the completion thereof result in, a material change
in the assets, liabilities, business, affairs, operations, prospects
(financial or otherwise) or capital of the Corporation;
(e) since the date hereof, the Corporation shall not have redeemed,
purchased or otherwise acquired any of its outstanding shares or authorized or
agreed to any such redemption, purchase or acquisition or declared or paid any
dividends or authorized or made any distributions or agreed to do so on or in
respect of its outstanding securities; and
(f) since the date hereof, the Corporation shall not have reserved, set
aside, allotted, issued or agreed to reserve, set aside, allot or issue,
conditionally or otherwise, any shares or any securities, rights or warrants
having the right or option to acquire, directly or indirectly, through
purchase, conversion, exchange or otherwise, any shares.
In case any of the foregoing conditions has not been fulfilled and/or
performed at or before the Time of Closing to the satisfaction of the
Purchaser, the Purchaser may rescind the Agreement by notice to the Vendor and
in such event the Purchaser shall be released from all obligations hereunder;
provided that any of such conditions may be waived in whole or in part by the
Purchaser without prejudice to its rights of rescission in the event of the
non-fulfilment of any other condition or conditions.
5.2 The obligation of the Purchaser to purchase the Purchased Securities
shall be subject to the further condition for the exclusive benefit of the
Purchaser that, on or before the close of business on December 13, 1996, the
Purchaser shall be satisfied that it is or will be in compliance with all
applicable legal and regulatory requirements relating to it with respect to
its investment in the Purchased Securities and shall have received, in its
discretion, all necessary or appropriate orders, rulings and consents from
regulatory bodies, securities commissions, government agencies and others with
respect thereto.
<PAGE> 11
5.3 In the event that the Purchaser shall not have notified the Vendor on or
before 5 o'clock in the afternoon (Vancouver time) on December 13, 1996 that
the foregoing condition has been fulfilled or waived, then such condition
shall be deemed not to have been fulfilled.
5.4 In the event that the condition referred to in section 5.2 shall not
have been fulfilled or waived by the Purchaser, the Agreement shall be
rescinded and each of the parties hereto shall be released from all
obligations hereunder.
5.5 The obligations of the Vendor to sell the Purchased Securities shall be
subject to the condition for the exclusive benefit of the Vendor that, on or
before the close of business on December 13, 1996, that the Vendor's
"disinterested directors" shall have approved the terms of the Agreement. If
the foregoing condition has not been fulfilled, the Agreement shall be
rescinded and each of the parties shall be released from any obligations
hereunder.
6. COVENANTS OF THE VENDOR
6.1 The Vendor covenants and agrees that, between the date hereof and the
Time of Closing, it will not take any step or act with respect to or in
furtherance of the sale of the Purchased Securities or any portion thereof to
any person, firm or corporation other than the Purchaser and, without limiting
the generality of the foregoing, will not negotiate with, solicit any offer
from, or have any discussion with, any other person, firm or corporation with
a view to such a sale.
7. INDEMNIFICATION
7.1 Each of the parties hereto covenants and agrees to indemnify and save
harmless the other party from and against any claims whatsoever for any
commissions or remuneration payable or alleged to be payable to any broker,
agent or other intermediary who has acted for such party in connection with
the sale or purchase of the Purchased Securities.
8. COSTS AND EXPENSES
8.1 All costs and expenses incurred in connection with the Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
9. ENTIRE AGREEMENT
9.1 The agreement resulting from acceptance of this offer shall constitute
the entire agreement and understanding between the parties with respect to the
subject matter hereof and shall supersede any prior agreement, representation
or understanding with respect thereto.
<PAGE> 12
10. TIME OF THE ESSENCE
10.1 Time shall be of the essence hereof.
11. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
11.1 The respective covenants, representations and warranties of the parties
contained herein shall survive the closing of the purchase and sale of the
Purchased Securities herein provided for, and, notwithstanding such closing,
or any investigation made by or on behalf of any party, shall continue in full
force and effect for the benefit of the party to whom the covenant,
representation or warranty was made.
12. NOTICES
12.1 Any notice, direction or other instrument required or permitted to be
given to either party hereto shall be in writing and may be given by
delivering or sending by facsimile the same to the Vendor at:
Arbatax International Inc.
Brandschenke Strasse 64
8002 Zurich, SWITZERLAND
Attention: President
Facsimile No.: 011-411-201-7717
and to the Purchaser at:
Drummond Financial Corporation
Suite 1250, 400 Burrard Street
Vancouver, BC CANADA
V6C 3A6
Attention: President
Facsimile No.: 604-683-3205
12.2 Any such notice, direction or other instrument shall be deemed to have
been given or made on the date on which it was delivered or sent by facsimile
(or, if such day is not a business day, on the next following business day.)
<PAGE> 13
13. GOVERNING LAW
13.1 The Agreement shall be constructed and enforced in accordance with, and
the respective rights and obligations of the parties shall be governed by, the
laws of the province of British Columbia and the applicable federal laws of
Canada, irrespective of the choice of laws principles of the Province of
British Columbia, and the parties hereto irrevocably attorn to the exclusive
jurisdiction of the courts of British Columbia sitting in Vancouver.
14. CONFIDENTIALITY
14.1 The Agreement shall be kept confidential by the parties hereto and no
public announcement or press release concerning the Agreement shall be made by
either party without the consent of the other party or except as may be
required by law.
15. SUCCESSORS AND ASSIGNS
15.1 Neither party may assign of its rights or obligations hereunder to any
other person, firm or corporation without the prior written consent of the
other party hereto, except that the Purchaser may assign the Agreement and its
rights hereunder in whole or in part to one or more corporations all of the
shares of which are beneficially owned by the Purchaser or to its affiliate,
Logan International Corp.
15.2 The Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
<PAGE> 14
16. ACCEPTANCE OF OFFER
16.1 This offer is open for acceptance by the Vendor in the manner indicated
below until, but not after, 5 o'clock in the afternoon (Vancouver time) on
December 13, 1996, and if not accepted on or before such time on such date
shall be null and void. This offer may be accepted only by the Vendor signing
and returning the accompanying duplicate of this offer or a counterpart hereof
to the Purchaser or an officer of the Purchaser or by sending by facsimile to
the Purchaser, in the manner provide in section 12.1, a copy of a signed
counterpart hereof at or before the said time. Upon acceptance of this offer
by the Vendor as aforesaid, this offer shall become an agreement of purchase
and sale between the Vendor and the Purchaser in accordance with its terms.
Yours very truly,
ARBATAX INTERNATIONAL INC.
By:
------------------------
------------------------
(Name - please print)
------------------------
(Title)
The foregoing offer is hereby accepted and agreed to by the undersigned in the
City of Vancouver on this 13th day of December, 1996.
DRUMMOND FINANCIAL CORPORATION
By:
------------------------
------------------------
(Name - please print)
------------------------
(Title)
<PAGE> 15
Schedule "A"
Capital as at December 1, 1996
<TABLE>
<CAPTION>
Number or Amount
Number or Beneficially Owned
Description Authorized Amount Outstanding by the Vendor
- ----------- ---------- ------------------ ------------------
<S> <C> <C> <C>
Common Shares 100,000,000 1,500,001 All
Promissory Note N/A 3,281,694 All
</TABLE>
ICHOR CORPORATION
300 Oxford Drive
Monroeville, Pennsylvania U.S.A. 15146
December 13, 1996
LOGAN INTERNATIONAL CORP.
Suite 1250, 400 Burrard Street
Vancouver, BC
V6C 3A6
ATTENTION: PRESIDENT
- ---------------------
Dear Sirs:
We understand that Logan International Corp. (the "Vendor") is the legal and
beneficial owner of 1,500,001 of the issued and outstanding common shares and
a promissory note of 501164 B.C. Ltd. (the "Corporation"), a corporation
incorporated under the laws of British Columbia.
All monetary amounts referred to herein are in lawful currency of the United
States of America, unless otherwise expressly stated.
1. PURCHASE OF SECURITIES OF THE CORPORATION
1.1 Subject to the terms and conditions hereof, ICHOR Corporation (the
"Purchaser") hereby offers to purchase from the Vendor and by its acceptance
hereof the Vendor agrees to sell and assign to the Purchaser:
(a) 1,500,001 common shares in the capital of the Corporation (the
"Purchased Common Shares"); and
(b) a promissory note issued by the Corporation in favour of the Vendor
dated December 16, 1996 having an outstanding amount owing calculated as of
December 1, 1996 of $3,281,694 (the "Purchased Note"),
for an aggregate price of $2,425,000 (the "Purchase Price").
The Purchased Common Shares and the Purchased Note are collectively referred
to herein as the "Purchased Securities".
<PAGE> 2
1.2 The Purchase Price shall be paid by the Purchaser to the Vendor at the
Time of Closing (as hereinafter defined) as follows:
(a) a secured promissory note in the amount of ONE MILLION FOUR HUNDRED
TWENTY FIVE THOUSAND DOLLARS ($1,425,000) (the "ICHOR Note"). The ICHOR Note
shall:
(i) mature three years after the date of issuance;
(ii) accrue interest thereon at a rate of 8% per annum compounded
and payable monthly in arrears;
(iii) be secured by a first fixed charge upon the Purchased
Securities, all of the shares of ICHOR Services, Inc. and all of
the shares of B.C. Ventures Limited, to be renamed Ortek Inc.;
(iv) contain provisions for accelerated payment in the event of any
material adverse developments, including, without limitation, any
liabilities resulting to the Purchaser in relation to its class
action law suit in the amount of $50,000 or greater; and
(v) be substantially in the form of Schedule "B" attached hereto;
and
(b) TWO MILLION FIVE HUNDRED THOUSAND (2,5000,000) common shares of the
Purchaser (the "ICHOR Shares") at an issue price of $0.40 per share.
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE VENDOR
2.1 The Vendor, by its acceptance hereof, covenants, represents and warrants
as follows and acknowledges and confirms that the Purchaser is relying upon
such covenants, representations and warranties in connection with the purchase
by the Purchaser of the Purchased Securities:
(a) all the Purchased Securities are now, and at the Time of Closing
will be, owned by the Vendor as the sole legal and beneficial owner of record
with a good and marketable title thereto, free and clear of any mortgage,
liens, charges, restrictions, security interests, adverse claims, pledges,
encumbrances or demands whatsoever, and the Purchased Common Shares are issued
and outstanding as fully paid and non-assessable;
(b) no person, firm or corporation has any agreement or option, or any
right or privilege (whether by law, pre-emptive or contractual) capable of
becoming an agreement or
<PAGE> 3
option for the purchase, acquisition or transfer from the Vendor of any of the
Purchased Securities or any interest therein or right thereto, except the
Purchaser pursuant hereto;
(c) the Vendor does not act as nominee, agent, trustee, executor,
administrator or other legal representative on behalf of any other person,
firm or corporation is respect of the Purchased Securities;
(d) the Vendor is a validly subsisting corporation under the laws of the
State of Washington and the Vendor has all necessary corporate power and
authority to execute and deliver the agreement resulting from its acceptance
hereof (the "Agreement"), to sell the Purchased Securities to the Purchaser
and to perform its obligations hereunder;
(e) the Agreement has been duly executed and delivered by and on behalf
of the Vendor and constitutes a legal, valid and binding obligation of the
Vendor enforceable against the Vendor in accordance with its terms;
(f) the authorized and issued capital of the Corporation, including
convertible securities, warrants and options or other rights to acquire shares
of the Corporation, is as set out in Schedule "A" attached hereto;
(g) other than the Purchased Securities, there are no other shares,
options, warrants, notes or securities of the Corporation issued or issuable;
(h) the Purchased Securities are now, and at all times up to and
including the Time of Closing will continue to be, registered in the name of
the Vendor on the applicable securities registers of the Corporation;
(i) the execution and delivery of the Agreement and the completion of
the transactions contemplated hereby will not conflict with, result in a
default under, or accelerate or permit the acceleration of the performance
required by, any agreement or instrument to which the Vendor or the
Corporation is a party;
(j) the Corporation has, on a timely basis, duly filed or delivered all
reports, filings, disclosures, releases and other materials required to be
filed with or delivered to any regulatory authority having jurisdiction under
applicable law;
(k) the Corporation has no assets other than a loan (the "Loan")
initially made by Drummond Financial Corporation ("Drummond") to Enviropur
Waste Refining and Technology, Inc. and assigned by Drummond to the
Corporation pursuant to an assignment and assumption agreement made between
Drummond and the Corporation dated effective September 1, 1995;
<PAGE> 4
(l) the Loan is now, and at the Time of Closing will be, owed to the
Corporation and has not and will not be sold, assigned or transferred, and all
amounts thereunder are due and owing to the Corporation, provided that no
representation or warranty is given by the Vendor as to the collectability of
the amount outstanding under the Loan;
(m) other than administering the Loan, the Corporation has not and does
not carry on any other business;
(n) the Corporation has not had and does not have any employees who
receive any remuneration;
(o) the Corporation does not have any liabilities other than those
related to its interest in the Loan, comprised of accounts payable owed to
Drummond and others in an amount that does not exceed $350,000 as of December
1, 1996 and liabilities that may arise with respect to the administration of
the Loan, which are currently not quantifiable, including an existing action
against the Corporation and Drummond with respect to Enviropur West
Corporation;
(p) the Vendor acknowledges that the ICHOR Shares have not been
registered by the Purchaser under the Securities Act of 1933, as amended (the
"1933 Act"), that the Purchaser does not plan, and is under no obligation to
provide for, registration of the ICHOR Shares, that the ICHOR Shares are being
offered and sold in reliance upon an exemption from the registration
requirements of the 1933 Act, and that they cannot be sold unless they are
subsequently registered under the 1933 Act or are sold pursuant to an
exemption from the registration requirements thereunder;
(q) the Vendor shall file and cause to be filed all forms of
certification required to be filed by the Vendor in connection with the
purchase and sale of the ICHOR Shares so that the distribution of the ICHOR
Shares may lawfully occur without the necessity of filing a prospectus or
otherwise registering the same, and the Vendor shall not request that the
Purchaser provide it with an offering memorandum or prospectus, or do anything
which would require the Purchaser to provide such an offering memorandum or
prospectus to the Vendor;
(r) the ICHOR Shares are being subscribed for and any rights the Vendor
may acquire as a shareholder of the Purchaser will be acquired for the
Vendor's own account and for investment purposes and not with a view to a
subsequent offering, sale or distribution thereof, and the Vendor may not
participate, directly or indirectly, in any plan or scheme involving the
resale or distribution of the ICHOR Shares or any interest therein;
(s) the Vendor has knowledge and experience in financial and business
affairs as to be capable of evaluating the merits and risks of the investment
and is able to bear the economic risk of loss of the investment; and
<PAGE> 5
(t) the Vendor has not received or been provided with an offering
memorandum or similar document, and its decision to enter into the Agreement
and to purchase the ICHOR Shares has not been made upon any verbal or written
representation as to fact or otherwise by or on behalf of the Purchaser or any
other person and its decision to enter into the Agreement and purchase the
number of ICHOR Shares set forth herein is based entirely upon information
concerning the Purchaser which is publicly available.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
3.1 The Purchaser covenants, represents and warrants as follows and hereby
acknowledges and confirms that the Vendor is relying upon such covenants,
representations and warranties in connection with the sale by it of the
Purchased Securities:
(a) the Purchaser has all necessary power and authority to execute and
deliver this offer, to purchase the Purchased Securities pursuant to the
provisions hereof and to perform its obligations hereunder;
(b) this offer has been duly executed and delivered by and on behalf of
the Purchaser and the Agreement will constitute a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance
with its terms;
(c) on the Closing Date (as herein defined), the authorized capital of
the Purchaser will consist of, inter alia, 30,000,000 shares of common stock
with a par value of $0.01 per share and 5,000,000 shares of preferred stock
with a par value of $0.01 per share;
(d) on the Closing Date, the ICHOR Shares shall be delivered to the
Purchaser free and clear of any mortgages, liens, charges, restrictions,
security interests, adverse claims, pledges, encumbrances or demands,
whatsoever and shall, upon receipt of payment by the Company therefor, be
validly and duly authorized, created and issued by the Company as fully paid
and non-assessable;
(e) the Purchaser has good right, full corporate power and absolute
authority to enter into the Agreement and to issue, sell and assign the ICHOR
Shares and the ICHOR Note to the Vendor in the manner contemplated herein and
to perform all of the Purchaser's obligations under the Agreement;
(f) the Purchaser is a company duly incorporated and validly subsisting
in all respects under the laws of the State of Delaware and is in good
standing with respect to the filing of annual returns;
<PAGE> 6
(g) the execution and delivery of the Agreement and the completion of
the transactions contemplated hereby will not conflict with, result in a
default under, or accelerate or permit the acceleration of the performance
required by, any agreement or instrument to which the Purchaser is a party;
(h) the Purchaser is a registrant under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and has, on a timely basis, duly filed
or delivered all reports, filings, disclosures, releases and other materials
required to be filed with or delivered to any regulatory authority having
jurisdiction under applicable law, including periodical or timely disclosure
filings or reports required pursuant to the Exchange Act (collectively, the
"Periodic Filings") and such Periodic Filings are true and correct in all
material respects;
(i) the Purchaser shall file and cause to be filed all forms of
certification required to be filed by the Purchaser in connection with the
purchase and sale of the ICHOR Shares and the ICHOR Note so that the
distribution of the ICHOR Shares and the ICHOR Note may lawfully occur without
the necessity of filing a prospectus or otherwise registering the same.
4. CLOSING PROCEDURE
4.1 The closing of the purchase and sale of the Purchased Securities shall
take place at 10:00 (a.m.) on December 17, 1996, at the offices of the
Purchaser or at such other time or place as may be mutually agreed upon. The
date of the closing of the purchase and sale of the Purchased Securities is
referred to herein as the "Closing Date" and the time of closing on such date
is referred to herein as the "Time of Closing".
4.2 At the Time of Closing on the Closing Date, the Vendor agrees to deliver
to the Purchaser definitive certificates representing the Purchased Common
Shares and the original Purchased Note duly endorsed for transfer to the
Purchaser, or as the Purchaser may in writing direct, against the delivery by
the Purchaser to the Vendor, or as the Vendor may in writing direct, of:
(a) the ICHOR Note;
(b) security for the ICHOR Note;
(c) an opinion of the Purchaser's counsel; and
(d) the ICHOR Shares,
all in a form and content satisfactory to the Vendor and its counsel.
<PAGE> 7
4.3 Contemporaneously with the closing of the purchase and sale of the
Purchased Securities, the certificates representing the Purchased Common
Shares and the original Purchased Note delivered by the Vendor as aforesaid
shall be tendered to the Corporation and the parties shall arrange for the
immediate delivery to the Purchaser of definitive certificates representing
the Purchased Common Shares and a promissory note in replacement of the
Purchased Note duly issued and registered in the name of the Purchaser or as
it may in writing direct.
5. CONDITIONS OF CLOSING
5.1 The obligation of the Purchaser to purchase the Purchased Securities
shall be subject to the following conditions for the exclusive benefit of the
Purchaser to be fulfilled and/or performed at or prior to the Time of Closing
on the Closing Date:
(a) no action or proceeding shall be pending or threatened by any
person, company, firm, governmental authority, securities commission,
regulatory body or agency to enjoin or prohibit the purchase and sale of the
Purchased Securities contemplated hereby or the right of the Purchaser to own
the Purchased Securities or to suspend or stop trading in securities of the
Corporation;
(b) the covenants, representations and warranties of the Vendor
contained in Article 2 hereof shall be true and correct on and as of the date
of the acceptance of this offer by the Vendor and shall also be true and
correct on and as of the Closing Date with the same force and effect as though
such covenants, representations and warranties had been made on and as of such
date;
(c) the Vendor shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it; and
(d) since the date hereof, the Corporation shall not have reserved, set
aside, allotted, issued or agreed to reserve, set aside, allot or issue,
conditionally or otherwise, any shares or any securities, rights or warrants
having the right or option to acquire, directly or indirectly, through
purchase, conversion, exchange or otherwise, any shares.
In case any of the foregoing conditions has not been fulfilled and/or
performed at or before the Time of Closing to the satisfaction of the
Purchaser, the Purchaser may rescind the Agreement by notice to the Vendor and
in such event the Purchaser shall be released from all obligations hereunder;
provided that any of such conditions may be waived in whole or in part by the
Purchaser without prejudice to its rights of rescission in the event of the
non-fulfilment of any other condition or conditions.
<PAGE> 8
5.2 The obligations of the Vendor to sell the Purchased Securities shall be
subject to the following conditions for the exclusive benefit of the Vendor to
be fulfilled and/or performed, on or before the close of business on December
16, 1996:
(a) the Vendor's "disinterested directors" shall have approved the terms
of the Agreement;
(b) no action or proceeding shall be pending or threatened by any
person, company, firm, governmental authority, securities commission,
regulatory body or agency to enjoin or prohibit the purchase and sale of the
ICHOR Shares contemplated hereby or the right of the Vendor to own the ICHOR
Shares or to suspend or stop trading in securities of ICHOR;
(c) the covenants, representations and warranties of the Purchaser
contained in Article 3 hereof shall be true and correct on and as of the date
of the acceptance of this offer by the Vendor and shall also be true and
correct on and as of the Closing Date with the same force and effect as though
such covenants, representations and warranties had been made on and as of such
date;
(d) the Purchaser shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it; and
(e) since the date hereof, ICHOR shall not have reserved, set aside,
allotted, issued or agreed to reserve, set aside, allot or issue,
conditionally or otherwise, any shares or any securities, rights or warrants
having the right or option to acquire, directly or indirectly, through
purchase, conversion, exchange or otherwise, any shares.
In case any of the foregoing conditions has not been fulfilled and/or
performed at or before the Time of Closing to the satisfaction of the Vendor,
the Vendor may rescind the Agreement by notice to the Purchaser and in such
event the Vendor shall be released from all obligations hereunder; provided
that any of such conditions may be waived in whole or in part by the Vendor
without prejudice to its rights of rescission in the event of the
non-fulfilment of any other condition or conditions.
6. COVENANTS OF THE VENDOR
6.1 The Vendor covenants and agrees that, between the date hereof and the
Time of Closing, it will not take any step or act with respect to or in
furtherance of the sale of the Purchased Securities or any portion thereof to
any person, firm or corporation other than the Purchaser and, without limiting
the generality of the foregoing, will not negotiate with, solicit any offer
from, or have any discussion with, any other person, firm or corporation with
a view to such a sale.
<PAGE> 9
7. INDEMNIFICATION
7.1 Each of the parties hereto covenants and agrees to indemnify and save
harmless the other party from and against any claims whatsoever for any
commissions or remuneration payable or alleged to be payable to any broker,
agent or other intermediary who has acted for such party in connection with
the sale or purchase of the Purchased Securities.
8. COSTS AND EXPENSES
8.1 All costs and expenses incurred in connection with the Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
9. ENTIRE AGREEMENT
9.1 The agreement resulting from acceptance of this offer shall constitute
the entire agreement and understanding between the parties with respect to the
subject matter hereof and shall supersede any prior agreement, representation
or understanding with respect thereto.
10. TIME OF THE ESSENCE
10.1 Time shall be of the essence hereof.
11. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
11.1 The respective covenants, representations and warranties of the parties
contained herein shall survive the closing of the purchase and sale of the
Purchased Securities herein provided for, and, notwithstanding such closing,
or any investigation made by or on behalf of any party, shall continue in full
force and effect for the benefit of the party to whom the covenant,
representation or warranty was made.
12. NOTICES
12.1 Any notice, direction or other instrument required or permitted to be
given to either party hereto shall be in writing and may be given by
delivering or sending by facsimile the same to the Vendor at:
Logan International Corp.
Suite 1250, 400 Burrard Street
Vancouver, BC V6C 3A6 CANADA
Attention: President
<PAGE> 10
Facsimile No.: 604-683-3205
and to the Purchaser at:
ICHOR Corporation
300 Oxford Drive
Monroeville, Pennsylvania
U.S.A. 15146
Attention: President
Facsimile No.: 412-856-6057
12.2 Any such notice, direction or other instrument shall be deemed to have
been given or made on the date on which it was delivered or sent by facsimile
(or, if such day is not a business day, on the next following business day.)
13. GOVERNING LAW
13.1 The Agreement shall be constructed and enforced in accordance with, and
the respective rights and obligations of the parties shall be governed by, the
laws of the province of British Columbia and the applicable federal laws of
Canada, irrespective of the choice of laws principles of the Province of
British Columbia, and the parties hereto irrevocably attorn to the exclusive
jurisdiction of the courts of British Columbia sitting in Vancouver, provided
that nothing herein shall restrict the Vendor from enforcing its rights under
the Note and the security granted in connection therewith in the jurisdiction
of its choice.
14. CONFIDENTIALITY
14.1 The Agreement shall be kept confidential by the parties hereto and no
public announcement or press release concerning the Agreement shall be made by
either party without the consent of the other party or except as may be
required by law.
15. SUCCESSORS AND ASSIGNS
15.1 Neither party may assign its rights or obligations hereunder to any other
person, firm or corporation without the prior written consent of the other
party hereto, except that the Purchaser may assign the Agreement and its
rights hereunder in whole or in part to one or more corporations all of the
shares of which are beneficially owned by the Purchaser.
<PAGE> 11
15.2 The Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
16. ACCEPTANCE OF OFFER
16.1 This offer is open for acceptance by the Vendor in the manner indicated
below until, but not after, 5 o'clock in the afternoon (Vancouver time) on
December 16, 1996, and if not accepted on or before such time on such date
shall be null and void. This offer may be accepted only by the Vendor signing
and returning the accompanying duplicate of this offer or a counterpart hereof
to the Purchaser or an officer of the Purchaser or by sending by facsimile to
the Purchaser, in the manner provide in section 12.1 hereof, a copy of a
signed counterpart hereof at or before the said time. Upon acceptance of this
offer by the Vendor as aforesaid, this offer become an agreement of purchase
and sale between the Vendor and the Purchaser in accordance with its terms.
Yours very truly,
ICHOR CORPORATION
By: /s/ John M. Musacchio
------------------------------
John M. Musacchio
---------------------------------
(Name - please print)
President
---------------------------------
(Title)
The foregoing offer is hereby accepted and agreed to by the undersigned in the
City of Vancouver this 16th day of December, 1996.
LOGAN INTERNATIONAL CORP.
By: /s/ Leonard Petersen
------------------------------
Leonard Petersen
---------------------------------
(Name - please print)
Director
---------------------------------
(Title)
<PAGE> 12
Schedule "A"
Capital as at December 1, 1996
<TABLE>
<CAPTION>
Number or Amount
Number or Beneficially Owned
Description Authorized Amount Outstanding by the Vendor
- ----------- ---------- ------------------ ------------------
<S> <C> <C> <C>
Common Shares 100,000,000 1,500,001 All
Promissory Note N/A 3,281,694 All
</TABLE>
<PAGE> 13
This is SCHEDULE "B" to that certain Purchase Agreement dated for reference ,
1996 and made between ICHOR Corporation and Logan International Corp.
PROMISSORY NOTE
FOR VALUE RECEIVED ICHOR CORPORATION ("ICHOR") hereby promises to pay, on
, 1999, to LOGAN INTERNATIONAL CORP. ("Logan") the principal sum of
ONE MILLION FOUR HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($1,425,000), together
with interest at a rate of EIGHT (8%) PER CENT per annum on such principal
amount or part thereof outstanding from time to time from the date hereof and
interest on overdue interest at the same rate, as well after as before
maturity and judgment and both before and after default, until payment in
full. Interest payable hereunder shall accrue from day to day and shall be
computed on the basis of a year of 365 days and for actual days elapsed and
shall be compounded and payable monthly in arrears on the last day of each
month commencing on January 31, 1997.
The occurrence of any one or more of the following events (an "Event of
Default") shall constitute a default under this promissory note:
(a) if ICHOR defaults in the payment of any amount accruing due hereunder on
its due date and such failure shall be unremedied for five (5) days
after notice thereof to ICHOR;
(b) if ICHOR fails to observe or perform any term, covenant, condition,
agreement or obligation in favour of Logan (except for those described
in subsection (a) above) contained in that certain purchase agreement
entered into between ICHOR and Logan dated December 13, 1996 (the
"Purchase Agreement"), any security instruments delivered in connection
with the Purchase Agreement or this promissory note or any other
agreement between ICHOR and Logan and such failure shall remain
unremedied for ten (10) days after notice of such failure by Logan to
ICHOR;
(c) if any representation, warranty or statement made by ICHOR or any
director, officer or employee thereof in the Purchase Agreement, any
security instrument delivered pursuant thereto or any certificate,
declaration or other instrument delivered by or on behalf of ICHOR in
connection with the Purchase Agreement proves at any time to have been
incorrect in any material respect as of the date made;
(d) if ICHOR or any material subsidiary of ICHOR shall generally not pay its
debts as such debts become due, or shall indicate in writing its
inability to pay such debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against ICHOR seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or
for any part of its property or ICHOR shall take any corporate action to
authorize any of the actions set forth above;
<PAGE> 14
(e) if ICHOR or any material subsidiary of ICHOR shall fail to pay the
principal of, or premium or interest on, any debt of ICHOR which is
outstanding in an aggregate principal amount in excess of One Hundred
Thousand Dollars ($100,000) when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) or if any other event shall occur specified in any
agreement or instrument relating to any such debt, if the effect of such
event is to permit the acceleration of the maturity of such debt of
ICHOR; or any debt of ICHOR which is outstanding in an aggregate
principal amount exceeding One Hundred Thousand Dollars ($100,000) (or
the equivalent amount in any other currency) shall be validly declared
to be due and payable prior to the stated maturity thereof;
(f) if any judgment or order for the payment of money in excess of Fifty
Thousand ($50,000) (or the equivalent amount in any other currency)
shall be rendered against ICHOR and the same shall not be satisfied
within 30 days thereof;
(g) if any property of ICHOR or any material subsidiary of ICHOR is seized
under legal process to enforce a judgment, including execution,
garnishment or attachment, or a charging order or equitable execution
affecting or relating to property of ICHOR is obtained, or a judgment
creditor delivers a writ of execution or a certificate to a sheriff
under, or a sheriff seizes or has a right to any property of ICHOR or
any other execution, sequestration, extant or other process of any court
becomes enforceable against ICHOR or a distress or an analogous process
is levied upon any property of ICHOR;
(h) if all or any material portion of the property of ICHOR is lost,
materially damaged or destroyed by theft, fire or any other casualty and
the loss is not adequately covered by insurance and ICHOR fails to
provide security satisfactory to Logan, upon request by Logan, covering
the deficiency not covered by insurance immediately upon the deficiency
becoming known or known approximately;
(i) if it shall become illegal or unlawful for ICHOR to carry on its
business or for ICHOR to perform any of its obligations under this
promissory note or any agreement or security instrument in favour of
Logan;
(j) if ICHOR fails to actively and diligently contest in good faith, by
appropriate and timely proceedings, any action, suit, litigation or
other proceeding commenced against it the result of which could be
expected to have a materially adverse effect on its financial condition
or operations;
(k) if ICHOR or any material subsidiary of ICHOR knowingly at any time and
in any material respect contravenes the provisions of any applicable
law, regulation, bylaw, ordinance or work order of any governmental
authority affecting any property of ICHOR and, in the reasonable opinion
of Logan, the effect thereof could be expected to have a materially
adverse effect on the interests of Logan;
<PAGE> 15
(l) if this promissory note or, any security instrument granted in
connection with or collateral to this promissory note is contested by
any person other than ICHOR or is subrogated, impaired or set aside in
any manner;
(m) if, at any time, the liabilities of ICHOR exceed its assets on a
consolidated basis; or
(n) if Logan in good faith believes and has commercially reasonably grounds
to believe that there has been a material adverse change in the business
of ICHOR, including, without limitation, if Logan in good faith believes
and has commercially reasonable grounds to believe that ICHOR will incur
any liabilities resulting from a class action lawsuit filed against
ICHOR in New York under Civ. No. 95 Civ. 4954 that would equal or
surpass, in aggregate $50,000.
Upon the occurrence of an Event of Default, the entire principal amount
hereunder then outstanding and all accrued and unpaid interest thereon shall,
at the option of Logan, become immediately due and payable with interest at
the rate set out herein to the date of actual payment thereof, all without
presentment, protest or notice of dishonour, all of which are expressly waived
by ICHOR, provided that ICHOR shall have a reasonable time in which to repay
the monies so demanded. For the purposes of this provision, a reasonable
period of time shall be five (5) days unless Logan reasonably determines that
the value of ICHOR's business or any security held by Logan would be reduced
or the ability of Logan to realize on such security would be impaired by such
delay or any part thereof. In such event, Logan may exercise any right of
recourse and/or proceed by any action, suit, remedy or proceeding against
ICHOR authorized or permitted by law for the recovery of all indebtedness and
liabilities of ICHOR to Logan hereunder and proceed to exercise any and all
rights hereunder and under any security instruments granted by ICHOR and no
such remedy for the enforcement of the rights of Logan shall be exclusive of
or dependent upon any other remedy but any one or more of such remedies may
from time or time be exercised independently or in combination.
ICHOR agrees that if, and as often as, this promissory note is placed in the
hands of an attorney for collection or to defend or enforce any of Logan's
rights under this promissory note or any security instruments granted in
connection with or collateral thereto, or otherwise relating to the
indebtedness hereby evidenced, ICHOR will pay Logan's reasonable attorney's
fees, or court costs and all other expenses incurred by Logan in connection
therewith.
This Note shall be governed by and construed in accordance with the laws of
British Columbia. ICHOR hereby irrevocably attorns to the non-exclusive
jurisdiction of the Courts of British Columbia.
All references to "dollars" or "$" herein shall be references to United States
dollars.
<PAGE> 16
ICHOR hereby waives presentment for payment, notice of dishonour, notice of
non-payment, protest, notice of protest and any and all other notices and
demands in connection with the delivery, acceptance, performance, default or
enforcement of this promissory note.
DATED at , the day of December, 1996.
--------- ---------- ---
THE COMMON SEAL of )
ICHOR Corporation )
was hereunto affixed in the )
presence of: )
)
- ----------------------------- ) c/s
Authorized Signatory )
)
)
- ----------------------------- )
Authorized Signatory
