AMENDATORY AGREEMENT
WHEREAS, Sundial International Fund Limited ("Sundial") and
Ultra Pacific Holdings S.A. ("Ultra"), on the one hand, and Metalclad
Corporation ("MTLC"), on the other hand, heretofore entered into a
Purchase Agreement dated as of the 31st day of December, 1997 as amended
by Section 2.7.3 of that certain Purchase Agreement by and between Ultra
and MTLC dated as of the 18th day of June, 1998, and as further amended by
that certain Offer from Metalclad to Ultra, Sundial and others dated
February 23, 1999 as subsequently amended by the substitution of various
schedules thereto as accepted by Ultra, sundial and such others (said
Offer from Metalclad as so amended and accepted being sometimes referred
to as the "Offer", and said Purchase Agreement dated as of the 31st day of
December, 1997 as so amended by the Purchase Agreement dated as of June
18, 1998 and by the Offer being hereinafter sometimes referred to as the
"Original Purchase Agreement".
WHEREAS, capitalized terms used herein and not defined herein
are used herein as defined in the Original Purchase Agreement, the Pledge
Agreement or the Registration Rights Agreement, as the same may be
modified by this Agreement;
WHEREAS, the original Purchase Price of the Notes was $1,500,00
("Original Purchase Price"), $1,000,000 being attributable to the Sundial
Note and $500,000 being attributable to the Ultra Note;
WHEREAS, the parties hereto wish to increase the Purchase Price
of the Notes (i) by capitalizing interest accrued through and including
July 30, 1999; and (ii) by the making by Sundial and Ultra of an
additional loan to MTLC in the amount of $250,000.
WHEREAS, the original Principal Amount of the Notes, being the
amount due at maturity of the Notes on December 31, 2002, the Notes being
Zero Coupon Notes, was $2,200,000 ("Former Principal Amount"), of which
$1,466,666.67 was attributable to the Sundial Note ("Sundial Former
Principal"), and $783,333.33 was attributable to the Ultra note ("Ultra
Former Principal Amount");
WHEREAS, the parties have agreed effective July 30 to increase
the imputed interest rate on the Notes to 12% and as a consequence thereof
and of the transactions contemplated by the second preceding recital
hereof, the Former Principal Amounts of the Notes will be increased to
the "New Principal Amounts" (defined Below) and the definition of
Discounted Present Value will be modified accordingly;
WHEREAS, it has been previously agreed that the Conversion Rate
would be changed to the lesser of (i) 70% of the Market Price of the MTLC
Common Stock or (ii) 25 cents per share of the Common Stock of MTLC, said
Common Stock upon conversion to be paid for by cancellation of such
portion of the Original Purchase Price of the Notes being converted equal
to the number of shares being acquired multiplied by the lesser of (i) or
(ii), and the concurrent cancellation of all interest accrued attributable
to such portion of the Original Purchase Price being converted;
WHEREAS, MTLC effected a 10 for 1 reverse stock split following
the execution and delivery of the Original Purchase Agreement and has
agreed that the right to convert the "New Purchase Price" (as defined
below) of each of the Notes, in one or more tranches, into shares of MTLC
Common Stock, shall be at the lesser of 70% of the Market Price of the
MTLC Common Stock or $2.50 per share, said Common Stock upon conversion to
be paid for by cancellation of such portion of the New Purchase Price
equal to the number of shares of Common Stock being acquired multiplied by
the lesser of (i) or (ii) and the concurrent cancellation of all interest
accrued from and after July 30, 199 attributable to the tranche being
converted;
WHEREAS, after giving effect to the reverse stock split referred
to above, pursuant to the Offer, the accepting parties thereto, market
conditions permitting, had agreed to exercise warrants to acquire 400,000
shares (of which 300,00 shares were acquired by such exercise) and MTLC
has requested that such parties either exercise warrants to acquire an
additional 100,000 shares in whole or in part or resell to third parties
the unexercised warrants at 30 cents per share, any such warrants to be
warrants of Sundial and Ultra's choosing, held by Sundial, Ultra or the
other accepting parties to the Offer, and Sundial and Ultra have
determined to resell to such parties or their nominees concurrently with
or following the execution and delivery hereof warrants to acquire 70,000
shares for a purchase price of $21,00, and to exercise warrants to acquire
30,000 shares by payment to MTLC of $75,000, to the Agent by wire transfer
for the account of Sundial and Ultra, the Agent's account being account
No. 042 78931 maintained with Citibank N.A., ABA No. 000000000;
WHEREAS, Sundial, Ultra and MTLC have agreed to modify, among
other provisions, the provisions of the Original Purchase Agreement and
the Notes to extend the time within which the Notes may be converted and
to modify the terms of the Notes respecting the ability of MTLC, Sundial
and Ultra to require redemption of the Notes in whole or in part; and
WHEREAS, MTLC has agreed to provide certain additional
collateral for the loans evidenced by the Notes.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, receipt whereof is hereby acknowledged by each
party hereto, the parties hereto hereby agree as of the 30th day of July,
1999 as follows:
Section 1. Capitalization of Interest; Increase in Amount of Loans
Evidenced by the Notes; Prospective Change in Interest Rate.
(a) As of July 30, 1999 the accrued and unpaid interest on
the Notes was $221,200.00, of which $147,467.00 was attributable to the
Sundial Note and $73,733.00 was attributable to the Ultra Note which
interest the parties hereby agree to capitalize by increasing the Former
Purchase Price of the Notes. On or as of July 30, 1999, Sundial and
Ultra, at the request of MTLC, hereby agree to loan an additional $250,000
to MTLC to be secured as provided in the Original Purchase Agreement as
herein modified, of which $166,666.67 will be loaned by Sundial and
$83,333.33 will be loaned by Ultra, which loans will also increase the
Former Purchase Price of the Notes. Accordingly, the parties agree that
the "New Purchase Price" of the Notes aggregates $1,971,200.00, of which
$1,314,134.00 is attributable to the Sundial Note, and $657,066.00 is
attributable to the Ultra Note.
(b) Effective July 30, 1999, the imputed interest rate on the
Notes is hereby changed from 9 1/3% simple interest without compounding to
12% simple interest without compounding so that the "New Principal Amount"
of the Notes on the maturity date of December 31, 2002 will be
$2,780,771.00, of which $1,863,117.00 will be the New Principal Amount of
the Sundial Note, and $917,654.00 will be the New Principal Amount of the
Ultra Note. It is agreed that the interest accrual on both Notes from and
including July 30, 1999 for the 1,249 days remaining to maturity of the
Notes is $648.17 per day, of which $432.11 per day is attributable to the
Sundial Note and $216.06 per day is attributable to the Ultra Note. All
such interest accruing on or after July 30, 1999 shall be paid at maturity
or upon redemption or by cancellation in whole or in part in the event of
the conversion of the Notes in whole or in part, or upon the occurrence
and declaration of an Event of Default (which shall include any default
under this Agreement).
Section 2. Reverse Stock Split.
Prior to the date hereof, MTLC effected a 10 to 1 reverse
stock split. The Original Purchase Agreement is hereby revised to take
account of such reverse stock split and all provisions thereof shall be
deemed amended accordingly.
Section 3. Occurrence of Trigger Event.
It is acknowledged and agreed that the Trigger Event referred
to in the Original Purchase Agreement has occurred and that all warrants
issuable to Sundial and Ultra as a consequence thereof have been issued
and that MTLC's obligation in that regard has been fully discharged.
Section 4. Conversion Rate; Conversion; and Redemption.
Any provision of the Original Purchase Agreement to the
contrary notwithstanding, it is understood and agreed as follows:
(a) The Conversion Rate shall be equal to the lesser of (i)
70% of the average Market Price of MTLC Common Stock for the 5 trading
days preceding the receipt by MTLC of any notice of conversion, or (ii)
$2.50 per share. As used herein "Market Price" shall mean the average
closing bid price as shown on the NASDAQ screen for parties bidding for
100 or more shares as at 4:00 p.m. New York time on each such date.
(b) Conversion of the New Purchase Price of each Note into
shares of MTLC Common Stock may be made in one or more tranches of not
less than $25,000 per tranche at the option of Sundial and/or Ultra,
provided, however, that no conversion may occur without MTLC's prior
consent before the earlier to occur of (i) March 31, 2000, or (ii) the
final conclusion of MTLC and affiliated companies' arbitration dispute
with the United Mexican States. As used herein "final conclusion" shall
mean the first to occur of any of the following: (a) final settlement of
the litigation, (b) final decision from the arbitral tribunal after the
time for appeals and motions for rehearing have expired or been decided,
or (c) in the event of an award in favor of MTLC and/or affiliated
companies, the payment in full in United States dollars in the United
States of such award. The Notes, once they shall have become convertible,
shall remain so until paid at maturity or until redeemed by Sundial or
Ultra and until the redemption price has been paid in full.
(c) All shares of MTLC Common stock required to be issued by
MTLC upon any conversion shall be fully registered and tradeable;
provided, however, that it is understood and agreed that, in accordance
with NASDAQ listing requirements, the total number of shares of Common
Stock issuable upon conversion of the Notes may not exceed 19.99% in the
aggregate (including any conversion of the Notes prior thereto) of the ten
issued and outstanding shares of MTLC Common Stock. MTLC had 3,601,702
issued and outstanding shares of Common Stock as of June 30, 1999.
Accordingly, by way of example, were the Notes to have been converted as
at such date, no more than 720,000 shares could have been converted, any
balance of debt outstanding to remain fully payable in accordance with its
terms. By way of further example, if on the date of conversion there were
5,000,000 shares of Common Stock outstanding, the Notes can be converted
into 999,999 shares without regard to the conversion of other issues of
debt into Common Stock.
(d) The Noteholders shall have the right, but not the
obligation, to require the redemption of the Notes for their Discounted
Present Value at the time of redemption at any time after but not prior to
March 31, 2000 provided, however, that nothing contained herein shall
affect the rights of the Noteholders upon the occurrence of any Event of
Default.
(e) MTLC shall have no right to redeem the Notes.
Section 5. Warrant Offer Program.
Sundial and Ultra hereby tender the following warrants to MTLC
in exchange for the payment by MTLC to Ultra of $21,000:
1. Warrants owned by The Jan Chr. X. Xxxxx Family Trust
entitling the Trust to acquire 39,960 shares of MTLC Common Stock.
2. Warrants owned by Xxxxxx Xxxxxxxxxxxx entitling Xx.
Xxxxxxxxxxxx to acquire 30,040 shares of MTLC Common Stock.
Sundial and Ultra hereby agree to cause the Jan Chr. X. Xxxxx
Family Trust to exercise warrants entitling the Trust to acquire 30,00
shares of Common Stock and to pay MTLC $75,000 therefor.
Said warrants shall all be of the series expiring in October
20002, except that 40 of the warrants held by Xx. Xxxxxxxxxxxx expire in
February 2001, and shall automatically be deemed canceled or exercised, as
the case may be, without presentation of certificates, upon receipt by
MTLC of payment therefore. Upon cancellation and exercise of said
warrants and payment therefore, all obligations in respect of the warrant
exercise program set forth in the Offer shall be deemed fulfilled, the
terms of the Offer otherwise to remain in full force and effect,
including, without limitation, the provisions of the third sentence of
Section 4 of the Offer.
MTLC shall cause its transfer agent to issue not later than
August 10, 1999 30,000 unrestricted, fully registered and tradeable shares
in the name of The Jan Chr. X. Xxxxx Family Trust and to deliver the same
to the Agent, if the same be in certificated form, or by sending the
shares by DTC electronic transfer directly to the account of the Trust
maintained with Axiom Capital Management, Inc., Account No. 896-27266 R
20, through Axiom's clearing agent, Bear Xxxxxxx Securities Corp., Xxx
Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000-0000.
Section 6. Definitions.
The following terms defined in the Original Purchase Agreement
are hereby modified to read as follows:
"Common Stock" shall mean the authorized Common stock of MTLC
as at July 30, 1999.
"Conversion Rate" shall mean the whole or any portion of the
New Purchase Price of any Note being converted divided by the lesser of
U.S. $2.50 or 70% of the Market Price of the Common Stock prior to the
date of receipt by MTLC of the notice of conversion.
"Conversion Shares" shall mean the shares of Common Stock of
the Company issuable upon conversion, in whole or in part as the context
may require, of the Notes.
"Discounted Present Value" with respect to any Note shall be
based on a simple interest rate of 12% per annum without compounding and
shall mean with respect to any Note an amount calculated in accordance
with the following formula:
n
----
PP+(.41069957 PP x 1249)
wherein PP equals the New Purchase Price of a Note, n equals the number of
days elapsed from and including July 30, 1999 to and including (A) the
date of payment pursuant to the exercise by any Noteholder of its right of
redemption, or (B) the date of occurrence of an Event of Default, as the
case may be, and 1249 equals the total number of days from and including
July 30, 1999 to and including the date of maturity of the Note (December
31, 2002).
"Mandatory Redemption" shall mean the exercise by any
Noteholder, at any time after March 31, 2000, of the right to require the
Company to redeem such Note at a price equal to the Discounted Present
Value at the date of payment of the redemption price, which right may be
exercised in whole or in part.
"Principal Amount" shall mean the "New Principal Amount", being
with respect to all of the Notes, U.S. $2,780,771.00, with respect to the
Sundial Note, $1,863,117.00 and with respect to the Ultra Note,
$917,654.00.
"Purchase Price" of the Notes shall mean the "New Purchase
Price" of $1,971,200.00, with respect to the Sundial Note, $1,314,134.00
and with respect to the Ultra Note, $657,066.00.
"Total Interest" in respect of the Notes shall mean the total
interest thereon from and including July 30, 1999 to the date of maturity
and shall be equal to $648.17 per day, or $809,571.00.
"Warrant Exercise Price" shall mean the lesser of 70% of
Market Price or U.S. $2.50 per share of Common Stock.
Section 7. Existing and Additional Security for Notes.
(a) It is agreed that all of the stock of MIC held by the
Agent as security for the Notes and the other obligations under the
Original Purchase Agreement, Pledge Agreement, Registration Rights
Agreement and related documents, shall be held by the Agent as security
for all such obligations as hereby amended, including, without limitation,
the obligations to repay the New Purchase Price, interest accruing
thereon, and the New Principal Amount.
(b) It is understood that MTLC and its subsidiary Eco-Metalclad,
Inc. ("ECOM") as Sellers, propose to enter into a Stock
Purchase Agreement providing for the sale to Geologic, S.A. de C.V.
("Buyers"), substantially in the form of Exhibit A annexed hereto and made
a part hereof, of all of the issued and outstanding capital stock of the
"Companies" (as defined in the Stock Purchase Agreement). Concurrently
with the execution and delivery of the Stock Purchase Agreement, which
MTLC warrants will occur not later than August 5, 1999, MTLC or ECOM will
jointly and severally assign to the Agent for the benefit of Sundial and
Ultra as additional security for MTLC's obligations to Sundial and Ultra
all of their right, title and interest in and to said Stock Purchase
Agreement, in form and substance satisfactory to sundial, Ultra and its
counsel; provided, however, that the U.S. $125,000 payment referred to in
Section 1.4(e) and the U.S. $332,000 payment referred to in Section 1.4(c)
of the Stock Purchase Agreement shall be excluded from the assignment. In
view of the fact that the Stock Purchase Agreement is governed by the laws
of Mexico, MTLC will instruct its Mexican counsel to prepare and submit to
the Agent (who shall cooperate with Mexican counsel to minimize Mexican
legal fees) all necessary documentation (with an English language
translation thereof if it is in Spanish) to effect the aforementioned
assignment, which assignment must include a notification to and acceptance
by the Buyers of such assignment. The cooperation of the Agent shall
enable the preparation of a Security Agreement of rights to payment of the
purchase price under the Stock Purchase Agreement for review by Mexican
counsel. In the event of the failure to conclude the Stock Purchase
Agreement by August 5, 1999, MTLC will forthwith instruct and cause its
Mexican counsel to effect a pledge of all the shares in the Companies to
the Agent for the benefit of Sundial and Ultra. The assignment or pledge
shall be in all respects acceptable to the Agent and shall constitute
first, prior, perfected security interests in and to the collateral
referred to therein. There shall also be filed UCC-1 Financing Statements
in appropriate U.S. jurisdictions in respect of such assignment. In the
event a definitive Stock Purchase Agreement for the sale of such stock is
entered into after August 5, 1999, the Agent will release the shares of
the Companies pledged to it upon compliance with the assignment and
notification provisions referred to above.
Section 8. Sale of MIC Stock or Assets; Substitute Security.
MTLC agrees that it will not proceed with the sale of any
stock or assets of MIC without the prior written approval of Sundial and
Ultra unless such sale will provide substitute cash or equivalent fully
perfected security in an amount not less than the New Principal Amount of
the Notes. No such sale shall effect a redemption of the Notes.
Section 9. Proceeds From Settlement or Judgment in NAFTA Case.
MTLC has heretofore agreed to pay from the settlement or
judgment proceeds of the NAFTA case, if any, the following amounts and no
others: 7% of such proceeds net of all expenses to counsel representing
MTLC and bonus to those officers of MTLC not exceeding in the aggregate 5%
of any such gross proceeds.
MTLC agrees that it shall not directly or indirectly grant any
further interests in such proceeds or agree to pay any bonus or other
compensation or payment of any kind or type based on contingent upon or
measured by the receipt or amount of such proceeds to any party without
the Noteholders prior written consent. Such consent will be granted if in
the Noteholders opinion full compensation is made to them for any dilution
of their interests that may occur by reason of any such further grant.
MTLC's undertakings in this Section 9 shall not prevent the
granting to officers, directors or employees of options to purchase shares
of MTLC at not less than the fair market value thereof at the time of the
grant of said options.
Section 10. Legal Fees and Disbursements.
Concurrently with the execution and delivery of this Agreement
MTLC will reimburse Sundial's and Ultra's attorneys $10,000 in legal fees
plus estimated disbursements ($1,000.00) incurred in connection with the
preparation o this Agreement. It is agreed that such reimbursement may be
offset against the $250,000 in additional loan proceeds to be received by
MTLC hereunder or from the net payment due MTLC in respect of the warrant
exchange program as Sundial and Ultra shall direct.
Section 11. Authorization.
Concurrently with the execution and delivery hereof, MTLC
shall furnish the Agent with a certified copy of resolutions of the Board
of Directors of MTLC authorizing the execution, delivery and performance
of this Agreement.
Section 12. Original Purchase Agreement.
Except as herein expressly modified by the context of this
Agreement, the Original Purchase Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the 30th day of July, 1999.
SUNDIAL INTERNATIONAL FUND LIMITED
By: /s/Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Assistant Secretary
ULTRA PACIFIC HOLDINGS S.A.
By: /s/Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Assistant Secretary
METALCLAD CORPORATION
By: /s/Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, President
