Document:

exv10w81

 

Exhibit 10.81

SEPARATION AGREEMENT

THIS SEPARATION AGREEMENT (this “Agreement”) is entered into effective as of January 17, 2007 by and between
StarTek, Inc., a Delaware corporation (the “Company”), and Steven D. Butler, a resident of Colorado (“Executive”).

RECITALS

A. Executive has been employed by the Company, most recently as its President and Chief Executive Officer.

B. Executive’s employment with the Company is ending effective as of the date of this Agreement.

C. Executive’s employment is subject to an Employment Agreement effective as of May 13, 2005 between Executive and
the Company (the “Employment Agreement”).

D. The Company and Executive wish to provide for Executive’s transition to new employment on the terms and
conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and
Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:

1. Employment. Executive confirms that his employment by the Company will end effective January 17, 2007
(the “Termination Date”) and that his position as an officer of the Company ended effective January 5, 2007.

2. Board of Directors. Executive resigned as a director of the Company effective January 5, 2007.

3. Employment Compensation.

(a) Base Salary. Through the Termination Date, the Company shall pay to Executive a base salary at an
annual rate of $472,500, less deductions and withholdings, which base salary shall be paid in accordance with the
Company’s normal payroll policies and procedures.

(b) Employee Benefits. Through the Termination Date, Executive shall be entitled to participate in all
such employee benefit plans and programs of the Company as are provided from time to time by the Company or its
subsidiaries to senior executives of the Company, to the extent that Executive meets the eligibility requirements for
each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee
benefit plan or program, and Executive’s participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto.

 

 

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(c) Expenses. The Company shall reimburse Executive for all out-of-pocket business, travel and
entertainment expenses incurred by Executive in the performance of his employment duties and responsibilities through
the Termination Date, subject to the Company’s normal policies and procedures for expense verification and
documentation.

(d) Vacation. Through the Termination Date, Executive shall receive paid vacation time in accordance with
the Company’s policies for executives. Upon termination, Executive will be paid for unused vacation in an amount
Executive would have received had he remained employed by the Company through April 4, 2007.

(e) Pay In Lieu Of Notice. In lieu of receiving notice of the termination of his employment pursuant to
the provisions of the Employment Agreement, Executive shall accept a lump sum payment in the amount of $154,771.87 ,
less deductions and withholdings, as complete compensation for the base salary and vacation pay that Executive would
have received had he remained employed by the Company through April 4, 2007. Executive acknowledges receipt of such
lump sum payment on the Termination Date. In addition, if following the Termination Date Executive elects to continue
his group health, dental and vision coverage through COBRA for himself and those of his eligible dependents who were
covered as of the Termination Date, the Company shall pay to the plan administrator all of the continuation premium for
coverage through April 30, 2007, subject to extension pursuant to Section 4(a)(ii) below; provided, however, that such
Company payments for coverage shall end on such earlier date as (i) Executive or his dependents (as the case may be)
are offered comparable coverage through another employer, or (ii) Executive or his dependents (as the case may be)
cease to be eligible for continuation coverage, whichever occurs first. Executive hereby waives any requirement of the
Employment Agreement that he be given notice of the termination of his employment.

4. Payments upon Termination of Employment.

(a) After the termination of Executive’s employment, the Company shall, subject to the conditions in Section 4(b):

	 	(i)	 	pay to Executive as severance pay
$472,500 in equal installments commencing on the Company’s first regular
payday that is no less than six months after the Termination Date (currently
July 22, 2007) and continuing according to the Company’s regular payroll
schedule through April 8, 2008;

					
	 
	 	

	 	

	
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	 	(ii)	 	if following the Termination Date
Executive elects to continue his group health, dental and vision coverage
through COBRA for himself and those of his eligible dependents who were
covered as of the Termination Date, pay to the plan administrator all of the
continuation premium for coverage from February 1, 2007 through April 30,
2008; provided, however, such Company payments for coverage shall end on such
earlier date as (x) Executive or his dependents (as the case may be) are
offered comparable coverage through another employer, or (y) Executive or his
dependents (as the case may be) cease to be eligible for continuation
coverage, which ever occurs first; and

	 	(iii)	 	pay to Executive, as reimbursement for
one year’s premium paid by Executive in April 2007 for coverage through April
2008 under those certain Northwestern Mutual Insurance Company $1,000,000 life
insurance policies and supplemental disability insurance policy in effect as
of the date hereof, the aggregate premiums paid by Executive for such
coverage, which payment will be made in a lump sum on the Company’s first
regular payday (currently July 22, 2007) that is no less than six months after
the Termination Date.

(b) Notwithstanding the foregoing provisions of this Section 4, the Company shall not be obligated to make any
payments to or for the benefit of Executive and his eligible dependents under Section 4(a) hereof unless: (i) Executive
shall, after the Termination Date, have signed and delivered to the Company a release of claims in favor of the Company
and its Affiliates substantially in the form attached hereto as Exhibit A, and all applicable consideration and
rescission periods provided by law shall have expired; and (ii) Executive is as of the dates of such payments in strict
compliance with the terms of the Employment Agreement that survive the termination of Executive’s employment and with
the terms of this Agreement.

(c) Upon the termination of Executive’s employment, the sole obligation of the Company shall be its obligation to
make the payments called for by Sections 3 and 4 above, and the Company shall have no other obligation to Executive or
to his beneficiary or his estate, except as otherwise provided by law, under the terms of any employee benefit plans or
programs then maintained by the Company in which Executive participates, or under the terms of any stock option
agreements to which Executive is a party. Executive hereby waives all claims to payments pursuant to Section 10
(“Payments upon Termination of Employment”) of the Employment Agreement.

					
	 
	 	

	 	

	
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5. Stock Options.

(a) The Company and Executive are parties to that certain (i) Amended and Restated Option Agreement dated January
3, 2005 (the “1/05 Agreement”), (ii) Option Agreement dated May 13, 2005 (the “5/05 Agreement”), (iii) Option Agreement
dated June 12, 2006 (the “6/06 Agreement”) and (iv) Option Agreement dated July 31, 2006 (the “7/06 Agreement”). The
Company and Executive acknowledge and agree that options granted under each such agreement shall vest in accordance
with the terms and provisions of such agreement on the Termination Date as if Executive’s employment with the Company
had terminated on April 4, 2007 and, accordingly, further acknowledge and agree that as of the Termination Date options
to purchase the number of shares set forth below are vested pursuant to such agreements:

1/05 Agreement 30,000 shares

5/05 Agreement 90,000 shares

6/06 Agreement 0 shares

7/06 Agreement 0 shares

(b) Subject to the provisions of subsection (a) above with respect to the computation of vested options, after the
Termination Date Executive’s rights and obligations with respect to stock options shall continue to be governed by such
option agreements, except that Section 3(b)(iii) of each such option agreement is hereby amended to provide that such
vested options must be exercised on or before December 31, 2007.

(c) The provisions of subsections (a) and (b) above shall not become effective unless Executive shall, after the
Termination Date, have signed and delivered to the Company a release of claims in favor of the Company and its
Affiliates substantially in the form attached hereto as Exhibit A, and all applicable consideration and
rescission periods provided by law shall have expired

6. Bonus. Executive hereby waives all rights to payments under any 2007 incentive bonus plan of the
Company and waives all rights under Section 4(b) (“Annual Incentive Bonus”) of the Employment Agreement for a bonus for
2007.

7. Arbitration. All disputes involving the interpretation, construction, application or alleged breach of
this Agreement and, except for disputes arising under Sections 5, 7, 8, or 11 of the Employment Agreement, all disputes
relating to the termination of Executive’s employment with the Company shall be submitted to final and binding
arbitration in Denver, Colorado. The arbitrator shall be selected and the arbitration shall be conducted pursuant to
the then most recent Employment Dispute Resolution Rules of the American Arbitration Association. The decision of the
arbitrator shall be final and binding, and any court of competent jurisdiction may enter judgment upon the award. All
fees and expenses of the arbitrator shall be paid by the Company. The arbitrator shall have jurisdiction and authority
to interpret and apply the provisions of this Agreement and relevant federal, state and local laws,

					
	 
	 	

	 	

	
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rules and regulations insofar as necessary to the determination of the dispute and to remedy any breaches of the
Agreement and/or violations of applicable laws, but shall not have jurisdiction or authority to alter in any way the
provisions of this Agreement. The arbitrator shall have the authority to award attorneys’ fees and costs to the
prevailing party. The parties hereby agree that this arbitration provision shall be in lieu of any requirement that
either party exhaust such party’s administrative remedies under federal, state or local law.

8. Agreement Not To Solicit Employees. Section 7(b) of the Employment Agreement is hereby amended as
follows: (i) the caption “Agreement Not to Hire” is changed to “Agreement Not to Solicit Employees”;
and (ii) in line 6 thereof, “hire, engage or solicit” is changed to “solicit for employment.” The Company waives any
and all claims arising under Section 7(b) of the Employment Agreement prior to the Termination Date. The Company and
Executive acknowledge and agree that Section 7(b) of the Employment Agreement, as amended hereby, and the other
provisions of Section 7 shall remain in full force and effect.

9. Attorneys’ Fees. The Company shall reimburse Executive for his reasonable attorneys’ fees, not to
exceed $2,000, incurred in connection with the negotiation of this Agreement upon submission of appropriate invoices
detailing the legal services provided.

10. Miscellaneous.

(a) Governing Law. All matters relating to the interpretation, construction, application, validity and
enforcement of this Agreement shall be governed by the laws of the State of Colorado without giving effect to any
choice or conflict of law provision or rule, whether of the State of Colorado or any other jurisdiction, that would
cause the application of laws of any jurisdiction other than the State of Colorado.

(b) Jurisdiction and Venue. Except for disputes to be resolved by arbitration as provided in Section 7
above, Executive and the Company consent to jurisdiction of the courts of the State of Colorado and/or the federal
district courts, District of Colorado, for the purpose of resolving all issues of law, equity, or fact, arising out of
or in connection with this Agreement. Any action involving claims of a breach of this Agreement shall be brought in
such courts. Each party consents to personal jurisdiction over such party in the state and/or federal courts of
Colorado and hereby waives any defense of lack of personal jurisdiction. Venue, for the purpose of all such suits,
shall be in Denver County, State of Colorado.

(c) Entire Agreement. This Agreement, Exhibit A hereto, and Sections 5, 7, 8, 11, 12, and 13 of the
Employment Agreement contain the entire agreement of the parties relating to the termination of Executive’s employment
with the Company and supersede all prior agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement
that are not set forth herein.

					
	 
	 	

	 	

	
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(d) Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in
writing and signed by the parties hereto.

(e) No Waiver. No term or condition of this Agreement shall be deemed to have been waived, except by a
statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition
waived, and shall not constitute a waiver of such term or condition for the future or as to any act other than that
specifically waived.

(f) Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the
prior written consent of the other party, except that the Company may, without the consent of Executive, assign its
rights and obligations under this Agreement (i) to an Affiliate or (ii) to any corporation or other person or business
entity to which the Company may sell or transfer all or substantially all of its assets. After any such assignment by
the Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be
deemed to be “the Company” for purposes of all terms and conditions of this Agreement, including this Section 10(f).

(g) Affiliated Entities. As used in this Agreement, “Affiliates” shall include the Company and each
corporation, partnership, or other entity which controls the Company, is controlled by the Company, or is under common
control with the Company (in each case “control” meaning the direct or indirect ownership of 50% or more of all
outstanding equity interests).

(h) Taxes. Executive represents that he has made his own independent evaluation of the tax effect of the
consideration to be provided to him pursuant to this Agreement. Executive acknowledges and agrees that neither the
Company, its Affiliates, nor any person acting on behalf of the Company or its Affiliates has made any representations
or warranties as to the tax effect of Executive’s entering into this Agreement or receiving the consideration provided
pursuant to this Agreement. The Company may deduct from any payments made and benefits provided to Executive under
this Agreement any taxes or other withholdings which the Company is required or authorized to deduct under applicable
law.

(i) Counterparts; Facsimile Delivery. This Agreement may be executed in any number of counterparts, and
such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. Any
signature page delivered by facsimile or electronic image transmission shall be binding to the same extent as an
original signature page. Any party that delivers a signature page by facsimile or electronic image transmission shall
deliver an original counterpart to any other party that requests such original counterpart.

(j) Severability. To the extent that any portion of any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

(k) Captions and Headings. The captions and paragraph headings used in this Agreement are for convenience
of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions
hereof.

(l) Legal Advice. Executive acknowledges that he is hereby being advised by the Company to consult with
an attorney prior to signing this Separation Agreement.

**Signature page to follow**

					
	 
	 	

	 	

	
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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first
paragraph.

	 	 	 	 	 	 	 
	 	 	STARTEK, INC.
	 	 
	 

	 	 
	 	 	 	 
	 

	 	By:
	 	         
	 	 
	
 
	 	 	 	 
	 	

	 

	 	 	 	Albert C. Yates, Chairman of
	 	 
	 

	 	 	 	the Compensation Committee
	 	 
	 

	 	 	 	of the Board of Directors
	 	 
	 

	 	 
	 	 
	 	 
	 	 	 	 	 
	 	 	STEVEN D. BUTLER
	 	 

Approved as to form:

	 	 	 
	       

	 	 
	 

	 	

	Donald S. Samuels, Esq.

	 	 
	Holme Roberts & Owen, LLC

	 	 
	Counsel for Steven D. Butler

	 	 

 

 

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EXHIBIT A

RELEASE BY STEVEN D. BUTLER

Definitions. I intend all words used in this Release to have their plain meanings in ordinary English.
Specific terms that I use in this Release have the following meanings:

	 	A.	 	I, me, and my include both me and anyone who has or obtains any legal
rights or claims through me.

	 	B.	 	StarTek means StarTek, Inc., any company related to StarTek, Inc. in the present or
past (including without limitation its predecessors, parents, subsidiaries, affiliates, and joint venture
partners), and any successors of StarTek, Inc.

	 	C.	 	Company means StarTek; the present and past officers, directors, committees, and
employees of StarTek; any company providing insurance to StarTek in the present or past; the present and
past fiduciaries of any employee benefit plan sponsored or maintained by StarTek (other than
multiemployer plans); the attorneys for StarTek; and anyone who acted on behalf of StarTek or on
instructions from StarTek.

	 	D.	 	Separation Agreement means the Separation Agreement between StarTek and me that I
executed on January 17, 2007, including all of the documents attached to the Separation Agreement.

	 	E.	 	My Claims mean all of my rights that I now have to any relief of any kind from StarTek,
whether or not I now know about those rights, relating to my employment relationship with StarTek
including without limitation:

	 	1.	 	all claims arising out of or relating to my employment relationship with
StarTek or the termination of that employment relationship;

	 	2.	 	all claims for any alleged unlawful discrimination, harassment, retaliation
or reprisal, or other alleged unlawful practices arising under any federal, state, or local
statute, ordinance, or regulation, including without limitation, claims under Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, 42 U.S.C. § 1981, the Employee Retirement Income Security Act, the Equal Pay
Act, the Worker Adjustment and Retraining Notification Act, the Fair Credit Reporting Act, and
workers’ compensation non-interference or non-retaliation statutes;

	 	3.	 	all claims for alleged wrongful discharge; breach of employment contract;
breach of implied employment contract; failure to keep any promise relating to my employment;
breach of a covenant of good faith and fair dealing under the Employment Agreement; breach of
fiduciary duty; estoppel; my activities, if any, as a “whistleblower”; constructive discharge; retaliation
or reprisal; defamation, infliction of emotional distress, fraud, misrepresentation,
negligence, harassment, assault, battery, invasion of privacy, and interference with
contractual or business relationships relating to my employment relationship with StarTek
and the termination of such employment relationship; any other wrongful employment
practices; and violation of any other law relating to my employment with StarTek;

					
	 
	 	

	 	

	
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	 	4.	 	all claims for compensation of any kind as an employee of StarTek, including
without limitation, bonuses, commissions, stock-based compensation or stock options, vacation
pay, and expense reimbursements;

	 	5.	 	all claims for back pay, front pay, reinstatement, other equitable relief,
compensatory damages, damages for alleged personal injury, liquidated damages, and punitive
damages relating to my employment relationship with StarTek and the termination of such
employment relationship; and

	 	6.	 	all claims for attorneys’ fees, costs, and interest relating to any of the
foregoing claims.

However, My Claims do not include any claims that the law does not allow to be waived; any
claims that may arise after the date on which I sign this Release; any claims for breach of a stock
option agreement to which I am a party; any claims for benefits under the terms and conditions of any
retirement, pension, profit sharing, welfare benefit or other employee benefit plan of the Company in
which I am a participant as of the termination of my employment; or any claims that I may have to
indemnification from StarTek as provided under the charter documents of StarTek or that certain
Indemnification Agreement dated January 3, 2005 by and between StarTek and me (the “Indemnification
Agreement”), any general liability or officers’ and directors’ liability insurance policies
maintained by StarTek, or applicable law.

Agreement to Release My Claims. I will receive consideration from StarTek as set forth in the Separation
Agreement if I sign and do not rescind this Release as provided below. I understand and acknowledge that that
consideration is in addition to anything of value that I would be entitled to receive from StarTek if I did not sign
this Release or if I rescinded this Release. In exchange for that consideration I give up and release all of My
Claims. I will not make any demands or claims against the Company for compensation or damages relating to My Claims.
The consideration that I am receiving is a fair compromise for the release of My Claims.

Additional Agreements and Understandings. Even though StarTek will provide consideration for me to settle and
release My Claims, the Company does not admit that it is responsible or legally obligated to me. In fact, the Company denies that it is responsible or legally obligated to me for My Claims,
denies that it engaged in any unlawful or improper conduct toward me, and denies that it treated me unfairly.

					
	 
	 	

	 	

	
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Cooperation/Non-Disparagement. At the Company’s reasonable request and upon reasonable notice, I will, from
time to time and without further consideration, timely execute and deliver such acknowledgements, instruments,
certificates, and other ministerial documents as may be necessary or appropriate to formalize and complete the
Company’s corporate records and discuss and consult with the Company regarding other matters relating to my
responsibilities while employed by the Company. I will not malign, defame, or disparage the reputation, character,
image, products, or services of the Company, or the reputation or character of the Company’s directors, officers,
employees, or agents.

Acknowledgement of Continuing Obligations. I acknowledge and agree that certain of my obligations under the
Employment Agreement entered into between StarTek, Inc. and me as of May 13, 2005 (“Employment Agreement”), including
but not limited to my obligations under Sections 5, 7 (as amended by the Separation Agreement), 8, 11, 12, and 13 of
the Employment Agreement, survive the termination of my employment with the Company. I represent that I am in
compliance, and shall continue to comply, with all such lawful continuing obligations under the Employment Agreement.
I understand that nothing in this Release will impact my rights or the Company’s obligations under the Indemnification
Agreement.

Advice to Consult with an Attorney. I understand and acknowledge that I am hereby being advised by the Company
to consult with an attorney prior to signing this Release and I have done so. My decision whether to sign this Release
is my own voluntary decision made with full knowledge that the Company has advised me to consult with an attorney.

Period to Consider the Release. I acknowledge that I may take up to 21 days after the termination of my
employment to consider whether I wish to sign this Release. If I sign this Release before the end of the 21-day
period, it will be my voluntary decision to do so because I have decided that I do not need any additional time to
decide whether to sign this Release. I acknowledge that if I sign this Release before the last day of my employment,
StarTek need not accept this release in satisfaction of my obligation under the Separation Agreement to provide a
Release.

My Right to Rescind this Release. I understand that I may rescind this Release at any time within seven days
after I sign it, not counting the day upon which I sign it. This Release will not become effective or enforceable
unless and until the seven-day rescission period has expired without my rescinding it.

					
	 
	 	

	 	

	
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Procedure for Accepting or Rescinding the Release. To accept the terms of this Release, I must deliver the
Release, after I have signed and dated it, to StarTek by hand or by mail within the 21-day period that I have to
consider this Release. To rescind my acceptance, I must deliver a written, signed statement that I rescind my acceptance to StarTek by hand or by mail within the seven-day rescission
period. All deliveries must be made to StarTek at the following address:

StarTek, Inc.

44 Cook Street
Suite 400
Denver, Colorado 80206

Attention: Senior Vice President,

                   Human Resources

If I choose to deliver my acceptance or the rescission of my acceptance by mail, it must be postmarked within the
period stated above and properly addressed to StarTek at the address stated above.

Interpretation of the Release. This Release should be interpreted as broadly as possible to achieve my
intention to resolve all of My Claims against the Company. If this Release is held by a court to be inadequate to
release a particular claim encompassed within My Claims, this Release will remain in full force and effect with respect
to all the rest of My Claims.

My Representations. I am legally able and entitled to receive the consideration being provided to me in
settlement of My Claims. I have not been involved in any personal bankruptcy or other insolvency proceedings at any
time since I began my employment with StarTek. No child support orders, garnishment orders, or other orders requiring
that money owed to me by StarTek be paid to any other person are now in effect.

I have read this Release carefully. I understand all of its terms. In signing this Release, I have not relied on any
statements or explanations made by the Company except as specifically set forth in the Separation Agreement. I am
voluntarily releasing My Claims against the Company. I intend this Release to be legally binding.

	 	 	 	 	 	 	 
	Dated:________________________, 2007

	 	 
	 	      
	 	 
	
 
	 	 	 	 
	 	

	 

	 	 
	 	Steven D. Butler
	 	 

					
	 
	 	

	 	

	
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12Exhibit 10.42 Form of Secured Promissory Note due 6-30-06

    
      
        
          

        

        EXHIBIT
          10.42

          SECURED
            PROMISSORY NOTE

          (TRUST
            NOTE)

          

          $179,433.20        Issuance
            Date: November 1, 2005

          Maturity
            Date: June 30, 2006

          

          FOR
            VALUE RECEIVED, Natural
            Soda, Inc.
            (hereinafter designated "Maker") promises to pay to the order of Sentient
            Global Resources Trust No. 1
            (hereinafter designated "Holder") at c/o
            Sentient (Aust) Pty Limited, Trustee of Sentient Global Resources Trust
            No. 1,
            Level 9, 20 Loftus Street, Sydney NSW 2000 Australia,
            (or at
            the option of Holder, at such other place or places Holder shall designate
            in
            writing) in lawful money of the United States, the principal sum of One
            Hundred
            Seventy Nine Four Hundred Thirty Three and 20/100 Dollars ($179,433.20)
            with
            interest thereon as described herein. 

          

          1. Interest.
            The
            unpaid principal balance remaining unpaid from time to time shall bear
            interest
            at the rate of Twenty per cent (20.0 %) per annum. Interest shall be
            compounded
            monthly.

          

          2. Payments.
            Interest
            shall be payable monthly with the first such payment being due and payable
            on
            December 1, 2005, and succeeding payments due and payable on the first
            day of
            each and every month thereafter. Principal shall be payable on June 30,
            2006
            unless accelerated prior to such date.

          

          3. Maturity
            Date.
            The
            entire balance of the unpaid principal together with interest thereon,
            shall be
            due and payable on June 30, 2006 unless the maturity date is accelerated
            as
            provided below. 

          

          4. Prepayment
            Permitted.
            Prepayments may be made in part or in full of principal or interest due
            under
            this Note without penalty. Any prepayments shall be credited against
            the final
            installment due under this Note and shall not affect the next installment
            of
            principal and interest. 

          

          5. Nonmonetary
            Default.
            If (i)
            this Note, any guarantee hereof, the security agreement related hereto,
            or any
            other agreement, undertaking or arrangement referred to therein shall
            become
            unenforceable in accordance with its terms, or (ii) Maker or any endorser,
            surety or guarantor of this Note:

          

          a. Fails,
            after demand, to furnish financial information or to permit inspection
            of any of
            their respective books and records;

          

          b. Suspends
            business, dissolves or terminates its existence;

          

          c. Becomes
            insolvent (unable to pay his, her, or its debts as they become due) or
            offers
            settlement to its creditors in lieu of such proceedings;

          

          d. Files
            a
            voluntary petition in bankruptcy, or an involuntary petition in bankruptcy
            is
            filed against him, her, or it that is not discharged within thirty (30)
            days;

          

          e. Makes
            an
            assignment for the benefit of creditors;

          

          f. Mortgages,
            pledges, assigns, or transfers any assets, accounts receivable or other
            property, in trust or otherwise without the prior written consent of
            Holder;

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          g. Makes
            any
            representation or warranty or has made any representation or warranty
            which
            proves to be false, incorrect or misleading in any material respect regarding
            its business, operations, assets or financial condition, or if any report,
            certificate, or financial statement given to Holder shall be false or
            misleading
            in any material respect; 

          

          h. Fails
            to
            pay any of its obligations when due, whether at scheduled maturity, required
            prepayment, demand, acceleration, or otherwise, or fails to perform any
            agreement or other material obligation owed to any other party; 

          

          i. If
            it is
            dissolved, 

          

          such
            occurrence shall be deemed to be a “non-monetary
            event of default” hereunder.
            

          

          6. Acceleration.
            Upon (i)
            any failure of Maker to pay any installment of principal or interest
            when due
            hereunder, (ii) the occurrence of a non-monetary
            event of default if
            said
non-monetary
            event of default is
            not
            cured within ten (10) days of notice from Holder to the Maker, or (iii)
            if, by
            December 31, 2005, Maker’s bonding has not been renewed or extended at no
            additional cost to Maker, or (iv) on or before March 31, 2006, all of
            Natural
            Soda Holdings, Inc.’s Unsecured Subordinated Series C Debentures due February
            19, 2008 and 95% of the Secured Series A Debentures Due September 30,
            2005
            issued to AmerAlia. Inc. and Maker plus accrued interest thereon have
            not been
            converted into equity of Natural Soda Holdings, Inc., then in the case
            of any
            such occurrence, the unpaid principal, accrued interest, and all other
            amounts
            represented by this Note, at the option of the Holder hereof, to be exercised
            at
            any time thereafter, shall be due and payable at once, without further
            notice or
            demand

          

          7. Cross
            Default.
            A
            default under this Note shall be deemed to constitute a default under
            any and
            all other notes or other evidences of indebtedness and any instruments
            of
            security under which the Holder is a beneficiary or under the Continuing
            Guarantee dated March 19, 2004 from Maker for the benefit of Holder (and
            others). Similarly, should Maker or any endorser, guarantor, or surety
            for this
            Note default under any agreement or obligation to the Holder, then
            such
            default shall also constitute a default hereunder.

          

          8. Late
            Charge.
            If any
            installment of principal or interest is not received when due, it shall
            be
            subject to and Maker agrees to pay, a late charge equal to five percent
            (5%) of
            such delinquent installment. Said late charge shall be immediately due
            and
            payable without notice to Maker or demand by Holder.

          

          9. Default
            Interest.
            After
            any default, interest shall accrue on all unpaid principal and interest
            at the
            rate of thirty percent (30%) per annum, compounded monthly, until such
            default
            is cured or until this Note is paid in full (the “default rate”).

          

          10. Security.
            This
            Note will be secured by a first priority security interest in Maker's
            accounts
            receivable and contract rights and general intangibles directly related
            to the
            accounts receivable which is described in Security Agreement between
            Maker and
            Sentient Asset Management USA, Inc. as collateral agent for the Holder,
            of even
            date herewith.

          

          11. Conversion.
            After
            any default, upon written notice to the Maker, the Holder may convert
            the
            outstanding principal amount of this Note and all accrued but unpaid
            interest
            into eight tenths of one percent (0.8%) of each class of the Maker's
            capital
            stock. When issued, the shares of the Maker's capital stock issuable
            upon
            conversion of this Note will be legally issued, fully-paid and non-assessable.
            Upon conversion, this Note will be cancelled and no longer
            outstanding.

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          12. Waiver.
            Each
            person or entity now or at any time liable, whether primarily or secondarily,
            for the payment of the indebted-ness hereby evidenced, for himself, herself,
            or
            itself, and its heirs, legal representa-tives, successors and assigns,
            expressly
            waives presentment for payment, notice of dishonor, protest, notice of
            protest,
            and diligence in collection, and consents that the time of said payments
            or any
            part thereof may be extended by the Holder hereof, without modifying,
            altering,
            releasing, affecting or limiting its respective liability. 

          

          13. Cumulative
            Rights.
            No
            failure to exercise and no delay in exercising on the part of the Holder,
            his,
            her, or its successors or assigns, of any right hereunder shall operate
            as a
            waiver of such right, nor shall any single or partial exercise thereof
            preclude
            any other or further exercise thereof or the exercise of any other right.
            The
            rights of the Holder, or his, her, or its successors or assigns, shall
            be
            cumulative and in addition to all other rights provided by law.

          

          14. Costs
            and Attorney’s Fees.
            The
            Maker of this Note agrees to reimburse the Holder hereof for all reasonable
            costs, including attorneys' fees incurred to collect this Note (whether
            a formal
            action is commenced or not), or any installments or principal and/or
            interest if
            not paid when due, or to enforce any of the rights of a secured party
            with
            respect to the collateral for this Note (including but not limited to
            the costs
            of retaking possession of any collateral for this Note), or to collect
            on any of
            the guarantees hereof. All amounts awarded to the Holder as part of any
            judgment
            shall bear interest at the default rate until paid in full.

          

          15. Joint
            and Several Obligation.
            The
            obligations of Maker and any other obligor shall be joint and
            several.

          

          16. Consent.
            No
            extension of time for payment of all or any part of the amount owing
            on this
            Note will affect the liability of the Maker or any surety, guarantor,
            or
            endorser of this Note. The Maker and all sureties, guarantors, endorsers,
            severally consent to any and all extensions of time, renewals, releases
            of
            liens, waivers, and modifications that may be made by the Holder to any
            other
            party. No delay by the Holder in exercising any right under this Note
            will
            operate as a waiver of that right; nor will any single or partial exercise
            of
            any right preclude other or further exercise of the right, or the exercise
            of
            any other right under this Note or otherwise as permitted by law. Any
            waiver or
            modification will be valid only to the extent set forth in writing signed
            by the
            parties hereto.

          

          17. Waiver
            of Jury Trial.
            Maker
            and each endorser, surety or guarantor of this Note waives the right
            to trial by
            jury in any action in connection with this Note. 

          

          18. Addresses
            for Notices and Payments.
            Except
            as otherwise provided, all payments, notices, tender, delivery or other
            communications to be given shall be in writing and shall be deemed to
            be
            properly given if delivered, mailed or sent by wire or other telegraphic
            communication:

          

          If
            to
            Holder:

          Sentient
            (Aust) Pty Limited

          Trustee
            of Sentient Global Resources Trust No. 1

          Level
            9,
            29 Loftus Street

          Sydney
            NSW 2000

          Australia

          

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          With
            a
            copy to:

          Sentient
            Asset Management Canada Limited

          1010
            Sherbrooke Street West, Suite 1512

          Montreal,
            Quebec H3A-2R7

          Canada

          

          If
            to
            Maker:

          Natural
            Soda, Inc.

          20971
            Smoky Hill Rd.

          Centennial,
            Colorado 80015

          

          Either
            party may change that party's address for these purposes by giving written
            notice of the change to the other party in the manner provided in this
            section.
            If sent by mail, any notice, delivery, or other communication shall be
            effective
            or deemed to have been given two (2) days after it has been deposited
            in the
            United States mail, duly registered or certified, with postage prepaid,
            and
            addressed as set forth above. If sent by wire or other form of telegraphic
            communica-tion, including facsimile transmission, or if delivered by
            courier or
            personal service, any notice, delivery or other communication shall be
            effective
            or deemed to have been given upon receipt.

          

          19. Applicable
            Law.
            This
            Note shall be governed by and construed and enforced in accordance with
            the
            provisions of the laws of the State of Colorado. The federal and state
            courts in
            the State of Colorado shall have exclusive jurisdiction to adjudicate
            any
            dispute arising out of this Note. Maker hereby expressly consents to
            personal
            jurisdiction of said courts.

          

          20. Business
            Purposes.
            The
            obligation represented by this Note is for commercial purposes only and
            is not
            for personal, family or household purposes.

          

          21. Interest
            Limitation.
            Interest
            payable under this Note and other amounts which would be considered to
            be
            interest or other charge for the use or loan of money shall never exceed
            the
            highest rate allowed by law. If the interest or other charges collected
            or to be
            collected in connection with the loan evidenced hereby exceed the permitted
            limits, then: (i) any such interest or loan charge shall be reduced by
            the
            amount necessary to reduce the amount charged to the permitted limit,
            and (ii)
            any sums already collected from Maker which exceed the permitted limits
            will be
            refunded or used to reduce other amounts payable hereunder.

          

          22. Registered
            Obligation. This
            note
            is registered with the Maker as to both the principal amount and any
            interest
            payable hereunder and may be transferred by the Holder to any third person
            only
            by surrendering the original note to the Maker and the issuance by the
            Maker of
            a new obligation to the transferee, as required under Section 1.871-14(c)
            of the
            Treasury Regulations promulgated under the United States Internal Revenue
            Code.

          

          MAKER:

          Natural
            Soda, Inc.

          

          

          By:
             

          Bill
            H.
            Gunn, President

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