EXHIBIT 3.9
JOINT VENTURE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 23rd day of September, 1997
A M O N G:
DURASKID (NEW ENGLAND), L.L.C., a limited liability
company formed under the laws of the Commonwealth of
Massachusetts,
(hereinafter called the "Company")
OF THE FIRST PART;
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DURA PRODUCTS INTERNATIONAL INC.,
a corporation incorporated
under the laws of the Province of Ontario,
(hereinafter called "Dura Products")
OF THE SECOND PART;
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DURASKID AND PRODUCTS, INC.,
a corporation incorporated
under the laws of the State of Delaware,
(hereinafter called "Duraskid US")
OF THE THIRD PART;
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ENVIRONMENTAL COMPOSITE PRODUCTS L.L.C., a limited
liability company formed under the laws of the
Commonwealth of Massachusetts,
(hereinafter called "Woodco")
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OF THE FOURTH PART;
WHEREAS Duraskid US is a wholly-owned subsidiary of Dura Products and
Dura Products is the owner of certain proprietary technology (the "Technology")
relating to Duraskids;
AND WHEREAS Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx, Xxxxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx
are the sole members of Woodco;
AND WHEREAS Woodco will use its skills to enable the Company to source
from third parties the requisite raw materials to manufacture Duraskids;
AND WHEREAS Duraskid US and Woodco have therefore agreed to establish a
joint venture by incorporating the Company as a limited liability company which
will hold a licence for the manufacture, sale and distribution of Duraskids
using the Technology throughout the Territory;
AND WHEREAS the parties hereto understand that the following is the
Company's contemplated investment requirement in order to establish a facility
having 14 extrusion lines, it being understood, however, that the facility size
may be expanded if so determined by the management committee of the Company:
Equity $750,000
Subordinated Debt $750,000
Equipment Lease Financing $1,875,000
Bank Loans (working capital) $375,000
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$3,375,000
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants, agreements, warranties and payments herein set forth and provided
for, the parties hereto respectively covenant and agree as follows:
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1. DEFINED TERMS
1. DEFINITIONS. Where used herein, the following terms shall have the following
meanings respectively:
"Affiliate" means, with respect to any designated person, each person that,
directly or indirectly, controls or is controlled by or is under common
control with such designated person. For the purpose of this definition,
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with") as used with respect to any person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person, whether through
the ownership of voting securities or by contract;
"Closing Date" means October 15, 1997 or such earlier or later date as may be
mutually agreed upon by the parties hereto;
"Duraskid US Subscribed Capital" has the meaning attributed thereto in
section 3.2;
"Duraskids" means pallets and skids manufactured from Dura Products'
proprietary composite material;
"Dura Products Option Agreement" means the agreement between Woodco and Dura
Products relating to the grant of option to purchase Dura Product common
shares, in the form of the agreement attached hereto as Schedule A;
"Initial Subscription Capital" means the aggregate subscribed capital to be
paid by Duraskid US and Woodco at the Time of Closing pursuant to sections
3.1(i) and 3.2(ii);
"Letter of Intent" means the restated letter of intent entered into by Wood
Recycling and Dura Products dated June 4, 1997;
"Maturity Date" means the date which is 10 years after the Closing Date;
"Operating Agreement" means the operating agreement among the Company, Woodco
and Duraskid US in the form attached hereto as Schedule B;
"Subordinated Loan" has the meaning attributed thereto in section 4.1;
"Subscribed Capital" means collectively the Woodco Subscribed Capital and the
Duraskid US Subscribed Capital;
"Technology" has the meaning set forth in the first recital to this
Agreement;
"Technology Licence Agreement" means the agreement between the Company, as
licensee, and Dura Products, as licensor, relating to the licencing of the
Technology to manufacture, sell and distribute Duraskids in the Territory, in
the form of the agreement attached hereto as Schedule C;
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"Territory" means the States of Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island, Vermont and that part of upper New York State
described in Schedule D hereto;
"Time of Closing" means 10:00 o'clock (Toronto time) in the morning on the
Closing Date;
"Woodco Subscribed Capital" has the meaning attributed thereto in section
3.1.
1.2 UNITED STATES DOLLARS. Unless otherwise expressed herein, all dollar amounts
referred to in this agreement are in United States dollars.
1.3 SINGULAR, PLURAL, ETC. Wherever in this agreement the context so requires,
the singular number shall include the plural number and vice versa and any
gender herein used shall be deemed to include the feminine, masculine or neuter
gender and "person" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, or other entity or a government or any agency,
department or instrumentality thereof and vice versa.
2. SCHEDULES
2.1 SCHEDULES. The following are the schedules attached to and incorporated in
this agreement by reference and deemed to be a part hereof:
Schedule A - Form of Dura Products Option Agreement
Schedule B - Operating Agreement
Schedule C - Technology Licensing Agreement
Schedule D - Area of Upper New York State Forming Part of the
Territory
Schedule E - Form of Promissory Note
Schedule F - Certificate of Organization of the Company
3. SUBSCRIPTIONS
3.1 WOODCO SUBSCRIPTION. Woodco hereby subscribes for, on its own behalf and for
its own account, a 49% ownership interest in the Company and agrees to
contribute, as equity capital to the Company, the aggregate amount of $367,500
(the "Woodco Subscribed Capital") as follows:
(i) at the Time of Closing, an aggregate initial subscription amount of
$36,750, payable by certified cheque or banker's draft to the order of
the Company; and
(ii) from time to time thereafter upon not less than 20 business days
written notice from the Company to Woodco specifying (a) the aggregate
additional capital to be paid by Woodco by certified cheque, bank draft
or wire transfer of immediately available funds to the order of the
Company, (b) the final date by which the additional capital to be paid
by Woodco must be received by the Company which date cannot be earlier
than 20 business days following the giving of the notice and (c) that
the giving of such notice has been approved by the management committee
of the Company.
3.2 DURASKID US SUBSCRIPTION. Duraskid US hereby subscribes for, on its own
behalf and for its own account, a 51% ownership interest in the Company and
agrees to contribute, as equity
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capital to the Company, the aggregate amount of $382,500 (the "Duraskid US
Subscribed Capital") as follows:
(i) at the Time of Closing, an aggregate initial subscription amount of
$38,250, payable by certified cheque or banker's draft to the order of
the Company; and
(ii) from time to time thereafter upon not less than 20 business days
written notice from the Company to Duraskid US specifying (a) the
aggregate additional capital to be paid by Duraskid US by certified
cheque, bank draft or wire transfer of immediately available funds to
the order of the Company, (b) the final date by which the additional
capital to be paid by Duraskid US must be received by the Company which
date cannot be earlier than 20 business days following the giving of
the notice and (c) that the giving of such notice has been approved by
the management committee of the Company.
3.3 PRO RATA NOTICES. The Company agrees that any notices contemplated in
sections 3.1(ii) and 3.2 (ii) shall be given contemporaneously and the parties
hereto agree that such notices shall in all respects be identical save and
except that the aggregate additional capital to be paid shall be pro rata
between Woodco and Duraskid US on a 49:51 basis. Woodco and Duraskid US covenant
and agree with the Company and each other that each of them will comply with the
terms of the notices from time to time issued by the Company pursuant to
sections 3.1(ii) and 3.2(ii).
3.4 UNDISTRIBUTED EARNINGS INCLUDED IN ADDITIONAL CAPITAL. Woodco and Duraskid
US hereby agree for greater certainty that in the event that the management
committee of the Company determines that additional capital is required in
accordance with sections 3.1 and 3.2, any amount of undistributed or retained
profits or net income then held by the Company and deemed part of the Capital
Account of either Woodco or Duraskid US shall be included in all or part of that
party's proportionate share of any additional capital so required.
4. SUBORDINATED LOAN TO THE COMPANY
4.1 COMMITMENT TO LEND. Subject to the provisions of section 4.10 hereof, Woodco
hereby agrees to lend to the Company the aggregate principal amount of $750,000
(the "Subordinated Loan") as hereinafter provided. The Subordinated Loan may be
availed of by way of various advances and the resulting indebtedness shall be
evidenced by promissory notes, substantially in the form annexed hereto as
Schedule E, in the aggregate principal amount of the Subordinated Loan so
advanced by Woodco.
4.2 ADVANCES OF SUBORDINATED LOAN. Unless otherwise agreed by the parties
hereto, $187,500 of the Subordinated Loan shall be advanced contemporaneously at
the time when 50% of the aggregate equity capital commitment in sections 3.1 and
3.2 hereof has been requested by Company. Thereafter, advances of the
Subordinated Loan shall be made by Woodco upon not less than thirty days prior
written notice from the Company of the amount so required. The Company has
advised Woodco that it anticipates the balance of the Subordinated Loan will be
required on the basis of $75,000 per month thereafter; however, nothing herein
shall preclude requested advances on a faster basis. Woodco shall have no
obligation to advance any of the Subordinated Loan after the Maturity Date.
4.3 INTEREST. The principal portion of all indebtedness created by advances
under the Subordinated Loan, both before and after maturity, default or judgment
and overdue interest both before and after default of judgment shall bear
interest from the date of the advance or from the date interest is due, as the
case may be at 9% per annum, calculated quarterly. Interest shall accrue from
the earlier of the date of the final advance of the Subordinated Loan and the
date that
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occurs three months following the date of the first advance of the Subordinated
Loan. Interest shall thereafter only be payable commencing on the first day of
the next succeeding calendar quarter. In all events interest shall not become
payable until the earlier of the advance of the entire Subordinated Loan and the
date determined by the management committee of the Company that no further
advances of the Subordinated Loan are required. The Company shall not be in
default of payment of any amount of interest hereunder if the Company is
prohibited from making such payment by reason of the terms of any loan
documentation provided by the Company to any third party lender; however,
interest shall nevertheless accrue and shall be added to the principal amount
outstanding if such interest has not been paid within six months of the date
such interest should otherwise have been paid.
4.4 REPAYMENT. The principal amount of the Subordinated Loan shall be repaid on
the following basis:
(a) payment of $25,000 on the first day of March, June, September
and December in each and every year commencing on December 1,
2000; and
(b) on the Maturity Date, the balance outstanding under the
Subordinated Loan;
provided, however, the Company shall not be in default of payment of any amount
of principal hereunder if the Company is prohibited from making such payment by
reason of the terms of any loan documentation provided by the Company to any
third party lender.
4.5 PREPAYMENT. The Subordinated Loan may be prepaid in whole or in part at any
time and from time to time without penalty or bonus.
4.7 NO SECURITY AND SUBORDINATION. The Subordinated Loan shall be unsecured.
Woodco covenants and agrees to execute any and all subordination documentation
reasonably requested by any lender or lenders or contemplated lender or lenders
to the Company in order to evidence the subordination and postponement of the
Subordinated Loan to the indebtedness owing, or to be owing, by the Company to
such lender or lenders. It is expressly acknowledged and agreed that such
documentation may restrict the payment of interest and the repayment of
principal on terms acceptable to both the lenders and the management committee
of the Company.
4.8 EVENTS OF DEFAULT. Woodco may demand immediate payment of the Subordinated
Loan and the same shall thereby become immediately due and payable and failing
payment of the same forthwith, Woodco may then proceed to enforce payment
thereof by exercising any right, power or remedy permitted by law, upon the
happening of any one or more of the following events:
(a) if the Company shall fail to pay any instalment of principal
or interest which shall have become due and payable after
thirty (30) days written notice to the Company from Woodco;
and
(b) if the Company is adjudged a bankrupt or if a custodian or
receiver or receiver and manager or any other officer with
similar powers if appointed for the Company or for a
substantial part of its assets.
Woodco may waive any breach by the Company of any of the provisions contained
herein or any default by the Company in the observance or performance of any
covenant in this section 4 to be
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observed or performed by the Company; provided always that no act or omission of
Woodco shall extend to or be taken in any manner whatsoever to affect any
subsequent breach or default or the rights resulting therefrom.
4.9 ASSIGNMENT OF THE SUBORDINATED LOANS. Woodco may assign the Subordinated
Loan provided it obtains the prior written consent of the Company and Duraskid
US, which consent shall not be unreasonably withheld or delayed, and provided
that the assignee agrees in writing, in a form satisfactory to the Company and
Duraskid US, to be bound by the terms of this agreement insofar as this
agreement relates to the Subordinate Loan.
4.10 ISSUANCE OF LETTERS OF CREDIT. Woodco acknowledges that as part of
negotiating the equipment lease financing or bank working capital loans, one or
more of such lenders may wish to advance to the Company additional amounts which
would equal all or any part of the Subordinated Loan. In such event the parties
agree that the Company may give notice to Woodco that the amount of the
Subordinated Loan shall be reduced or eliminated by the amount set forth in the
notice and, in lieu thereof, if requested by the Company and such lenders,
Woodco covenants and agrees to provide a letter of credit from a bank,
acceptable to such lenders, in favour of such lenders and on terms acceptable to
such lenders in the amount of the Subordinated Loan which Woodco no longer has
the obligation to advance. The Company shall pay an annual fee to Woodco in the
amount of 0.50% of the amount of the letter of credit so provided by Woodco.
5. EXECUTION AND DELIVERY OF ADDITIONAL AGREEMENTS
5.1 EXECUTION OF TECHNOLOGY LICENCE AGREEMENT. At the Time of Closing, Dura
Products and the Company will enter into the Technology Licence Agreement.
5.2 EXECUTION OF OPERATING AGREEMENT. At the Time of Closing, Duraskid US,
Woodco and the Company will enter into the Operating Agreement.
5.3 EXECUTION OF DURA PRODUCTS OPTION AGREEMENT. At the Time of Closing, Dura
Products and Woodco will enter into the Dura Products Option Agreement.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS OF THE COMPANY. The Company represents and warrants to
Woodco and Duraskid US as follows and acknowledges that Woodco and Duraskid US
are relying upon such representations and warranties in connection with the
purchase, and/or the commitment to purchase, by Woodco and Duraskid US of the
Subscribed Capital:
6.1.1 The Company has been duly formed and organized and is validly subsisting
under the laws of the Commonwealth of Massachusetts. Attached hereto as Schedule
F is a true copy of the Certificate of Organization (and any amendments thereto)
of the Company.
6.1.2 Prior to the receipt of the Subscribed Capital, no person holds any
ownership interest in the Company.
6.1.3 At the Time of Closing upon payment of that portion of the Initial
Subscription Capital, Woodco will hold a 49% ownership interest in the Company
and Duraskid US will hold a 51% ownership interest in the Company.
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6.1.4 Except for Woodco and Duraskid US, no person, firm, corporation or any
party whatsoever has any agreement or option or any right or privilege (whether
by law, pre-emptive or contractual) capable of becoming an agreement, including
convertible securities, warrants or verbal obligations of any nature, for the
purchase, subscription, allotment or issuance of any ownership interest in the
Company.
6.1.5 The Company has no subsidiaries or agreements of any nature to acquire any
subsidiaries or to acquire or lease any other business operations.
6.1.6 At the Time of Closing, the Company will not have any material assets or
liabilities of any nature and kind.
6.2 REPRESENTATIONS OF WOODCO. Woodco represents and warrants to Dura Products,
Duraskid US and the Company as follows and acknowledges that Dura Products,
Duraskid US and the Company are relying upon such representations and warranties
in connection with the transactions contemplated hereby:
6.2.1 Woodco has been duly formed and organized and is validly subsisting under
the laws of the Commonwealth of Massachusetts. Woodco has the power and
authority to enter into this Agreement and each of the agreements contemplated
herein and to perform its obligations hereunder and thereunder.
6.2.2 The entering into of this Agreement and the agreements contemplated herein
and the performance of their obligations hereunder and thereunder will not
result in the violation of any of the terms and provisions of the constating
documents of Woodco or of any indenture or other agreement, written or oral, to
which it may be a party of by which it is bound. The execution and delivery of
this Agreement and the agreements contemplated herein by Woodco and the
consummation of the transactions contemplated hereby and thereby will not result
in the violation of any statute, order, decree, judgment, notice, ordinance,
regulation, law, or other restrictions applicable to Woodco or require the
consent or approval of any governmental entity or other party.
6.2.3 The execution, delivery and performance of this Agreement and the
agreements contemplated herein have been duly authorized by all necessary
corporate action on the part of Woodco and this Agreement constitutes and, upon
execution, the agreements contemplated herein will constitute, valid and binding
obligations of Woodco enforceable in accordance with their terms, subject to the
following qualifications:
(a) specific performance and injunctive relief and other equitable
remedies are discretionary and, in particular, may not be
available where damages are considered by a court of competent
jurisdiction to be an adequate remedy; and
(b) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other laws
generally affecting enforceability of creditors' rights.
6.2.4 Xxxxxx X. Xxxxx, Xxxxx X. Herhily, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx are the sole
members of Woodco.
6.3 REPRESENTATIONS AND WARRANTIES OF DURASKID US. Duraskid US represents and
warrants to Woodco and the Company as follows and acknowledges that Woodco and
the Company are
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relying upon such representations and warranties in connection with the
transactions contemplated hereby:
6.3.1 Duraskid US is a corporation duly incorporated and validly subsisting
under the laws of the State of Delaware. Duraskid US has the corporate power and
authority to enter into this Agreement and the agreements contemplated herein
and to perform its obligations hereunder and thereunder.
6.3.2 The entering into of this Agreement and the agreements contemplated herein
and the performance of their obligations hereunder and thereunder will not
result in the violation of any of the terms and provisions of the constating
documents or by-laws of Duraskid US or of any indenture or other agreement,
written or oral, to which it may be a party of by which it is bound. The
execution and delivery of this Agreement and the agreements contemplated herein
by Duraskid US and the consummation of the transactions contemplated hereby and
thereby will not result in the violation of any statute, order, decree,
judgment, notice, ordinance, regulation, law, or other restrictions applicable
to it or require the consent or approval of any governmental entity or other
party.
6.3.3 The execution, delivery and performance of this Agreement and the
agreements contemplated herein have been duly authorized by all necessary
corporate action on the part of Duraskid US and this Agreement constitutes and,
upon execution, the agreements contemplated herein, will constitute, valid and
binding obligations of Duraskid US, enforceable in accordance with their terms,
subject to the following qualifications:
(a) specific performance and injunctive relief and other equitable
remedies are discretionary and, in particular, may not be
available where damages are considered by a court of competent
jurisdiction to be an adequate remedy; and
(b) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other laws
generally affecting enforceability of creditors' rights.
6.3.4 Dura Products is the legal and beneficial owner of all of the issued and
outstanding shares in the capital of Duraskid US.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.1 The representations and warranties of the Company, Woodco and Duraskid US
contained in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the closing of the transactions contemplated
herein for a period of two years from the Closing Date.
8. COVENANTS OF THE COMPANY, WOODCO AND DURASKID US
8.1 OWNERSHIP INTEREST AND ELECTION OF MANAGEMENT COMMITTEE AND OFFICERS. The
Company, Woodco and Duraskid US covenant and agree with each other that they
will take all steps at the Time of Closing so that:
(a) a certificate representing a 51% ownership interest in the
Company will be issued to Duraskid US and a certificate
representing a 49% ownership interest in the Company will be
issued to Woodco;
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(b) Xxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxxxxx and Xxxxxxx
Xxxxxxxx will be elected to the management committee of the
Company; and
(c) Xxxxx Xxxxxxxx shall be the initial chairman of the management
committee of the Company.
8.2 SUPPLY OF RECYCLED CELLULOSE AND HDPE. So long as the Company is licensed to
manufacture and sell Duraskids and so long as the Company so requests, Woodco
covenants and agrees with the Company that Woodco will arrange for third party
suppliers acceptable to the Company, acting reasonably, to directly supply the
Company with recycled cellulose and high density polyethylene (or other similar
material acceptable to the Company ) at such supplier's best available pricing,
it being understood that that all such arrangements must be acceptable to the
Company and shall be directly between the Company and such supplier and not
indirectly through Woodco.
8.3 EXCESS COMPOUNDING CAPACITY. If the Company has compounding capacity and
material supply in excess of that required to manufacture Duraskids as
contemplated by this Agreement, Dura Products shall have the right, from and
after the Closing Date, to direct the Company to supply, and the Company agrees
that, from and after the Closing Date, it will supply compounded material in
respect of manufacturing products other than Duraskids to any joint venture
entity being formed or acquired by Dura Products or its Affiliates at prices
acceptable to the management committee of the Company.
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9. INDEMNIFICATION
9.1 INDEMNIFICATION BY THE COMPANY. The Company covenants and agrees to
indemnify and save harmless Woodco and Duraskid US of and from any loss
whatsoever arising out of, under or pursuant to: (a) any loss suffered by either
of them as a result of any breach of representation, warranty or covenant by the
Company contained in this Agreement; and (b) all claims, demands, costs and
expenses in respect of the foregoing; provided that the indemnification provided
by this section shall be limited to a maximum amount of $500,000 in the
aggregate.
9.2 INDEMNIFICATION BY THE WOODCO. Woodco covenants and agrees to indemnify and
save harmless the Company and Duraskid US of and from any loss whatsoever
arising out of, under or pursuant to: (a) any loss suffered by any of them as a
result of any breach of representation, warranty or covenant by Woodco contained
in this Agreement; and (b) all claims, demands, costs and expenses in respect of
the foregoing; provided that the indemnification provided by this section shall
be limited to a maximum amount of $500,000 in the aggregate.
9.3 INDEMNIFICATION BY DURASKID US. Duraskid US covenants and agrees to
indemnify and save harmless Woodco of and from any loss whatsoever arising out
of, under or pursuant to: (a) any loss suffered by it as a result of any breach
of representation, warranty or covenant by Duraskid US contained in this
Agreement; and (b) all claims, demands, costs and expenses in respect of the
foregoing; provided that the indemnification provided by this section shall be
limited to a maximum amount of $500,000 in the aggregate.
10. CLOSING ARRANGEMENTS
10.1 LOCATION. The closing shall take place at the Time of Closing on the
Closing Date at the offices of Dura Products or such other location as the
parties may agree.
10.2 DELIVERIES. At the Time of Closing on the Closing Date, the Company shall
deliver to Woodco and Duraskid US certificates respecting the ownership
interests in the Company contemplated in sections 3.1(i) and 3.2(i) and will
cause such ownership interests to be duly and regularly recorded in the records
of the Company in the name of Woodco and Duraskid US whereupon, upon receipt of
such certificates and subject to all of the terms and conditions hereof being
complied with, payment of the Initial Subscription Capital shall be made and
satisfied in the manner provided in section 3.
11. CONDITIONS OF CLOSING FOR THE BENEFIT OF WOODCO
The payment of the Initial Subscription Capital is subject to the
following terms and conditions for the exclusive benefit of Woodco to be
fulfilled and/or performed at or prior to the Time of Closing:
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The covenants, representations
and warranties of the Company and Duraskid US contained in sections 6.1 and 6.3
hereof shall be true and correct as of the date hereof in all material respects
with the same force and effect as though such representations and warranties had
been made on and as of such date and Woodco shall have received at the Time of
Closing on the Closing Date certificates from Duraskid US dated the Closing Date
to the effect that such representations and warranties referred to above are
true and correct on and as of the Closing Date, in all material respects, with
the same force and effect as though made on and as of such date.
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11.2 COMPLIANCE WITH COVENANTS. The Company, Dura Products and Duraskid US shall
have complied with all covenants and agreements herein agreed to be performed or
caused to be performed by them at or prior to the Time of Closing.
11.3 NO ACTIONS. No action or proceeding by law or in equity shall be pending or
threatened by any person, company, firm, governmental authority, regulatory body
or agency to enjoin or prohibit the issuance of the ownership interest
contemplated in section 3 hereof or the payment of the Subscribed Capital
contemplated hereby.
If any of the foregoing conditions shall not be fulfilled or performed at or
before the Time of Closing, Woodco may terminate this Agreement by notice to the
other parties and in such event Woodco shall be released from all obligations
hereunder without prejudice to any rights or remedies they may have against the
other parties; provided that any of the said conditions may be waived in whole
or in part by Woodco without prejudice to their rights of termination in the
event of the non-fulfilment of any other condition or conditions, any such
waiver to be binding on Woodco only if the same is in writing.
12. CONDITIONS OF CLOSING FOR THE BENEFIT OF DURASKID US
The payment of the Initial Subscription Capital is subject to the
following terms and conditions for the exclusive benefit of Duraskid US to be
fulfilled and/or performed at or prior to the Time of Closing:
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The covenants, representations
and warranties of the Company and Woodco contained in sections 6.1 and 6.2
hereof shall be true and correct as of the date hereof in all material respects
with the same force and effect as though such representations and warranties had
been made on and as of such date and Duraskid US shall have received at the Time
of Closing on the Closing Date certificates from Woodco dated the Closing Date
to the effect that such representations and warranties referred to above are
true and correct on and as of the Closing Date, in all material respects, with
the same force and effect as though made on and as of such date.
12.2 COMPLIANCE WITH COVENANTS. The Company and Woodco shall have complied with
all covenants and agreements herein agreed to be performed or caused to be
performed by them at or prior to the Time of Closing.
12.3 NO ACTION. No action or proceeding by law or in equity shall be pending or
threatened by any person, company, firm, governmental authority, regulatory body
or agency to enjoin or prohibit the issuance of the ownership interest
contemplated in section 3 hereof or the payment of the Subscribed Capital
contemplated hereby.
12.4 BOARD APPROVAL. The transactions contemplated by this Agreement shall have
been approved by the board of directors of Dura Products no later than the
Closing Date.
If any of the foregoing conditions shall not be fulfilled or performed at or
before the Time of Closing, Duraskid US may terminate this Agreement by notice
to the other parties and in such event Dura Products and Duraskid US shall be
released from all obligations hereunder without prejudice to any rights or
remedies they may have against the other parties; provided that any of the said
conditions may be waived in whole or in part by Duraskid US without prejudice to
their rights of termination in the event of the non-fulfilment of any other
condition or conditions, any such waiver to be binding on Duraskid US only if
the same is in writing.
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13. MANUFACTURE AND SALE OF OTHER PRODUCTS IN THE TERRITORY
13.1 DELIVERY OF SALE NOTICE. Subject to the provisions of section 13.4, in the
event that Dura Products develops new non-pallet products and makes a
determination that it wishes to create a joint venture for the manufacture, sale
and distribution of such products in the Territory, so long as the Company and
Woodco are not in default under this Agreement or any agreement contemplated
hereby, Dura Products will deliver a notice in writing (the "JV Notice") to
Woodco whereby Dura Products will offer Woodco the right to participate in the
proposed joint venture on the terms and conditions set forth in the JV Notice
(such terms and conditions being hereinafter collectively referred to as the "JV
Terms"). Woodco shall have the right, exercisable by giving notice (the
"Acceptance Notice") to Dura Products within 30 days after its receipt of the JV
Notice (the "Acceptance Period") to agree to participate in the joint venture as
required by the JV Notice and to comply with the JV Terms. In the event that no
Acceptance Notice is received from Woodco within the Acceptance Period, the
offer to Woodco shall be deemed to have been refused. For greater certainty,
nothing herein shall restrict Dura Products or any Affiliate from itself
manufacturing, selling or distributing such products in the Territory.
13.2 SALE NOTICE IRREVOCABLE. The delivery by Dura Products of a JV Notice shall
be irrevocable and, upon delivery by Woodco of an Acceptance Notice, Dura
Products and Woodco shall be bound by the JV Terms.
13.3 SALE TO THIRD PARTIES. If, following completion of the procedure stipulated
in section 13.1, the offer contained in the JV Notice remains unaccepted by
Woodco without amendment, Dura Products may enter into the joint venture
contemplate in section 13.1 with any person (the "Third Party") on terms not
more favourable to the Third Party than the JV Terms. If no joint venture is
established by Dura Products within 180 days following the expiration of the 30
day period referred to in section 13.1, Dura Products shall be required, before
proposing to establish another such joint venture in the Territory, again to
offer the said joint venture opportunity, as aforesaid, to Woodco in the manner
provided in section 13.1 and such process shall be repeated so often as Dura
Products desires to establish such joint venture in the Territory.
13.4 LIMITATION ON RIGHTS GRANTED IN THIS SECTION 13. If pursuant to section 6.4
of the Operating Agreement, Duraskid US or its nominees on the management
committee recommend additional funding for the Company in circumstances which
require unanimous approval of the Company's management committee and Woodco or
its nominees on the management committee reject such request, any rights of
Woodco under this section 13 shall thereupon cease and Dura Products shall have
no further obligations under this section 13.
14. RIGHT OF FIRST REFUSAL FOR ADDITIONAL TERRITORIES
14.1 DELIVERY OF SALE NOTICE. Subject to the provisions of section 14.4, in the
event that Dura Products wishes to create a joint venture for the manufacture,
sale and distribution of Duraskids in the State of New Jersey and that part of
the State of New York not forming part of the Territory, prior to the date which
is 18 months after the Closing Date (the "Expiry Date"), so long as the Company
and Woodco are not in default under this Agreement or any agreement contemplated
hereby, Dura Products will deliver a notice in writing (the "Duraskid Notice")
to Woodco whereby Dura Products will offer Woodco the right to participate in
the proposed joint venture on the terms and conditions set forth in the Duraskid
Notice (such terms and conditions being hereinafter collectively referred to as
the "Duraskid Terms"). Woodco shall have the right, exercisable by giving notice
(the "Acceptance Notice") to Dura Products within 60 days after its receipt of
the Duraskid Notice (the "Acceptance Period") to agree to participate in the
joint
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venture as required by the Duraskid Notice and to comply with the Duraskid
Terms. In the event that no Acceptance Notice is received from Woodco within the
Acceptance Period, the offer to Woodco shall be deemed to have been refused. For
greater certainty, nothing herein shall restrict Dura Products or any Affiliate
from itself manufacturing, selling or distributing Duraskids in New Jersey and
that part of the State of New York not forming part of the Territory. Dura
Products shall have no obligation to deliver a Duraskid Notice after the Expiry
Date.
14.2 SALE NOTICE IRREVOCABLE. The delivery by Dura Products of a Duraskid Notice
shall be irrevocable and, upon delivery by Woodco of an Acceptance Notice, Dura
Products and Woodco shall be bound by the Duraskid Terms.
14.3 SALE TO THIRD PARTIES. If, following completion of the procedure stipulated
in section 14.1, the offer contained in the Duraskid Notice remains unaccepted
by Woodco without amendment, Dura Products may enter into the joint venture
contemplate in section 14.1 with any person (the "Third Party") on terms not
more favourable to the Third Party than the Duraskid Terms. If no joint venture
is established by Dura Products within 180 days following the expiration of the
60 day period referred to in section 14.1, Dura Products shall be required,
before proposing to establish another such joint venture, again to offer the
said joint venture opportunity, as aforesaid, to Woodco in the manner provided
in section 14.1 and such process shall be repeated so often as Dura Products
desires to establish such joint venture.
14.4 LIMITATION ON RIGHTS GRANTED IN THIS SECTION 14. If pursuant to section 6.4
of the Operating Agreement, Duraskid US or its nominees on the management
committee recommend additional funding for the Company in circumstances which
require unanimous approval of the Company's management committee and Woodco or
its nominees on the management committee reject such request, any rights of
Woodco under this section 14 shall thereupon cease and Dura Products shall have
no further obligations under this section 14.
15. NOTICES
15.1 NOTICES. All notices, consents or other communications to any party under
this Agreement shall be in writing and shall be deemed to be sufficiently given
if delivered by overnight courier, in which case the notice shall be deemed to
have been received two (2) business days after the sending thereof, or if
delivered by hand to a representative of such party, in which case the notice
shall be deemed to have been received on the date of delivery thereof, or if
sent by telecopier to such party, in which case the notice shall be deemed to
have been received on the business day (in the locality of the addressee)
following the sending thereof (provided it is received or reproduced at the
address of the addressee on paper), addressed as follows:
(a) if to the Company, to it at:
c/o Wood Recycling Inc.
0 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000
Attention: Chairman
Telephone: 000-000-0000
Telecopier: 000-000-0000
(b) if to Dura Products or Duraskid US, to them at:
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00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chief Financial Officer
Telephone: 000-000-0000
Telecopier: 000-000-0000
(c) if to Woodco, to it at:
c/o Wood Recycling Inc.
0 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000
Attention: Management Committee
Telephone: 000-000-0000
Telecopier: 000-000-0000
Any party may change the address to which all notices, consents or other
communications are to be sent by giving written notice of such change of address
to the other parties in conformity with this section.
16. TIME OF THE ESSENCE
16.1 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
17. ENTIRE AGREEMENT
17.1 ENTIRE AGREEMENT. This Agreement, including the Schedules hereto,
constitutes the entire agreement between the parties hereto with respect to the
subject matter contained herein and supercedes the Letter Agreement. There are
not and shall not be any verbal statements, representations, warranties,
undertakings or agreements between the parties and this Agreement may not be
amended or modified in any respect except by written instrument signed by the
parties hereto.
18. PROPER LAW OF CONTRACT
18.1 GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the
Commonwealth of Massachusetts. Each of the parties hereto hereby irrevocably
attorns to the jurisdiction of the courts of the Commonwealth of Massachusetts.
19. BENEFIT AND BINDING NATURE OF THE AGREEMENT
19.1 BINDING AGREEMENT. This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, legal personal
representatives, successors and assigns but shall not be assignable by any of
the parties hereto without the written consent of the other parties hereto.
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20. COUNTERPARTS
20.1 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which shall
constitute one and the same agreement.
21. EXPENSES
21.1 EXPENSES. It is understood and agreed that Woodco, on the one hand, and
Dura Products and Duraskid US, on the other hand, (and not the Company) shall be
responsible for all legal and accounting expenses incurred by each of them in
connection with the transactions herein provided for, unless all of the parties
hereto otherwise agree in writing.
22. NO ANNOUNCEMENT
22.1 ANNOUNCEMENTS. Any announcement with respect to this Agreement by Dura
Products shall be submitted in advance for the comments of Woodco where
practicable; provided always that nothing herein contained shall prevent or
restrict Dura Products from making any announcement with respect to this
Agreement which it is required by law to make. No announcement with respect to
this Agreement shall be made by Woodco without the prior written approval of
Dura Products.
23. CONFIDENTIALITY
23.1 CONFIDENTIALITY. Woodco acknowledges that it, Xxxxxx X. Xxxxx, Xxxxx X.
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxx and Xxxxxxx Xxxxxxxx have executed and delivered to Dura Products and
Duraskid US a confidentiality and non-use agreement contemporaneously with the
execution of this Agreement.
24. DISPUTE RESOLUTION
24.1 PROCEDURE FOR DISPUTE RESOLUTION. The purpose of this Section 24 is to set
forth a framework and procedure under which the parties shall, in good faith,
use their reasonable efforts to resolve any disputes that may arise under this
Agreement without resort to litigation. Except with respect to section 9 hereof,
the parties agree to first utilize the following process to accomplish this
goal, engaging first in informal discussion, and thereafter, to arbitration.
24.2 NOTICES AND APPOINTMENT OF NOMINEES. Except with respect to section 9
hereof, in the event of a dispute under this Agreement, including without
limitation, any failure of the parties to agree on a matter requiring settlement
or agreement (a "Dispute"), the party alleging the Dispute shall provide notice
giving particulars of the Dispute to the other parties (the "Notice of
Dispute"). The parties each agree to appoint a representative and to cause their
respective representatives to meet as soon as possible in an effort to resolve
the Dispute. Should the Dispute not be resolved within ten (10) Business Days of
the Notice of Dispute, representatives of the parties at a senior management
level shall attempt, in good faith, to resolve the Dispute in no more than
thirty (30) Business Days from the date of the Notice of Dispute. All such
representatives of the parties shall be referred to hereafter as "Settlement
Nominees", and the thirty (30) Business Day period shall be referred to as the
"Period of Discussion".
24.3 ARBITRATION. Except with respect to section 9 hereof, in the event that the
Settlement Nominees are unable to resolve the Dispute during the Period of
Discussion, any party may
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submit, within five (5) days following the expiration of the Period of
Discussion, the Dispute to binding arbitration before a single and sole (1)
arbitrator in Boston, Massachusetts pursuant to the UNCITRAL rules, except as
modified below:
(a) such arbitration shall be the exclusive dispute settlement
procedure between the parties, and the decision of the arbitrator
shall be binding on each of Dura Products and the Corporation,
subject only to section 24.3(f) hereof and the right of each party
to appeal a decision that is contrary to law;
(b) the parties shall have ten (10) Business Days from receipt of the
Arbitration Notice to select an arbitrator
(c) if the parties fail to appoint an arbitrator, the party initiating
the arbitration (the "Initiating Party") will be free, upon
written notice to the other party, to request that a court of
competent jurisdiction in the Commonwealth of Massachusetts
promptly appoint an arbitrator, as applicable, and to notify each
party of such appointment;
(d) the parties shall agree in advance as to the manner in which the
arbitrator shall promptly hear witnesses and arguments, review
documents and otherwise conduct the arbitration procedures and
failing agreement within five (5) Business Days from the date of
selection of their arbitrator, the arbitrator shall formulate its
own procedural rules and promptly commence and expeditiously
conduct the arbitration proceedings;
(e) the arbitrator shall issue its decision in writing within
forty-five (45) days from the date of appointment of the
arbitrator;
(f) nothing in this section 24 shall prevent either party from
applying to a court of competent jurisdiction in the Commonwealth
of Massachusetts for injunctive relief pending final disposition
of the arbitration proceeding;
(g) in no event shall the arbitrator have the jurisdiction to amend or
vary the terms of this Agreement;
(h) the arbitration award shall be given in writing and shall be final
and binding on the parties, not subject to any appeal, and shall
deal with the question of costs of arbitration and all matters
related thereto;
(i) judgement upon the award rendered may be entered in any court
having jurisdiction, or, application may be made to such court for
a judicial recognition of the award or an order of enforcement
thereof, as the case may be; and
(j) subject to paragraph (f) of this provision, it shall be a
condition precedent to the bringing of any legal proceedings with
respect to the Dispute that the arbitration procedure set out in
this section 24.3 shall have taken place.
The parties hereto agree that the foregoing shall apply so long as it does not
conflict with the arbitration rules of the American Arbitration Association, in
which event such rules of the American Arbitration Association shall apply.
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IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date first above written.
DURASKID (NEW ENGLAND), L.L.C.
Per:__________________________________
Authorized Signing Officer
Per:__________________________________
Authorized Signing Officer
DURA PRODUCTS INTERNATIONAL INC.
Per:__________________________________
Authorized Signing Officer
Per:__________________________________
Authorized Signing Officer
DURASKID AND PRODUCTS, INC.
Per:__________________________________
Authorized Signing Officer
Per:__________________________________
Authorized Signing Officer
ENVIRONMENT COMPOSITE PRODUCTS L.L.C.
Per:__________________________________
Authorized Signing Officer
Per:__________________________________
Authorized Signing Officer
